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| 8-K - CURRENT REPORT - Track Group, Inc. | trck8k_feb142020.htm |
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%.
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5th Avenue
Station
200 E. 5thAvenue, Suite
100
Naperville, IL
60563
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877.260.2010
trackgrp.com
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-1-
BUSINESS
OUTLOOK
|
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Actual
|
Outlook
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|
|
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FY
2018
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FY
2019
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FY
2020
|
|
|
|
|
|
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Revenue:
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$30.6M
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$34.0M
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$36-40M
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|
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Adjusted
EBITDA Margin:
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19.2%
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21.9%
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21-26%
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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.
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
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(Unaudited)
December
31,
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September
30,
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Assets
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2019
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2019
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Current assets:
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Cash
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$8,493,550
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$6,896,711
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Accounts
receivable, net of allowance for doubtful accounts of $2,556,393
and $2,454,281, respectively
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5,321,396
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6,763,236
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Prepaid expense,
deposits and right of use assets
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1,692,887
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1,339,465
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Inventory, net of
reserves of $62,147 and $26,934, respectively
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442,570
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274,501
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Total current
assets
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15,950,403
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15,273,913
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Property and
equipment, net of accumulated depreciation of $2,316,172 and
$2,248,913, respectively
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636,619
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675,037
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Monitoring
equipment, net of accumulated amortization of $6,325,027 and
$6,322,768, respectively
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2,568,379
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2,624,900
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Intangible assets,
net of accumulated amortization of $14,729,536 and $14,157,090,
respectively
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21,829,868
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21,955,679
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Goodwill
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8,227,025
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8,187,911
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Deferred tax
asset
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526,833
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540,563
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Other
assets
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451,696
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124,187
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Total
assets
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$50,190,823
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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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2,616,049
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2,628,003
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Accrued
liabilities
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14,607,777
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13,828,696
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Current portion of
long-term debt
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33,818,587
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33,827,689
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Total current
liabilities
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51,042,413
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50,284,388
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Long-term
liabilities
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327,644
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-
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Total
liabilities
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51,370,057
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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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-
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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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(302,384,917)
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(302,152,292)
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Accumulated other
comprehensive loss
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(1,065,700)
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(1,001,602)
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Total equity
(deficit)
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(1,179,234)
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(902,198)
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Total liabilities
and stockholders’ equity (deficit)
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$50,190,823
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$49,382,190
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-4-
TRACK
GROUP, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(Unaudited)
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Three
Months Ended December 31,
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2019
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2018
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Revenue:
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Monitoring and
other related services
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$8,268,423
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$8,060,328
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Product sales and
other
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152,408
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151,207
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Total
revenue
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8,420,831
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8,211,535
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Cost
of revenue:
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Monitoring,
products and other related services
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3,266,909
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3,100,193
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Depreciation &
amortization included in cost of revenue
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487,442
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478,289
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Total cost of
revenue
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3,754,351
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3,578,482
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Gross
profit
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4,666,480
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4,633,053
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Operating
expense:
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General &
administrative
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3,011,854
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3,422,272
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Selling &
marketing
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541,549
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503,930
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Research &
development
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296,155
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248,865
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Depreciation &
amortization
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515,939
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514,981
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Total operating
expense
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4,365,497
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4,690,048
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Operating
income (loss)
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300,983
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(56,995)
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Other
income (expense):
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Interest expense,
net
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(602,533)
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(601,239)
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Currency exchange
gain (loss)
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143,308
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(932,677)
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Total
other expense
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(459,225)
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(1,533,916)
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Loss
before income taxes
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(158,242)
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(1,590,911)
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Income
tax expense
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74,383
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144,007
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Net
loss attributable to common stockholders
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(232,625)
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(1,734,918)
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Foreign currency
translation adjustments
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(64,098)
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96,673
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Comprehensive
loss
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$(296,723)
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$(1,638,245)
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Net loss per common
share, basic and diluted
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$(0.02)
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$(0.16)
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Weighted average
common shares outstanding, basic and diluted
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11,411,704
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11,101,650
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-5-
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Three
Months Ended December
31,
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||
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2019
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2018
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Non-GAAP
Adjusted EBITDA
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|
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Net
loss attributable to common shareholders
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$(233)
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$(1,735)
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Interest expense,
net
|
603
|
601
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Depreciation and
amortization
|
1,003
|
993
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Income taxes
(1)
|
74
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144
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Board compensation
and stock-based compensation
|
95
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158
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Foreign exchange
expense
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(143)
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933
|
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Other charges, net
(2)
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374
|
624
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Non
GAAP Adjusted EBITDA
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$1,773
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$1,718
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Non
GAAP Adjusted EBITDA, percent of revenue
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21.1%
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20.9%
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Weighted average
common shares outstanding
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11,411,704
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11,101,650
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Non-GAAP
earnings per share
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$0.16
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$0.15
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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.
(2)
Other
charges may include gains or losses and non-recurring accrual
adjustments.
-6-