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TRCK Track Group Inc (QB)

0.105
0.00 (0.00%)
11 Dec 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type
Track Group Inc (QB) USOTC:TRCK OTCMarkets Common Stock
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 0.105 0.105 0.1879 0.00 13:10:36

Form 8-K - Current report

13/05/2024 2:40pm

Edgar (US Regulatory)


false 0001045942 0001045942 2024-05-13 2024-05-13


 
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): May 13, 2024
 
Commission File Number: 0-23153
 
Track Group, Inc.
(Exact name of registrant as specified in its charter.)
 
Delaware
 
87-0543981
(State or other jurisdiction
of incorporation or organization)
 
(IRS Employer
Identification No.)
 
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))
 
Securities registered pursuant to Section 12(b) of the Act: None.
 
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. ☐
 


 
 

 
 
Item 2.02 Results of Operations and Financial Condition.
 
Track Group, Inc. (the "Company") issued a press release on May 13, 2024, announcing its financial results for the period ended March 31, 2024. A copy of the press release is attached hereto 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 9.01 Financial Statements and Exhibits.
 
(d) Exhibits.
 
Exhibit No.
Description
99.1
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 
 

 
 
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.
 
 
TRACK GROUP, INC.
 
       
Date: May 13, 2024
By:
/s/ James A. Berg
 
   
James A. Berg
 
   
Chief Financial Officer
 
 
 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

May 13, 2024

James Berg

Chief Financial Officer

jim.berg@trackgrp.com

 

Track Group Reports 2nd Quarter Fiscal 2024 Financial Results

 

NAPERVILLE, ILLINOIS – Track Group, Inc. (OTCQB: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its fiscal quarter ended March 31, 2024 (“Q2 FY24”). In Q2 FY24, the Company posted (i) total revenue of $9.0 Million (“M”), an increase of approximately 8% over total revenue of $8.3M for the quarter ended March 31, 2023 (“Q2 FY23”); (ii) Q2 FY24 gross profit of $4.0M also representing an increase of approximately 6% over Q2 FY23 of $3.7M; (iii) Q2 FY24 operating loss of ($1.0M) compared to Q2 FY23 operating loss of ($0.9M); and (iv) net loss attributable to common shareholders of ($1.9M) in Q2 FY24 compared to ($1.5M) in Q2 FY23.

 

FINANCIAL HIGHLIGHTS 

 

 

Total Q2 FY24 revenue of $9.0M was up 8% compared to Q2 FY23 revenue of $8.3M. Revenue for the six months ended March 31, 2024 (“6M FY24’) of $18.0M was up approximately 5% compared to revenue of $17.2M for the six months ended March 31, 2023 (“6M FY23”). This positive performance can be attributed to increased activity among customers in Illinois, Canada, and Brazil, partially offset by decreases in revenue from customers in Michigan and Chile. 

 

 

Gross Profit of $4.0M rose by 6% ($0.2M) in Q2 FY24 compared to Q2 FY23. Gross profit for 6M FY24 was $8.2M compared to gross profit of $7.9M for 6M FY23. This improvement stems from factors like increased revenue, reduced communication costs and lower lost, stolen or damaged costs. However, it was partly offset by higher device repair expenses, higher monitoring center costs and increased hardware purchases. 

 

 

Operating loss in Q2 FY24 of ($1.0M) was up approximately 12% compared to ($0.9M) in Q2 FY23. Operating loss for 6M FY24 of ($1.1M) was up approximately 15% compared to ($1.0M) for 6M FY23. This rise in operating loss is primarily due to higher operating expenses. Operating expenses were up $0.3M in Q2 FY24 compared to Q2 FY23, primarily due to the estimated accrued liability related to an ongoing contract dispute of approximately $0.5M.

 

 

Adjusted EBITDA for Q2 FY24 was $0.8M compared to $0.5M for Q2 FY23. Adjusted EBITDA for 6M FY24 was $1.9M compared to Adjusted EBITDA for 6M FY23 of $1.7M primarily due to negative currency exchange rate movements of $0.6M in Q2 FY24 compared to Q2 FY23. Adjusted EBITDA in 6M FY24 as a percentage of revenue remained at 10%, compared to 6M FY23.

 

 

Cash balance of $3.6M for Q2 FY24 declined 10% compared to $4.1M at September 30, 2023.  The modest decrease in cash position was due to a negative effect of exchange rate changes on cash of $0.3M and a decrease in net cash provided by operating activities of approximately $0.1M.

 

 

Net loss attributable to shareholders in Q2 FY24 was ($1.9M) compared to ($1.5M) in Q2 FY23, an increase of $0.4M. Net loss attributable to shareholders in 6M FY24 was ($1.9M), compared to ($1.4M) for 6M FY23, a change principally attributable to negative currency exchange rate movements and an estimated accrued liability related to an ongoing contract dispute of approximately $0.5M.

