Our Board of Directors has adopted resolutions approving, declaring advisable and recommending that our stockholders approve an amendment to and restatement of our Articles of Incorporation to change our corporate name from “SecureAlert, Inc.” to “Track Group, Inc.” If approved, the change to our corporate name will become effective upon the filing of a certificate of amendment with the Utah Secretary of State. We currently plan to file the Amended and Restated Articles as soon as reasonably practicable after receiving approval of the amendment from our stockholders. However, the Board of Directors has reserved the right to abandon the proposed amendment if, at any time before the filing of the certificate of amendment, it determines that changing our name is no longer in the best interests of the Company or our stockholders.
If this Proposal is approved, Article I of our Articles of Incorporation will be amended to reflect our new corporate name. The proposed amendment and restatement of our Articles of Incorporation is set forth in its entirety in Appendix A to this Proxy Statement.
Purpose of and Rationale for the Amended and Restated Articles
The purpose of the proposed name change is to align our corporate name more closely with our vision as a leading provider of offender tracking technologies. As the Company continues to expand its products, services and locations, our Board of Directors believes that the proposed name change will build and foster the Company’s unparalleled dedication to offering innovative technologies and tracking capabilities, and will be beneficial to our stockholders because our customers will associate the name “Track Group, Inc.” with a more focused objective.
Effect of Proposed Amendment
If approved by our stockholders, the Amended and Restated Articles and the change to our corporate name will not affect the validity of any of our existing stock certificates that bear the name “SecureAlert, Inc.” Stockholders with certificated shares may continue to hold existing certificates, and the number of shares represented by those certificates will remain unchanged the Amended and Restated Articles. New stock certificates that are issued after the Amended and Restated Articles of Incorporation are filed with the Utah Secretary of State will bear the name “Track Group, Inc.”
Currently our common stock is quoted on the OTCQB under the symbol “SCRA” If the proposed Amended and Restated Articles are approved, we will request a CUSIP number and new ticker symbol based on our new name. Under the rules of the OTC QB, we cannot make any requests for a particular symbol and, as a result, we will not know what our new symbol will be until it has been assigned by the Financial Industry Regulatory Authority (“FINRA”).
If this Proposal is not approved, the proposed Amended and Restated Articles will not become effective and our name will remain unchanged.
Under Utah law, the number of votes FOR must exceed the number of votes AGAINST to approve this Proposal. Abstentions and broker non-votes will no effect on the outcome of this Proposal. Broker non-votes are counted towards a quorum, but are not counted for any purpose in determining whether this Proposal has been approved. Unless otherwise instructed on the proxy or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” the adoption of the Amended and Restated Articles.
Board of Directors Recommendation
The Board recommends that you vote “FOR” the amendment to and restatement of out Articles of Incorporation to change our name from “SecureAlert, Inc.” to “Track Group, Inc.”
PROPOSAL NO. 3
AMENDMENT TO OUR 2012 EQUITY INCENTIVE AWARD PLAN2
Background of Plan and Purpose of the Plan Amendment
The Plan was first adopted by the Board of Directors on September 26, 2011, and authorized a total of 18.0 million shares of our common stock for issuance thereunder, which number was reduced to 90,000 shares following a one-for- 200 reverse split of our common stock on February 28, 2013. As of March 30, 2015, 80,320 shares of common stock have been issued under the Plan. Accordingly, the Board of Directors has approved the Plan Amendment, subject to approval by the Company’s stockholders, to increase the number of shares available for issuance under the Plan to by the greater of 700,000 or 7% of the issued and outstanding shares of common stock on the day of the Annual Meeting.
Summary Description of the Plan
The Plan is intended to (i) encourage ownership of shares by our employees and directors and certain consultants to the Company; (ii) induce them to work for the benefit of the Company; and (iii) provide additional incentive for such persons to promote the success of the Company.
The Compensation Committee of the Board of Directors will administer the Plan, which permits the granting of equity awards to purchase up to 90,000 shares of common stock, which number will increase to by the greater of 700,000 or 7% of the issued and outstanding shares of common stock on the day of the Annual Meeting.
The Plan permits the Compensation Committee to grant various types of equity awards, including incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights, performance shares, performance stock units, stock payments, deferred stock, restricted stock units, other stock-based awards, and performance-based awards to eligible individuals.
The Compensation Committee of the Board of Directors will administer the Plan. The Compensation Committee may delegate to a committee of one or more members of the Board the authority to grant or amend awards to participants other than senior executives of the Company who are subject to Section 16 of the Exchange Act, or employees who are “covered employees” within the meaning of Section 162(m) (“Section 162(m)”) of the Internal Revenue Code (the “Code”). The Compensation Committee includes at least two directors, each of whom qualifies as a non-employee director pursuant to Rule 16b-3 of the Exchange Act, and an “outside director" pursuant to Section 162(m).
The Compensation Committee will have the exclusive authority to administer the Plan, including the power to determine eligibility, the types and sizes of awards, the price and timing of awards and the acceleration or waiver of any vesting restriction, provided that the Compensation Committee will not have the authority to accelerate vesting or waive the forfeiture of any performance-based awards.
Persons eligible to participate in the Plan include non-employee members of the Board, consultants to the Company, and all of the employees of the Company and its subsidiaries, as determined by the Compensation Committee.
The Plan provides for the grant of incentive stock options and nonqualified stock options, restricted stock, stock appreciation rights, performance shares, performance stock units, dividend equivalents, stock payments, deferred stock, restricted stock units, other stock-based awards and performance-based awards.
Stock options, including incentive stock options, as defined under Section 422 of the Code, and nonqualified stock options may be granted pursuant to the Plan. The option exercise price of all stock options granted pursuant to the Plan will be at least 100% of the fair market value of the common stock on the date of grant. Stock options may be exercised as determined by the Compensation Committee, but in no event after the tenth anniversary of the date of grant. The aggregate fair market value of the shares with respect to which options intended to be incentive stock options are exercisable for the first time by an employee in any calendar year may not exceed $100,000, or such other amount as the Code provides.
Restricted stock may be granted pursuant to the Plan. A restricted stock award is the grant of shares of common stock that is nontransferable and may be subject to substantial risk of forfeiture until specific conditions are met. Conditions may be based on continuing employment or achieving performance goals. During the period of restriction, participants holding shares of restricted stock may have full voting and dividend rights with respect to such shares. The restrictions will lapse in accordance with a schedule or other conditions determined by the Compensation Committee.
A stock appreciation right (“SAR”) is the right to receive payment of an amount equal to the excess of the fair market value of a share of common stock on the date of exercise of the SAR over the fair market value of a share of common stock on the date of grant of the SAR. Payments will be made by the Company in cash or common stock.
The other types of awards that may be granted under the Plan include performance shares, performance stock units, deferred stock, restricted stock units, and other stock-based awards.
Changes in Capital Structure
In the event of a stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off, recapitalization, distribution of assets or any other corporate event affecting the common stock or the share price of the common stock in a manner that causes dilution or enlargement of benefits or potential benefits under the Plan, then the Compensation Committee may make proportionate adjustments to: (i) the aggregate number of, and types of, shares of stock subject to the Plan, (ii) the terms and conditions of any outstanding awards (including any applicable performance targets) and (iii) the grant or exercise price for any outstanding awards.
In addition, in such a case or in the event of any unusual or nonrecurring transactions or events affecting the Company or of changes in applicable laws, the Compensation Committee, may, subject to the terms of the Plan, take any of the following actions if it determines that such action is appropriate in order to prevent the dilution or enlargement of benefits or potential benefits intended to be made available under the Plan or with respect to any award: (i) provide for either the termination, purchase or replacement of the awards, (ii) provide that the awards shall be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices, (iii) make adjustments in the number and type of shares of stock (or other securities or property) subject to outstanding awards and/or in the terms and conditions of (including the exercise price), and the criteria included in, outstanding awards which may be granted in the future, (iv) provide for the acceleration of vesting or exercisability of the awards and (v) provide that the awards cannot vest or be exercised after the event that triggers the action.
Amendment and Termination
The Compensation Committee, subject to approval of the full Board of Directors, may terminate, amend, or modify the Plan at any time; provided, however, that stockholder approval must be obtained for any amendment to the extent necessary or desirable to comply with any applicable law, regulation or stock exchange rule, to increase the number of shares available under the Plan, to extend the exercise period for an option beyond ten years from the date of grant or to allow a material increase in the benefits or change the eligibility requirements under the Plan. In addition, without approval of the Company's stockholders, no option may be amended to reduce the per share exercise price of the shares subject to such option below the per share exercise price as of the date the option was granted and, except to the extent permitted by the Plan in connection with changes in the Company's capital structure, no option may be granted in exchange for, or in connection with, the cancellation or surrender of an option having a higher per share exercise price.
In no event may an award be granted pursuant to the Plan on or after the tenth anniversary of the effectiveness of the Plan.
Federal Income Tax Consequences
The tax consequences of the Plan under current federal law are summarized in the following discussion, which deals with the general tax principles applicable to the Plan, and is intended for general information only. Alternative minimum tax and state and local income taxes are not discussed. Tax laws are complex and subject to change and may vary depending on individual circumstances and from locality to locality. The tax information summarized is not tax advice.
Nonqualified Stock Options. For federal income tax purposes, an optionee generally will not recognize taxable income on the grant of a nonqualified stock option (“NQSO”) under the Plan, but upon the exercise of an NQSO will recognize ordinary income, and the Company generally will be entitled to a deduction. The amount of income recognized (and the amount generally deductible by the Company) generally will be equal to the excess, if any, of the fair market value of the shares at the time of exercise over the aggregate exercise price paid for the shares, regardless of whether the exercise price is paid in cash or in shares or other property. An optionee's basis for the stock for purposes of determining his or her gain or loss upon a subsequent disposition of the shares generally will be the fair market value of the stock on the date of exercise of the NQSO, and any subsequent gain or loss will generally be taxable as capital gains or losses.
