Exhibit 99.1
 
 
 
FOR IMMEDIATE RELEASE
August 6, 2020
 
Peter Poli
Chief Financial Officer 877-260-2010
peter.poli@trackgrp.com
 
 
Track Group Reports 3rd Quarter Fiscal 2020 Financial Results

Total Revenue down 5%, Monitoring Revenue up 5%, Operating Income improves 59%, Adjusted EBITDA up 17%, Net Income Turnaround
 
NAPERVILLE, ILLINOIS – Track Group, Inc. (OTCQX: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its third quarter ended June 30, 2020 (the “Q3 FY20”). In Q3 FY20, the Company posted (i) total revenue of $8.5M, down 5% from $9.0M in the third quarter last year due to device sales used to establish a large Latin American reseller in 2019; however, monitoring revenue which comprises the substantial majority of total revenue was $8.3M in Q3 FY20, an increase of approximately 5% over the same period last year , (ii) operating income of $1.0M representing an increase of 59% compared to operating income of $0.6M for the quarter ended June 30, 2019 (“Q3 FY19”), (ii) adjusted EBITDA of $2.3M, up 17% compared to $1.9M for Q3 FY19, and (iv) a net income attributable to common shareholders of $0.4M compared to a net loss of $0.1M for the same period last year.
 
FINANCIAL HIGHLIGHTS

Total revenue of $8.5M for the Q3 FY20 and $25.0M for the nine months ended June 30, 2020 (“9M FY20”), are down 5% and 1%, respectively, compared to Q3 FY19 and the nine months ended June 30, 2019 (“9M FY19”) due to a decline in device sales. Quarterly monitoring revenue which comprises the substantial majority of total revenue was $8.33M in Q3 FY20, up 5% over Q3 FY19 monitoring revenue of $7.90M. Monitoring revenue for the 9M FY20 was $24.6M, up approximately 3% compared to monitoring revenue of $23.8M for the 9M FY19.
 
Quarterly gross profit of $4.6M in Q3 FY20 was down 4% vs. Q3 FY19 gross profit of $4.8M but up 4% over Q2 FY20 gross profit of $4.4M. Gross profit for the 9M FY20 was $13.7 million, or down 1% compared to gross profit of $13.9 million for the 9M FY19.
 
 
 
 
 
 
 
Total operating expense for Q3 FY20 of $3.6M is down 13% versus Q3 FY19’s $4.2M of total operating expense. The reduction in quarterly operating expense when combined with Q3 FY20 gross profit of $4.6M led to Q3 FY20 quarterly operating income of $1.0M, which is an improvement of 59% compared to the $0.6M operating profit for Q3 FY19. For the 9M FY20, operating income was $1.6M compared to operating income of $0.3M for the nine-month period in FY19, representing an improvement of over 400%.
 
Adjusted EBITDA for the Q3 FY20 finished at $2.3M, up 17%, compared to $1.9M for Q3 FY19. Adjusted EBITDA for the 9M FY20 was $5.7M, up approximately 7% vs $5.3M for the nine-month period in FY19.
 
Cash balance of $9.0M for Q3 FY20, up 31% compared to $6.9M for Q3 FY19 and up 17% over the March 31, 2020 cash balance of $7.7M.
 
Net income attributable to shareholders in Q3 FY20 was $0.4M compared to a net loss of $0.1M in Q3 FY19, a change principally attributable to the Company’s strong operating performance and exchange rate gains as the US dollar strengthened against the Chilean peso. The net loss attributable to shareholders for the 9M FY20 was $1.5 million compared to a net loss of $2.1 million in the nine-month period in FY19.
 
BUSINESS OUTLOOK
 
As of August 6, 2020, the adverse impact by the coronavirus pandemic (COVID-19) on the Company has been significant on the Chile operation and also has caused some delays with both the supply chain and certain requests for proposal administered by potential new clients. In addition, we are operating in a rapidly changing environment so the extent to which the Coronavirus pandemic impacts our business, operations and financial results from this point forward will depend on numerous evolving factors that we cannot accurately predict. Given this uncertainty, the Company has removed specific guidance regarding fiscal 2020 results.
 
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, and 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.
 
 
 
 
TRACK GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
  June 30,
 
 
September 30,
 
Assets
 
2020
 
 
2019
 
Current assets:
 
(Unaudited)
 
 
 
 
Cash
 $9,030,645 
 $6,896,711 
Accounts receivable, net of allowance for doubtful accounts of $2,617,996 and $2,454,281, respectively
  4,811,533 
  6,763,236 
Prepaid expense and deposits
  989,094 
  1,339,465 
Inventory, net of reserves of $7,225 and $26,934, respectively
  87,322  
  274,501  
Total current assets
  14,918,594 
  15,273,913 
Property and equipment, net of accumulated depreciation of $2,399,271 and $2,248,913, respectively
  466,892 
  675,037 
Monitoring equipment, net of accumulated amortization of $6,566,293 and $6,322,768, respectively
  2,051,128 
  2,624,900 
Intangible assets, net of accumulated amortization of $15,801,787 and $14,157,090, respectively
  21,149,358 
  21,955,679 
Goodwill
  8,169,117 
  8,187,911 
Deferred tax asset
  451,127 
  540,563 
Other assets
  545,130 
  124,187 
Total assets
 $47,751,346 
 $49,382,190 
 
