UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) ofPROXY STATEMENT PURSUANT TO SECTION 14(A) OF
the Securities Exchange Act ofTHE SECURITIES EXCHANGE ACT OF 1934
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| [ ] | Soliciting Material Pursuant to §240.14a-12 |
Track Group, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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1215 W. Lakeview Court
Romeoville, Illinois 60446
(877) 260-2010
January 10, 2017
Dear Stockholders:
You are cordially invited to attend the 2017 Annual Meeting of Stockholders of Track Group (the “Annual Meeting”), which will be held at our corporate offices located at 1215 W. Lakeview Court, Romeoville, Illinois, on February 14, 2017 at 10:00 A.M., local time.
Details of the business to be conducted at the Annual Meeting are described in the attached Notice of Annual Meeting and this Proxy Statement. We have also made available a copy of our Annual Report on Form 10-K for the year ended September 30, 2016 (“Annual Report”) along with this Proxy Statement. We encourage you to read our Annual Report. It includes our audited financial statements and provides information about our business and services.
In order for us to have an efficient Annual Meeting, please either submit your vote online by following the instructions on the enclosed proxy card, or sign, date and return the enclosed proxy promptly in the accompanying reply envelope. If you are able to attend the Annual Meeting and wish to change your proxy vote, you may do so simply by voting in person at the Annual Meeting.Regardless of whether you plan to attend the Annual Meeting in person, please read the accompanying Proxy Statement and then submit your vote as promptly as possible. Voting promptly will save us additional expense in soliciting proxies and will ensure that your shares are represented at the Annual Meeting.
Our Board of Directors has unanimously approved the proposals set forth in the Proxy Statement and we recommend that you vote in favor of each such proposal.
We look forward to seeing you at the Annual Meeting.
Sincerely,
Gordon O. Jesperson
Corporate Secretary and General Counsel
| YOUR VOTE IS IMPORTANT
All stockholders are cordially invited to attend the Annual Meeting in person. However, to ensure your representation at the Annual Meeting, you are urged to vote online or complete, sign, date and return, in the enclosed postage paid envelope, the enclosed proxy card as soon as possible. Returning your proxy will help us assure that a quorum will be present at the Annual Meeting and avoid the additional expense of duplicate proxy solicitations. Any stockholder attending the Meeting may vote in person, even if he or she has returned a proxy.
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200 E. 5thAvenue, Suite 100
Naperville, Illinois 60563
(877) 260-2010
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELDCONSENT SOLICITATION
February 14, 2017July 13, 2018
To the Stockholders ofDear Track Group, Inc.: Stockholder:
NOTICE IS HEREBY GIVENNotice is hereby given that the Annual Meeting of Stockholders of Track Group, Inc., a Delaware corporation will be held on Tuesday, February 14, 2017, at 10:00 A.M. (local time)(the “Company” or “we”), at our offices located at 1215 W. Lakeview Court, Romeoville, Illinois, foris seeking the written consent of stockholders holding a majority of the Company’s outstanding common stock, par value $0.0001 per share (“Common Stock”), to authorize and approve the following purposes:proposals (together, the “Proposals”):
1.
To elect sixGuy Dubois, Karen Macleod and Karim Sehnaoui as directors of the Company, each to serve a one-year term until the 2018 Annual Meetingnext annual meeting of Stockholdersstockholders or until their successors aresuccessor is duly electedelected; and qualified;
2.
to consider an advisory vote on executive compensation paid to the Company’s Named Executive Officers;
3.
to ratify the appointment of Eide Bailly, LLP as our independent auditors for the fiscal year ending September 30, 2017; and
4.
to transact such other business as may properly come before the annual meeting and any adjournment or postponement thereof.
These matters are more fully discussed in the attached Proxy Statement.
The close of business on December 23, 2016 (the “Record Date”) has been fixed as the Record Date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournments or postponements thereof. Only holders of record of our common stock, par value $0.0001, at the close of business on the Record Date are entitled to notice of, and to vote at the Annual Meeting. A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination by any of our stockholders for purposes pertaining to the Annual Meeting at our corporate offices, 1215 W. Lakeview Court, Romeoville, Illinois, during normal business hours for a period of 10 days prior to the Annual Meeting, and at the time and place of the Annual Meeting. We are providing a copy of our Annual Report on Form 10-K for the year ended September 30, 2016 with the accompanying Proxy Statement.
Whether or not you expect to attend in person, we urge you to vote your shares as promptly as possible by either submitting your vote online by following the instructions on the enclosed proxy card, or by signing and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the Annual Meeting.If your shares are held in the name of a bank, broker or other fiduciary, please follow the instructions on the voting instruction card furnished by the record holder.
Our Board of Directors unanimously recommends that you vote “FOR” the Annual Meeting Proposal Nos. 1, 2 and 3, all of which are described in detail in the accompanying Proxy Statement.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON FEBRUARY 14, 2017 - THE ANNUAL REPORT AND PROXY STATEMENT ARE AVAILABLE ONLINE AT: http://www.astproxyportal.com/ast/18188
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| By Order of the Board of Directors,
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| Guy Dubois |
| Chief Executive Officer and Chairman of the Board of Directors
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Romeoville, Illinois
January 10, 2017
1215 Lakeview Court
Romeoville, Illinois 60446
(877) 260-2010
PROXY STATEMENT
General
This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the “Board”) of Track Group, a Delaware corporation (the “Company,” “we,” “us,” or “our”), of proxies for use at the Annual Meeting of Stockholders of the Company to be held at the Company’s offices located at 1215 W. Lakeview Court, Romeoville, Illinois, on Tuesday, February 14, 2017, at 10:00 a.m. (local time), and at any adjournment or postponement thereof (the “Annual Meeting”).
Who Can Vote
Stockholders of record at the close of business on December 23, 2016 (the “Record Date”) are entitled to notice of and to vote at the Annual Meeting. As of the close of business on the Record Date, the Company had 10,333,516 shares of common stock issued and outstanding. Each holder of common stock is entitled to one vote for each share held as of the Record Date.
How You Can Vote
On or about January 10, 2017, we mailed these proxy materials to each of our stockholders entitled to notice of and to vote at the Annual Meeting. The proxy materials are also available free of charge on the Internet athttp://www.astproxyportal.com/ast/18188.Stockholders are invited to attend the Annual Meeting to vote on the proposals described in this proxy statement. However, stockholders do not need to attend the Annual Meeting to vote. Instead, stockholders may submit their vote online by following the instructions on the enclosed proxy card, or by simply completing, signing and returning the enclosed proxy card.
If your proxy is properly returned to the Company, the shares represented thereby will be voted at the Annual Meeting in accordance with the instructions specified thereon. If return your proxy without specifying how the shares represented thereby are to be voted, the proxy will be voted (i)FORthe election of six directors nominated by our Board, (ii)FORthe advisory vote to approve executive compensation paid to the Company’s Named Executive Officers (the “Say-on-PayProposal”); (iii)FORratification of the appointment of Eide Bailly, LLP as our independent auditors for the year ended September 30, 2017; and (iv) at the discretion of the proxy holders on any other matter that may properly come before the Annual Meeting or any adjournment or postponement thereof.
If a bank holds your shares, broker or other institution, you will receive instructions from the holder of record that you must follow for your shares to be voted.
Broker Non-Votes
A “broker non-vote” occurs when a nominee (typically a broker or bank) holding shares for a beneficial owner (typically referred to as shares being held in “street name”) submits a proxy for the Annual Meeting, but does not vote on a particular proposal because the nominee has not received voting instructions from the beneficial owner and does not have discretionary authority to vote the shares with respect to that proposal.
Brokers and other nominees may vote on “routine” proposals on behalf of beneficial owners who have not furnished voting instructions, subject to the rules applicable to broker nominees concerning transmission of proxy materials to beneficial owners, and subject to any proxy voting policies and procedures of those firms. The ratification of the independent registered public accountants, for example, is a routine proposal. Brokers and other nominees may not vote on “non-routine” proposals, unless they have received voting instructions from the beneficial owner. The election of directors and the Say-on-Pay Proposal are considered “non-routine” proposals. This means that brokers and other firms must obtain voting instructions from the beneficial owner to vote on these matters; otherwise they will not be able to cast a vote for these “non-routine” proposals. If your shares are held in the name of a broker, bank or other nominee, please follow their voting instructions so you can instruct your broker on how to vote your shares.
Revocation of Proxies
Stockholders of record can revoke their proxies at any time before they are exercised in any one of three ways:
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by voting in person at the Annual Meeting;
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by submitting written notice of revocation to the Secretary of the Company prior to the Annual Meeting; or
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by submitting another proxy bearing a later date that is properly executed prior to or at the Annual Meeting.
Quorum
In order for any business to be conducted at the Annual Meeting, there must be a quorum, meaning a majority of the shares of our common stock issued and outstanding and entitled to vote at the Annual Meeting must be present, either in person or by proxy. If you submit a properly executed proxy, regardless of whether you abstain from voting on one or more matters, your shares will be counted as present at the Annual Meeting for the purpose of establishing a quorum. Shares that constitute broker non-votes will also be counted as present at the Annual Meeting for the purpose of establishing a quorum. If a quorum is not present at the scheduled time of the Annual Meeting, the stockholders who are present may adjourn the Annual Meeting until a quorum is present. The time and place of the adjourned Annual Meeting will be announced at the time the adjournment is taken, and no other notice will be given. An adjournment will have no effect on the business that may be conducted at the Annual Meeting.
Vote Required for Approval
Proposal No. 1:Election of Directors. Directors are elected by a plurality vote. This means the director nominees who receive the highest number of affirmative votes cast at the Annual Meeting, up to the number of directors to be elected, will be elected as directors. Abstentions and broker non-votes will have no effect on the outcome of the election of the directors.