Incentive Stock Options. An optionee generally will not recognize taxable income upon either the grant or exercise of an Incentive Stock Option (“ISO”); however, the amount by which the fair market value of the shares at the time of exercise exceeds the exercise price will be an "item of tax preference" for the optionee for purposes of the alternative minimum tax. Generally, upon the sale or other taxable disposition of the shares of the common stock acquired upon exercise of an ISO, the optionee will recognize income taxable as capital gains in an amount equal to the excess, if any, of the amount realized in such disposition over the option exercise price, provided that no disposition of the shares has taken place within either (a) two years from the date of grant of the ISO or (b) one year from the date of exercise. If the shares of common stock are sold or otherwise disposed of before the end of the one-year and two-year periods specified above, the difference between the ISO exercise price and the fair market value of the shares on the date of exercise generally will be taxable as ordinary income; the balance of the amount realized from such disposition, if any, generally will be taxed as capital gain. If the shares of common stock are disposed of before the expiration of the one-year and two-year periods and the amount realized is less than the fair market value of the shares at the date of exercise, the optionee's ordinary income generally is limited to excess, if any, of the amount realized in such disposition over the option exercise price paid. The Company (or other employer corporation) generally will be entitled to a tax deduction with respect to an ISO only to the extent the optionee has ordinary income upon sale or other disposition of the shares of common stock.
Stock Appreciation Rights. No taxable income is generally recognized upon the receipt of an SAR, but upon exercise of the SAR the fair market value of the shares (or cash in lieu of shares) received generally will be taxable as ordinary income to the recipient in the year of such exercise. The Company generally will be entitled to a compensation deduction for the amount the recipient recognizes as ordinary income.
Restricted Stock and Deferred Stock. A participant to whom restricted or deferred stock is issued generally will not recognize taxable income upon such issuance and the Company generally will not then be entitled to a deduction, unless, in the case of restricted stock, an election is made under Section 83(b) of the Code. However, when restrictions on shares of restricted stock lapse, such that the shares are no longer subject to a substantial risk of forfeiture, the employee generally will recognize ordinary income and the Company generally will be entitled to a deduction for an amount equal to the excess of the fair market value of the shares at the date such restrictions lapse over the purchase price therefore. Similarly, when deferred stock vests and is issued to the employee, the employee generally will recognize ordinary income and the Company generally will be entitled to a deduction for the amount equal to the fair market value of the shares at the date of issuance. If an election is made under Section 83(b) with respect to restricted stock, the employee generally will recognize ordinary income at the date of issuance equal to the excess, if any, of the fair market value of the shares at that date over the purchase price therefore and the Company will be entitled to a deduction for the same amount. The Code does not permit a Section 83(b) election to be made with respect to deferred stock.
Dividend Equivalents. A recipient of a dividend equivalent award generally will not recognize taxable income at the time of grant, and the Company will not be entitled to a deduction at that time. When a dividend equivalent is paid, the participant generally will recognize ordinary income, and the Company will be entitled to a corresponding deduction
Performance Awards. A participant who has been granted a performance award generally will not recognize taxable income at the time of grant, and the Company will not be entitled to a deduction at that time. When an award is paid, whether in cash or common stock, the participant generally will recognize ordinary income, and the Company will be entitled to a corresponding deduction.
Stock Payments. A participant who receives a stock payment in lieu of a cash payment that would otherwise have been made will generally be taxed as if the cash payment has been received, and the Company generally will be entitled to a deduction for the same amount.
Section 162(m) Limitation. In general, under Section 162(m), income tax deductions of publicly held corporations may be limited to the extent total compensation (including base salary, annual bonus, stock option exercises, transfers of property and benefits paid under nonqualified retirement plans) for certain executive officers exceeds $1 million (less the amount of any “excess parachute payments” as defined in Section 280G of the Code) in any one year. However, under Section 162(m), the deduction limit does not apply to certain “performance-based compensation.
Under Section 162(m), stock options and SARs will satisfy the “performance-based compensation” exception if the awards of the options or SARs are made by a committee of the Board of Directors consisting solely of two or more “outside directors,” the plan sets the maximum number of shares that can be granted to any person within a specified period, and the compensation is based solely on an increase in the stock price after the grant date (i.e., the option or SAR exercise price is equal to or greater than the fair market value of the stock subject to the award on the grant date). Other types of awards may only qualify as “performance-based compensation” if such awards are granted or payable only to the recipients based upon the attainment of objectively determinable and pre-established performance targets established by a qualifying committee of the Board and related to performance goals approved by the Company's stockholders.
The Plan has been designed in order to permit the Compensation Committee to grant stock options and SARs that will qualify as “performance-based compensation” under Section 162(m). In addition, in order to permit Awards other than stock options and SARs to qualify as “performance-based compensation,” the Plan allows the Compensation Committee to designate as “Section 162(m) Participants” employees whose compensation for a given fiscal year may be subject to the limit on deductible compensation imposed by Section 162(m). The Compensation Committee may grant awards to Section 162(m) Participants that vest or become exercisable upon the attainment of specific performance targets that are related to one or more of the performance goals set forth in the Plan. The Company's stockholders are also being asked in this Proposal to approve the performance goals established in the Plan.
Awards Granted Under the Plan
Because grants under the Plan are subject to the discretion of the Compensation Committee, awards under the Plan that may be made in the future are not determinable. Future exercise prices for options granted under the Plan are also not determinable because they will be based upon the fair market value of the Company’s common stock on the date of grant.
The following table discloses all awards granted to the persons or groups specified below under the current version of the Plan as of our most recently completed fiscal year ended September 30, 2014:
Awards Granted Pursuant to the 2012 Equity Incentive Award Plan
| Name and Position | | Number of Stock Options | | | Number of Shares of Restricted Stock | | Dollar Value ($) | |
| | | | | | | | | | |
John Merrill Chief Financial Officer | | | - | | | | - | | | $ | - | |
| | | | | | | | | | | | | |
| Total- Executive Officers | | | - | | | | - | | | $ | - | |
| | | | | | | | | | | | | |
Directors, as a group (1) | | | 14,988 | | | | 16,490 | | | $ | 291,233 | |
| | | | | | | | | | | | | |
Employees, as a group (1) | | | 30,000 | | | | 18,842 | | | $ | 686,617 | |
| | | | | | | | | | | | | |
| Total | | | 44,988 | | | | 35,332 | | | $ | 977,850 | |
(1) | Excludes the Company’s executive officers. |
The affirmative “FOR” vote of a majority of the shares present in person or by proxy and entitled to vote is necessary for approval of the amendment to the Company’s 2012 Equity Incentive Award Plan. Broker non-votes are counted towards a quorum, but are not counted for any purpose in determining whether this Proposal has been approved. Unless otherwise instructed on the proxy or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” the adoption of the Plan Amendment.
Board of Directors Recommendation
The Board recommends a vote “FOR” an amendment to our 2012 Equity Incentive Award Plan.
PROPOSAL NO. 4
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Company’s executive compensation program is designed to attract, motivate and retain a talented team of executives. The Company seeks to accomplish this goal in a way that rewards performance that is aligned with its stockholders’ long-term interests. The Company believes that its executive compensation program achieves this goal and is strongly aligned with the long-term interests of its stockholders.
Pursuant to Section 14A of the Exchange Act, the Company is submitting a proposal to its stockholders for an advisory vote on the compensation of its named executive officers. This Proposal, commonly known as a “say-on-pay” proposal, is a non-binding vote, but gives stockholders the opportunity to express their views on the compensation of the Company’s named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the named executive officers.
Accordingly, the following resolution is submitted for stockholders for approval:
RESOLVED, that the stockholders of SecureAlert, Inc., dba Track Group, approve, on an advisory basis, the compensation of its named executive officers as disclosed in the Proxy Statement for the Annual Meeting to be held May 19, 2015, pursuant to Item 402 of Regulation S-K, the accompanying tabular disclosure regarding named executive officer compensation and the corresponding narrative disclosure and footnotes.
As an advisory vote, this Proposal is not binding. However, the Compensation Committee, which is responsible for designing and administering the Company’s executive compensation program, values the opinions expressed by stockholders in their vote on this Proposal and will consider the outcome of the vote when making future compensation decisions for named executive officers.
The affirmative “FOR” vote must exceed the number of votes “AGAINST: to approve this non-binding matter. Broker non-votes are counted towards a quorum, but are not counted for any purpose in determining whether this Proposal has been approved. Unless otherwise instructed on the proxy or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” this Proposal.
The number of votes FOR must exceed the number of votes AGAINST to approve this non-binding matter. Abstentions and broker non-votes will no effect on the outcome of this Proposal.
Board of Directors Recommendation
The Board recommends that stockholders vote “FOR” the advisory resolution above, approving of the compensation paid to the Company’s named executive officers.
PROPOSAL NO. 5
RATIFICATION OF THE APPOINTMENT OF
EIDE BAILLY, LLP TO SERVE AS OUR
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE CURRENT FISCAL YEAR ENDED SEPTEMBER 30, 2018
The Board of Directors has appointed Eide Bailly, LLP (“Eide Bailly”) as our independent registered public accounting firm for the current fiscal year ended September 30, 2018 and hereby recommends that the stockholders ratify such appointment.
The Board of Directors may terminate the appointment of Eide Bailly as the Company’s independent registered public accounting firm without the approval of the stockholders whenever the Board of Directors deems such termination necessary or appropriate.
Representatives of Eide Bailly will be present at the Annual Meeting, or available by telephone, and will have an opportunity to make a statement if they so desire and to respond to appropriate questions from stockholders.Required Consents
Principal Accountant Fees and Services
Audit services consistPursuant to Section 228 of the audit ofDGCL, the annual consolidated financial statements of us, and other services related to filings and registration statements filed by us and our subsidiaries and other pertinent matters. Hansen Barnett & Maxwell, P.C. (“HBM”) served as our independent auditors for most of fiscal year 2013, for which we paid approximately $49,750. HBM resigned as our independent registered public accounting firm on September 23, 2013. We appointed Eide Bailly as our independent registered public accounting firm on September 24, 2013. We paid Eide Bailly approximately $162,500 and $50,000 for audit services for the year ended September 30, 2014 and 2013, respectively.
Tax Fees, Audit Related Fees, and All Other Fees
HBM provided tax services to us for fiscal year 2013, for which we paid approximately $16,750. The Audit Committee of the Board of Directors considered and authorized all services provided by HBM. No tax services were provided to us during the fiscal year ended September 30, 2013 by Eide Bailly. The Company paid Eide Bailly $9,064 in audit related fees for the year ended September 30, 2013. The Company paid Eide Bailly $16,230 and $13,231 for tax and audit related fees during the year ended September 30, 2014, respectively.
Our Audit Committee considered that the work done for us in fiscal year 2013 and 2014 by HBM and by Eide Bailly was compatible with maintaining the independence of each of those firms.
Required Vote
Ratificationratification of the selection of Eide Bailly as the Company’s independent auditors for the fiscal year ending September 30, 20152018 requires the affirmative votewritten consents from holders of record of at least a majority of the outstanding shares present or represented by proxy andof our Common Stock on the Record Date who are entitled to vote at the Annual Meeting. Under Utah law and the Company’s Articlessubmit consents.
