Exhibit 99.1
 
 
 
 
FOR IMMEDIATE RELEASE
February 13, 2020
 

Peter Poli
Chief Financial Officer 877-260-2010
peter.poli@trackgrp.com

Track Group Reports 1st Quarter Fiscal 2020 Financial Results
 
Revenue up 3%, Operating Income improves dramatically, Adjusted EBITDA up 3% and Net Loss shrinks 87%
 
 
NAPERVILLE, ILLINOIS – Track Group, Inc. (OTCQX: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its first quarter ended December 31, 2019 (the “First Quarter FY20”). The Company posted (i) revenue of $8.4M, an increase of 3% over the same period last year, (ii) operating income of $0.3M compared to an operating loss of $0.1M in First Quarter FY19, (iii) Adjusted EBITDA of $1.8M, up 3% compared to First Quarter FY19, and (iv) a cash balance at December 31, 2019 of $8.5M, representing an increase of 23% over September 30, 2019.
 
“We are please to kick off our new fiscal year with a strong first quarter that ended December 31, 2019 with revenue growth of nearly 3%, which is commendable given the impact of the strengthening of the US dollar and the subsequent reduction in revenue caused by the translation of our significant Chilean peso revenue into US dollars”, said Derek Cassell, Track Group’s CEO.
 
FINANCIAL HIGHLIGHTS
 
Strong quarterly revenue of $8.4M in First Quarter FY20, up 3% over First Quarter FY19 of $8.2M.
 
Favorable quarterly gross profit of $4.7M in First Quarter FY20, up 1% over First Quarter FY19 of $4.6M.
 
Total operating expense for the First Quarter FY20 of $4.4M is down 7 % versus First Quarter FY19’s $4.7M of operating expense. The decline in quarterly operating expense when combined with a favorable quarterly gross profit led to Operating Income of $301K, which is a dramatic improvement of over 600% compared to a quarterly loss of $57K in the First Quarter FY19.
 
Adjusted EBITDA in the First Quarter FY20 finished at $1.8M, up 3% compared to $1.7M for First Quarter FY2019.
 
Cash balance of $8.5M for First Quarter FY20, up 23% compared to $6.9M at September 30, 2019.
 
Net loss attributable to shareholders for First Quarter FY20 of ($0.2M) compared to a net loss attributable to shareholders in the First Quarter FY2019 of ($1.7M), representing an improvement of 87%.
 
                                
5th Avenue Station
200 E. 5thAvenue, Suite 100
Naperville, IL 60563
877.260.2010
trackgrp.com
 
 
 
 
 

 
-1-
 
 
 
BUSINESS OUTLOOK
 
 
 
Actual
 
 
Outlook
 
 
 
FY 2018
 
 
FY 2019
 
 
FY 2020
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 $30.6M 
 $34.0M 
 $36-40M 
 
    
    
    
Adjusted EBITDA Margin:
  19.2%
  21.9%
  21-26%
 
About Track Group, Inc.
Track Group designs, manufactures, and markets location tracking devices; as well as develops and sells a variety of related software, services, accessories, networking solutions, and monitoring applications. The Company's products and services are designed to empower professionals in security, law enforcement, corrections and rehabilitation organizations worldwide with single-sourced offender management solutions that integrate reliable intervention technologies to support re-socialization and monitoring initiatives.
 
The company currently trades under the ticker symbol "TRCK" on the OTCQX exchange. For more information, visit www.trackgrp.com.
 
Forward-Looking Statements
Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "if", "should" and "will" and similar expressions as they relate to Track Group, Inc. and subsidiaries ("Track Group") are intended to identify such forward-looking statements. These statements are only predictions and reflect Track Group's current beliefs and expectations with respect to future events and are based on assumptions and subject to risks and uncertainties and subject to change at any time. Track Group may from time to time update these publicly announced projections, but it is not obligated to do so. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. For a discussion of such risks and uncertainties, see "Risk Factors" in Track Group's annual report on Form 10-K, its quarterly report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. New risks emerge from time to time. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the dates on which they are made.
 
Non-GAAP Financial Measures
This release includes financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission including non-GAAP EBITDA. These measures may be different from non- GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures are based on the financial figures for the respective period.
 
 
 
-2-
 
 
TRACK GROUP, INC. AND SUBSIDIARIES
 
Non-GAAP Adjusted EBITDA excludes items included but not limited to interest, taxes, depreciation, amortization, impairment charges, gains and losses, currency effects, one time charges or benefits that are not indicative of operations, charges to consolidate, integrate or consider recently acquired businesses, costs of closing facilities, stock based or other non-cash compensation or other stated cash and non-cash charges (the “Adjustments”).
 
 
The Company believes the non-GAAP measures provide useful information to both management and investors when factoring in the Adjustments. Specific disclosure regarding the Company’s financial results, including management’s analysis of results from operations and financial condition, are contained in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2019, and other reports filed with the Securities and Exchange Commission. Investors are encouraged to carefully read and consider such disclosure and analysis contained in the Company’s Form 10-K and other reports, including the risk factors contained in such Form 10-K.
 