 

“In the quarter ending March 31, 2024, we demonstrated a return to growth in revenue and gross profit, surpassing Q2 FY23. Notably, revenues grew by 8% ($9.0M vs. $8.3M in Q2 FY23), while gross profit experienced a 6% increase ($4.0M vs $3.7M in Q2 FY23). Adjusted EBITDA increased to $0.8M in Q2 FY24 compared to $0.5M in Q2 FY23. We are optimistic about maintaining and building upon these positive trends throughout the year, expecting continued improvements compared to the same quarter last year. This momentum reflects our dedication to growth and sets a promising tone for the ongoing fiscal year.” said Derek Cassell, Track Group’s CEO. 

 

-1-

 

 

Business Outlook

Despite previous challenges from supply chain delays, the impact of the Coronavirus, and the phase-out of our 3G-based cellular devices in the U.S., Track Group stands resilient. The demonstrated financial growth witnessed in Q2 FY24 reinforces our confidence in the strategic reinvestment in technology and the implementation of new programs initiated in late FY23. These endeavors position us well for a sustained return to growth throughout FY24. Our outlook for FY24 is as follows: 

 

   

Actual

   

Outlook

 
   

FY 2022

   

FY 2023

   

FY 2024

 

Revenue (in millions):

  $ 37.0     $ 34.5     $ 37 - 38  
                             

Adjusted EBITDA Margin:

    18.0 %     11.1 %     11 - 15%  

 

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 OTCQB 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.

 

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, 2023, 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.

 

-2-

 

 

TRACK GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   

(Unaudited)

         
   

March 31,

   

September 30,

 
   

2024

   

2023

 
Assets                

Current assets:

               

Cash

  $ 3,645,651     $ 4,057,195  

Accounts receivable, net of allowance for credit losses of $453,611 and $178,095, respectively

    5,550,187       4,536,916  

Prepaid expense and deposits

    389,972       610,440  

Inventory, net of reserves of $0 and $3,772, respectively

    972,937       1,286,194  

Other current assets

    1,329,593       -  

Total current assets

    11,888,340       10,490,745  

Property and equipment, net of accumulated depreciation of $1,742,598 and $1,920,850, respectively

    79,126       115,808  

Monitoring equipment, net of accumulated depreciation of $7,149,591 and $6,348,695, respectively

    4,944,977       5,187,092  

Intangible assets, net of accumulated amortization of $18,659,164 and $17,430,846, respectively

    14,107,643       14,157,294  

Goodwill

    7,951,977       7,851,466  

Other assets

    795,212       2,442,154  

Total assets

  $ 39,767,275     $ 40,244,559  
                 

Liabilities and Stockholders Equity (Deficit)

               

Current liabilities:

               

Accounts payable

  $ 3,643,125     $ 2,796,712  

Accrued liabilities

    3,524,085       2,571,839  

Current portion of long-term debt

    134,106       308,417  

Total current liabilities

    7,301,316       5,676,968  

Long-term debt, net of current portion

    42,765,361       42,801,165  

Long-term liabilities

    236,170       259,359  

Total liabilities

    50,302,847       48,737,492  
                 

Commitments and contingencies

               
                 

Stockholders equity (deficit):

               

Common stock, $0.0001 par value: 30,000,000 shares authorized; 11,863,758 and 11,863,758 shares outstanding, respectively

    1,186       1,186  

Preferred stock, $0.0001 par value: 20,000,000 shares authorized; 0 shares outstanding

    -       -  

Series A Convertible Preferred stock, $0.0001 par value: 1,200,000 shares authorized; 0 shares outstanding

    -       -  

Paid in capital

    302,600,546       302,597,115  

Accumulated deficit

    (311,513,011 )     (309,610,397 )

Accumulated other comprehensive loss

    (1,624,293 )     (1,480,837 )

Total equity (deficit)

    (10,535,572 )     (8,492,933 )

Total liabilities and stockholders’ equity (deficit)

  $ 39,767,275     $ 40,244,559  

 

-3-

 

 

TRACK GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

(Unaudited)

 

   

Three Months Ended

   

Six Months Ended

 
   

March 31,

   

March 31,

   

March 31,

   

March 31,

 
   

2024

   

2023

   

2024

   

2023

 

Revenue:

                               

Monitoring and other related services

  $ 8,758,650     $ 8,179,025     $ 17,433,136       16,468,807  

Product sales and other

    232,570       129,021       525,057       694,930  

Total revenue

    8,991,220       8,308,046       17,958,193       17,163,737  
                                 

Cost of revenue:

                               