Board of Incorporation and Bylaws, an abstention will have the same legal effect as a vote againstDirectors Recommendation
The Board of Directors recommends you consent to the ratification of Eide Bailly and each broker non-vote will reduce the absolute number, but not the percentage, of affirmative votes necessary for approval of the ratification. Unless otherwise instructed on the proxy or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” the ratificationselection of Eide Bailly, LLP (“Eide Bailly”) as the Company’s independent auditors for the fiscal year ending September 30, 2015.2018.
Independent Auditor
During the years ended September 30, 2017 and 16, Eide Bailly served as our independent registered public accounting firm.
The following table presents approximate aggregate fees and other expenses for professional services rendered by Eide Bailly, our independent registered public accounting firm, for the audit of the Company’s annual financial statements for the years ended September 30, 2017 and 2016 and fees and other expenses for other services rendered during those periods.
| | | |
| | | |
Audit Fees (1) | $162,420 | $155,552 |
Audit-Related Fees (2) | $6,141 | $1,863 |
Tax Fees (3) | $20,728 | $24,415 |
All Other Fees (4) | $21,661 | $- |
| Total | $210,950 | $181,830 |
| (1) | Audit services in 2017 and 2016 consisted of the audit of our annual consolidated financial statements, and other services related to filings and registration statements filed by us and our subsidiaries, and other pertinent matters. Eide Bailly has served as our independent registered public accounting firm since September 24, 2013. |
| (2) | Audit-related fees consisted of travel costs related to our annual audit. |
| (3) | For permissible professional services related to income tax return preparation and compliance. |
| (4) | All other fees are related to the preparation of the Company’s Affordable Care Act forms and examination of the 401(k) financial statements. |
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee has established its pre-approval policies and procedures, pursuant to which the Audit Committee approved the foregoing audit and permissible non-audit services provided by Eide Bailly in fiscal 2017 and 2016. Such procedures govern the ways in which the Audit Committee pre-approves audit and various categories of non-audit services that the auditor provides to the Company. Services which have not received pre-approval must receive specific approval of the Audit Committee. The Audit Committee is to be informed of each such engagement in a timely manner, and such procedures do not include delegation of the Audit Committee’s responsibilities to management.
Auditor Independence
Our Audit Committee considered that the work done for us in fiscal year 2017 and 2016 by Eide Bailly was compatible with maintaining Eide Bailly’s independence.
Report of the Audit Committee of the Board of Directors
Date: September 30, 2017
The Audit Committee reviewed and discussed with management and Eide Bailly, LLP, our independent registered public accounting firm, the audited consolidated financial statements in the Track Group, Inc. Annual Report on Form 10-K for the year ended September 30, 2017. The Audit Committee also discussed withEide Bailly, LLPthose matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 61.
Eide Bailly, LLPalso provided the Audit Committee with the written disclosures and the letter required by the applicable requirements of the PCAOB regarding the independent auditor’s communication with the Audit Committee concerning independence. The Audit Committee has discussed with the registered public accounting firm their independence from our Company.
Based on its discussions with management and the registered public accounting firm, and its review of the representations and information provided by management and the registered public accounting firm, including as set forth above, the members of the Audit Committee as of September 30, 2017, as set forth below, recommended to our Board of Directors Recommendationthat the audited financial statements be included in our Annual Report on Form 10-K for the year ended September 30, 2017.
| Respectfully Submitted, Eric Rosenblum Dirk Karel J. van Daele Karen Macleod |
| |
The information contained above under the caption “Report of the Audit Committee of the Board of Directors recommends” shall not be deemed to be soliciting material or to be filed with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that stockholders vote “FOR” the ratification of the selection of Eide Bailly, LLP as the Company’s independent auditors for the fiscal year ending September 30, 2015.we specifically incorporate it by reference into such filing.
EXECUTIVE OFFICERSCOMPENSATION
The Company’s executive officers are appointed by the Board on an annual basis and serve at the discretion of the Board, subject to the terms of any employment agreements they may have with the Company. The following is a brief description of the present and past business experience of each of the Company’s current executive officers.
| Name | | Age | | Position |
Executive Committee of Board of Directors
| Derek Cassell | | 44 | | Chief Executive Officer and former President |
| Guy Dubois | | 59 | | Chairman and former Chief Executive Officer |
| Peter K. Poli | | 56 | | Chief Financial Officer |
The Executive CommitteeDerek Cassell joined Track Group in June 2014 through the strategic acquisition of Emerge Monitoring, at which time he was appointed Divisional President, Americas. Mr. Cassell was appointed to serve as President of Track Group in December 2016 and was promoted to the Boardrole of Directors was established to act temporarily in the principal executive officer function following the resignation of our Chief Executive Officer in October 2012. Current memberseffective January 1, 2018. From September 2008 until June 2014, Mr. Cassell served as an Executive Vice President of Emerge Monitoring, which was part of the Bankers Surety Team. Mr. Cassell has over 20 years of experience providing correctional solutions to the criminal justice industry. His previous positions include Director of Operations for ADT Correctional Services, Director of Customer Support for G4S Justice Services, and National Sales and Marketing Manager for ElmoTech Inc. He holds a Criminal Justice Degree from Henry Ford College in Dearborn Heights, Michigan.
Guy Dubois.Mr. Dubois’ biography appears on page 4 of this Consent Solicitation Statement.
Peter K. Poli has served as our Chief Financial Officer since January 2017. Before joining the Company, Mr. Poli served as the Chief Financial Officer of Grand Banks Yachts Limited from August 18, 2004 through December 31, 2015. In addition, he served as an Executive Committee are Guy DuboisDirector of Grand Banks Yachts from March 31, 2008 through October 28, 2015. Prior to his time with Grand Banks Yachts Limited, Mr. Poli served as the Chief Financial Officer for Acumen Fund Inc., I-Works Inc., and David S. Boone. Biographies for Messrs. Duboisas Vice President and Boone appear under heading director biographical informationChief Financial Officer of FTD.COM. Mr. Poli also spent nine years as stated above.an Investment Banker with Dean Witter Reynolds, Inc. and served as the CFO of a wholly-owned subsidiary of Morgan Stanley Dean Witter from 1997 to 1999. In addition, Mr. Poli served as an Independent Director of Leapnet, Inc. from 2000 to 2002. Mr. Poli earned a Bachelor of Art in Economics and Engineering from Brown University in 1983 and an MBA from Harvard Business School in 1987.
John R. Merrill was appointed to Chief Financial Officer in April 2014. Mr. Merrill has held a variety of financial roles within public and private organizations including United Health Group, Clear Channel, IMG, and Sports Authority. From 2013 to 2014, Mr. Merrill was the CFO of TenXNetworks and IPVidTech.com, a start-up network hardware and business intelligence provider. From 2010 to 2013, Mr. Merrill worked as an advisor in the healthcare technology industry facilitating due diligence and integration of certain acquired companies. Prior to 2010, Mr. Merrill was the CFO of Park City Group, Inc. (NASDAQ: PCYG) and Prescient Applied Intelligence, Inc. (OTCQB: PPID) software-as-a-service providers of supply chain solutions for both retailers and their suppliers. He began his career with KPMG and holds a Bachelors and a Master’s in Accounting from the University of South Florida.
EXECUTIVE COMPENSATION
Compensation of Our Executive Officers
Set out inThe following Summary Compensation Table sets forth the following summary compensation table are the particulars of compensation paid to the following persons for our fiscal years ended September 30, 20142016 and 2013:2017:
(a) | our principal executive officer, consisting of the executive committee of the Board of Directors; and |
| |
(b) | our most highly compensated executive officer who was serving as an executive officer at the end of the fiscal year ended September 30, 2014 who had total compensation exceeding $100,000 (together, with the principal executive officer, the “Named Executive Officers”); and
|
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(c) | an additional individual for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as an executive officer at the end of the most recently completed financial year. |
our principal executive officer;
(b)
our most highly compensated executive officers who were serving as executive officers at the end of the fiscal year ended September 30, 2017 and who had total compensation exceeding $100,000 (together, with the principal executive officer, the “Named Executive Officers”); and
(c)
| Name and | | | Salary | | | Bonus | | | Stock Awards | | | Option Awards | | | All Other Compensation | | | Total | |
| Principal Position | Year | | ( $ ) | | | ( $ ) | | | ( $ ) | | | ( $ ) | | | ( $ ) | | | ( $ ) | |
| | | | | | | | | | | | | | | | | | | | |
Guy Dubois (1) | 2014 | | $ | - | | | $ | - | | | $ | - | | | $ | 346,276 | | | $ | - | | | $ | 346,276 | |
Chairman and Acting Principal Executive Officer | 2013 | | $ | - | | | $ | - | | | $ | - | | | $ | 335,687 | | | $ | - | | | $ | 335,687 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Chad D. Olsen (2) | 2014 | | $ | 325,056 | | | $ | - | | | $ | - | | | $ | - | | | $ | 32,515 | | | $ | 357,571 | |
| Former Chief Financial Officer | 2013 | | $ | 192,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | 8,740 | | | $ | 200,740 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
John R. Merrill (3) | 2014 | | $ | 79,615 | | | $ | - | | | $ | - | | | $ | - | | | $ | 12,613 | | | $ | 92,228 | |
| Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Bernadette Suckel (4) | 2014 | | $ | 211,048 | | | $ | - | | | $ | - | | | $ | - | | | $ | 15,995 | | | $ | 227,043 | |
Former Managing Director Global Customer Service | 2013 | | $ | 168,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | 8,061 | | | $ | 176,061 | |
| Name and | | Salary | Bonus | Stock Awards | Option Awards | All Other Compensation | Total |
| Principal Position | | ($) | | ($) (1) | ($) (2) | ($) (3) | ($) |
| | | | | | | | |
Guy Dubois (4) | 2017 | - | - | $100,000 | - | - | $100,000 |
| Chairman and Former Chief Executive Officer | 2016 | - | - | $30,000 | $170,182 | - | $200,182 |
| | | | | | | |
Derek Cassell (5) | 2017 | $224,454 | - | $193,846 | - | $351 | $418,651 |
| Chief Executive Officer and Former President | 2016 | $206,076 | - | $42,500 | - | - | $248,576 |
| | | | | | | |
Peter Poli (6) | 2017 | $175,384 | - | - | $134,318 | - | $309,702 |
| Chief Financial Officer | 2016 | - | - | - | - | - | - |
| (1) | Thiscolumn represents the grant date fair value in accordance with ASC 718. These amounts do not represent the actual value that may be realized by the named executive officers. $25,000 of Mr. Dubois’ stock award payment had been accrued, but had not yet been issued as of September 30, 2017. |
| (2) | This column represents the grant date fair value in accordance with ASC 718. Please refer to the section labeled “Stock-Based Compensation” found within Note 2, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed on December 19, 2017 for the relevant assumptions used to determine the compensation cost of our stock option awards. These amounts do not represent the actual value, if any, that may be realized by the named executive officers. |
| (3) | All other compensation includes health club membership for Mr. Cassell. |
| (4) | Mr. Dubois has beenserved as a member of the Executive Committee sincefrom October 2012 to September 2016, and as the Chief Executive Officer from September 2016 to December 2017. He currently serves as the Chairman of the Board of Directors. |
(2)(5) | On January 1, 2018, Mr. Cassell was appointed as the Company’s Chief Executive Officer. Mr. Cassell previously served as the Company’s President from December 19, 2016 to January 1, 2018. |
| (6) | Mr. Olsen servedPoli began serving as our Chief Financial Officer on January 3, 2017 and, as such, did not receive any compensation from January 2010 through April 2014. The total column includes additional compensation for paid-time off, health, dental, life and vision insurance.the Company during fiscal 2016. |
(3) | Mr. Merrill has served as our Chief Financial Officer since April 2014. The total column includes additional compensation for paid-time off, health, dental, life and vision insurance. |
(4) | Mrs. Suckel served as Managing Director of Global Customer Service and Account Management of the Company from June 2008 through June 2014. The total column includes additional compensation for health, dental, life and vision insurance |
Narrative Disclosure to the ExecutiveSummary Compensation Table
Compensation Paid to the Members of theour Chief Executive CommitteeOfficer
Member of the Executive Committee and actingOur former principal executive officer, Guy Dubois, was granted warrants51,746 shares of Common Stock, equal to $300,326$100,000, for his additional work as a director and memberChairman of the Board’s Executive CommitteeBoard of the Company during the fiscal year ended September 30, 2014 consisting2017, $25,000 of warrants to purchase 51,576 shareswhich had been accrued, but had not yet been issued as of common stock at an exercise price of $17.45 per share. These warrants vest in equal monthly increments over a period of oneSeptember 30, 2017. Mr. Dubois did not receive any compensation during the fiscal year or immediately uponended September 30, 2017 for his services as the hiring of a new Chief Executive Officer. These warrants were valued atOfficer of the date of grant using the Black-Scholes model. The Board of Directors has not determined a timeline for the hiring of a new Chief Executive Officer.Company.