    
    
Liabilities and Stockholders’ Equity (Deficit)
    
    
Current liabilities:
    
    
Accounts payable
  574,519 
  2,628,003 
Accrued liabilities
  14,571,805 
  13,828,696 
Current portion of long-term debt
  3,758,031 
  33,827,689 
Total current liabilities
  18,904,355 
  50,284,388 
Long-term debt, net of current portion
  30,974,813 
  - 
Long-term liabilities
  217,324 
  - 
Total liabilities
  50,096,492 
  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
  (303,691,914)
  (302,152,292)
Accumulated other comprehensive loss
  (924,615 )
  (1,001,602 )
Total equity (deficit)
  (2,345,146)
  (902,198)
Total liabilities and stockholders’ equity (deficit)
 $47,751,346  
 $49,382,190  
 
 
 
 
 
TRACK GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
  
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
 
June 30,
 
 
June 30,
 
 
June 30,
 
 
June 30,
 
 
 
2020
 
 
2019
 
 
2020
 
 
2019
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
Monitoring and other related services
 $8,325,697 
 $7,904,015 
 $24,587,212 
 $23,841,746 
Product sales and other
  158,213 
  1,051,449 
  449,255 
  1,416,495 
Total revenue
  8,483,910 
  8,955,464 
  25,036,467 
  25,258,241 
 
    
    
    
    
Cost of revenue:
    
    
    
    
Monitoring, products and other related services
  3,379,934 
  3,661,470 
  9,848,520 
  9,827,373 
Depreciation and amortization
  482,797 
  500,704 
  1,464,396 
  1,512,583 
Total cost of revenue
  3,862,731 
  4,162,174 
  11,312,916 
  11,339,956 
 
    
    
    
    
 Gross profit
  4,621,179 
  4,793,290 
  13,723,551 
  13,918,285 
 
    
    
    
    
 Operating expense:
    
    
    
    
General & administrative
  2,329,520 
  2,725,991 
  8,064,593 
  9,464,332 
Selling & marketing
  487,786 
  556,122 
  1,671,767 
  1,637,026 
Research & development
  281,820 
  350,532 
  901,712 
  954,276 
Depreciation & amortization
  505,585 
  521,013 
  1,530,811 
  1,556,378 
Total operating expense
  3,604,711 
  4,153,658 
  12,168,883 
  13,612,012 
 
    
    
    
    
Operating income
  1,016,468 
  639,632 
  1,554,668 
  306,273 
 
    
    
    
    
Other income (expense):
    
    
    
    
Interest expense, net
  (622,869)
  (597,623)
  (1,821,726)
  (1,783,210)
Currency exchange rate gain (loss)
  535,141 
  201,972 
  (655,791)
  (134,795)
Other income, net
  - 
  - 
  (4,347)
  143 
Total other income (expense)
  (87,728)
  (395,651)
  (2,481,864)
  (1,917,862)
Income (loss) before income taxes
  928,740 
  243,981 
  (927,196)
  (1,611,589)
Income tax expense
  514,678 
  313,328 
  612,426 
  457,335 
Net income (loss) attributable to common shareholders
  414,062 
  (69,347)
  (1,539,622)
  (2,068,924)
Foreign currency translation adjustments
  8,497 
  15,255 
  76,987 
  (144,053)
Comprehensive income (loss)
 $422,559 
 $(54,092)
 $(1,462,635)
 $(2,212,977)
Net income (loss) per common share, basic and diluted
 $0.04 
 $(0.01)
 $(0.14)
 $(0.18)
Weighted average common shares outstanding, basic and diluted
  11,414,150 
  11,251,650 
  11,362,416 
  11,200,551 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
 
Nine Months Ended
June 30,
 
 
 
2020
 
 
2019
 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common shareholders
 $414 
 $(69)
 $(1,540)
 $(2,069)
Interest expense, net
  623 
  597 
  1,822 
  1,783 
Depreciation and amortization
  988 
  1,022 
  2,995 
  3,069 
Income taxes (1)
  514 
  313 
  612 
  457 
Board compensation and stock-based compensation
  75 
  95 
  245 
  353 
Foreign exchange expense
  (535)
  (202)
  656 
  135 
Other charges, net (2)
  196 
  185 
  876 
  1,549 
Non-GAAP Adjusted EBITDA
 $2,275 
 $1,941 
 $5,666 
 $5,277 
Non-GAAP Adjusted EBITDA, percent of revenue
  26.8%
  21.7%
  22.6%
  20.9%
 
    
    
    
    
Weighted average common shares outstanding
  11,414,150 
  11,251,650 
  11,362,416 
  11,200,551 
Non-GAAP earnings per share
 $0.20 
 $0.17 
 $0.50 
 $0.47 
 
    
    
    
    
(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.
 
 
 
 

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