Recurring Revenues up 13 % Over 2006 OMAHA, Neb., March 19
/PRNewswire-FirstCall/ -- iSECUREtrac Corp. (OTC:ISEC) (BULLETIN
BOARD: ISEC) , an industry leader in electronic monitoring
solutions, reported total revenue for the year ending December 31,
2007 was up 9% to $8.8 million, from $8.1 million the prior year.
Recurring revenue from the leasing of monitoring systems and
related services was $8.4 million, up 13% from $7.4 million in
2006. For the year ending December 31, 2007, the company reported a
net loss of $7.2 million, compared to a net loss of $5.4 million
for 2006. The increase in net loss was primarily due to: 1.
Litigation and settlement expenses related to a patent infringement
lawsuit ($1,118,000). The lawsuit, brought by a competitor, alleged
that certain components in iSECUREtrac's GPS systems infringed on
their patent. The settlement included a cash payment as well as
equipment purchases which iSECUREtrac will subsequently use to
generate additional revenue. 2. Restructuring of the entire
executive team and senior management ($407,000). This expense is
related to the recruitment and relocation of new executive officers
and senior management as well as the severance costs associated
with some of the departing executives. 3. Outside consulting
expenses to ensure Sarbanes-Oxley compliance ($70,000). 4.
Increased interest expense ($371,000). This was a result of
increased borrowing from Crestpark LP, an affiliate of the
company's largest shareholder, Sammons Enterprises, and the
continuing use of capital leases to finance equipment purchases.
"Litigation and settlement costs, management restructuring and
Sarbanes-Oxley added $1.6 million in expenses for 2007," said
Lincoln Zehr, CFO of iSECUREtrac. "Without these three items, our
operating loss, before interest, would have been $5.1 million, an
improvement compared to the operating loss of $5.3 million in
2006." "Although our total revenue increased by 9%, our gross
profit increased by 15% over 2006 as a result of a gross margin
improvement of 3 points, from 56% to 59%," continued Zehr. "This
was the third consecutive year of improvement in gross margin
percentage." "Overall, I am disappointed by our 2007 financial
performance," stated Peter Michel, CEO of iSECUREtrac. "We began
the year with encouraging Beta tests on the System 5000, fully
anticipating a national roll-out late in the second quarter. As we
deployed units in the field, we encountered a few unanticipated
issues not usually discoverable in a laboratory or test
environment. These product issues were not fully resolved until
November, 2007 when we were able to resume the System 5000 roll-out
in volume. As a result, our increase in recurring revenue was only
13%." "In addition," continued Michel, "we spent $1.1 million to
settle a patent infringement lawsuit. Although we still firmly
believe the case was without merit, a trial would have been even
more costly and distracted us from our main task of growing top
line revenue." "However, it would be a mistake to ignore the
significant achievements of 2007 which are not reflected in the
current year's financial results," said Michel. "During the year,
we added three exceptionally qualified and talented executives to
our senior management team. We also provided additional
opportunities to grow recurring revenues through services like
Monitoring Center Intervention in which our staff works directly
with offenders to resolve compliance issues without the involvement
of supervising officers at our agency clients." "Looking forward,"
concluded Michel, "the company is in a much stronger position today
than at the close of 2006 to capitalize on the strengths of our new
and talented executive team, the superior performance of the System
5000, increasing demand for our services and the continued robust
expansion of the market." Conference Call Information Please join
CEO Peter Michel and CFO Lincoln Zehr on Wednesday, March 19, 2008.