Monitoring, products and other related services

    4,230,498       3,721,527       8,204,487       7,623,521  

Depreciation & amortization included in cost of revenue

    793,887       843,714       1,583,351       1,616,733  

Total cost of revenue

    5,024,385       4,565,241       9,787,838       9,240,254  
                                 

Gross profit

    3,966,835       3,742,805       8,170,355       7,923,483  
                                 

Operating expense:

                               

General & administrative

    3,173,866       2,869,799       5,931,753       5,624,320  

Selling & marketing

    810,441       768,871       1,516,972       1,498,341  

Research & development

    701,183       706,772       1,383,646       1,296,577  

Depreciation & amortization

    236,524       247,574       476,284       495,283  

Total operating expense

    4,922,014       4,593,016       9,308,655       8,914,521  
                                 

Operating income (loss)

    (955,179 )     (850,211 )     (1,138,300 )     (991,038 )
                                 

Other income (expense):

                               

Interest expense, net

    (428,868 )     (400,976 )     (866,791 )     (820,526 )

Currency exchange rate gain (loss)

    (519,933 )     71,792       19,013       554,943  

Other income (expense), net

    (3,443 )     -       (3,443 )     -  

Total other income (expense)

    (952,244 )     (329,184 )     (851,221 )     (265,583 )

Income (loss) before income taxes

    (1,907,423 )     (1,179,395 )     (1,989,521 )     (1,256,621 )

Income tax expense (benefit)

    (4,348 )     305,863       (86,907 )     192,253  

Net income (loss) attributable to common stockholders

    (1,903,075       (1,485,258 )     (1,902,614 )     (1,448,874 )

Foreign currency translation adjustments

    (36,754 )     93,585       (143,456 )     245,831  

Comprehensive income (loss)

  $ (1,939,829 )   $ (1,391,673 )   $ (2,046,070 )   $ (1,203,043 )
                                 

Net income per share basic

                               

Net income per common share

  $ (0.16 )   $ (0.13 )   $ (0.17 )   $ (0.12 )

Weighted average common shares outstanding

    11,863,758       11,863,758       11,863,758       11,863,758  

Net income per share diluted

                               

Net income per common share

  $ (0.16 )   $ (0.13 )   $ (0.17 )   $ (0.12 )

Weighted average common shares outstanding

    11,863,758       11,863,758       11,863,758       11,863,758  

 

-4-

 

 

TRACK GROUP, INC. AND SUBSIDIARIES

NON-GAAP ADJUSTED EBITDA DECEMBER 31 (Unaudited)

(amounts in thousands, except share and per share data)

 

   

Three Months Ended

March 31,

   

Six Months Ended

March 31,

 
   

2024

   

2023

   

2024

   

2023

 

Non-GAAP Adjusted EBITDA

                               

Net Income (loss) attributable to common shareholders

  $ (1,903 )   $ (1,485 )   $ (1,903 )   $ (1,449 )

Interest expense, net

    432       401       870       821  

Depreciation and amortization

    1,030       1,091       2,060       2,112  

Income taxes (1)

    (4 )     306       (87 )     192  

Board compensation

    50       101       103       238  

Foreign exchange (gain)/loss

    520       (72 )     (19 )     (555 )

Other charges, net (2)

    663       204       826       369  

Non-GAAP Adjusted EBITDA

  $ 788     $ 546     $ 1,850     $ 1,728  

Non-GAAP Adjusted EBITDA, percent of revenue

    8.8 %     6.6 %     10.3 %     10.1 %

Weighted average common shares outstanding - basic

    11,863,758       11,863,758       11,863,758       11,863,758  

Non-GAAP earnings per share

  $ 0.07     $ 0.05     $ 0.16     $ 0.15  

Weighted average common shares outstanding - diluted

    11,863,758       11,863,758       11,863,758       11,863,758  

Non-GAAP earnings per share

  $ 0.07     $ 0.05     $ 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 includes an estimated accrued liability related to an ongoing contract dispute of approximately $0.5M and may include gains or losses and non-recurring accrual adjustments.

 

-5-
v3.24.1.1.u2
Document And Entity Information
May 13, 2024
Document Information [Line Items]  
Entity, Registrant Name Track Group, Inc.
Document, Type 8-K
Document, Period End Date May 13, 2024
Entity, File Number 0-23153
Entity, Incorporation, State or Country Code DE
Entity, Tax Identification Number 87-0543981
Entity, Address, Address Line One 200 E 5th Ave, Suite 100
Entity, Address, City or Town Naperville
Entity, Address, State or Province IL
Entity, Address, Postal Zip Code 60563
City Area Code 877
Local Phone Number 260-2010
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity, Emerging Growth Company false
Amendment Flag false
Entity, Central Index Key 0001045942

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