SOURCE: RemoteMDx, Inc.

RemoteMDx, Inc.

August 19, 2009 09:00 ET

RemoteMDx, Inc. Reports Increase in Recurring Revenue and 25% Gross Margin for the Third Fiscal Quarter Ended June 30, 2009 -- 3 Consecutive Quarters of Gross Margin Growth

SANDY, UT--(Marketwire - August 19, 2009) - RemoteMDx Inc. (OTCBB: RMDX), a national leader in patented advanced communications technology widely utilized by more than 625 public safety clients across 35 states, reported results for the fiscal third quarter ended June 30, 2009. The company reported improved operating results from continuing operations on a year-over-year basis. Total consolidated recurring revenues from monitoring services for the quarter ended June 30, 2009 increased by 29% or $710,617 to $3,133,518 compared to $2,422,901 for the quarter ended June 30, 2008. Additionally, total consolidated recurring revenues from monitoring services for the nine months ended June 30, 2009 increased by 24% or $1,713,380 to $8,985,386 compared to $7,272,006 for the nine months ended June 30, 2008.

Total consolidated revenues for the quarter ended June 30, 2009 increased over 5% or $161,255 to $3,208,969 compared to $3,047,714 for the quarter ended March 31, 2009.

Importantly, while increasing revenues, the company continued to improve operating margins by significantly reducing costs and developing a higher margin business.

Gross margins continued to improve on a quarter-to-quarter basis with a 25% gross margin or $788,143 for the quarter ended June 30, 2009. This compares to a 9% gross margin or $288,457 for the previous quarter ended March 31, 2009, and 4% gross margin or $106,841 for the quarter ended December 31, 2008.

The gross margin for the nine months ended June 30, 2009 was $1,183,441 (driven by recurring revenues from monitoring services) compared to $107,930 (driven by one time device sales) for the nine months ended June 30, 2008, or an improvement of $1,075,511.

Notably, the loss from operations improved by $14,324,511 for the fiscal third quarter ended June 30, 2009 compared to the same quarter in fiscal 2008. The loss from operations for the quarter ended June 30, 2009 was $2,821,391 compared to $17,145,902 for the comparable quarter in 2008.

The loss from operations for the nine months ended June 30, 2009 was $11,171,720 compared to $32,286,442 for the nine months ended June 30, 2008, or an improvement of $21,114,722.

These operational improvements for the quarter and the nine-month period ended June 30, 2009 are primarily due to the company's continued program of reducing costs and its ongoing drive toward profitability, resulting from increased sales and higher margin business activities.

The results of these cost-cutting and sales activities are reflected in the reduction in net loss from continuing operations to $5,032,308 for the quarter ended June 30, 2009, an improvement of $12,130,162 compared to the net loss from continuing operations of $17,162,470 reported for the quarter ended June 30, 2008.

John Hastings, President and Chief Operating Officer of RemoteMDx, pointed out several milestones and actions taken that resulted in the improvements achieved by the company for the third quarter and the year-to-date, fiscal 2009. These include the following:

--  Cashflow Improvement -- "We are very gratified that we have been able
    to improve our cashflow from operations, which provides us with an enhanced
    ability to take advantage of the major business opportunities that we have
    in place," according to Mr. Hastings. "Cash used for operations has been
    significantly reduced for the last three quarters from $2,687,201 in the
    quarter ended December 31, 2008 and $2,306,066 in the quarter ended March
    31, 2009 to $1,711,937 for the quarter ended June 30, 2009."
    
--  Cost Efficiencies -- "The 25% gross margin for the fiscal quarter
    ended June 30, 2009 reflects our concerted efforts to improve customer
    service levels, concurrent with our continued emphasis on driving
    operational and cost efficiencies, combined with a strategic focus on
    developing more profitable, higher margin accounts," added Mr. Hastings.
    
--  Continued Customer Deployments -- Mr. Hastings noted, "The company
    increased recurring revenues from monitoring services due to its ongoing
    deployments of the 58 new agency and county clients added since the quarter
    ended December 31, 2008."
    
--  International Opportunities -- "The company made significant progress
    in the quarter in positioning itself in the rapidly growing international
    marketplace and a growing global desire for monitoring programs. We
    currently have several international RFPs underway.  We also expect to
    benefit greatly from the $1 million plus investment in overseas development
    that the company has made over the last two years. We will continue to
    target significant opportunities that exist in Latin America, Europe and
    Africa. A major example of our international recognition is the recently
    announced 6-year agreement with euromicron AG in 18 European countries,"
    added Mr. Hastings.
    
--  Government Initiatives -- "The importance of various predator
    monitoring programs for sex offenders, gang members and other high risk
    security groups continues to be increasingly recognized by the national and
    international media and by several ongoing legislative  initiatives in the
    U.S. and overseas, all central to  Remote's core businesses," said
    Hastings. "Government agencies are becoming increasingly cost-driven during
    these challenging times and are more anxious to take advantage of the cost
    savings inherent in developing alternatives to costly incarceration or
    through offender pay programs, which are made possible by working closely
    with firms like RemoteMDx." Mr. Hastings added, "It is most rewarding to
    the entire RemoteMDx team to be part of an effort to not only save
    governmental cost, but more importantly to help save and change lives."
    

About RemoteMDx

RemoteMDx is a leading edge, patented monitoring, case management and advanced communications technology company, widely utilized by approximately 15,000 Offenders in over 625 law enforcement agencies, judicial districts and county jurisdictions across 35 states, with applications targeted for offender tracking and homeland security. Through its SecureAlert subsidiary, RemoteMDx observes and tracks offenders no matter where they may be -- in their car, home or office. SecureAlert can intervene in real-time with direct voice communication when an offender is in violation of probation or parole, such as sex offenders who are prohibited from entering school areas, parks, etc. Highly trained monitoring center personnel monitor the offender's activities 24/7 through satellite mapping and computer systems. The SecureAlert programs allow convicted criminals to re-enter society by keeping them accountable 24 hours a day, every day, supporting rehabilitation initiatives and providing for enhanced public safety, while reducing the overall burdens and costs carried by the criminal justice and corrections systems. To learn more about RemoteMDx, visit www.remotemdx.com.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, including future growth and earnings opportunities of the company. Examples of forward-looking statements in this release include references to the results of operations during future periods, the success of implementing cost-cutting plans, the goal for break-even operating results, future phases of the company's business plan, and the launch of new products. Actual results could differ materially from those projected in these forward-looking statements, which involve a number of risks and uncertainties, including the company's ability to retain and to promptly satisfy current backorders and other economic, competitive, governmental, technological, regulatory, manufacturing and marketing risks associated with the company's business and financial plans. The contents of this release should be considered in conjunction with the risk factors, warnings, and cautionary statements that are contained in the company's most recent filings with the Securities and Exchange Commission.

Non-GAAP Financial Measures

To supplement our reporting of operating results, we use non-GAAP financial measures (such as "recurring revenues"), which we believe are helpful in understanding our past financial performance and our future results. Recurring revenues are generated from persistent monitoring services, which include the monitoring & tracking of individual offenders through the use of securely attached electronic monitoring devices, satellite tracking, intervention monitoring applications and highly trained monitoring and case management personnel. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. SecureAlert, TrackerPAL™ and Offender Monitoring Center are trademarks of SecureAlert. RemoteMDx is a trademark of RemoteMDx, Inc.

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