The company will discuss year-end 2007 results and provide a
company update. The details for the call are as follows: Date:
Wednesday, March 19, 2008 Time: 3:30 PM Central (4:30 PM Eastern)
Dial-in number: 1-800-762-8795 International: 1-480-629-9041
Conference ID#: 3857578 Dial in 5-10 minutes prior to the start
time. An operator will request your name and organization and ask
you to wait until the call begins. If you have any difficulty
connecting, please call iSECUREtrac at 1-866-537-0022. A replay of
the conference call will be available until March 26, 2008. Replay
number: 1-800-406-7325 Int'l Replay number: 1-303-590-3030 Replay
Pin Number: 3857578 About iSECUREtrac iSECUREtrac Corp. provides
electronic monitoring systems, client management software and
supplemental services for use in community supervision. The
company's rich stream of reliable data concerning a client's
location, movement and status better enables effective compliance
management and positive behavior modification. Visit
http://www.isecuretrac.com/ for more information. Safe Harbor This
press release contains forward-looking statements that, if not
verifiable historical fact, may be viewed as forward-looking
statements that could predict future events or outcomes with
respect to iSECUREtrac Corp. and its business. The predictions
embodied in these statements will involve risks and uncertainties
and accordingly, iSECUREtrac's actual results may differ
significantly from the results discussed or implied in such
forward-looking statements. iSECUREtrac Corp. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS Years Ended December 31, 2007 and 2006
2007 2006 ASSETS Current Assets Cash and cash equivalents
$3,442,712 $4,341,685 Accounts receivable, net of allowance for
doubtful accounts of $292,669 in 2007 and $171,409 in 2006
1,941,902 2,284,177 Inventories 135,376 61,021 Prepaid expenses and
other 92,750 74,608 Total current assets 5,612,740 6,761,491
Leasehold improvements and equipment, net of accumulated
depreciation of $7,041,272 in 2007 and $5,251,139 in 2006 3,875,728
3,379,897 Intangibles, net of accumulated amortization and
impairment charges of $850,166 in 2007 and $767,598 in 2006 61,356
143,924 Goodwill 2,302,179 2,302,179 Other assets 88,425 66,045
Total assets $11,940,428 $12,653,536 LIABILITIES AND STOCKHOLDERS'
(DEFICIT) Current Liabilities Current maturities of long- term debt
$622,340 $891,070 Accounts payable 1,069,577 457,481 Accrued
expenses 609,083 390,284 Deferred revenues & gain on
sale-leaseback transactions 314,090 423,349 Accrued interest
payable 30,513 37,838 Total current liabilities 2,645,603 2,200,022
Long-term debt, less current maturities 12,381,598 6,694,102
Redeemable convertible Series C preferred stock, 5,000,000 shares
designated at $0.01 par value; 1,000,000 issued and outstanding
11,882,545 10,696,697 Commitments and contingency Stockholders'
(Deficit) Common stock, 75,000,000 shares authorized at $0.001 par
value; 10,779,680 issued and outstanding in 2007; 10,773,454 issued
and outstanding in 2006 10,779 10,773 Additional paid-in capital
55,109,333 54,950,315 Accumulated deficit (70,089,430) (61,898,373)
Total stockholders' (deficit) (14,969,318) (6,937,285) Total
liabilities and stockholders' (deficit) $11,940,428 $12,653,536
CONDENSED CONSOLIDATED FINANCIAL HIGHLIGHTS Years Ended December
31, 2007 and 2006 2007 2006 Change Total revenues $8,785,712
$8,063,843 $721,869 Cost of revenues 3,640,219 3,574,126 66,093
Gross profit 5,145,493 4,489,717 655,776 Research and development
expenses 1,891,820 1,325,076 566,744 Sales, general and
administrative expenses: Litigation and settlement expenses
1,117,966 - 1,117,966 Management restructuring expenses 206,726
149,399 57,327 Consulting expenses - Sarbanes-Oxley 70,059 - 70,059
Other sales, general and administrative expenses 8,530,691
8,308,484 222,207 Total sales, general and administrative expenses
9,925,442 8,457,883 1,467,559 Total R&D and sales, general and
administrative expenses 11,817,262 9,782,959 2,034,303 Operating
loss (6,671,769) (5,293,242) (1,378,527) Interest expense, net
(529,958) (158,394) (371,564) Net loss $(7,201,727) $(5,451,636)
$(1,750,091) Preferred stock dividends and accretion (1,185,848)
(1,112,299) (73,549) Net loss available to common stockholders
$(8,387,575) $(6,563,935) $(1,823,640) DATASOURCE: iSECUREtrac
Corp. CONTACT: Jeff Durski of iSECUREtrac Corp., +1-402-537-0022,
Web site: http://www.isecuretrac.com/
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