Proposal No. 2: Advisory Vote to Approve Executive Compensation. This advisory vote is not binding on us, our Board of Directors, or management. The number of votes cast “FOR” must exceed the number of votes cast “AGAINST” this Proposal to approve, on an advisory basis, the compensation paid to the Company’s Named Executive Officers; and
Proposal No. 3: Ratification of Appointment of Auditors. To ratify the appointment of Eide Bailly, LLP as our independent auditors for the fiscal year ending September 30, 2017,2018.
The Board previously approved resolutions to (i) nominate Messrs. Dubois and Sehnaoui, and Ms. Macleod as directors, and (ii) appoint Eide Bailly, LLP as the numberCompany’s independent auditors for the fiscal year ending September 30, 2018.
In order to save the expense associated with holding an annual meeting of votes cast “FOR” must exceed the numberCompany’s stockholders, the Company’s Board of votes cast “AGAINST” this Proposal.Directors has elected to obtain stockholder approval of the Proposals by written consent (“A properly executed proxy marked “ABSTAIN” will not be voted, although it willWritten Consent”) in lieu of an annual meeting of stockholders, pursuant to Sections 211 and 228 of the Delaware General Corporation Law. The close of business on July 6, 2018 has been fixed as the record date (“Record Date”) for the determination of holders of shares of our Common Stock entitled to receive notice of, and the discretion to approve, the Proposals.
This solicitation is being made on the terms and subject to the conditions set forth in the accompanying Consent Solicitation Statement and form of Written Consent that is attached to the Consent Solicitation Statement. The Board of Directors requests that you sign, date and return the Written Consent in the enclosed envelope (or submit your consent by email) as soon as possible. To be counted, as present and entitledyour properly completed Written Consent must be received before 5:00 p.m. Central Time, on August 13, 2018 (the “Expiration Date”), subject to vote for purposesearly termination of, or extension of the Proposal. Accordingly, an abstentionExpiration Date at the discretion of our Board of Directors.
Failure to submit the Written Consent by any stockholder of record as of the Record Date will have the same effect ofas a vote against this Proposal. A broker or other nominee will generally have discretionary authoritythe Proposals. We recommend that all stockholders consent to vote on this Proposal because it is considered a routine matter, and therefore we do not expect broker non-votesthe Proposals by marking the box titled “FOR” with respect to this Proposal. However, any broker non-votes receivedthe Proposals and submitting the Written Consent by one of the methods set forth in the attached form of Written Consent. If you sign and send in the Written Consent form but do not indicate how you want to vote as to the Proposals, your consent form will have no effect onbe treated as a consent “FOR” the outcome of this Proposal.
Proposals.
SolicitationThe actions to be taken pursuant to the Written Consent will be taken as soon as practicable and at such time that we receive properly executed Written Consents approving the Proposals set forth herein from the stockholders holding a majority of the outstanding shares of our Common Stock as of the Record Date.
We will bearPlease return the entire cost of solicitation, including the preparation, assembly, printing and mailing of this Proxy Statement, the proxy and any additional solicitation materials furnishedenclosed written consent to the stockholders. Copies of any solicitation materials will be furnishedus no later than 5:00 p.m. Central Time, on August 13, 2018 via email to brokerage houses, fiduciaries and custodians holding shares in their names that are beneficially owned by others so that they may forward this solicitation material to such beneficial owners. In addition, we may reimburse such persons for their costs in forwarding the solicitation materials to such beneficial owners. The original solicitation of proxies bypeter.poli@trackgrp.com, or via mail may be supplemented by a solicitation by telephone, facsimile or other means by our directors, officers or employees. No additional compensation will be paid to these individuals for any such services. Except as described above, we do not presently intend to solicit proxies other than by mail and telephone.to:
Track Group, Inc.
Attn: Corporate Secretary
200 E. 5thAvenue, Suite 100
Naperville, Illinois 60563
-2-By order of the Board of Directors,
Guy Dubois
Chairman
200 E. 5thAvenue, Suite 100
Naperville, Illinois 60563
Tel. (877) 260-2010
CONSENT SOLICITATION STATEMENT
This Consent Solicitation Statement is being furnished to you as a holder of shares of common stock, par value $0.0001 (“Common Stock”), of Track Group, Inc., a Delaware corporation (the “Company”), in connection with the solicitation of written consents of the stockholders of the Company for approval of the following proposals (together, the “Proposals”):
1.
To elect Guy Dubois, Karen Macleod and Karim Sehnaoui as directors of the Company, each to serve a one-year term until the next annual meeting of stockholders or until their successor is duly elected; and
2.
To ratify the appointment of Eide Bailly, LLP as our independent auditors for the fiscal year ending September 30, 2018.
In this Consent Solicitation Statement, all references to the “Company,” “we,” “us” or “our” refer to Track Group, Inc.
Our Board of Directors has elected to seek stockholder approval of the Proposals by written consent (“Written Consent”) in lieu of an annual meeting of stockholders in order to eliminate the costs and management time involved in holding an annual meeting of stockholders. Written Consents are being solicited from stockholders of record as July 6, 2018, the record date set in connection with this Consent Solicitation Statement (the “Record Date”), pursuant to Sections 211 and 228 of the Delaware General Corporation Code (the “DGCL”).
Who May Consent
This Consent Solicitation Statement, the attached form of Written Consent and our Annual Report on Form 10-K for the year ended September 30, 2017 (the “Annual Report”) are being mailed to those eligible stockholders on or about July 13, 2018.
As of the Record Date, we had 11,401,650 shares of Common Stock issued and outstanding, each of which are entitled to act with respect to this Consent Solicitation.
Stockholders who wish to consent to the Proposals must return the attached form of Written Consent either by mail or email on or before 5:00 p.m. Central Time on August 13, 2018 (the “Expiration Date”). The Company expressly reserves the right, in its sole discretion and regardless of whether any of the conditions of the Consent Solicitation have been satisfied, subject to applicable law, at any time prior to Expiration Date, to (i) terminate the Consent Solicitation for any reason, including if the consent of stockholders holding a majority of the Company’s outstanding shares has been received; (ii) waive any of the conditions to the Consent Solicitation; or (iii) amend the terms of the Consent Solicitation.
Stockholders who wish to consent must deliver their properly completed and executed Written Consents to the Corporate Secretary of the Company in accordance with the instructions set forth in the attached form of Written Consent. The Company reserves the right (but is not obligated) to accept any Written Consent received by any other reasonable means or in any form that reasonably evidences the giving of consent to the approval of the Proposals.
IF YOU HOLD YOUR STOCK IN “STREET NAME,” YOU MUST INSTRUCT YOUR BROKER OR NOMINEE TO APPROVE THE PROPOSALS. IF YOU FAIL TO DO SO, YOUR BROKER OR NOMINEE MAY NOT RETURN THE WRITTEN CONSENT. Any beneficial owner of the Company who is not a record holder must arrange with the person who is the record holder or such record holder’s assignee or nominee to: (i) execute and deliver a Written Consent on behalf of such beneficial owner; or (ii) deliver a proxy so that such beneficial owner can execute and deliver a Written Consent on its own behalf.
Requests for copies of this Consent Solicitation Statement should be directed to Track Group, Inc. at the address or telephone number set forth above.
We will act as tabulation agent for this Consent Solicitation Statement. If you have any questions regarding your form of Written Consent, please contact us directly at (877) 260-2010.
Consent Required
Pursuant to Section 228 of the DGCL, approval of each of the Proposals requires the affirmative vote or written consent of holders of a majority of the issued and outstanding shares of our Common Stock entitled to vote thereon.
Stockholder approval of the Proposals will be effective upon receipt by us of affirmative Written Consents, not previously revoked, representing at least 5,700,826 votes, or a majority of votes that may be cast by our issued and outstanding voting securities as of the Record Date. Accordingly, abstentions from submitting your Written Consent will have the same effect of disapproving the Proposals.
Revocation of Consents
You may withdraw or change your Written Consent at any time prior to the Expiration Date by submitting a written notice of revocation to the Company’s Corporate Secretary at the address set forth above. A notice of revocation or withdrawal must specify the record stockholder’s name and the number of shares being withdrawn. After the Expiration Date, all written consents previously executed and delivered and not revoked will become irrevocable.
Absence of Appraisal Rights
Stockholders who abstain from consenting to the approval of the Proposals, or who withhold consent of the Proposals, do not have the right to an appraisal of their shares of Common Stock or any similar dissenters’ rights under the Delaware General Corporation Law, our Certificate of Incorporation (“Charter”) or our Bylaws.
Expenses of this Solicitation
This solicitation is being made by our Board of Directors and management, and we will bear the entire cost of the solicitation, including preparation, printing and mailing costs. Written Consents will be solicited principally through the mail, but our directors, officers and employees may solicit Written Consents personally, by phone or by e-mail. Arrangements will be made with brokerage firms and other custodians, nominees and fiduciaries to forward these consent solicitation materials to stockholders whose shares of Common Stock are held of record by such entities, and we will reimburse suck brokerage firms, custodians, nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them in connection herewith. In addition, we may pay for and utilize the services of individuals or companies we do not regularly employ in connection with this consent solicitation, if management determines it advisable.
PROPOSALS TO BE ACTED UPON BY STOCKHOLDERS:
PROPOSAL NO. 1
ELECTION OF DIRECTORS
General
The Company’s Certificate of IncorporationOur Charter provides that thenumber of directors that constitute the entire Board shall be fixed from time to time by resolution adopted by a majority of the entire Board.Board of Directors. A director elected by the Board to fill a vacancy shall serve for the remainder of the term of that director and until the director’s successor is elected and qualified. The Board of Directors has recommended for election the following six individuals to the Board of Directors at the Annual Meeting: Guy Dubois, David S. Boone, Dirk van Daele, Eric Rosenblum, Karen Macleod and Dr. Ray Johnson.
