false 0001045942 0001045942 2025-02-07 2025-02-07


 
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): February 7, 2025
 
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 February 7, 2025, announcing its financial results for the quarter ended December 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: February 7, 2025
By:
/s/ James A. Berg
 
   
James A. Berg
 
   
Chief Financial Officer
 
 
 
 

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

February 7, 2025

 

James Berg

Chief Financial Officer

jim.berg@trackgrp.com 

 

 

Track Group Reports 1st Quarter Fiscal 2025 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 December 31, 2024 (“Q1 FY25”). In Q1 FY25, the Company posted (i) total revenue of $8.7 Million (“M”), a decrease of approximately 3.3% over total revenue of $9.0M for the quarter ended December 31, 2023 (“Q1 FY24”); (ii) Q1 FY25 operating income of $0.1M compared to Q1 FY24 operating loss of ($0.2M); and (iii) net loss attributable to common shareholders of ($2.0M) in Q1 FY25 compared to net income attributable to common shareholders of $0.1M in Q1 FY24.

 

“The quarter ending December 31, 2024 showed increases in gross profit, operating income and Adjusted EBITDA. This progress reflects the increased use of our products and services in legacy programs and continued expansion through newly awarded contracts domestically and abroad. With a strong pipeline and a commitment to delivering value, we are poised for continued success in fiscal year 2025” said Derek Cassell, Track Group’s CEO. 

 

FINANCIAL HIGHLIGHTS

 

 

Total Q1 FY25 revenue of $8.7M decreased approximately 3.3% compared to Q1 FY24 revenue of $9.0M. The decrease in revenue was driven principally by a decrease in people assigned to monitoring for clients in Michigan and Virginia, and our recently sold Chilean subsidiary. This decrease was partially offset by revenue increases for clients in Illinois, Puerto Rico and the Bahamas who experienced increases in the number of people assigned to monitoring.

 

 

Gross profit of $4.4M in Q1 FY25 increased approximately 5.2% compared to Q1 FY24 gross profit of $4.2M due to a decrease in monitoring center costs, partially offset by a decrease in revenue.

 

 

Operating income in Q1 FY25 of $0.1M increased compared to the operating loss of ($0.2M) in Q1 FY24. The increase in net income in Q1 FY25 is primarily due to a decrease in cost of revenue and a decrease in operating expense.

 

 

Adjusted EBITDA for Q1 FY25 of $1.2M, increased compared to $1.1M for Q1 FY24 due to an increase in operating income and gross profit. Adjusted EBITDA in Q1 FY25 as a percentage of revenue increased to 14.4%, compared to 11.8% for Q1 FY24 for the same reasons.

 

 

Unrestricted cash balance of $3.7M for Q1 FY25 increased compared to $3.6M for Q1 FY24. The change in cash position was principally due to the sale of our Chilean subsidiary.

 

 

Net loss attributable to shareholders in FY24 was ($2,010,849) compared to net income of $461 in FY23, a change principally attributable to lower revenue and a foreign currency exchange rate loss.

 

-1-

 

Business Outlook

 

Growth in gross profit and operating income in Q1 FY25 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 sustained growth throughout FY25. As a result, the Company's preliminary outlook for FY25 is as follows: 

 

   

Actual

   

Outlook

 
   

FY 2023

   

FY 2024

   

FY 2025

 

Revenue:

   

$34.5

M

   

$36.9

M

 

$

35M

-

$36M

 
                             

Adjusted EBITDA Margin:

   

11.1

%

   

14.6

%

   

14%

-

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

CONSOLIDATED BALANCE SHEETS

 

   

(Unaudited)

         
   

December 31,

   

September 30,

 
   

2024

   

2024

 

Assets

               

Current assets:

               

Cash

  $ 3,740,043     $ 3,574,215  

Accounts receivable, net of allowance for credit losses of $525,141 and $432,904 respectively

    5,319,041       4,428,535  

Prepaid expense and deposits

    420,680       638,293  

Inventory, net of reserves of $99,041 and $82,848, respectively

    811,992       582,481  

Assets held for sale

    -       969,481  

Total current assets

    10,291,756       10,193,005  

Property and equipment, net of accumulated depreciation of $293,419 and $430,003, respectively

    351,353       317,206  

Monitoring equipment, net of accumulated depreciation of $5,145,204 and $5,982,972, respectively

    4,550,033       4,598,864  

Intangible assets, net of accumulated amortization of $19,954,086 and $19,699,966, respectively

