Track Group, Inc 8-K, filed Aug 6, 2020
Track Group, Inc. (TRCK)
8-K
2020-08-06
For: 2020-08-06
View Original
Added on
April 06, 2026
About this 8-K
Track Group, Inc filed this 8-K on August 6, 2020.
Items reported
- Item 2.02: Financial results
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of report (Date of earliest event reported): August 6, 2020
Commission File Number: 0-23153
Track
Group, Inc.
(Exact name of registrant as specified in its
charter.)
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Delaware
(State or other
jurisdiction of incorporation or organization)
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87-0543981
(IRS Employer
Identification No.)
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200 E 5th Ave,
Suite 100, Naperville, Illinois 60563
(Address of principal executive offices)
(877) 260-2010
(Registrant's Telephone number)
Not Applicable
(Former Name or Former Address, if Changed Since Last
Report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (17
CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934
(17 CFR 240.12b-2)
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. [
]
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Trading Symbol(s)
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Name of exchange on which registered
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Common
Stock, par value $0.0001 per share
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TRCK
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OTCQX
Marketplace
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Item 2.02
Results of Operations and Financial Condition.
Track Group, Inc. (the “Company”) issued a press release today announcing
its financial results for the quarter ended June 30, 2020. A copy
of the press release is attached as Exhibit
99.1.
In accordance with General Instruction B.2 for
Form 8-K, the information in this Form 8-K, including Exhibit 99.1,
shall not be deemed “filed” for purposes of Section 18
of the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”), or otherwise
subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of
1933, as amended, or the Exchange Act, except as expressly set
forth by specific reference in such filing.
Item 8.01
Other Events.
See
Item 2.02.
Item 9.01
Financial Statements and Exhibits.
See
Exhibit Index.
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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TRACK
GROUP, INC.
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Date: August 6, 2020
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By:
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/s/ Peter K.
Poli
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Peter K. Poli
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Chief Financial Officer
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EXHIBIT INDEX
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Exhibit No.
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Description
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Press release,
dated August 6, 2020
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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
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June 30,
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September
30,
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Assets
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2020
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2019
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Current assets:
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(Unaudited)
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Cash
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$9,030,645
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$6,896,711
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Accounts
receivable, net of allowance for doubtful accounts of $2,617,996
and $2,454,281, respectively
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4,811,533
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6,763,236
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Prepaid
expense and deposits
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989,094
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1,339,465
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Inventory,
net of reserves of $7,225 and $26,934, respectively
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87,322
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274,501
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Total
current assets
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14,918,594
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15,273,913
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Property
and equipment, net of accumulated depreciation of $2,399,271 and
$2,248,913, respectively
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466,892
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675,037
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Monitoring
equipment, net of accumulated amortization of $6,566,293 and
$6,322,768, respectively
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2,051,128
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2,624,900
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Intangible
assets, net of accumulated amortization of $15,801,787 and
$14,157,090, respectively
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21,149,358
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21,955,679
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Goodwill
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8,169,117
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8,187,911
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Deferred
tax asset
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451,127
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540,563
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Other
assets
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545,130
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124,187
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Total
assets
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$47,751,346
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$49,382,190
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Liabilities and Stockholders’ Equity (Deficit)
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Current liabilities:
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Accounts
payable
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574,519
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2,628,003
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Accrued
liabilities
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14,571,805
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13,828,696
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Current
portion of long-term debt
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3,758,031
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33,827,689
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Total
current liabilities
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18,904,355
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50,284,388
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Long-term
debt, net of current portion
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30,974,813
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-
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Long-term
liabilities
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217,324
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-
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Total
liabilities
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50,096,492
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50,284,388
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Commitments and contingencies
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-
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-
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Stockholders’ equity (deficit):
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Common
stock, $0.0001 par value: 30,000,000 shares authorized;
11,414,150 and 11,401,650 shares outstanding,
respectively
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1,141
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1,140
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Series
A Convertible Preferred stock, $0.0001 par value: 1,200,000 shares
authorized; 0 shares outstanding
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-
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Paid
in capital
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302,270,242
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302,250,556
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Accumulated
deficit
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(303,691,914)
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(302,152,292)
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Accumulated
other comprehensive loss
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(924,615
)
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(1,001,602
)
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Total
equity (deficit)
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(2,345,146)
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(902,198)
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Total
liabilities and stockholders’ equity (deficit)
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$47,751,346
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$49,382,190
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TRACK GROUP, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(Unaudited)
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Three
Months Ended
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Nine
Months Ended
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June
30,
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June
30,
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June
30,
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June
30,
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2020
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2019
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2020
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2019
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Revenue:
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Monitoring
and other related services
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$8,325,697
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$7,904,015
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$24,587,212
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$23,841,746
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Product
sales and other
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158,213
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1,051,449
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449,255
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1,416,495
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Total
revenue
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8,483,910
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8,955,464
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25,036,467