Each nominee, if elected at the Annual Meeting, will hold officeby stockholders shall serve for a one-year term until the next Annual Meetingannual meeting of Shareholdersstockholders or until their successor is duly elected, unless prior thereto the director resigns or the director’s office becomes vacant by reason of death or other cause.
Required Consents
Pursuant to Section 228 of the DGCL, the election of each director nominee requires written consents from holders of record of at least a majority of the outstanding shares of our Common Stock on the Record Date who are entitled to submit consents. If any such person is unable or unwilling to serve as a nominee for the officeBoard of director atDirectors does not receive the dateaffirmative vote of a majority of the Annual Meetingoutstanding shares of our Common Stock pursuant to this Consent Solicitation Statement, then under the DGCL and the Company’s Bylaws, he or any postponementshe will continue to serve until the earliest of the next annual meeting of stockholders, his successor is elected and qualified, or adjournment thereof,his resignation or removal.
In addition to the proxies mayvoting requirements set forth in Section 228 of the DGCL, Section 211(b) of the DGCL permits stockholders of a Delaware corporation to, in lieu of an annual meeting, act by written consent to elect the corporation’s directors if (i) such consent is unanimous or (ii) if all of the directorships to which directors could be voted for a substitute nominee, designatedelected at an annual meeting are vacant and filled by such action.
Each of our current directors, Messrs. Dubois and Sehnaoui and Ms. Macleod (the “Directors”), shall resign from their positions as directors on the Company’s Board of Directors, effective immediately prior to the receipt and acceptance by the proxy holders or by the present Board to fill such vacancy, or for the balanceCompany of those nominees named without nomination of a substitute, and the Board may be reduced accordingly. The Board has no reason to believe that any of such nominees will be unwilling or unable to serve if elected as a director.
Required Vote
Directors are elected by a plurality vote. This means that the nominees for directors who receive the highest number of affirmative votes castWritten Consents required to approve the Proposals. As a result, all of the directorships of the Company shall be vacant at the Annual Meeting, up to the number of directors to be elected, will be elected as directors. Abstentions and broker non-votes will have no effect on the outcomesuch time that approval of the election of directors by written consent takes effect, as required by Section 211(b) of the directors.DGCL. Should the Company not receive Written Consents affirmatively voting in favor of the re-election of any of the foregoing Directors, such Director shall not resign, and shall continue to hold his or her position as a director on our Board until the earliest of next annual meeting of stockholders or until his or her successor is duly elected, unless prior thereto the Director resigns or the Director’s office becomes vacant by reason of death or other cause.
Board of Directors Recommendation
The Board of Directors recommends a vote “FOR”you consent to the election of each nominee set forth below.of Guy Dubois, Karen Macleod and Karim Sehnaoui as directors of the Company, to hold such position until the earliest of next annual meeting of stockholders or until his or her successor is duly elected, unless prior thereto the Director resigns or the Director’s office becomes vacant by reason of death or other cause.
Nominee BiographiesDirector Nominees
Following are the names and ages of each director nominee, for election as a director, the principal occupation of each, the year in which each was first elected or nominated as a director of the Company (if applicable), the business experience of each nominee for at least the past five years, and certain other information concerning each of the nomineesnominees.
| Name | | Served as Director Since | | Age | | Principal Business Experience |
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| Guy Dubois | | 2012 | | 59 | | Guy Dubois became a director in December 2012, and has served as our Chairman since February 2013. Mr. Dubois also served as a member of the Company’s Executive Committee from October 2012 to September 2016, and was appointed to serve as Chief Executive Officer of the Company in September 2016, which position he held through December 31, 2017. Mr. Dubois is a director of Singapore-based Tetra House Pte. Ltd., a provider of consulting and advisory services worldwide. Mr. Dubois is a former director and chief executive officer of Gategroup AG, and also previously held various executive leadership roles at Gate Gourmet Holding LLC. Mr. Dubois has held executive management positions at Roche Vitamins Inc. in New Jersey, as well as regional management roles in that firm’s Asia Pacific operations. Mr. Dubois also served the European Organization for Nuclear Research (CERN) team in Switzerland in various roles, including treasurer and chief accountant. Additionally, Mr. Dubois worked with IBM in Sweden as Product Support Specialist for Financial Applications. A Belgian citizen, Mr. Dubois holds a degree in financial science and accountancy from the Limburg Business School in Diepenbeek, Belgium. When considering Mr. Dubois as a director of the Company, the Board reviewed his extensive financial and management expertise and experience, as well as the fact that he served as the Company’s CEO for approximately 4 years. |
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| Karen Macleod | | 2016 | | 54 | | Ms. Macleod became a director of the Company in January 2016 and currently serves as chief executive officer of Arete Group LLC, a professional services firm. Prior to Arete Group, Ms. Macleod was President of Tatum LLC, a New York-based professional services firm owned by Randstad, from 2011 to 2014, and was a co-founder of Resources Connection (NASDAQ:RECN), now known as RGP, a multinational professional services firm founded as a division of Deloitte in June 1996. Ms. Macleod served in several positions for RGP, including as a director from 1999 to 2009 and President, North America from 2004 to 2009. Prior to RGP, Ms. Macleod held several positions in the audit department of Deloitte from 1985 to 1994. Ms. Macleod served as a director for A-Connect (Schweiz) AG, a privately held, Swiss-based global professional services firm, from 2014-2016, and was a director for Overland Solutions from 2006 to 2013. Currently, Ms. Macleod is serving as a director on the Board of the FWA (Financial Women’s Association) in New York, and is a member of their audit committee. Ms. Macleod holds a Bachelor of Science in Business/Managerial Economics from the University of California, Santa Barbara. The Board believes Ms. Macleod’s senior public company leadership experience along with her finance and accounting background are important to the ongoing growth of the Company and corporate governance excellence. |
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| Karim Sehnaoui | | 2018 | | 39 | | Mr. Sehnaoui became a director of the Company in February 2018. Mr. Sehnaoui is an entrepreneur and investment professional, who specializes in private equity, venture capital, and corporate finance. Currently, he serves as General Manager of the Reference Group SARL, a boutique financial advisory firm based in Geneva, Switzerland, which position he has held since October 2017, and as a Director of ETS Limited. In addition, Mr. Sehnaoui is the founder and current Managing Director of Elham Management and Investment Group, an investment firm founded in 2011 that is dedicated to sustainable strategic investing. From 2012 to 2016, Mr. Sehnaoui taught graduate level finance courses as a visiting Assistant Professor at MSB Mediterranean School of Business in Tunisia. Prior to that, Mr. Sehnaoui spent several years in investment banking and private equity, serving as Acting Chief Investment Officer of Abu Dhabi Investment House PJSC and General Manager for Abu Dhabi Investment House S.A., and Business Development Director at Ithmaar Bank. Mr. Sehnaoui is currently a member of the Supervisory Board of Fyber N.V. (FRA: FBEN), an advertising technology company. Mr. Sehnaoui holds Bachelor’s and Master’s degrees in Civil Engineering from McGill University in Montreal, Canada, and was a Global Leadership Fellow at the World Economic Forum in Geneva, Switzerland from 2005 to 2007. The Board’s decision to appoint Mr. Sehnaoui as a director of the Company was made in connection with ETS Limited becoming the Company’s largest shareholder of record. The Board also believes Mr. Sehnaoui’s senior leadership experience, along with his private equity and venture capital background, are important to the ongoing growth of the Company and corporate governance. |
| Name | | Served as Director Since | | Age | | Principal Business Experience |
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| Guy Dubois | | 2012 | | 58 | | Guy Dubois has served as our Chairman since February 2013, and became a director in December 2012. Mr. Dubois also served as a member of the Company’s Executive Committee from October 2012 to September 2016, and was appointed to serve as Chief Executive Officer of the Company in September 2016. Mr. Dubois is a director of Singapore-based Tetra House Pte. Ltd., a provider of consulting and advisory services worldwide; and a director of RNTS Media NV, a Luxembourg listed digital content developer and mobile application advertising monetization platform provider. Mr. Dubois is a former director and CEO of Gategroup AG, and held various executive leadership roles at Gate Gourmet Holding LLC. Mr. Dubois has held executive management positions at Roche Vitamins Inc. in New Jersey, as well as regional management roles in that firm’s Asia Pacific operations. Mr. Dubois also served the European Organization for Nuclear Research (CERN) team in Switzerland in various roles, including treasurer and chief accountant. Mr. Dubois also worked with IBM in Sweden as Product Support Specialist for Financial Applications. A Belgian citizen, Mr. Dubois holds a degree in financial science and accountancy from the Limburg Business School in Diepenbeek, Belgium. In considering Mr. Dubois as a director of the Company, the current Board of Directors reviewed his extensive financial and management expertise and experience. In addition, Mr. Dubois’ public company senior management and board experience, and the leadership he has shown in his positions with prior companies, were considered important factors in the determination of the current Board of Directors. |
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| David S. Boone | | 2011 | | 56 | | David S. Boone became a director of the Company on December 21, 2011. Mr. Boone currently serves as the CEO of Alacura and Angel MedFlight, a private equity backed medical transportation company. He has served in executive roles with a variety of publicly traded and start-up organizations including Kraft General Foods, Sears, PepsiCo, Safeway and Belo Corporation, as well as serving as the CFO of Intira Corporation and CEO of Paranet Solutions, LLC. In addition, he has served as a consultant with the Boston Consulting Group. Mr. Boone was CEO, President and Director of American CareSource Holdings from 2005 to 2011, a NASDAQ traded company. He was the 2009 Ernst and Young Entrepreneur of the Year winner for Health Care in the Southwest Region. Mr. Boone serves on a number of private company boards and serves on the board of the Texas Kidney Foundation. Mr. Boone graduated from the University of Illinois, cum laude, in 1983 majoring in accounting. Mr. Boone is a Certified Public Accountant. He received his master’s degree in business administration from Harvard Business School in 1989. In considering Mr. Boone as a director of the Company, the current Board of Directors reviewed his extensive financial expertise and experience. In addition, Mr. Boone's public company senior management and board experience, and the leadership he has shown in his positions with prior companies and as a director of the Company, were considered important factors in the determination of the current Board of Directors. |
Subsequent to the year ended September 30, 2017, and effective May 31, 2018, David Boone, Dirk van Daele, Eric Rosenblum and Ray Johnson (together, the “Former Directors”) resigned from their positions as directors on the Company’s Board of Directors, leaving Guy Dubois, Karim Sehnaoui and Karen Macleod as the remaining directors on our Board. Certain disclosure which follows regarding corporate governance refer to the Company’s Board of Directors and corporate governance policies and procedures prior to the resignation of the Former Directors, and do not reflect the Company’s corporate governance policies and procedures subsequent to such resignations.