    13,415,776       13,959,571  

Goodwill

    7,913,369       7,941,190  

Other assets, net

    1,238,608       660,170  

Total assets

  $ 37,760,895     $ 37,670,006  
                 

Liabilities and Stockholders Equity (Deficit)

               

Current liabilities:

               

Accounts payable

  $ 3,336,084     $ 3,082,467  

Accrued liabilities

    2,542,932       2,639,318  

Liabilities held for sale

    -       732,028  

Total current liabilities

    5,879,016       6,453,813  

Long-term debt, net of current portion

    42,659,634       42,639,197  

Long-term liabilities

    679,823       186,407  

Total liabilities

    49,218,473       49,279,417  
                 

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       302,600,546  

Accumulated deficit

    (315,274,178 )     (312,691,811 )

Accumulated other comprehensive loss

    1,214,868       (1,519,332 )

Total equity (deficit)

    (11,457,578 )     (11,609,411 )

Total liabilities and stockholders’ equity (deficit)

  $ 37,760,895     $ 37,670,006  

 

-3-

 

 

TRACK GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

(Unaudited)

 

   

Three Months Ended

December 31,

 
   

2024

   

2023

 

Revenue:

               

Monitoring and other related services

  $ 8,441,307     $ 8,674,485  

Product sales and other

    227,021       292,487  

Total revenue

    8,668,328       8,966,972  
                 

Cost of revenue:

               

Monitoring, products and other related services

    3,508,762       3,973,989  

Depreciation and amortization included in cost of revenue

    735,224       789,463  

Total cost of revenue

    4,243,986       4,763,452  
                 

Gross profit

    4,424,342       4,203,520  
                 

Operating expense:

               

General & administrative

    2,431,118       2,757,887  

Selling & marketing

    901,189       706,531  

Research & development

    669,391       682,463  

Depreciation & amortization

    227,553       239,760  

Loss on sale of subsidiary

    66,483       -  

Total operating expense

    4,295,734       4,386,641  
                 

Operating income (loss)

    128,608       (183,121 )
                 

Other income (expense):

               

Interest income

    2,839       48,162  

Interest expense

    (571,798 )     (486,084 )

Currency exchange rate gain (loss)

    (1,499,262 )     538,945  

Total other income (expense)

    (2,068,221 )     101,023  

Net income (loss) before income taxes

    (1,939,613 )     (82,098 )

Income tax expense (benefit)

    71,236       (82,559 )

Net income (loss) attributable to common stockholders

    (2,010,849 )     461  

Release of cumulative translation adjustment for sale of subsidiary

    1,390,913       -  

Equity adjustment for sale of subsidiary

    571,518       -  

Foreign currency translation adjustments

    771,769       (106,702 )

Comprehensive income (loss)

  $ 723,351     $ (106,241 )

Net income (loss) per share basic:

               

Net income (loss) per common share

  $ (0.17 )   $ 0.00  

Weighted average common shares outstanding

    11,863,758       11,863,758  
                 

Net income (loss) per share diluted:

               

Net income (loss) per common share

  $ (0.17 )   $ 0.00  

Weighted average common shares outstanding

    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

December 31,

 
   

2024

   

2023

 
                 

Non-GAAP Adjusted EBITDA

               

Net income (loss) attributable to common shareholders

  $ (2,011 )   $ -  

Interest expense, net

    569       438  

Depreciation and amortization

    963       1,029  

Income taxes (1)

    71       (83 )

Board compensation and stock-based compensation

    75       53  

Foreign exchange expense (gain)

    1,499       (539 )

Loss on sale of subsidiary

    66       -  

Other charges (2)

    18       164  

Total Non-GAAP Adjusted EBITDA

  $ 1,250     $ 1,062  

Non-GAAP Adjusted EBITDA, percent of revenue

    14.4 %     11.8 %
                 

Non-GAAP earnings per share basic:

               

Weighted average common shares outstanding

    11,863,758       11,863,758  

Non-GAAP earnings per share

  $ 0.11     $ 0.09  
                 

Non-GAAP earnings per share diluted:

               

Weighted average common shares outstanding

    11,863,758       11,863,758  

Non-GAAP earnings per share

  $ 0.11     $ 0.09  

 

 

(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 are expenses related to the board of directors, severance, and other Chile monitoring center costs for our recently sold subsidiary.

 

-5-
v3.25.0.1
Document And Entity Information
Feb. 07, 2025
Document Information [Line Items]  
Entity, Registrant Name Track Group, Inc.
Document, Type 8-K
Document, Period End Date Feb. 07, 2025
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
Entity, Address, Address Line Two 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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