TKX TrackX Holdings Inc

TrackX Holdings Inc. (TSX.V:TKX | FRANKFURT:3TH) (“TrackX” or the “Company”), a Software-as-a-Service (SaaS)-based enterprise asset management solution provider, announces the financial and operational highlights from its fourth quarter and fiscal year ended September 30, 2021 (FY21). All results are reported in Canadian dollars unless otherwise specified. A complete set of the September 30, 2021 Consolidated Financial Statements and Management’s Discussion & Analysis has been filed on SEDAR (www.sedar.com).

Fiscal year 2021 represented a significant shift for the Company as it evolved its IoT-enabled solution platform from delivering efficiencies within a singular enterprise account to tracing and tracking products from source material, through manufacturing all the way to retail across the entire supply chain partner ecosystem. With this refined focus came a significant investment in the development of new features and functions to not only provide improved tracing, tracking and operational efficiencies, but to also help companies meet their sustainability and ESG (Environmental, Social and Governance) initiatives.

“The most recent pandemic has brought with it many challenges,” said Tim Harvie, TrackX CEO. “Many companies suffered significant operational disruptions and, while these caused implementation delays which negatively impacted our revenue, we have seen growing demand from companies for supply chain solutions which will enable them to be more sustainable, adaptable, collaborative, efficient, transparent and trusted.”

TrackX’s expanded supply chain and sustainability solutions have increased configurability, require less customization and are less hardware intensive, thereby allowing TrackX to support a broader market opportunity, with higher margin, more repeatable solutions which are easier for partners to implement. This more targeted solution focus also coincides with market trends that have resulted in companies across many industries needing to accelerate their digital transformation and sustainability in order to remain competitive in today’s digital world:

• Companies are still dealing with the impact of supply chain disruptions on their business and need to invest in technologies that provide improved visibility, transparency and trust throughout their entire supply chains;
• Consumers are insisting that companies they purchase products from provide proof of Environment, Social and Governance (ESG) compliance initiatives and practices;
• Increased reporting, regulatory and ESG compliance mandates are forcing companies to implement better tracing, tracking and sustainability solutions to ensure compliance; and
• Companies are seeking real-time, reliable, granular data, feeding predictive analytics and AI in order to gain efficiencies and remain competitive in today’s world.

Financial Highlights for the Year Ended September 30, 2021

• In Q3 2021 the Company completed a non-brokered private placement of 40,000,000 units of the Company (the "Units") at a price of $0.05 per Unit for gross proceeds of $2,000,000. Each Unit consists of one common share of the Company (a "Share") and one common share purchase warrant (a "Warrant”) at an exercise price of $0.075. The proceeds of this private placement were primarily devoted to onboarding additional resources in order to execute the Company’s supply chain focused strategy and to further expand the technology solution in response to demand for proof of sustainability and ESG initiatives.
• Revenue for FY21 of $3.493 million vs $3.995 million in FY20, largely due to a decline in revenue resulting from the sale of the yard business to FourKites and the impact that the most recent pandemic has had on hardware availability and access to customer facilities to complete implementations.
• FY21 gross margin of 51%, as compared to 56% in FY20 largely due to:
  • Hiring of engineering resources in Q1 21 to support the new business strategy
  • Decline in high margin revenue associated with the transition services provided to FourKites in 2020, but which ended Q2 21;
• In FY21, TrackX expanded its partner network and did enter into a software licensing agreement resulting in perpetual software license revenue of $1.518 million for FY21 which is anticipated to generated future SaaS and services revenue.
• Net loss was $0.759 million or $(0.01)/share compared to a net income of $0.185 million or $0.01/share for the year ended September 30, 2020 (“FY20”);
• Adjusted EBITDA loss for the year was $0.537 million compared to a $0.333 million loss for the FY20;
• Recurring revenue of $0.673 million, a 67% decrease over $2.037 million for the FY20, largely due to:
  • The sale of the yard management business to FourKites was completed in Q3 2020 and resulted in the loss of legacy SaaS customers that were a part of that sale;
  • The shift in business strategy to focus on supply chain tracing, tracking, sustainability and proof of ESG (environmental, social, governance) required the Company to onboard additional resources and complete additional software development prior to implementing new customer accounts.

Annual Revenue Mix

Revenue	FY21		FY20
Perpetual software license fees	43%		-%
Recurring and Software License	19%		52%
Hardware	3%		7%
Setup, implementation, and other fees	35%		41%
TOTAL	100%		100%

Financial Highlights for the 3-Months Ended September 30, 2021 (Q4 21)

• Adjusted EBITDA of $0.599 million compared to ($0.064) million in Q4 20;
• Revenue of $1.453 million versus $0.818 million in the fourth quarter of FY20 (“Q4 20”);
• Net income of $0.736 million ($0.01/share) versus $0.307 million loss ($0.01/share) in Q4 20; and
• Gross margin of 52%, down from 68% in Q4 20.