Merrill
Poli Employment Agreement
On November 19, 2014,December 12, 2016, the Company entered into a two-yearthree-year employment agreement with John Merrill, our Chief Financial OfficerMr. Poli (the “Merrill PoliEmployment Agreement”). Under the terms and conditions of the MerrillPoli Employment Agreement, Mr. Merrill will receive an annualPoli began receiving a base salary of $180,000equal to $240,000 per annum beginning in January 2017, and is eligiblereceived an option to participate in the Company’s Employee Bonus Plan and 2012 Equity Incentive Award Plan, wherein Mr. Merrill may earn a variable cash bonus and/orpurchase 100,000 shares of the Company’s common stock basedCommon Stock at an exercise price per share equal to the closing price of the Company’s Common Stock on individual performancethe date approved by the Board. One-half of this option vested on January 1, 2018, and achieving specific Company milestones.the remaining one-half is scheduled to vest on January 1, 2019.
Subsequent to the 2017 fiscal year end, an amendment to the Poli Employment Agreement was approved at Board meeting on December 13, 2017. Such amendment was signed on January 3, 2018.Under the terms of the Poli Agreement, as amended (the “Poli Amendment”), effective January 1, 2018, Mr. Merrill is alsoPoli’s employment was extended three years, and shall automatically renew for successive one year periods thereafter unless either party provides the other with notice of its intent not to renew the Poli Agreement at least six months prior to termination. In addition, the Poli Amendment provides: (i) an increase in Mr. Poli’s base salary to $250,000 per year; (ii) the issuance of 150,000 unregistered restricted shares of the Company’s Common Stock, which shall vest annually in increments of 50,000 beginning January 1, 2018; (iii) in the event of a change of control, Mr. Poli shall be entitled to participate in such life insurance, disability, medical, dental, retirement plansa cash payment equal to one year’s salary, plus all restricted stock, warrants and other programs as mayoptions previously issued to Mr. Poli shall become immediately vested and exercisable; and (iv) for purposes of any severance due Mr. Poli upon his involuntary termination, any annual bonus due Mr. Poli shall be made generally available from timedeemed to time bybe vested and earned.
Cassell Employment Agreement
On December 1, 2016, the Company forentered into an employment agreement with Mr. Cassell, which was subsequently amended on February 13, 2017 (the “CassellEmployment Agreement”). Under the benefitterms and conditions of similarly situated employees or its employees generally.the Cassell Employment Agreement, Mr. Cassell receives a base salary equal to $240,000 per annum, and received 60,000 unregistered restricted shares of the Company’s Common Stock. One-half of these shares vested immediately upon issuance, and the remaining one-half is scheduled to vest on March 30, 2018.
Subsequent to the 2017 fiscal year end, a second amendment to the Cassell Employment Agreement was approved at Board meeting held on December 13, 2017. Such amendment was signed on January 4, 2018. Under the terms of the Cassell Agreement, as amended (the “Cassell Amendment”), effective January 1, 2018, Mr. Cassell was promoted from President to CEO of the Company, a position which he shall hold until December 31, 2020, unless earlier terminated or extended. Should Mr. Cassell elect to voluntarily terminate his employment with the Company, he must provide written notice of his intent to do so at least 180 days prior to terminating his employment. In addition, the Cassell Amendment provides: (i) an increase in Mr. Cassell’s base salary to $275,000 per year; (ii) a 50% increase in his annual bonus effective for bonus plan year 2018 and thereafter; (iii) subject to Board approval, the issuance of 300,000 unregistered restricted shares of the Company’s Common Stock, which shall vest annually in increments of 100,000 beginning January 1, 2018; (iv) in the event of a change of control, Mr. Cassell shall be entitled to a cash payment equal to one year’s salary, plus all restricted stock, warrants and options previously issued to Mr. Cassell shall become immediately vested and exercisable; and (v) for purposes of any severance due Mr. Cassell upon his involuntary termination, any annual bonus due Mr. Cassell shall be deemed to be vested and earned.
Outstanding Equity Awards at September 30, 20142017
The following table discloses outstanding stock option awards and warrants held by each of the Named Executive Officers atas of September 30, 20142017:
Outstanding Equity Awards at Fiscal Year-End 2014
2017| Name | | Number of securities underlying unexercised options (#) exercisable | | | Number of securities underlying unexercised options (#) exercisable | | | Equity incentive plan awards: Number of underlying unexercised unearned options (#) | | | Option exercise price ($) | | Option expiration date | | Number of shares or units of stock that have not vested (#) | | | Market value of shares or units of stock that have not vested ($) | | | Equity incentive plan awards: Number of Unearned shares, units or other rights that have not vested (#) | | | Equity incentive plan awards: Market or Payout value of unearned shares, units or other rights that have not vested ($) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Guy Dubois | | | 2,385 | | | | - | | | | - | | | $ | 12.580 | | 3/21/2015 | | | - | | | | - | | | | - | | | | - | |
| | | | 64,665 | | | | - | | | | - | | | $ | 9.000 | | 4/15/2015 | | | - | | | | - | | | | - | | | | - | |
| | | | 4,083 | | | | - | | | | - | | | $ | 14.700 | | 6/30/2015 | | | - | | | | - | | | | - | | | | - | |
| | | | 2,280 | | | | - | | | | - | | | $ | 19.460 | | 9/30/2015 | | | - | | | | - | | | | - | | | | - | |
| | | | 2,344 | | | | - | | | | - | | | $ | 19.290 | | 12/31/2015 | | | - | | | | - | | | | - | | | | - | |
| | | | 2,432 | | | | - | | | | - | | | $ | 18.750 | | 3/31/2016 | | | - | | | | - | | | | - | | | | - | |
| | | | 51,576 | | | | | | | | | | | $ | 17.450 | | 6/2/2016 | | | | | | | | | | | | | | | | |
| | | | 2,647 | | | | | | | | | | | $ | 15.450 | | 6/30/2016 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Chad D. Olsen | | | - | | | | - | | | | - | | | | - | | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| John R. Merrill | | | - | | | | - | | | | - | | | | - | | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Bernadette Suckel | | | - | | | | - | | | | - | | | | - | | | | | - | | | | - | | | | - | | | | - | |
Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Equity incentive plan awards: Number of underlying unexercised unearned options (#) | Option
exercise
price ($)(1) | | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($) | Equity incentive plan awards: Number of Unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: Market or Payout value of unearned shares, units or other rights that have not vested ($) |
| | | | | | | | | | |
| | | | | | | | | | |
| Guy Dubois | 2,385 | - | - | $12.58 | 3/21/2022 | - | - | - | - |
| | 64,665 | - | - | $9.00 | 4/14/2022 | - | - | - | - |
| | 4,083 | - | - | $14.70 | 6/30/2022 | - | - | - | - |
| | 2,280 | - | - | $19.46 | 9/30/2022 | - | - | - | - |
| | 2,344 | - | - | $19.29 | 12/31/2023 | - | - | - | - |
| | 2,432 | - | - | $18.75 | 3/31/2023 | - | - | - | - |
| | 51,576 | - | - | $17.45 | 6/02/2023 | - | - | - | - |
| | 2,647 | - | - | $15.45 | 6/30/2023 | - | - | - | - |
| | 14,988 | - | - | $12.01 | 1/27/2022 | - | - | - | - |
| | 8,868 | - | - | $10.15 | 4/20/2022 | - | - | - | - |
| | 113,310 | - | - | $9.65 | 8/14/2022 | - | - | - | - |
| | 8,571 | - | - | $10.50 | 9/30/2022 | - | - | - | - |
| | 12,676 | - | - | $5.95 | 10/14/2022 | - | - | - | - |
| | 15,126 | - | - | $5.95 | 1/15/2023 | - | - | - | - |
| | 14,286 | - | - | $6.30 | 3/31/2023 | - | - | - | - |
| | 18,000 | - | - | $5.00 | 6/30/2023 | - | - | - | - |
| | | | | | | 11,468(3) | 16,399 | | |
| | | | | | | | | | |
| Peter Poli | 50,000 | 50,000(4) | - | $3.75 | 1/1/2022 | - | - | - | - |
| | | | | | | | | | |
| Derek Cassell | - | - | - | - | - | 30,000(5) | 42,900 | - | - |
| (1) | This table reports the exercise prices of the stock options reported therein as of September 30, 2017. However, on November 30, 2017, the Board of Directors approved of the repricing of all outstanding stock options and warrants currently held by the Company’s officers and directors. As such, all of the stock options reported in this table now have an exercise price of $1.24, the closing price of the Company’s Common Stock as reported by the OTCQX Marketplace on November 30, 2017. |
| (2) | On May 11, 2017, the Board of Directors extended the warrant expiration date of current board members and certain employees by 5 years. The dates included in this table reflect the expiration dates after such extension. |
| (3) | Representsthe number of shares, equaling $25,000, which have not yet been issued to Mr. Dubois for his services on the Board for the quarter ended September 30, 2017. |
| (4) | Such shares are scheduled to vest on January 1, 2019. |
| (5) | Such shares are scheduled to vest on March 30, 2018. |