| Name | | Served as Director Since | | Age | | Principal Business Experience |
| | | | | | | |
| Dirk Karel J. van Daele | | 2015 | | 55 | | Mr. van Daele, a resident of Switzerland, became a director of the Company in May 2015 and is currently a principal of Anoa Capital SA, a Luxembourg investment advisory company focused on advisory services for direct lending and acquisition of secondary loan portfolios. Mr. van Daele has served in that capacity since January 2010. Prior to joining Anoa Capital SA, Mr. van Daele was the Managing Director and Head of Global Finance, Asia Pacific (Singapore) for Union Bank of Switzerland, having served in that capacity since July 1998. He received his Master of Arts in Economics at the University of Louvain (Belgium) in 1984. In considering Mr. van Daele’s nomination, the Board of Directors believed his extensive international finance, banking and senior management experience would assist in the Board’s deliberations as the Company expands operations internationally and finances its growth. |
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| Karen Macleod | | 2016 | | 53 | | Ms. Macleod became a director of the Company in January 2016 and currently serves as CEO of Arete Group LLC, a professional services firm. Prior to Arete Group, Ms. Macleod was President of Tatum LLC, a New York-based professional services firm owned by Randstad, from 2011-2014, and was a co-founder of Resources Connection (NASDAQ:RECN), now known as RGP, a multinational professional services firm founded as a division of Deloitte in June 1996. Ms. Macleod served in several positions for RGP, including as a director from 1999- 2009 and President, North America from 2004-2009. Prior to RGP, Ms. Macleod held several positions in the audit department of Deloitte between 1985-1994. Ms. Macleod currently serves as a director for A-Connect (Schweiz) AG, a privately held, Swiss-based global professional services firm and was a director for Overland Solutions from 2006-2013. Ms. Macleod holds a Bachelor of Science in Business/Managerial Economics from the University of California, Santa Barbara. In considering Ms. Macleod’s nomination, the Board of Directors believes Ms. Macleod’s senior public company leadership experience along with her finance and accounting background are important to the ongoing growth of the Company and corporate governance excellence.
|
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| | 2016 | | 47
| | Mr.Rosenblum became a director of the Company in September 2016 and is currently a senior executive with Palantir Technologies (a privately held big data analytics company), where he oversees several product groups. In his role, he has overseen the deployment of data analytics platforms for both government and large commercial institutions. From 2012 to 2014, Mr. Rosenblum served as a Vice President and Chief Operating Officer at drawbridge, Inc. a mobile advertising start-up, during which time Drawbridge developed a cross-device digital marketing technology based on algorithms without the use of personally identifiable information. Mr. Rosenblum served as a Director of Product, and Director of Strategy and Business operations at Google, Inc. from 2008 to 2012. From 2005 to 2008 he served as a Managing Director, China and General Manager, Strategy for Realnetworks, Inc. Mr. Rosenblum earned his Bachelor’s degree in East Asian Studies and Economics at Harvard University and his Masters of Business Administration from the Massachusetts Institute of Technology. In considering Mr. Rosenblum’s nomination, the Board of Directors believed his extensive technological and analytics background, international business and management experience would assist in the Board’s deliberations regarding product development and international growth. |
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| Dr. Ray Johnson | | 2016 | | 61 | | Dr. Johnson became a director of the Company in September 2016 and currently serves as an Executive in Residence with Bessemer Venture Partners. From 2006 through February 2015, Dr. Johnson served as the Senior Vice President and Chief Technology Officer of the Lockheed Martin Corporation, where he led the strategic areas of technology, engineering, production operations, global supply chain, program management, and logistics and sustainment. Prior to his time with Lockheed Martin, Dr. Johnson served as the Chief Operating Officer for Modern Technology Solutions, Inc. of Alexandria, Virginia from 2005 to 2006, and from 1996 to 2005, he served in a number of executive positions with Science Applications International Corporation, including Senior Vice President and General Manager of the Advanced Concepts Business Unit. Dr. Johnson served for 12 years as an officer in the U.S. Air Force. Currently Dr. Johnson serves as a director on the boards of: QxBranch, LLC, Terrestrial Energy, Inc., United Sciences, LLC, and 8 Rivers Capital, LLC, all privately held companies. He received his Bachelor’s degree in Electrical Engineering from Oklahoma State University, and his Master’s and Ph.D. degrees in Electrical Engineering from the Air Force Institute of Technology. In considering Dr. Johnson’s nomination, the Board of Directors reviewed his extensive technology expertise and experience. In addition, Dr. Johnson's public company senior management and board experience, and the leadership he has shown in his positions with prior companies, were considered important factors in the determination of the current Board of Directors. |
Board Meetings and Committees
The Board met eightsix times during the year ended September 30, 20162017 and all incumbent directors attended at least 75% of the aggregate number of meetings of the Board and of the committees on which such directors served. The Board encourages the directors to attend our annual meetings of stockholders when stockholder participation is expected.
Independent Directors
The Board believes that a majorityPrior to the resignations of its members should be independent directors. The Board hasMessrs. Boone, van Daele, Rosenblum and Johnson, the Company had determined that, other than Mr.Messrs. Dubois and Sehnaoui, all of its currentthen directors as well as each of the nominees for election, arewere independent directors as defined by the rules and regulations of the NASDAQ Stock Market.
The membersBoard has determined that Ms. Macleod is currently the Company’s sole independent director as defined by the rules and regulations of the Audit Committee and Compensation Committee of the Board each meetNASDAQ Stock Market. Ms. Macleod meets the independence standards established by the NASDAQ Stock Market and the U.S. Securities and Exchange Commission (the “SEC”) for audit committees and compensation committees.. In addition, the Board has determined that of its current directors, Ms. Macleod and Mr. van Daele each satisfysatisfies the definition of an “audit committee financial expert” under SEC rules and regulations. These designations do not impose any duties, obligations or liabilities that are greater than those generally imposed as members of the Audit Committee and the Board, and the designation as an audit committee financial expert does not affect the duties, obligations or liability of any other member of the Audit Committee or the Board.
Board Committees and Charters
The Board of Directors hashad three standing committees:committees as of the year ended September 30, 2017: the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. These committees assistassisted the Board of Directors to perform its responsibilities and make informed decisions.
Effective May 31, 2018, as a result of the resignation of Messrs. Boone, van Daele, Rosenblum and Johnson, the Board no longer has an acting Audit Committee, Compensation Committee, or Nominating and Corporate Governance Committee. Instead, the full Board of Directors administers the duties of the Audit Committee, Compensation and Nominating and Corporate Governance Committees.
Audit Committee
As of the year ended September 30, 2018, we had a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The primary duties of the Audit Committee arewere to oversee (i) management’s conduct ofrelated to our financial reporting process, including reviewing the financial reports and other financial information provided by the Company, and reviewing our systems of internal accounting and financial controls, (ii) our independent auditors’ qualifications and independence and the audit and non-audit services provided to the Company, and (iii) the engagement and performance of our independent auditors. The Audit Committee assistsassisted the Board in providing oversight of our financial and related activities, including capital market transactions. The Audit Committee hashad a charter, a copy of which is available on our website at www.trackgrp.com.
The Audit Committee meetsmet with our Chief Financial Officer and with our independent registered public accounting firm and evaluatesevaluated the responses by the Chief Financial Officer, both to the facts presented and to the judgments made by our independent registered public accounting firm. The Audit Committee met four times during the 2017 fiscal year 2016 and all members of the Audit Committee attended at least 75% of the Committee’s meetings.
As of the year ended September 30, 2017, the Members of the Audit Committee currently consistconsisted of Ms. Macleod, Mr. Rosenblum and Mr. van Daele. Each member of the Audit Committee, satisfies, according tosatisfied, as determined by the full Board of Directors, the definition of independent director as established in the NASDAQ Stock Market Rules and arewere financially literate. In accordance with Section 407 of the Sarbanes-Oxley Act of 2002, the Board of Directors designated Ms. Macleod as the Audit Committee’s “Audit Committee Financial Expert”“audit committee financial expert” as defined by the applicable regulations promulgated by the SEC.
Currently, the entire Board of Directors serves in the capacity as an Audit Committee.
The Audit Committee reviewed and discussed the matters required by United States auditing standards required by the Public Company Accounting Oversight Board (“(the “PCAOB”) and our audited financial statements for the fiscal year ended September 30, 20162017 with management and our independent registered public accounting firm. The Audit Committee has received the written disclosures and the letter from our independent registered public accounting firm required by Independence Standards Board No. 1, and the Audit Committee has discussed with the independent registered public accounting firm the independent registered public accounting firm's independence.
Compensation Committee
MembersAs of the year ended September 30, 2017, members of the Compensation Committee currently consistconsisted of Dr. Johnson and Mr. Rosenblum. The Compensation Committee met two times during fiscal year 2016. The BoardRosenblum, both of Directors appoints members of the Compensation Committee. Mr. Rosenblum and Dr. Johnson arewhom were determined to be independent directors as determined by the Board of Directors in accordance with the NASDAQ Stock Market Rules, including Rule 5605(d)(2)(A). The Compensation Committee is governed by a charter approved bymet twice during the 2017 fiscal year.