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25,258,241
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Cost
of revenue:
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Monitoring,
products and other related services
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3,379,934
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3,661,470
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9,848,520
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9,827,373
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Depreciation
and amortization
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482,797
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500,704
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1,464,396
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1,512,583
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Total cost of
revenue
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3,862,731
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4,162,174
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11,312,916
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11,339,956
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Gross profit
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4,621,179
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4,793,290
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13,723,551
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13,918,285
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Operating
expense:
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General &
administrative
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2,329,520
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2,725,991
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8,064,593
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9,464,332
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Selling &
marketing
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487,786
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556,122
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1,671,767
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1,637,026
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Research &
development
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281,820
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350,532
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901,712
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954,276
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Depreciation &
amortization
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505,585
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521,013
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1,530,811
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1,556,378
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Total operating
expense
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3,604,711
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4,153,658
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12,168,883
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13,612,012
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Operating
income
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1,016,468
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639,632
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1,554,668
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306,273
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Other
income (expense):
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Interest expense,
net
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(622,869)
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(597,623)
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(1,821,726)
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(1,783,210)
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Currency exchange
rate gain (loss)
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535,141
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201,972
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(655,791)
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(134,795)
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Other income,
net
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-
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-
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(4,347)
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143
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Total other income (expense)
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(87,728)
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(395,651)
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(2,481,864)
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(1,917,862)
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Income
(loss) before income taxes
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928,740
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243,981
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(927,196)
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(1,611,589)
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Income
tax expense
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514,678
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313,328
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612,426
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457,335
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Net
income (loss) attributable to common shareholders
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414,062
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(69,347)
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(1,539,622)
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(2,068,924)
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Foreign currency
translation adjustments
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8,497
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15,255
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76,987
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(144,053)
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Comprehensive
income (loss)
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$422,559
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$(54,092)
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$(1,462,635)
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$(2,212,977)
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Net
income (loss) per common share, basic and diluted
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$0.04
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$(0.01)
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$(0.14)
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$(0.18)
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Weighted
average common shares outstanding, basic and diluted
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11,414,150
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11,251,650
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11,362,416
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11,200,551
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Three
Months Ended
June
30,
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Nine
Months Ended
June
30,
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2020
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2019
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2020
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2019
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Non-GAAP Adjusted EBITDA
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Net income (loss) attributable to common shareholders
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$414
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$(69)
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$(1,540)
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$(2,069)
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Interest
expense, net
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623
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597
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1,822
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1,783
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Depreciation
and amortization
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988
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1,022
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2,995
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3,069
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Income taxes (1)
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514
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313
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612
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457
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Board
compensation and stock-based compensation
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75
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95
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245
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353
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Foreign
exchange expense
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(535)
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(202)
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656
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135
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Other charges, net (2)
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196
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185
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876
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1,549
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Non-GAAP Adjusted EBITDA
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$2,275
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$1,941
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$5,666
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$5,277
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Non-GAAP Adjusted EBITDA, percent of revenue
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26.8%
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21.7%
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22.6%
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20.9%
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Weighted
average common shares outstanding
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11,414,150
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11,251,650
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11,362,416
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11,200,551
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Non-GAAP earnings per share
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$0.20
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$0.17
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$0.50
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$0.47
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(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.
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(2) Other charges may
include gains or losses and non-recurring accrual
adjustments.
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