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires our officers, directors, and persons who beneficially own more than ten percent of our common stock to file reports of ownership and changes in ownership with the SEC. Officers, directors, and greater-than-ten-percent stockholders are also required by the SEC to furnish us with copies of all Section 16(a) forms that they file.DIRECTOR COMPENSATION
Based solely upon a review of these forms that were furnished to us, we believe that all reports required to be filed by these individuals and persons under Section 16(a) were filed during fiscal year 2014 and that such filings were timely except the following:
| · Mr. Klinkhammer, a director, filed one late Form 4 reporting one transaction
|
| · Mr. Schmitt, a director, filed three late Form 4s reporting three transactions
|
| · Mr. Dubois, a director, filed one late Form 4 reporting one transaction
|
| · Mr. Boone, a director, filed one late Form 4 reporting one transaction
|
| · Mr. Mabey, a director, filed two late Form 4s reporting two transactions
|
| · Mr. Kunz, a director, filed two late Form 4s reporting two transactions
|
DIRECTOR COMPENSATION
The table below summarizes the compensation paid by us to our non-employee directors forDuring the fiscal year ended September 30, 2014:
| | | Fees earned | | | Stock awards | | | Option awards | | | Total | |
| Name | | ($)* | | | ($) | | | ($) | | | ($) | |
| | | | | | | | | | | | | |
| Winfried Kunz | | $ | 15,000 | | | $ | 15,000 | | | $ | 15,000 | | | $ | 45,000 | |
| George F. Schmitt | | $ | 15,000 | | | $ | 22,500 | | | $ | 8,991 | | | $ | 46,491 | |
| Rene Klinkhammer | | $ | 15,000 | | | $ | 30,000 | | | $ | - | | | $ | 45,000 | |
| David S. Boone | | $ | 30,000 | | | $ | 30,000 | | | $ | 30,000 | | | $ | 90,000 | |
| Dan L. Mabey | | $ | 15,000 | | | $ | 29,833 | | | $ | - | | | $ | 44,833 | |
| Guy Dubois | | $ | 30,000 | | | $ | - | | | $ | 346,276 | | | $ | 376,276 | |
*Fees earned by2017, each of our non-employee directors will be paidreceived $25,000 per quarter for serving on the Board of Directors, which fees were payable in common stock or options to purchase common stock(i) cash, (ii) Common Stock valued at the option ofcurrent market price at the director. A liability for these fees was included with accrued expenses at September 30, 2014.
From October 2013 through May 2014, we accrued $2,500 per month, which amount was increased to $5,000 per month in June 2014, for each director to be issued in shares of common stock valued on the last date of the quarter. Alternatively, any director may elect to receivegrant, or (iii) warrants with an exercise price at the current market price at the date of grant in the amountgrant; all grants of three times the amount had the director elected to take shares,warrants were valued at the date of grant using the Black-Scholes valuation method. Additionally, the Chairman and Chairmanmethod. For four of the Audit Committee accrue $10,000 per month rather than $5,000. Mr. Dubois becamefive directors, $25,000 of Common Stock and warrant awards had been accrued, but had not yet been issued, as of September 30, 2017.
The members of the Board of Directors are also eligible for reimbursement of their expenses incurred in attending Board meetings in accordance with our policies.
The following table sets forth the compensation awarded to, earned by, or paid to each person who served as a director in December 2012 and our Chairman on February 28, 2013.
during the fiscal year ended September 30, 2017, other than a director who also served as an executive officer:
| | Fees earned | Stock awards | Warrant awards | Cash | Total |
Name (1) | ($) (2) | ($) | ($) | ($) | ($) |
| | | | | | |
| David Boone | $100,000 | $100,000 | - | - | $100,000 |
| Karen Macleod | $100,000 | - | $100,000 | - | $100,000 |
| Dirk van Daele | $100,000 | $75,000 | - | $25,000 | $100,000 |
| Dr. Ray Johnson | $100,000 | - | $100,000 | - | $100,000 |
| Eric Rosenblum | $100,000 | $100,000 | - | - | $100,000 |
| (1) | As discussed above, Messrs. Boone, van Daele, Rosenblum and Johnson resigned from their positions as directors on the Company’s Board of Directors effective May 31, 2018. Additionally, Mr. Sehnaoui was appointed to serve as a director on the Board on February 7, 2018. |
| (2) | Fees earned by our non-employee directors were paid in cash, Common Stock or warrants at the option of the director. A liability of $100,000 for certain of these fees, which have not yet been issued, was included in the Company’s accrued expenses at September 30, 2017. |
The following table lists the warrants to purchase shares of common stockCommon Stock held by each of our non-employee directors as of December 12, 2014:
| | Grant | | Expiration | | Exercise | | | Number of | | | Compensation | |
| Name | Date | | Date | | Price | | | Options | | | Expense | |
| | | | | | | | | | | | | |
| Winfried Kunz | 3/22/13 | | 3/21/15 | | $ | 12.58 | | | | 8,943 | | | $ | 43,809 | |
| | 7/1/13 | | 6/30/15 | | $ | 14.70 | | | | 2,040 | | | $ | 11,811 | |
| | 10/1/13 | | 9/30/15 | | $ | 19.46 | | | | 1,140 | | | $ | 8,991 | |
| | 1/2/14 | | 12/31/15 | | $ | 19.29 | | | | 1,172 | | | $ | 6,007 | |
| | | | | | | | | | | | | | | | |
| George F. Schmitt | 3/22/13 | | 3/21/15 | | $ | 12.58 | | | | 8,943 | | | $ | 43,809 | |
| | 7/1/13 | | 6/30/15 | | $ | 14.70 | | | | 2,040 | | | $ | 11,811 | |
| | 10/1/13 | | 9/30/15 | | $ | 19.46 | | | | 1,140 | | | $ | 8,991 | |
| | | | | | | | | | | | | | | | |
| Guy Dubois | 3/22/13 | | 3/21/15 | | $ | 12.58 | | | | 2,385 | | | $ | 11,682 | |
| | 4/16/13 | | 4/15/15 | | $ | 9.00 | | | | 64,665 | | | $ | 285,003 | |
| | 7/1/13 | | 6/30/15 | | $ | 14.70 | | | | 4,083 | | | $ | 23,640 | |
| | 10/1/13 | | 9/30/15 | | $ | 19.46 | | | | 2,280 | | | $ | 17,982 | |
| | 1/2/14 | | 12/31/15 | | $ | 19.29 | | | | 2,344 | | | $ | 12,014 | |
| | 4/1/14 | | 3/31/16 | | $ | 18.75 | | | | 2,432 | | | $ | 8,684 | |
| | 6/3/14 | | 6/2/16 | | $ | 17.45 | | | | 51,576 | | | $ | 300,326 | |
| | 7/1/14 | | 6/30/16 | | $ | 15.45 | | | | 2,647 | | | $ | 7,270 | |
| | | | | | | | | | | | | | | | |
| David S. Boone | 3/22/13 | | 3/21/15 | | $ | 12.58 | | | | 8,943 | | | $ | 43,809 | |
| | 7/1/13 | | 6/30/15 | | $ | 14.70 | | | | 4,083 | | | $ | 23,640 | |
| | 10/1/13 | | 9/30/15 | | $ | 19.46 | | | | 2,280 | | | $ | 17,982 | |
| | 1/2/14 | | 12/31/15 | | $ | 19.29 | | | | 2,344 | | | $ | 12,014 | |
| | | | | | | | | | | | | | | | |
| Dan L. Mabey | 3/22/13 | | 3/21/15 | | $ | 12.58 | | | | 8,943 | | | $ | 43,809 | |
| | | | | | | | | | | | | | | | |
| Rene Klinkhammer | 1/20/10 | | 1/19/15 | | $ | 26.00 | | | | 1,000 | | | $ | 21,036 | |
| | 3/22/13 | | 3/21/15 | | $ | 12.58 | | | | 8,943 | | | $ | 43,809 | |
| | 7/1/13 | | 6/30/15 | | $ | 14.70 | | | | 2,040 | | | $ | 11,811 | |
January 16, 2018, all of which were granted in connection with their services as directors:
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT| | Grant | Expiration | | | |
| | | | | |
| | | | | | |
| David S. Boone | 3/22/13 | 3/21/22 | $1.24 | 8,943 | $62,580 |
| 7/1/13 | 6/30/22 | $1.24 | 4,083 | $32,275 |
| 10/1/13 | 9/30/22 | $1.24 | 2,280 | $22,775 |
| 1/2/14 | 12/31/23 | $1.24 | 2,344 | $16,305 |
| 10/15/15 | 10/14/22 | $1.24 | 12,676 | $50,943 |
| 1/15/16 | 1/15/23 | $1.24 | 15,126 | $73,039 |
| 7/1/16 | 6/30/23 | $1.24 | 18,000 | $80,310 |
| Karen Macleod | 7/1/16 | 6/30/23 | $1.24 | 9,000 | $37,154 |
| 9/30/16 | 9/30/21 | $1.15 | 3,529 | $15,000 |
| 10/1/16 | 9/30/21 | $1.15 | 5,882 | $25,000 |
| 1/1/17 | 12/31/21 | $1.15 | 9,191 | $25,000 |
| 4/1/17 | 3/31/22 | $1.15 | 12,195 | $25,000 |
7/1/17(3) | 6/30/22 | $1.15 | 13,812 | $25,000 |
10/1/17(3) | 9/30/22 | $1.15 | 21,008 | $25,000 |
1/1/18(3) | 12/31/22 | $1.05 | 33,784 | $25,000 |
| | | | |
| Dirk van Daele | 10/15/15 | 10/14/22 | $1.24 | 6,338 | $29,690 |
| 1/15/16 | 1/15/23 | $1.24 | 7,563 | $36,520 |
| 7/1/16 | 6/30/23 | $1.24 | 9,000 | $40,155 |
| | | | |
| Dr. Ray Johnson | 10/1/16 | 9/30/21 | $1.24 | 5,882 | $32,904 |
| 1/1/17 | 12/31/21 | $1.24 | 9,191 | $34,454 |
| 4/1/17 | 3/31/22 | $1.24 | 12,195 | $25,744 |
| 7/1/17 | 6/30/22 | $1.24 | 13,812 | $25,554 |
| 10/1/17 | 9/30/22 | $1.24 | 21,008 | $25,000 |
| 1/1/2018 | 12/31/22 | $1.05 | 33,784 | $25,000 |
The following table presents information regarding beneficial ownership as of March 30, 2015 (the “Table Date”), of our common stock by (i) each shareholder known| (1) | Reflects the expiration dates following the expiration date modification of the warrants reported herein, as approved by the Board of Directors on May 11, 2017. |
| (2) | Reflects the exercise prices following the repricing of the warrants reported herein, as approved by the Board of Directors on November 30, 2017 and January 26, 2018. |
| (3) | On January 26, 2018, at the request of Ms. Macleod, these warrants were exchanged for an aggregate amount of 52,761 share of Common Stock. |
*Compensation paid to us to beMr. Dubois, the beneficial owner of more than five percent of our common stock; (ii) each of our NamedCompany’s former Chief Executive Officers serving asOfficer and current Chairman of the Board of Directors, during the year ended September 30, 2017 is reflected in the Executive Compensation Table Date; (iii) each of our directors serving as of the Table Date; and (iv) all of our executive officers and directors as a group.above.