Currently, the entire Board of Directors serves in the capacity as a copyCompensation Committee. As such, the entire Board of which is available onDirectors has the Company’s website www.trackgrp.com.
The Compensation Committee has responsibility for developing and maintaining an executive compensation policy that creates a direct relationship between pay levels and corporate performance and returns to stockholders. The CommitteeBoard monitors the results of such policy to assure that the compensation payable to our executive officers provides overall competitive pay levels, creates proper incentives to enhance shareholderstockholder value, rewards superior performance, and is justified by the returns available to stockholders.
The Compensation Committee also acts on behalf of Additionally, the Board of Directors in administeringadministers compensation plans approved by the Board, in a manner consistent with the terms of such plans (including, as applicable, the granting of stock options, restricted stock, stock units and other awards, the review of performance goals established before the start of the relevant plan year, and the determination of performance compared to the goals at the end of the plan year). The Committee reviews and makes recommendations to
Currently, Ms. Macleod serves as the sole independent director, as determined by the Board of Directors in accordance with respect to new compensation incentive plans and equity-based plans; reviews and recommends the compensation of the Company’s directors to the full Board for approval; and reviews and makes recommendations to the Board on changes in major benefit programs of executive officers of the Company.NASDAQ Stock Market Rules, including Rule 5605(d)(2)(A).
Nominating and Corporate Governance Committee
As of the year ended September 30, 2017, Messrs. van Daele, Boone and Dr. Johnson currently serveserved as members of theour Nominating and Corporate Governance Committee. TheCurrently, the entire Board of Directors serves in the capacity as a Nominating CommitteeCommittee. As such, the entire Board of Directors has the responsibility for identifying and recommending candidates to fill vacant and newly created Board positions, setting corporate governance guidelines regarding director qualifications and responsibilities, and planning for senior management succession.
The Nominating and Corporate Governance Committee is required to review the qualifications and backgrounds of all directors and nominees (without regard to whether a nominee has been recommended by stockholders), as well as the overall composition of the Board of Directors, and recommend a slate of directors to be nominated for election at the annual meeting of stockholders, or, in the case of a vacancy on the Board of Directors, recommend a director to be elected by the Board to fill such vacancy. The Nominating and Corporate Governance Committee held one meeting during fiscal 2016. The Nominating and Corporate Governance Committee’s charter is available on our website, www.trackgrp.com.
Director Nominations
The Board nominates directors for election at each annual meeting of stockholders and appoints new directors to fill vacancies when they arise. The Nominatingarise, and Corporate Governance Committee has the responsibility to identify, evaluate recruit and recommendrecruit qualified candidates to the Board for such nomination or appointment.
The Board of Directors identifies director nominees by first considering those current members of the Board who are willing to continue service. Current members of the Board with skills and experience that are relevant to our business and who are willing to continue service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of obtaining a new perspective. Nominees for director are selected by a majority of the members of the Board of Directors. Although the Company does not have a formal diversity policy, in considering the suitability of director nominees, the Board considers such factors as it deems appropriate to develop a Board that is diverse in nature and comprised of experienced and seasoned advisors. Factors considered by the Board include judgment, knowledge, skill, diversity, integrity, experience with businesses and other organizations of comparable size, including experience in the software and/or technology industries, software, intellectual property, business, finance, administration or public service, the relevance of a candidate’s experience to our needs and experience of other Board members, experience with accounting rules and practices, the desire to balance the considerable benefit of continuity with the periodic injection of the fresh perspective provided by new members, and the extent to which a candidate would be a desirable addition to the Board and any committees of the Board.
A stockholder who wishes to suggest a prospective nominee for the Board should notify the Secretary of the Company or any member of the Nominating and Corporate Governance Committee in writing with any supporting material the stockholder considers appropriate. Nominees suggested by stockholders are considered in the same way as nominees suggested from other sources. Once the Nominating and Corporate Governance Committee chooses a slate of candidates, the Nominating and Corporate Governance Committee recommends the candidates to the entire Board, and the Board then determines whether to recommend the slate to the stockholders.
In addition, the Company’s Bylaws contain provisions that address the process by which a stockholder may nominate an individual to stand for election to the Board at the Company’s annual meeting of stockholders. In order to nominate a candidate for director, a stockholder must give timely notice in writing to the Secretary of the Company and otherwise comply with the provisions of the Company’s Bylaws. Information required by the Company’s Bylaws to be in the notice include: the name, contact information and share ownership information for the candidate and the person making the nomination, and other information about the nominee that must be disclosed in proxy solicitations under Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and its related rules and regulations. The Nominating and Corporate Governance CommitteeBoard may also require any proposed nominee to furnish such other information as may reasonably be required by the Nominating and Corporate Governance CommitteeBoard to determine the eligibility of such proposed nominee to serve as director of the Company. The recommendation should be sent to: Secretary, Track Group, Inc., 1215 W. Lakeview Court, Romeoville,200 E. 5thAvenue, Suite 100, Naperville, Illinois 60446.60563. You can obtain a copy of the Company’s Bylaws by writing to the Secretary at this address.
Stockholder Communications
If you wish to communicate with the Board, you may send your communication in writing to: Secretary, Track Group, Inc., 1215 W. Lakeview Court, Romeoville,200 E. 5thAvenue, Suite 100, Naperville, Illinois 60446.60563. You must include your name and address in the written communication and indicate whether you are a stockholder of the Company. The Secretary will review any communication received from a stockholder, and all material and appropriate communications from stockholders will be forwarded to the appropriate director or directors or committee of the Board based on the subject matter.
Code of Business Conduct and Ethics
We have established a Code of Business Conduct and Ethics that applies to our officers, directors and employees. The Code of Business Conduct and Ethics contains general guidelines for conducting our business consistent with the highest standards of business ethics, and is intended to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. We will posthave posted our Code of Business Conduct and Ethics on our website, www.trackgrp.com, and will post any amendments to or waivers from a provision of our Code of Business Conduct and Ethics that appliesapply to our principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions and that relates to any element of the Code of Business Conduct and Ethics.
Board Leadership Structure
Our Board of Directors has discretion to determine whether to separate or combine the roles of Chief Executive Officer and Chairman of the Board. Guy Dubois has served in both roles sincefrom September 11, 2016 and ourthrough December 31, 2017. Our Board continues to believebelieved that his combined role iswas most advantageous to the Company and our stockholders, as Mr. Dubois possesses in-depth knowledge of the issues, opportunities and risks facing us, our business and our industry and iswas best positioned to fulfill the responsibilities of our Chief Executive Officer, as well as the Chairman’s responsibility to develop meeting agendas that focus the Board’s time and attention on the most critical matters and to facilitate constructive dialogue among Board members on strategic issues.
Effective January 1, 2018, the Board of Directors promoted the President of the Company, Mr. Derek Cassell, to the role of Chief Executive Officer, and thereby separated the roles of Chief Executive Officer and Chairman of the Board.
In addition to Mr. Dubois’ and Mr. Cassell’s leadership, the Board maintains effective independent oversight through a number of governance practices, including, open and direct communication with management, input on meeting agendas, and regular executive sessions.
Board Role in Risk Assessment
Management, in consultation with outside professionals, as applicable, identifies risks associated with the Company’s operations, strategies and financial statements. Risk assessment is also performed through periodic reports received by the Audit Committee from management, counsel and the Company’s independent registered public accountants relating to risk assessment and management. Audit Committee members meet privately in executive sessions with representatives of the Company’s independent registered public accountants. The Board also provides risk oversight through its periodic reviews of the financial and operational performance of the Company.
PROPOSAL NO. 2
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 Track Group, Inc., 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 February 14, 2017, 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.
Vote Required
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.
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. 32
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.
RepresentativesRequired Consents
Pursuant to Section 228 of the DGCL, the ratification of the selection of Eide Bailly will be presentas the Company’s independent auditors for the fiscal year ending September 30, 2018 requires written consents from holders of record of at least a majority of the Annual Meeting, or available by telephone, and will have an opportunityoutstanding shares of our Common Stock on the Record Date who are entitled to make a statement if they so desire and to respond to appropriate questions from stockholders.submit consents.
Principal Accountant Fees and ServicesBoard of Directors Recommendation
Audit FeesThe Board of Directors recommends you consent to the ratification of the selection of Eide Bailly, LLP (“Eide Bailly”) as the Company’s independent auditors for the fiscal year ending September 30, 2018.
Audit services consist ofIndependent Auditor
During the audit of our annual consolidated financial statements,years ended September 30, 2017 and other services related to filings and registration statements filed by us and our subsidiaries, and other pertinent matters.16, Eide Bailly has served as our independent registered public accounting firm since September 24, 2013. We paidfirm.
The following table presents approximate aggregate fees and other expenses for professional services rendered by Eide Bailly, approximately $155,552 and $125,982 for audit servicesour independent registered public accounting firm, for the yearaudit of the Company’s annual financial statements for the years ended September 30, 2017 and 2016 and 2015, respectively.fees and other expenses for other services rendered during those periods.
Tax Fees, Audit Related Fees, and All Other Fees| | | |
| | | |
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 Company paidAudit 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 $24,415in fiscal 2017 and $1,863 for tax2016. Such procedures govern the ways in which the Audit Committee pre-approves audit and audit related fees, respectively, duringvarious categories of non-audit services that the year ended September 30, 2016,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 $31,937 and $8,375 for tax and audit related fees, respectively, duringsuch procedures do not include delegation of the year ended September 30, 2015.Audit Committee’s responsibilities to management.
Auditor Independence
Our Audit Committee considered that the work done for us in fiscal year 20162017 and 20152016 by Eide Bailly was compatible with maintaining Eide Bailly’s independence.