 
 
-3-
 
 
TRACK GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS


 
(Unaudited)
December 31,
 
 
 
September 30,
 
Assets
 
2019
 
 
2019
 
Current assets:
 
 
 
 
 
 
Cash
 $8,493,550 
 $6,896,711 
Accounts receivable, net of allowance for doubtful accounts of $2,556,393 and $2,454,281, respectively
  5,321,396 
  6,763,236 
Prepaid expense, deposits and right of use assets
  1,692,887 
  1,339,465 
Inventory, net of reserves of $62,147 and $26,934, respectively
  442,570 
  274,501 
Total current assets
  15,950,403 
  15,273,913 
Property and equipment, net of accumulated depreciation of $2,316,172 and $2,248,913, respectively
  636,619 
  675,037 
Monitoring equipment, net of accumulated amortization of $6,325,027 and $6,322,768, respectively
  2,568,379 
  2,624,900 
Intangible assets, net of accumulated amortization of $14,729,536 and $14,157,090, respectively
  21,829,868 
  21,955,679 
Goodwill
  8,227,025 
  8,187,911 
Deferred tax asset
  526,833 
  540,563 
Other assets
  451,696 
  124,187 
Total assets
 $50,190,823 
 $49,382,190 
   Liabilities and Stockholders’ Equity (Deficit)
    
    
Current liabilities:
    
    
Accounts payable
  2,616,049 
  2,628,003 
Accrued liabilities
  14,607,777 
  13,828,696 
Current portion of long-term debt
  33,818,587 
  33,827,689 
Total current liabilities
  51,042,413 
  50,284,388 
Long-term liabilities
  327,644 
  - 
Total liabilities
  51,370,057 
  50,284,388 
Commitments and contingencies
  - 
  - 
 Stockholders’ equity (deficit):
    
    
Common stock, $0.0001 par value: 30,000,000 shares authorized; 11,414,150 and 11,401,650 shares outstanding, respectively
  1,141 
  1,140 
Series A Convertible Preferred stock, $0.0001 par value: 1,200,000 shares authorized; 0 shares outstanding
  - 
  - 
Paid in capital
  302,270,242 
  302,250,556 
Accumulated deficit
  (302,384,917)
  (302,152,292)
Accumulated other comprehensive loss
  (1,065,700)
  (1,001,602)
Total equity (deficit)
  (1,179,234)
  (902,198)
Total liabilities and stockholders’ equity (deficit)
 $50,190,823 
 $49,382,190 
 
 
 
 
 
-4-
 
 
TRACK GROUP, INC. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
 
 
 
Three Months Ended December 31,
 
 
 
2019
 
 
2018
 
Revenue:
 
 
 
 
 
 
Monitoring and other related services
 $8,268,423 
 $8,060,328 
Product sales and other
  152,408 
  151,207 
Total revenue
  8,420,831 
  8,211,535 
Cost of revenue:
    
    
Monitoring, products and other related services
  3,266,909 
  3,100,193 
Depreciation & amortization included in cost of revenue
  487,442 
  478,289 
Total cost of revenue
  3,754,351 
  3,578,482 
Gross profit
  4,666,480 
  4,633,053 
Operating expense:
    
    
General & administrative
  3,011,854 
  3,422,272 
Selling & marketing
  541,549 
  503,930 
Research & development
  296,155 
  248,865 
Depreciation & amortization
  515,939 
  514,981 
Total operating expense
  4,365,497 
  4,690,048 
  Operating income (loss)
  300,983 
  (56,995)
Other income (expense):
    
    
Interest expense, net
  (602,533)
  (601,239)
Currency exchange gain (loss)
  143,308 
  (932,677)
Total other expense
  (459,225)
  (1,533,916)
Loss before income taxes
  (158,242)
  (1,590,911)
Income tax expense
  74,383 
  144,007 
Net loss attributable to common stockholders
  (232,625)
  (1,734,918)
Foreign currency translation adjustments
  (64,098)
  96,673 
Comprehensive loss
 $(296,723)
 $(1,638,245)
Net loss per common share, basic and diluted
 $(0.02)
 $(0.16)
Weighted average common shares outstanding, basic and diluted
  11,411,704 
  11,101,650 
 
 
 
-5-
 
 
 
 
    
    

 
      Three Months Ended December 31, 


 
2019 
 
 
2018 
 
Non-GAAP Adjusted EBITDA
 
 
 
 
 
 
Net loss attributable to common shareholders
 $(233)
 $(1,735)
Interest expense, net
  603 
  601 
Depreciation and amortization
  1,003 
  993 
Income taxes (1)
  74 
  144 
Board compensation and stock-based compensation
  95 
  158 
Foreign exchange expense
  (143)
  933 
Other charges, net (2)
  374 
  624 
Non GAAP Adjusted EBITDA
 $1,773 
 $1,718 
Non GAAP Adjusted EBITDA, percent of revenue
  21.1%
  20.9%
Weighted average common shares outstanding
  11,411,704 
  11,101,650 
Non-GAAP earnings per share
 $0.16 
 $0.15 
 
(1)
Currently, the Company has significant U.S. tax loss carryforwards that may be used to offset future taxable income, subject to IRS limitations. However, the Company is still subject to certain state, commonwealth, and other foreign based taxes.
 
(2)
Other charges may include gains or losses and non-recurring accrual adjustments.
 
 
 
 
-6-

The following information was filed by Track Group, Inc. (TRCK) on Thursday, February 13, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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