We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and dispositive power with respect to all securities they beneficially own. The applicable percentage ownership is based on 10,150,167 shares of common stock issued and outstanding as of the Table Date.
Beneficial ownership representing less than one percent of the issued and outstanding shares of a class is denoted with an asterisk (“*”). Holders of common stock are entitled to one vote per share.Securities Authorized for Issuance Under Equity Compensation Plans
| Name and Address of | | Common Stock | |
Beneficial Owner (1) | | Shares | | | % | |
| | | | | | | |
| 5% Beneficial Owners: | | | | | | |
Sapinda Asia Limited (2) | | | 5,127,853 | | | | 51 | % |
Safety Invest S.A., Compartment Secure I (3) | | | 1,890,697 | | | | 19 | % |
| | | | | | | | | |
| Directors and Named Executive Officers: | | | | | | | | |
David S. Boone (4) | | | 24,339 | | | | * | |
Guy Dubois (5) | | | 147,400 | | | | 1 | % |
Rene Klinkhammer (6) | | | 17,098 | | | | * | |
Winfried Kunz (7) | | | 15,793 | | | | * | |
Dan Mabey (8) | | | 16,436 | | | | * | |
George F. Schmitt (9) | | | 24,641 | | | | * | |
| John R. Merrill | | | - | | | | * | |
| | | | | | | | | |
All directors and executive officers as a group (7 persons) | | | 245,707 | | | | 2 | % |
| Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
| | | | |
| Equity compensation plans approved by security holders | 488,011 | $8.51 | 38,292 |
| | | | |
| Equity compensation plans not approved by security holders | 59,684(1) | - | - |
| | | | |
| Total | 547,695 | $8.51 | 38,292 |
| (1) | Except as otherwise indicated, the business address for these beneficial owners is c/o the Company, 405 South Main Street, Suite 700, Salt Lake City, Utah 84111.This excludes 966,691 warrants and shares of Common Stock awarded subsequent to September 30, 2017, 906,092 of which warrants and shares were issued on May 1, 2018. |
(2) | Address is Rooms 803-4, 8F, Hang Seng Bank Building, 200 Hennessy Road, Wanchai, Hong Kong. Based on a Form 4 filed by Sapinda Asia Limited on November 5, 2013. |
Compensation Risks Assessment
(3) | Secure I is a compartment of Safety Invest S.A. (“Safety”), a company established under the Luxembourg Securitization Law and incorporated as a “société anonyme” under the laws of the Grand Duchy of Luxembourg whose principal business is to enter into one or more securitization transactions.
|
(4) | Mr. Boone is a director and a member of the Board of Directors’ executive committee. Includes 6,689 shares of common stock owned of record and 17,650 shares of common stock issuable upon exercise of stock purchase warrants. |
(5) | Mr. Dubois is a director and Chairman of the Board of Directors; he is also a member of the executive committee of the Board of Directors. Includes 147,400 shares of common stock issuable upon exercise of stock purchase warrants. |
(6) | Mr. Klinkhammer is a director. Includes 6,115 shares of common stock owned of record and 10,983 shares of common stock issuable upon exercise of stock purchase warrants. |
| |
(7) | Mr. Kunz is a director. Includes 2,498 shares of common stock owned of record and 13,295 shares of common stock issuable upon exercise of stock purchase warrants. |
| |
(8) | Mr. Mabey is a director. Includes 7,493 shares of common stock owned of record and 8,943 shares of common stock issuable upon exercise of stock purchase warrants. |
| |
(9) | Mr. Schmitt is a director. Includes 12,518 shares of common stock owned of record and 12,123 shares of common stock issuable upon exercise of stock purchase warrants. |
As required by rules adopted by the SEC, management has made an assessment of our compensation policies and practices with respect to all employees to determine whether risks arising from those policies and practices are reasonably likely to have a material adverse effect on us. In doing so, management considered various features and elements of the compensation policies and practices that discourage excessive or unnecessary risk taking. As a result of the assessment, we have determined that our compensation policies and practices do not create risks that are reasonably likely to have material adverse effects.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Royalty Agreement
Related-Party Loan AgreementsAmended and Restated Facility Agreement and Debt Exchange Agreement with Conrent Invest, S.A. On August 4, 2011, with an effective date of July 1, 2011, we14, 2015, the Company entered into an agreementAmended and Restated Facility Agreement (the “RoyaltyAmended Facility Agreement”) with Borinquen Container Corp.Conrent Invest S.A., a corporation organizedpublic limited liability company incorporated under the laws of the CommonwealthGrand Duchy of Puerto RicoLuxembourg (“BorinquenConrent”), pursuant to purchase Borinquen’s wholly-owned subsidiary, International Surveillance Services Corporation, a Puerto Rico corporation (“ISS”) in consideration of 310,000 shares of our common stock, valued at the market price on the date of the Royalty Agreement at $16.40 per share, or $5,084,000. We also agreed to pay to Borinquen quarterly royalty payments in an amount equal to 20% of our net revenues from the sale or lease of our monitoring devices and monitoring services within a territory comprised of South and Central America, the Caribbean, Spain and Portugal, for a term of 20 years. On February 1, 2013, we redeemed and terminated this royalty obligation in February 2013 for a total cost of $13.0 million using the proceeds of a $16.7 million loan from a related party, Sapinda Asia Limited (“Sapinda Asia”). In addition to the $13.0 million used to terminate the Royalty Agreement, we used the remaining $3.7 million as operating capital during the 2013 fiscal year. On September 30, 2013, Sapinda Asia converted all outstanding principal and interest under the loan, totaling $17,576,627, into 3,905,917 shares of common stock at a rate of $4.50 per share.
On February 1, 2013, the Company entered into a revolving loan agreement with Sapinda Asia (the “Revolving Loan”). Under this arrangement,which the Company may borrow up to $1,200,000 at an interest rate$29.4 million of 3% per annum for unused funds and 10% per annum for borrowed funds. On October 24, 2013, the Company drew down the full $1,200,000 for use in a performance bond as required under a contract with an international customer. The loan initially matured in June 2014. However, the maturity date of the note was extended and now matures in December 2015.
Related-Party Promissory Note
On November 19, 2013, the Company borrowed $1,500,000 from Sapinda Asia. The unsecured note bearsdebt, which accrues interest at a rate of 8% per annum and initially maturedmatures on July 31, 2018. The Amended Facility Agreement also provides the Company with a voluntary prepayment option, wherein the Company may pay the amounts borrowed under the debt facility, including all accrued but unpaid interest, prior to the maturity date without any penalty or prepayment fee.
On October 9, 2017, the Company entered into a Debt Exchange Agreement with Conrent regarding total debt and unpaid interest of approximately $34.7 million due under the Amended Facility Agreement as of October 31, 2017 (the “Debt”) (the “Debt Exchange”). The Debt Exchange called for the Company to exchange newly issued shares of preferred stock for the entire Debt subject to approval by the investors who purchased securities from Conrent to finance the Debt (the “Noteholders”). On November 18, 2014. However,2, 2017, Conrent convened a meeting of the Noteholders to approve the Debt Exchange; however, the quorum required to approve the Debt Exchange was not achieved.
On February 26, 2018, the Company proposed that the maturity date of the note wasAmended Facility Agreement be extended from July 31, 2018 to November 19, 2015. AsApril 1, 2019. On April 26, 2018, the Noteholders approved the extension of September 30, 2014,the Facility Agreement from July 31, 2018 to April 1, 2019, subject to the satisfaction of certain conditions (the “Debt Extension”). On June 14, 2018, the Company owed $1,500,000received a letter from Conrent acknowledging that certain conditions had been met, and indicating that Conrent would proceed with the Debt Extension.Management is currently negotiating with Conrent regarding the terms of principala debt extension agreement with the objective of reaching an agreement acceptable to both Conrent and $43,726 of accrued interestthe Noteholders before the Debt matures on the note.July 31, 2018.
Related-Party Service Agreement
During the fiscal year ended September 30, 2013,Conrent Loan Agreement. On May 1, 2016, the Company entered into an unsecured Loan Agreement with Conrent, acting with respect to its Compartment Safety III (the “Conrent Loan Agreement”). Pursuant to its terms, available borrowing capacity under the Conrent Loan Agreement was $5.0 million; however, due to the failure of the lender to satisfy certain conditions precedent to its obligation to fund, the Company had not received funds under the Conrent Loan Agreement as of July 13, 2018, and no proceeds thereunder are anticipated.