Required VoteReport of the Audit Committee of the Board of Directors
RatificationDate: 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 selectionPCAOB 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 Eide Baillythe representations and information provided by management and the registered public accounting firm, including as set forth above, the Company’s independent auditors formembers of the fiscal year endingAudit Committee as of September 30, 2017, requiresas set forth below, recommended to our Board of Directors that the affirmative vote of a majority of the shares present or represented by proxy and entitled to vote at theaudited financial statements be included in our Annual Meeting. Under Delaware law and the Company’s Certificate of Incorporation and Bylaws, an abstention will have the same legal effect as a vote against 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 instructedReport on the proxy or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” the ratification of Eide Bailly as the Company’s independent auditorsForm 10-K for the fiscal year endingended September 30, 2017.
Board of Directors Recommendation | Respectfully Submitted, Eric Rosenblum Dirk Karel J. van Daele Karen Macleod |
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The information contained above under the caption “Report of the Audit Committee of the Board of Directors recommends that stockholders vote “FOR” shall not be deemed to be soliciting material or to be filed with the ratificationSEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the selectionSecurities Exchange Act of Eide Bailly, LLP1934, as amended, except to the Company’s independent auditors for the fiscal year ending September 30, 2017.extent that we specifically incorporate it by reference into such filing.
EXECUTIVE OFFICERS
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 |
Guy Dubois | | 58 | | Chief Executive Officer |
Peter K. Poli | | 55 | | Chief Financial Officer |
Derek Cassell | | 43 | | President |
Guy Dubois. Mr. Dubois’ biography appears on page 4 of this Proxy Statement, under Proposal No. 1.
Peter K. Polihas 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, 2014 through December 31, 2015. In addition, he served as an Executive Director 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., USA, I-Works Inc., and as Vice President and Chief Financial Officer of FTD.COM. Mr. Poli also spent nine years as 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 has served as an Independent Director of Leapnet, Inc. since May 2000. Mr. Poli holds BA in Economics and Engineering from Brown University in 1983 and an MBA from Harvard Business School in 1987.
Derek Cassellhas served as our President since December 2016, and previously served as a Divisional President for the Company from June 2014 until December 2016. 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 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.
EXECUTIVE COMPENSATION
Set outThe 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 |
| 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 |
Derek 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 role of Chief Executive Officer effective 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 Director 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 as Vice President and Chief Financial Officer of FTD.COM. Mr. Poli also spent nine years as 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.
Compensation of Our Executive Officers
The following summary compensation table areSummary Compensation Table sets forth the particulars of compensation paid to the following persons for our fiscal years ended September 30, 2016 and 2015:2017:
(a)
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, 20162017 and who had total compensation exceeding $100,000 (together, with the principal executive officer, the “Named Executive Officers”); and
(c)
additional individuals 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.
| Name and | | | | | | | |
| | | | | | | |
| | | | | | | | |
| Guy Dubois | 2016 | $- | $- | $30,000
| $170,182 | $- | $200,182
|
| Chairman and Chief Executive Officer | 2015 | $- | $- | $- | $419,445 | $- | $419,455 |
| | | | | | | |
Peter Poli (1) | 2016 | $- | $- | $- | $- | $- | $- |
| Chief Financial Officer | 2015 | $- | $- | $- | $- | $- | $- |
| | | | | | | |
Derek Cassell (2) | 2016 | $206,076 | $- | $42,500 | $- | $- | $248,576 |
| President | 2015 | $190,000 | $- | $42,500 | $- | $- | $232,500 |
| | | | | | | |
John R. Merrill (3) | 2016 | $153,854 | $- | $42,500
| $- | $- | $196,354
|
| Former Chief Financial Officer | 2015 | $180,000 | $- | $42,500 | $- | $74,700 | $297,200 |
| | | | | | | |
Mark Attarian (4) | 2016 | $91,167 | $- | $- | $- | $- | $91,167 |
| Former Chief Financial Officer | 2015 | $- | $- | $- | $- | $- | $- |
| Name and | | Salary | Bonus | Stock Awards | Option Awards | All Other Compensation | Total |
| Principal Position | | ($) | | ($) (1) | ($) (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 served as a member of the Executive Committee from 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. |
| (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. Poli began serving as our Chief Financial Officer on January 6,3, 2017 and, as such, did not receive any compensation from the Company during either fiscal 2016 or 2015. |
(2) | Mr. Cassell was appointed President of the Company on December 19, 2016. Prior to this appointment, Mr. Cassell served as the Company’s President of the Company’s America’s Division since June 2014. |
(3) | Mr. Merrill’s employment as the Company’s Chief Financial Officer was terminated on September 27, 2016. |
(4) | Mr. Attarian was appointed to serve as the Company’s Chief Financial Officer on September 12, 2016, and previously served as the Company’s Chief Administrative Officer since July 11, 2016. Mr. Attarian subsequently resigned from the Company on November 15, 2016. |
Narrative Disclosure to the ExecutiveSummary Compensation Table
Compensation Paid to our Chief Executive Officer
Our currentformer principal executive officer, Guy Dubois, was granted warrants51,746 shares of Common Stock, equal to $300,000$100,000, for his additional work as a director and memberChairman of the Board’s Executive Committee, the then the acting principal executive officerBoard of the Company during the fiscal year ended September 30, 2015, consisting2017, $25,000 of warrants to purchase 113,310 shareswhich had been accrued, but had not yet been issued as of common stock at an exercise price of $9.65 per share. These warrants vest in equal monthly increments over a period of one year or immediately upon the hiring of a new Chief Executive Officer. These warrants were valued at the date of grant using the Black-Scholes model.
To date,September 30, 2017. Mr. Dubois has only received compensation for his service as a director and member of the Executive Committee. Mr. Dubios’sdid not receive any compensation during the fiscal year ended September 30, 2016 consisted2017 for his services as the Chief Executive Officer of warrants to purchase an aggregate total of 68,659 shares of common stock with an average exercise price of $6.97 per share, and 4,167 shares of common stock.the Company.
Poli Employment Agreement
On December 12, 2016, the Company entered into a three-year employment agreement with Mr. Poli (the “Poli Employment Agreement”). Under the terms and conditions of the Poli Employment Agreement, Mr. Poli will receivebegan receiving a base salary equal to $240,000 per annum beginning in January 2017, and received an option to purchase 100,000 shares of the Company’s common stockCommon Stock at an exercise price per share equal to the closing price of the Company’s common stockCommon Stock on the date approved by the Board. One-half of this option is scheduled to vestvested on January 1, 2018, and 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. Poli’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 a cash payment equal to one year’s salary, plus all restricted stock, warrants and options 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 deemed to be vested and earned.
Cassell Employment Agreement
On December 1, 2016, the Company entered into an employment agreement with Mr. Cassell, which was subsequently amended on February 13, 2017 (the “Cassell Employment Agreement”). Under the terms and conditions of the Cassell Employment Agreement, Mr. Cassell will receivereceives a base salary equal to $240,000 per annum, and received an option to purchase 100,00060,000 unregistered restricted shares of the Company’s common stock at an exercise price per share equal to the closing price of the Company’s common stock on the date approved by the Board.Common Stock. One-half of this option is scheduled to vest on September 30, 2017,these shares vested immediately upon issuance, and the remaining one-half is scheduled to vest on SeptemberMarch 30, 2018.
AttarianSubsequent to the 2017 fiscal year end, a second amendment to the Cassell Employment Agreement
On September 11, 2016, was approved at Board meeting held on December 13, 2017. Such amendment was signed on January 4, 2018. Under the Company entered into a two-year employment agreement with Mr. Attarianterms of the Cassell Agreement, as amended (the “Attarian Employment AgreementCassell Amendment”). Under the terms and conditions of the Attarian Employment Agreement,, effective January 1, 2018, Mr. Attarian will receive a for a base salary equalCassell was promoted from President to $250,000 per annum, and received an option to purchase 125,000 shares of common stockCEO of the Company, at an exercise price equal to the per share sale price of any underwritten public offering of the Company's common stock occurring between the date of the Attarian Employment Agreement anda position which he shall hold until December 31, 2016 (the "Option"). In the event the public offering does not occur by December 31, 2016, the exercise price of the Option shall be equal2020, unless earlier terminated or extended. Should Mr. Cassell elect to the average of the closing price ofvoluntarily terminate his employment with the Company, common stock onhe must provide written notice of his intent to do so at least 180 days prior to terminating his employment. In addition, the 30 trading days immediately preceding December 31, 2016. The Option vests 25% on December 31, 2016, with the balance vestingCassell Amendment provides: (i) an increase in equal monthly installments over the following 36 months. Mr. Attarian resigned from the Company effective November 15, 2016 and therefore forfeited the Option.
Merrill Employment Agreement
On November 19, 2014, the Company entered into a two-year employment agreement with John Merrill (the “Merrill Employment Agreement”). Under the terms and conditions of the Merrill Employment Agreement, Mr. Merrill received an annualCassell’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 $180,000 and was eligible to participate in the Company’s Employee Bonus Plan and 2012 Equity Incentive Award Plan, wherein Mr. Merrill may earn a variable cash bonus and/or300,000 unregistered restricted shares of the Company’s common stock based on individual performance and achieving specific Company milestones.Common Stock, which shall vest annually in increments of 100,000 beginning January 1, 2018; (iv) in the event of a change of control, Mr. Merrill was alsoCassell shall be entitled to participate in such life insurance, disability, medical, dental, retirement plansa cash payment equal to one year’s salary, plus all restricted stock, warrants and other programs as mayoptions previously issued to Mr. Cassell shall become immediately vested and exercisable; and (v) for purposes of any severance due Mr. Cassell upon his involuntary termination, any annual bonus due Mr. Cassell shall be made generally available from timedeemed to time by the Company for the benefit of similarly situated employees or its employees generally. Mr. Merrill's employment with the Company was terminated on September 27, 2016.
be vested and earned.