Fourth Quarter Revenue Mix

Revenue	Q421		Q420
Perpetual software license fees	78%		-%
Recurring and Software License	11%		18%
Hardware	4%		10%
Setup, implementation, and other fees	7%		72%
TOTAL	100%		100%

Highlights Subsequent to the Fourth Quarter

• Appointed Kirk Ball to TrackX Board of Directors. Mr. Ball is currently the EVP and Chief Information Officer at Giant Eagle, Inc. where he has responsibility for delivering all information technology solutions for the company. Previously, Mr. Ball served as CTO at The Kroger Company, America’s largest supermarket chain by revenue and third largest retailer (behind Walmart and Amazon).
• Renewed the annual SaaS subscription agreement with one of largest online insurance companies in the industry.
• Expansion of the Shifflet solution implementation within the utility industry to support additional yard storage locations.
• Further expansion of the solution implementation for a global powersports leader to track additional vehicles, capture additional data and improve business analytics.
• Expansion of solution implementation for one of the largest online used car retailers in the industry.

Selected Financial Information

C$(000s) (except per share)	Twelve-month PeriodEnded September 30				Three-month PeriodEnded September 30
	2021		2020		2021		2020
Revenue	$3,493		$3,955		$1,453		$818
Gross Margin %	51%		56%		52%		68%
Income (loss) for the period	$(0.759)		$0.185		$736		($307)
Income (loss) per share	($0.01)		$0.01		$0.01		($0.01)
Adjusted EBITDA (Loss)*	($0.538)		($0.333)		$0.599		($0.064)
* Adjusted EBITDA is a non-IFRS (international financial reporting standards) measure and excludes stock-based compensation

Business Outlook

In 2022, TrackX will continue to invest and focus our go to market on the delivery of solutions which help our customers achieve what TrackX refers to as the 5C’s in today’s digital supply chain:

• Consumer demand for proof of origin, chain of custody and authenticity
• Compliance reporting for regulatory mandates and sustainability claims
• Collaboration across the entire supply chain ecosystem
• Control tower analytics to aggregate enterprise data and drive efficiency
• Comprehensive end-to-end supply chain visibility

The Company continued to expand its solution implementation across all major customer accounts and implemented its enhanced supply chain focused solutions to meet the needs of new customers like Do Good Foods in the grocery industry and a large online used car retailer within the automotive industry.

TrackX has renamed its technology platform to Keychain, representing it as the “key” to digital supply ”chain” transformation for enterprise accounts. It will further leverage technologies such as blockchain, video analytics and machine learning. It will continue to integrate with new IoT sensors to gain even more data attributes related to the origin, state, location, ownership, and contents of a product. Developments to Keychain evolve the GAME platform from delivering efficiencies within a singular enterprise account to tracing and tracking a product from source material, through manufacturing all the way to retail across multiple enterprises. It will deliver the transparency, trust and proof of ESG that consumers now demand, and companies must provide in order to operate efficiently, remain competitive, respond to increased regulatory requirements, prove their sustainability initiatives and protect their brands.

The TrackX solutions enable the digital supply chain, and the Keychain platform represents one of the only full-cycle supply chain execution platforms with the ability to scale and cater to a global market and enterprise accounts in the areas of tracing, tracking and sustainability. With this as its primary solution focus, TrackX expects to see an increase in pipeline activity and new revenue opportunities throughout 2022.

About TrackX

TrackX, Inc. (TSX.V: TKX), based in Denver, Colorado, is the SaaS-based enterprise tracing, tracking and collaboration solution that leading brands trust to achieve more sustainable and better performing supply chains. TrackX solutions are built on an enterprise scalable and fully customizable platform that leverages a broad array of RFID, IoT (Internet of Things) and Sensor Technologies to provide item level visibility to customers across a broad array of industries, including food, beverage, brewery, automotive, retail, financial services, technology and government. For more information, visit www.trackx.com.

For more information, please contact:

Tim Harvie, TrackX Holdings Inc.investor@trackx.com303-325-7300

Neither TSX Venture Exchange nor its Regulations Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Forward looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. All statements that address future plans, activities, events or developments that the Company believes, expects or anticipates will or may occur including the Company’s anticipated pipeline and value of current and customer deployments and future opportunities are the managements best estimates and cannot be guaranteed or relied upon and is forward-looking information. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements in this news release, whether as a result of new information, future events or otherwise, except as required by law.