Sapinda Loan Agreement. On September 25, 2015, the Company entered into a loan agreement with Paranet Solutions, LLCone of the Company’s related parties, Sapinda Asia Limited (“Sapinda”), to provide the following primary services: (i) procurementCompany with a $5.0 million line of hardwarecredit that accrues interest at a rate of 3% per annum for undrawn funds and software necessary8% per annum for borrowed funds (the “Sapinda Loan Agreement”). Pursuant to ensure that vital databases arethe terms and conditions of the Sapinda Loan Agreement, available infunds could be drawn down at the event of a disaster (backupCompany’s request at any time until the loan agreement matured on September 30, 2017, when all borrowed funds, plus all accrued but unpaid interest became due and disaster recovery system);payable.
On March 13, 2017, the Company and (ii) providing Sapinda entered into an agreement to amend the securitySapinda Loan Agreement (“Amendment Number One”). Amendment Number One extends the maturity date of all dataloans made pursuant to the Sapinda Loan Agreement to September 30, 2020. In addition, we began accruing penalties because Sapinda had not funded the remaining amount of approximately $1.5 million available on the loan on or before March 31, 2017. The penalties totaled approximately $469,000 as of July 13, 2018, and the integrity of such data against all loss of data, misappropriation of data by Paranet, its employees and affiliates. David S. Boone, a director and member ofdaily penalties currently exceed the Company’s Executive Committee, wasdaily interest due Sapinda.Further advances under the Chief Executive Officer of Paranet until August 2014.
Loan Agreement are not currently expected to be forthcoming.As consideration for these services, the Company agreed to pay Paranet $4,500 per month, and during the year ended September 30, 2014 the Company paid $461,223 to Paranet. The arrangement can be terminated by either party for any reason upon ninety (90) days written notice to the other party.
Facility AgreementStock Payable – Related Party
On January 3,In connection with certain acquisitions during fiscal 2014 we entered into an unsecured Facility Agreement with Tetra House Pte. Ltd.,and 2015, the Company recognized a related-party entity, controlled by our Chairman, Guy Dubois. Under this agreement, we may borrow upliability for stock payable to $25,000,000 for working capital and acquisitions purposes. The loan bears interest at a rate of 8% per annum, payable in arrears semi-annually, with all principal and accrued and unpaid interest due on January 3, 2016. In addition, we agreed to pay Tetra House an arrangement fee equal to 3%the sellers of the aggregate maximum amount underentities acquired. In conjunction with the loan. On January 14, 2014 Tetra House assigned the Facility Agreement to Conrent Invest S.A. Since January 3, 2014, we have borrowed $25,000,000 under the Facility Agreement. The borrowed funds have been used for acquisitions and for general corporate purposes. The Facility Agreement was reviewed and approved by disinterested and independent membersrespective purchase agreements, shares of the BoardCompany’s stock were payable during the years ended September 30, 2017 and 2016 based on the achievement of Directors, David S. Boone, Winfried Kunz, Dan L. Mabey and George F. Schmitt.
certain milestones. Changes in the stock payable liability are shown below:| | | |
| Beginning balance | $3,289,879 | $3,501,410 |
| Payment of shares for achieving performance milestones | (75,939) | (211,531) |
| Adjustment to Track Group Analytics stock payable | (213,940) | - |
| Adjustment to GPS Global stock payable | (3,000,000) | - |
| Ending balance | - | $3,289,879 |
Additional Related-Party Transactions and Summary of All Related-Party Obligations
| | | |
| Related party loan with an interest rate of 3% and 8% per annum for undrawn and borrowed funds, respectively. Principal and interest due September 30, 2020. | $3,399,644 | $3,399,644 |
| Total related-party debt obligations | $3,399,644 | $3,399,644 |
| | | 2014 | | | 2013 | |
| | | | | | | |
Loan from a significant shareholder with an interest rate of 8% per annum. Principal and interest due at maturity on December 30, 2015. | | $ | 1,200,000 | | | $ | - | |
| | | | | | | | | |
Promissory note with a significant shareholder with an interest rate of 8% per annum. Principal and interest due at maturity on November 19, 2015. | | | 1,500,000 | | | | - | |
| | | | | | | | | |
Convertible debenture of $16,700,000 from a significant shareholder with an interest rate of 8% per annum. On September 30, 2013, $16,640,000 plus accrued interest of | | | - | | | | 60,000 | |
| | | | | | | | | |
| Total related-party debt obligations | | | 2,700,000 | | | | 60,000 | |
| Less current portion | | | - | | | | (60,000 | ) |
| Long-term debt, net of current portion | | $ | 2,700,000 | | | $ | - | |
Each of the foregoing related-party transactions was reviewed and approved by those disinterested and independent members of the Company’s Board of Directors who served at the time of the foregoing transactions.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our officers, directors, and persons who beneficially own more than ten percent of our Common Stock to file reports of ownership and changes in ownership with the SEC. Officers, directors, and greater-than-ten-percent stockholders are also required by the SEC to furnish us with copies of all Section 16(a) forms that they file.
Based solely upon a review of these forms that were furnished to us, we believe that all reports required to be filed by these individuals and persons under Section 16(a) were filed during the year ended September 30, 2017 and that such filings were timely except the following:
| ● | Mr. Poli, our Chief Financial Officer, filed a Form 4 reporting one late transaction; |
| ● | Mr. Boone, a member of our Board of Directors during the year ended September 30, 2017, filed a Form 4 reporting four late transactions; and |
| ● | Mr. van Daele, a member of our Board of Directors during the year ended September 30, 2017, filed a Form 4 reporting one late transaction. |
BENEFICIAL OWNERSHIP OF EQUITY SECURITIES
Security Ownership of Certain Beneficial Owners
The following table presents information regarding beneficial ownership as of July 12, 2018 (the “Table Date”), of our Common Stock by (i) each stockholder known to us to be the beneficial owner of more than five percent of our Common Stock; (ii) each of our Named Executive Officers serving as of the Table Date; (iii) each of our directors serving as of the Table Date; and (iv) all of our executive officers and directors as a group.
We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and dispositive power with respect to all securities they beneficially own. As of the Table Date, the applicable percentage ownership is based on 11,401,650 shares of Common Stock issued and outstanding.
Beneficial ownership representing less than one percent of the issued and outstanding shares of a class is denoted with an asterisk (*). Holders of common stock are entitled to one vote per share.
| Name and Address of | |
| | |
ETS Limited (2) | 4,871,745 | 42.7% |
Safety Invest S.A., Compartment Secure I (3) | 1,740,697 | 15.3% |
Advance Technology Investors LLC (4) | 540,865 | 4.8% |
| | | |
| Directors and Named Executive Officers: | | |
Guy Dubois (5) | 653,568 | 5.4% |
Peter Poli (6) | 183,640 | 1.6% |
Derek Cassell (7) | 317,209 | 2.8% |
Karen Macleod (8) | 94,939 | * |
Karim Sehnaoui (9) | 14,021 | * |
All directors and executive officers as a group (6 persons) | 1,263,377 | 9.8% |
| (1) | Except as otherwise indicated, the business address for these beneficial owners is c/o the Company, 200 E. 5th Avenue, Suite 100, Naperville, Illinois 60563. |
| (2) | Address is c/o Mourant Ozannes Corporate Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, PO Box 1348, Grand Cayman KY1-1108, Cayman Islands. Holding information is based on Amendment No. 2 to Schedule 13D filed by ADS Securities LLC on February 9, 2018. |
| (3) | Secure I is a compartment of Safety Invest S.A. (“Safety”), a company established under the Luxembourg Securitization Law and incorporated as a “société anonyme” under the laws of the Grand Duchy of Luxembourg whose principal business is to enter into one or more securitization transactions. Holding information is based on the Company records. |
| (4) | Address is 154 Rock Hill Road, Spring Valley, New York 10977. Holding information is based on Company records. |
| (5) | Holdings consist of 315,331 shares of Common Stock owned of record and 338,237 shares of Common Stock issuable upon exercise of stock purchase warrants, exercisable within 60 days of July 12, 2018. |
| (6) | Holdings consist of 133,640 shares of Common Stock and 50,000 shares of Common Stock issuable upon exercise of stock purchase warrants, exercisable within 60 days of July 12, 2018. |
| (7) | Holdings include 317,209 shares of Common Stock owned of record. |
| (8) | Holdings includes 55,142 shares of Common Stock owned of record and 39,797 shares of Common Stock issuable upon exercise of stock purchase warrants, exercisable within 60 days of July 12, 2018. |
| (9) | Holdings include 14,021 shares of Common Stock owned of record. |
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other information with the SEC. The periodic reports and other information we have filed with the SEC, may be inspected and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington DC 20549. You may obtain information as to the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a Web site that contains reports, proxy statements and other information about issuers, like the Company, who file electronically with the SEC. The address of that site is www.sec.gov. Copies of these documents may also be obtained by writing our secretary at the address specified above.
STOCKHOLDER PROPOSALS FOR THE 20152019 ANNUAL MEETING
StockholderPursuant to Rule 14a-8 under the Exchange Act, stockholder proposals that are intended to be presented by stockholders at the Company’s 2016 Annual Meeting of Stockholdersincluded in our next proxy statement must be received by the Secretary of the Companyus at our principal executive offices no later than December 12, 201590 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting, or in order that they may be included, if appropriate, inthis case, the Company’s proxy statement and formfirst anniversary of proxy relating to that meeting.the date of mailing of this Consent Solicitation Statement. A stockholder proposal not included in the Company’s proxy statement for the 2016 Annual Meeting2019 annual meeting of Stockholdersstockholders will be ineligible for presentation at the meeting unless the stockholder gives timely notice of the proposal in writing to the Secretary of the Company at the principal executive offices of the Company and otherwise complies with the provisions of the Company’s Bylaws. To be timely, the Bylaws provide that the Company must have received the stockholder’s notice not less than 90 days nor more than 120 days in advance of the date the proxy statement was releasedthat this Consent Solicitation Statement is first mailed to stockholders in connection with the previous year’s annual meeting of stockholders. However, ifin the event that the date of the 2016 Annual Meeting2019 annual meeting of Stockholdersstockholders is changedadvanced or delayed by more than 30thirty (30) days from the first anniversary of the date that this Consent Solicitation Statement is first mailed to stockholders, a timely notice by the stockholder must be delivered no earlier than 120 days prior to the first anniversary of the notice of mailing of this year’s Annual Meeting, the Company must receive the stockholder’s notice noConsent Solicitation Statement and not later than the close of business on the later of (i) the 90th day prior to such annual meeting andthe date of mailing of this Consent Solicitation Statement or (ii) the seventhtenth day following the day on which public announcement of the date of suchmailing of the notice for the 2019 annual meeting of stockholders is first made. The Company reserves the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements.