Outstanding Equity Awards at September 30, 20162017
The following table discloses outstanding stock option awards and warrants held by each of the Named Executive Officers atas of September 30, 2016:2017:
Outstanding Equity Awards at Fiscal Year-End 20162017
Name (1)
| Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) exercisable | Equity incentive plan awards: Number of underlying unexercised unearned options (#) | | | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($) | 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 | 3/21/2017 | - | - | - | - |
| | 64,665 | - | - | $9.000 | 4/15/2017 | - | - | - | - |
| | 4,083 | - | - | $14.700 | 6/30/2017 | - | - | - | - |
| | 2,280 | - | - | $19.460 | 9/30/2017 | - | - | - | - |
| | 2,432 | - | - | $18.750 | 3/31/2018 | - | - | - | - |
| | 51,576 | - | - | $17.450 | 6/2/2018 | - | - | - | - |
| | 2,647 | - | - | $15.450 | 6/30/2018 | - | - | - | - |
| | 14,988 | - | - | $12.01 | 1/27/2017 | - | - | - | - |
| | 8,868 | - | - | $10.15 | 4/20/2017 | - | - | - | - |
| | 113,310 | - | - | $9.65 | 8/14/2017 | - | - | - | - |
| | 8,571 | - | - | $10.50 | 9/30/2017 | - | - | - | - |
| | 12,676 | - | - | $7.10 | 10/14/2017 | - | - | - | - |
| | 15,126 | - | - | $5.95 | 1/15/2018 | - | - | - | - |
| | 14,286 | - | - | $6.30 | 3/31/2018 | - | - | - | - |
| | 18,000 | - | - | $5.00 | 6/30/2018 | - | - | - | - |
| | | | | | | | | | |
| John R. Merrill | - | - | - | $- | -
| - | - | - | - |
| | | | | | | | | | |
| Mark Attarian | - | 125,000 | - | $(2) | 09/11/2019
| - | - | - | - |
Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Equity incentive plan awards: Number of underlying unexercised unearned options (#) | Option
exercise
price ($)(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)
Mr. Poli and Mr. Cassell do not appear in this table, as they were each appointed to their respective positions after the end of fiscal 2016.
(2)
Per the Attarian Employment Agreement, theexercise price of this option was set to be equal to the per share sale price of any underwritten public offering of the Company's common stock occurring between the date of the Attarian Employment Agreement and December 31, 2016. However, the exercise price was not determined, asMr.Attarian resigned from the Company on November 15, 2016 and forfeited the option.| (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.
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 2016 and that such filings were timely except the following:
●
Mr. Dubois, our CEO and a director, filed a Form 5 reporting five late transactions;
●
Mr. Boone, a director, filed a Form 5 reporting two late transactions; and
●
Mr. van Daele, a director, filed a Form 5 reporting two late transactions.
DIRECTOR COMPENSATION
The table below summarizes the compensation paid by us to our non-employee directors forDuring the fiscal year ended September 30, 2016:
| | | | | |
| Name** | | | | |
| | | | | |
| David Boone | $- | $59,997 | $178,107
| $238,104
|
| Karen Macleod | $- | $15,000 | $66,730
| $81,730
|
| Dirk van Daele | $- | $22,171 | $128,310
| $150,481
|
*
Fees earned by2017, each of our non-employee directors was 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, 2016.
**
Mr. Rosenblum and Dr. Johnson do not appear in this table as they were each appointed to the Board on September 11, 2016, and did not receive compensation from the Company during the year ended September 30, 2016.
During the year ended September 30, 2016, we accrued $5,000 per month in fees payable to 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,method. For four of the Chairmanfive 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 and Chairman 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 Audit Committee accrued $10,000 per month rathercompensation awarded to, earned by, or paid to each person who served as a director during the fiscal year ended September 30, 2017, other than $5,000. Beginning in fiscal 2017, we are accruing $25,000 per quarter for eacha director payable in common stock or warrants withwho also served as an exercise price at the current market price at the date of grant, all grants of common stock or warrants are to be valued at the date of grant using the Black-Scholes valuation method.
executive officer:
| | Fees earned | Stock awards | Warrant awards | Cash | Total |
Name (1) | ($) (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. |
Director Warrants
The following table lists the warrants to purchase shares of common stockCommon Stock held by each of our non-employee directors as of January 7, 2017:16, 2018, all of which were granted in connection with their services as directors:
| | Grant | | Expiration | | Exercise | | Number of | | Compensation | Grant | Expiration | | | |
| Name | Date | | Date | | Price | | Options | | Expense | | | | | |
| | | | | | | | | | | | |
| David S. Boone | 3/22/13 | | 3/21/17 | | $ | 12.58 | | | 8,943 | | $ | 43,809 | 3/22/13 | 3/21/22 | $1.24 | 8,943 | $62,580 |
| | 7/1/13 | | 6/30/17 | | $ | 14.70 | | | 4,083 | | $ | 23,640 | |
| | 10/1/13 | | 9/30/17 | | $ | 19.46 | | | 2,280 | | $ | 17,982 | |
| | 1/2/14 | | 12/31/18 | | $ | 19.29 | | | 2,344 | | $ | 12,014 | |
| | 10/15/15 | | 10/14/17 | | $ | 7.10 | | | 12,676 | | $ | 24,571 | |
| | 1/15/16 | | 1/15/18 | | $ | 5.95 | | | 15,126 | | $ | 45,008 | |
| | 7/1/16 | | 6/30/18 | | $ | 5.00 | | | 18,000 | | $ | 53,460 | |
| | 9/30/16 | | 9/30/18 | | $ | 7.20 | | | 12,500 | | $ | 30,000 | |
| | 10/1/16 | | 9/30/18 | | $ | 7.20 | | | 5,882 | | $ | 25,000 | |
| | 12/30/16 | | 12/30/18 | | $
| 4.50 | | | 9,191 | | $
| 25,000 | |
| | | | | | | | | | | | | | |
| 7/1/13 | | 7/1/13 | 6/30/22 | $1.24 | 4,083 | $32,275 |
| 10/1/13 | | 10/1/13 | 9/30/22 | $1.24 | 2,280 | $22,775 |
| 1/2/14 | | 1/2/14 | 12/31/23 | $1.24 | 2,344 | $16,305 |
| 10/15/15 | | 10/15/15 | 10/14/22 | $1.24 | 12,676 | $50,943 |
| 1/15/16 | | 1/15/16 | 1/15/23 | $1.24 | 15,126 | $73,039 |
| 7/1/16 | | 7/1/16 | 6/30/23 | $1.24 | 18,000 | $80,310 |
| Karen Macleod | 7/1/16 | | 6/30/18 | | $ | 5.00 | | | 9,000 | | $
| 26,730 | 7/1/16 | 6/30/23 | $1.24 | 9,000 | $37,154 |
| | 9/30/16
| | 9/30/18
| | $ | 7.20 | | | 6,250 | | $
| 15,000 | |
| | 10/1/16 | | 9/30/18 | | $ | 7.20 | | | 5,882 | | $ | 25,000 | |
| | 12/30/16
| | 12/30/18
| | $ | 4.50 | | | 9,191 | | $ | 25,000 | |
| 9/30/16 | | 9/30/16 | 9/30/21 | $1.15 | 3,529 | $15,000 |
| 10/1/16 | | 10/1/16 | 9/30/21 | $1.15 | 5,882 | $25,000 |
| 1/1/17 | | 1/1/17 | 12/31/21 | $1.15 | 9,191 | $25,000 |
| 4/1/17 | | 4/1/17 | 3/31/22 | $1.15 | 12,195 | $25,000 |
7/1/17(3) | | 7/1/17(3) | 6/30/22 | $1.15 | 13,812 | $25,000 |
10/1/17(3) | | 10/1/17(3) | 9/30/22 | $1.15 | 21,008 | $25,000 |
1/1/18(3) | | 1/1/18(3) | 12/31/22 | $1.05 | 33,784 | $25,000 |
| | | | | | | | | | | | | | | |
| Dirk van Daele | 10/15/15 | | 10/14/17 | | $ | 7.10 | | | 6,338 | | $ | 16,504 | 10/15/15 | 10/14/22 | $1.24 | 6,338 | $29,690 |
| | 1/15/16 | | 1/15/18 | | $ | 5.95 | | | 7,563 | | $ | 22,504 | |
| | 7/1/16 | | 6/30/18 | | $ | 5.00 | | | 9,000 | | $ | 26,730 | |
| | 9/30/16 | | 9/30/18
| | $ | 7.20 | | | 6,250 | | $ | 15,000 | |
| | 10/1/16 | | 9/30/18 | | $ | 7.20 | | | 5,882 | | $ | 25,000 | |
| | 12/30/16 | | 12/30/18 | | $
| 4.50 | | | 9,191 | | $ | 25,000 | |
| 1/15/16 | | 1/15/16 | 1/15/23 | $1.24 | 7,563 | $36,520 |
| 7/1/16 | | 7/1/16 | 6/30/23 | $1.24 | 9,000 | $40,155 |
| | | | | | | | | | | | | | | |
| Dr. Ray Johnson | 10/1/16 | | 9/30/18 | | $ | 7.20 | | | 5,882 | | $ | 25,000 | 10/1/16 | 9/30/21 | $1.24 | 5,882 | $32,904 |
| | 12/30/16 | | 12/30/18 | | $ | 4.50 | | | 9,191 | | $ | 25,000 | |
| | | | | | | | | | | | | | |
| Eric Rosenblum | 10/1/16 | | 9/30/18 | | $ | 7.20 | | | 5,882 | | $ | 25,000 | |
| | 12/30/16 | | 12/30/18 | | $ | 4.50 | | | 9,191 | | $ | 25,000 | |
| 1/1/17 | | 1/1/17 | 12/31/21 | $1.24 | 9,191 | $34,454 |
| 4/1/17 | | 4/1/17 | 3/31/22 | $1.24 | 12,195 | $25,744 |
| 7/1/17 | | 7/1/17 | 6/30/22 | $1.24 | 13,812 | $25,554 |
| 10/1/17 | | 10/1/17 | 9/30/22 | $1.24 | 21,008 | $25,000 |
| 1/1/2018 | | 1/1/2018 | 12/31/22 | $1.05 | 33,784 | $25,000 |
| (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 Mr. Dubois, who is the Company'sCompany’s former Chief Executive Officer and current Chairman of the Board of Directors, during the year ended September 201630, 2017 is reflected in the Executive Compensation Table above.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTSecurities Authorized for Issuance Under Equity Compensation Plans
The following table presentsprovides information regarding beneficial ownership as of January 7,September 30, 2017 (the “Table Date”),regarding equity compensation plans approved by our security holders and equity compensation plans that have not been approved by our security holders:
| 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) | 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. |
Compensation Risks Assessment
As required by rules adopted by the SEC, management has made an assessment of our common stock by (i) each shareholder 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;compensation policies 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 powerpractices with respect to all securities they beneficially own. Asemployees 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 Table Date, the applicable percentage ownership is based on 10,333,516 shares of common stock issuedcompensation policies and outstanding.
Beneficial ownership representing less than one percentpractices that discourage excessive or unnecessary risk taking. As a result of the issuedassessment, we have determined that our compensation policies and outstanding shares of a class is denoted with an asterisk (“*”). Holders of common stockpractices do not create risks that are entitledreasonably likely to one vote per share.
| Name and Address of | |
| Beneficial Owner (1) | | |
| | | |
| 5% Beneficial Owners: | | |
| Sapinda Asia Limited (2) | 5,172,214 | 50.05% |
| Safety Invest S.A., Compartment Secure I (3) | 1,890,697 | 18.30% |
| | | |
| Directors and Named Executive Officers: | | |
| Guy Dubois (4) | 351,432
| 3.29% |
| Peter Poli | - | * |
| Derek Cassell | 5,195 | * |
| David S. Boone (5) | 110,289
| * |
| Karen Macleod (6) | 32,704
| * |
| Dirk van Daele (7) | 106,123
| * |
| Dr. Ray Johnson (8) | 15,073
| * |
| Eric Rosenblum (9) | 15,073 | * |
All directors and executive officers as a group (7 persons) | 635,889
| 5.85% |
(1) | Except as otherwise indicated, the business address for these beneficial owners is c/o the Company, 1215 W. Lakeview Court, Romeoville, Illinois 60446. |
(2) | Address is Rooms 803-4, 8F, Hang Seng Bank Building, 200 Hennessy Road, Wanchai, Hong Kong. Holding information is based on Amendment No. 7 to Schedule 13D filed by Sapinda Asia Limited on November 4, 2015. |
(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 Schedule 13D filed by Safety on February 21, 2014.
|
(4) | Holdings consist of 13,195 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 January 7, 2017.
|
(5) | Holdings include 19,264 shares of common stock owned of record and 91,025 shares of common stock issuable upon exercise of stock purchase warrants, exercisable within 60 days of January 7, 2017. |
(6) | Holdings includes 2,381 shares of common stock owned of record and 30,323 shares of common stock issuable upon exercise of stock purchase warrants, exercisable within 60 days of January 7, 2017. |
(7) | Holdings includes 61,899 shares of common stock owned of record and 44,224 shares of common stock issuable upon exercise of stock purchase warrants, exercisable within 60 days of January 7, 2017. |
(8) | Holdings consist of 15,073 shares of common stock issuable upon exercise of stock purchase warrants, exercisable within 60 days of January 7, 2017. |
(9) | Holdings consist of 15,073 shares of common stock issuable upon exercise of stock purchase warrants, exercisable within 60 days of January 7, 2017. |
have material adverse effects.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Related-Party Loan Agreements
Conrent Loan Agreement. On May 1, 2016 we entered into an unsecured Loan Agreement with Conrent Invest S.A., acting with respect to its Compartment Safety III (the "Conrent Loan Agreement"). Under the Conrent Loan Agreement, the Company can borrow $5.0 million for working capital, repayment of debt, and operating purposes. The Conrent Loan Agreement contains a condition precedent, which provides that the lender is not obligated to fund the loan until it has received total proceeds of $5.0 million from the sale of fixed rate notes, which are to be issued by the lender through its Compartment Safety III. As of September 30, 2016 this condition precedent has not been satisfied. When funded, the loan will bear interest at a rate of 8% per annum, payable in arrears semi-annually, with all principal and accrued unpaid interest due on July 31, 2018. In addition, the Company anticipates paying the lender an arrangement fee of $112,500 when it receives proceeds from this loan. As of September 30, 2016, the Company had not received the funds under the Conrent Loan Agreement.
Amended and Restated Facility Agreement and Debt Exchange Agreement with Conrent Invest, S.A. On July 14, 2015, wethe Company entered into an Amended and Restated Facility Agreement (the “Amended Facility Agreement”) with Conrent to amend certain provisionsInvest S.A., a public limited liability company incorporated under the laws of the Company’s existing $25.0 million unsecured debt facility. PursuantGrand Duchy of Luxembourg (“Conrent”), pursuant to the terms and conditions of the Amended Facility Agreement, effective June 30, 2015,which the Company may now borrow an additional $5.4up to $29.4 million of unsecured debt, which together with the existing $25.0 million of unsecured debt borrowed under the debt facility, will now accrueaccrues interest at a rate of 8% per annum and maturematures 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 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 Amended Facility Agreement be extended from July 31, 2018 to April 1, 2019. On April 26, 2018, the Noteholders approved the extension of 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 received 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 a debt extension agreement with the objective of reaching an agreement acceptable to both Conrent and the Noteholders before the Debt matures on July 31, 2018.
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 AsiaLoan Agreement. On September 25, 2015, the Company entered into a loan agreement with one of the Company’s related parties, Sapinda Asia Limited (“Sapinda”), to provide the Company with a $5.0 million line of credit that accrues interest at a rate of 3% per annum for undrawn funds and 8% per annum for borrowed funds.funds (the “Sapinda Loan Agreement”). Pursuant to the terms and conditions of the loan agreement,Sapinda Loan Agreement, available funds maycould be drawn down at the Company’s request at any time until the loan agreement maturesmatured on September 30, 2017, when all borrowed funds, plus all accrued but unpaid interest will becomebecame due and payable. The
On March 13, 2017, the Company however, may electand Sapinda entered into an agreement to satisfy any outstanding obligations underamend the loan agreement prior toSapinda Loan Agreement (“Amendment Number One”). Amendment Number One extends the maturity date without penalties or fees. As of all loans made pursuant to the Sapinda Loan Agreement to September 30, 2016,2020. In addition, we began accruing penalties because Sapinda had not funded the Company had drawn down $3.4remaining 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 daily penalties currently exceed the daily interest due Sapinda.Further advances under this loan agreement.the Loan Agreement are not currently expected to be forthcoming.
Stock Payable – Related Party
In connection with certain acquisitions during fiscal 2014 and 2015, the Company recognized a liability for stock payable to the Sellerssellers of the entities acquired. In conjunction with the respective purchase agreements, shares of the Company’s stock arewere payable during the years ended September 30, 2017 and 2016 based on the achievement of certain milestones. Changes in the stock payable liability are shown below:
| | | |
| Beginning balance | $3,501,410 | $3,000,000 |
| Stock payable resulting from the acquisition of Track Group Analytics | - | 1,170,000 |
| Payment of shares for achieving performance milestones | (211,531) | (668,590) |
| Ending balance | $3,289,879 | $3,501,410 |
| | | |
| 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, 2017. | $3,399,644
| -
|
Total related-party debt obligations | $3,399,644
| -
|
| | | |
| 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 |
Each of the foregoing related-party transactions was reviewed and approved by those disinterested and independent members of the Company'sCompany’s Board of Directors.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 20182019 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 2018 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 September 12, 201790 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 2018 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 2018 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, 1215 Lakeview Court, Romeoville,200 E. 5thAvenue, Suite 100, Naperville, Illinois 60446,60563, or by calling (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.
TRACK 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, |
January 10, 2017
| | /s/ Guy Dubois
| | | | 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: | | | | | | | | | | | |
| | | 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 | | | | | | [ ] | | [ ] | | [ ] | |
| | | | | | | | | | | | | |
This Written Consent, when properly executed and Chairmanreturned 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 Boardcorporation. If the signer is a partnership, please print full partnership name and indicate capacity of Directors
duly authorized person executing on behalf of the partnership. Dated: ________________________, ______ |
|
| (Print Name of Stockholder) |
|
| (Signature of Stockholder) |
|
| (Second Signature if held jointly) |
The Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016 has been mailed with this Proxy Statement. The Company will provide copies of exhibitsIMPORTANT: PLEASE COMPLETE, SIGN, AND DATE YOUR WRITTEN CONSENT PROMPTLY
RETURN IT IN THE ENVELOPE PROVIDED TO:
Track Group, Inc.
Attn: Corporate Secretary
200 E. 5thAvenue, Suite 100
Naperville, Illinois 60563
Your executed written consent can also be sent via email in PDF form to that report, but will charge a reasonable fee per page to any requesting stockholder. Any such requestpeter.poli@trackgrp.com.
Your written consent should be addressed toreceived by the Company at 1215 Lakeview Court, Romeoville, Illinois 60446, Attention: Investor Relations Department. The request must include a representation by the stockholder that as of December 23, 2016 the stockholder was entitled to vote at the Annual Meeting.
Copies of the Annual Report on Form 10-K and the exhibits thereto may also be obtained through the SEC’s web site atwww.sec.govand at: http://www.astproxyportal.com/ast/18188.or before August 13, 2018.