PAYMENTDISTRIBUTION AND COSTS AND HOUSEHOLDING OF COSTSSOLICITATION MATERIALS
The expenseWe will pay the cost of preparing, printing and mailing proxy materialsdistributing this Consent Solicitation Statement and the solicitation of proxies will be borne by the Company. In addition to the solicitation of proxies by mail, solicitation may be made by proxy solicitors, directors, officers and other employees of the Company by personal interview, telephone, facsimile or other means. No additional compensation will be paid to directors, officers or employees of the Company for such solicitation. The Company will reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation materials to beneficial owners of the common stock.
HOUSEHOLDING OF PROXY MATERIALSaccompanying Annual Report.
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxyconsent solicitation statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxyconsent solicitation statement and annual report addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
A number of brokers with account holders who are stockholders of the Company will be “householding” the Company’s proxyconsent solicitation materials. A single set of the Company’s proxyconsent solicitation materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate set of the Company’s proxyconsent solicitation materials, please notify your broker or direct a written request to the Company, Attn: Investor Relations Department, 405 South Main Street,200 E. 5thAvenue, Suite 700, Salt Lake City, Utah 84111,100, Naperville, Illinois 60563, or by calling (801) 451-6141.(877) 260-2010. The Company undertakes to deliver promptly, upon any such oral or written request, a separate copy of its proxyconsent solicitation materials to a stockholder at a shared address to which a single copy of these documents was delivered. Stockholders who currently receive multiple copies of the Company’s proxyconsent solicitation materials at their address and would like to request “householding” of their communications should contact their broker, bank or other nominee, or contact the Company at the above address or phone number.
OTHER MATTERSTRACK GROUP, INC.
WRITTEN CONSENT SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF TRACK GROUP, INC.
The Company knowsundersigned hereby acknowledges receipt of no other business that will be presented ata copy of the accompanying Notice of Consent Solicitation Statement, the Consent Solicitation Statement and the Annual Meeting. IfReport on Form 10-K for the year ended September 30, 2017 of Track Group, Inc. (the “Company”) dated July 13, 2018 and hereby revokes any other businessconsent or consents heretofore given. This consent may be revoked at any time before 5:00 p.m. (Central Time), on August 13, 2018, unless the solicitation period is properly brought before the Annual Meeting, it is intended that proxies solicitedshortened or extended by this Proxy Statement, if validly signed, dated and returned to the Company will be voted in accordance with the judgmentits sole discretion (“Expiration Date”). The undersigned, as holder of shares of the persons holdingCompany’s common stock, par value $0.0001 per share (“Common Stock”), hereby takes the proxies.
Whetherfollowing actions without an annual meeting of stockholders, pursuant to Sections 211 and 228 of the Delaware General Corporations Code, with respect to all shares of Common Stock held by him, her or not you intend to be present at the Annual Meeting, the Company urges you to return your signed proxy promptly.it as follows:
| | [X] Please mark your votes as indicated in this example. |
| | | |
| | | By Order of the Board of Directors |
April 9, 2015
| | | | | | CONSENT (FOR) | | CONSENT WITHELD (AGAINST) | | ABSTAIN | |
| | | Guy DuboisAPPROVAL OF THE ELECTION OF THE FOLLOWING INDIVIDUALS AS MEMBERS OF OUR BOARD OF DIRECTORS, TO SERVE UNTIL THE NEXT ANNUAL MEETING OF STOCKHOLDERS OR UNTIL THEIR RESPECTIVE SUCCESSORS ARE ELECTED AND QUALIFIED, OR UNTIL THEIR EARLIER RESIGNATION OR REMOVAL: | | | | | | | | | | | |
| | | Executive Committee Member, Acting Chief Executive Officer Guy Dubois | | | | | | [ ] | | [ ] | | [ ] | |
| | Karen Macleod | | | | | | [ ] | | [ ] | | [ ] | |
| | Karim Sehnaoui | | | | | | [ ] | | [ ] | | [ ] | |
| | | | | | | | | | | | | |
| | APPROVAL OF THE RATIFICATION OF THE APPOINTMENT OF EIDE BAILLY, LLP TO SERVE AS THE COMPANY’S REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDED SEPTEMBER 30, 2018 | | | | | | [ ] | | [ ] | | [ ] | |
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This Written Consent, when properly executed and returned to the Company, will be voted in the manner directed herein by the undersigned. IF NO DIRECTION IS MADE FOR THE PROPOSAL, THIS CONSENT, IF SO EXECUTED AND RETURNED, WILL BE VOTED FOR THE PROPOSAL. When shares of Common Stock are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, give full legal title as such. If a corporation, sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. ALL CONSENTS MUST BE RECEIVED BY 5:00 P.M. CENTRAL TIME, ON THE EXPIRATION DATE. | | IMPORTANT: This Consent Card must be signed exactly as your name appears hereon. If more than one name appears, all persons so designated should sign. Attorneys, executors, administrators, trustees and guardians should indicate their capacities. If the signer is a corporation, please print full corporate name and indicate capacity of duly authorized officer executing on behalf of the corporation. If the signer is a partnership, please print full partnership name and indicate capacity of duly authorized person executing on behalf of the partnership. Dated: ________________________, ______ |
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| (Print Name of Stockholder) |
|
| (Signature of Stockholder) |
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| (Second Signature if held jointly) |
The Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2014 has been mailed with this Proxy Statement. The Company will provide copies of exhibits to that report, but will charge a reasonable fee per page to any requesting stockholder. Any such request should be addressed to the Company at 405 South Main Street, Suite 700, Salt Lake City, Utah 84111, Attention: Investor Relations Department. The request must include a representation by the stockholder that as of April 2, 2015 the stockholder was entitled to vote at the Annual Meeting.IMPORTANT: PLEASE COMPLETE, SIGN, AND DATE YOUR WRITTEN CONSENT PROMPTLY
Copies of the Annual Report on Form 10-K and the exhibits thereto may also be obtained through the SEC’s web site at www.sec.gov and at: www.astproxyportal.com/ast/18188. RETURN IT IN THE ENVELOPE PROVIDED TO:
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SECUREALERT, INC.
SecureAlert, Inc. (the “Corporation”), does hereby amend and restate its Articles of Incorporation, as amended, in their entirety in accordance with the Utah Revised Business Corporation Act, as amended, (the “Act”), and certifies as follows:
ARTICLE I
NAME
The name of the Corporation is Track Group, Inc.
Attn: Corporate Secretary
ARTICLE II200 E. 5thAvenue, Suite 100
PURPOSES AND POWERS
The Corporation is organized to engage in any and all lawful acts, activities and pursuits for which corporations may presently or hereafter be organized under the Act. The Corporation shall have all powers allowed by law, including, without limitation, those powers described in Section 16-10a-302 of the Act.Naperville, Illinois 60563
ARTICLE III
AUTHORIZED SHARES
The Corporation is authorizedYour executed written consent can also be sent via email in PDF form to issue two classes of shares to be designated, respectively, the “Common Stock” and the “Preferred Stock.” The total number of shares of Common Stock authorized to be issued is fifteen million (15,000,000) and the total number of shares of Preferred Stock authorized to be issued is twenty million (20,000,000). The Common Stock and the Preferred Stock shall each have a par value of $0.0001 per share.peter.poli@trackgrp.com.
Each outstanding share of the Common Stock and Preferred Stock of the Corporation held prior to the filing of these Amended and Restated Articles of Incorporation (the “Restated Articles”) shall immediately after such filing represent that same number of shares of Common Stock or Preferred Stock respectively. These Restated Articles do not provide for an exchange, reclassification, or cancellation of issued shares of the Corporation.
The Corporation’s previously authorized and designated Series A, Series B, Series C and Series D Convertible Preferred Stock have been redeemed, converted, and/or cancelled and such Convertible Preferred Stock Designations are of no further effect and no longer valid or existing as of the adoption and filing of these Restated Articles.
ARTICLE IV
REGISTERED OFFICE AND AGENT
The address of the registered office of the Corporation in the State of Utah is 111 East Broadway, Suite 900, Salt Lake City, UT 84111. The name of its registered agent at such address is DJP Corporate Services Salt Lake.
ARTICLE V
LIMITATION ON LIABILITY
Within the meaning of and in accordance with Section 16-10a-841 of the Act:
A. No director of the Corporation shallYour written consent should be personally liable to the Corporation or its shareholders for monetary damages for any action taken or any failure to take any action as a director, except as provided in this ARTICLE V.
B. The limitation of liability contemplated in this ARTICLE V shall not extend to (a) the amount of a financial benefit received by a director to which hethe Company on or she is not entitled, (b) an intentional infliction of harm on the Corporation or its shareholders, (c) a violation of Section 16-10a-842 of the Act, or (d) an intentional violation of criminal law.before August 13, 2018.
C. Any repeal or modification of this ARTICLE V by the shareholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.
D. Without limitation, this ARTICLE V shall be applied and interpreted, and shall be deemed to incorporate, any provision of the Act, as the same exists on the date hereof or may hereafter be amended, as well as any applicable interpretation of Utah law, so that personal liability of directors and officers of the Corporation to the Corporation or its shareholders, or to any third person, shall be eliminated or limited to the fullest extent as from time to time permitted by Utah law.
ARTICLE VI
ADOPTION OF ARTICLES
The foregoing Restated Articles were duly approved by all of the Board of Directors of the Corporation at a meeting of the Board of Directors on ______________, 2015, and by a majority vote at a meeting the Shareholders of all issued and outstanding voting securities the Corporation on May 19, 2015, in conformity with the requirements of the Act and the Bylaws of the Corporation. At the time of the adoption of the foregoing Restated Articles, the Corporation had one class of stock outstanding, designated as Common Stock and _______________ (_________) Common Stock shares were issued and outstanding, all of which were entitled to vote thereon. The number of shares of Common Stock that voted to approve the foregoing Restated Articles was ____________, or ____% of the issued and outstanding shares, which is sufficient for the approval of the foregoing Restated Articles.
IN WITNESS WHEREOF, these Amended and Restated Articles of Incorporation are executed as of the ___ day of ______________, 2015.
TRACK GROUP, INC.
| | By: ________________________________ |
| Name: ______________________________ |
| Title: _______________________________ |
