Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Jun. 30, 2013 | Aug. 05, 2013 | |
Document and Entity Information: | ' | ' |
Entity Registrant Name | 'SECUREALERT, INC. | ' |
Document Type | 'S-1 | ' |
Document Period End Date | 30-Jun-13 | ' |
Amendment Flag | 'false | ' |
Entity Central Index Key | '0001045942 | ' |
Current Fiscal Year End Date | '--09-30 | ' |
Entity Common Stock, Shares Outstanding | ' | 5,897,773 |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Voluntary Filers | 'No | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'FY | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ' | ' | ' |
Cash | $4,030,960 | $695,111 | $949,749 |
Accounts receivable, net of allowance for doubtful accounts of $772,000 and $996,122, respectively | 2,912,897 | 2,864,542 | 4,150,427 |
Note receivable, current portion | 196,116 | 156,190 | 90,000 |
Prepaid expenses and other | 1,873,640 | 1,979,172 | 1,082,581 |
Inventory, net of reserves of $192,000 and $192,000, respectively | 443,721 | 630,566 | 579,779 |
Total current assets | 9,457,334 | 6,325,581 | 6,852,536 |
Property and equipment, net of accumulated depreciation of $2,055,798 and $1,889,041, respectively | 352,388 | 677,493 | 1,086,633 |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | 2,113,641 | 3,325,110 | 3,461,985 |
Note receivable, net of current portion | ' | 112,492 | 125,000 |
Goodwill | ' | 375,000 | 5,889,395 |
Royalty Purchase Commitment | ' | 10,768,555 | ' |
Intangible assets, net of accumulated amortization of $801,905 and $485,393, respectively | 15,635,550 | 4,874,679 | 5,191,191 |
Other assets | 80,375 | 74,815 | 78,509 |
Total assets | 27,639,288 | 26,533,725 | 22,685,249 |
Current liabilities: Accounts payable (including $0 and $505,977 respectively due to a related party, see Note 5) | 296,682 | 2,444,632 | 2,840,845 |
Accrued liabilities | 3,336,656 | 3,001,062 | 2,713,230 |
Dividends payable | 9,325 | 630,528 | 541,797 |
Deferred revenue | 8,708 | 422,183 | 162,331 |
Current portion of long-term related-party debt | ' | 12,793,303 | 754,896 |
Current portion of long-term debt | 90,617 | 634,218 | 1,041,392 |
Total current liabilities | 3,741,988 | 19,925,926 | 8,054,491 |
Long-term related-party debt, net of current portion and debt discount | 5,934,012 | 1,730,712 | 116,852 |
Long-term debt, net of current portion | 61,929 | 449,950 | 898,598 |
Total liabilities | 9,737,929 | 22,106,588 | 9,069,941 |
Series D 8% dividend, convertible, voting, $0.0001 par value: 85,000 shares designated; 48,763 and 44,845 shares outstanding, respectively (aggregate liquidation preference of $28,476,086) | 1 | 5 | 5 |
Common stock, $0.0001 par value: 15,000,000 shares authorized; 3,096,642 and 2,518,117 shares outstanding, respectively | 590 | 61,933 | 50,362 |
Additional paid-in capital | 272,608,421 | 252,878,825 | 244,620,460 |
Accumulated deficit | -254,707,653 | -248,513,626 | -231,055,519 |
Total equity | 17,901,359 | 4,427,137 | 13,615,308 |
Total liabilities and stockholders' equity | $27,639,288 | $26,533,725 | $22,685,249 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) | ' | ' | ' |
Allowance for doubtful accounts | $338,000 | $772,000 | $996,122 |
Reserve for damaged or obsolete inventory | 192,000 | 192,000 | 127,016 |
Property and equipment accumulated depreciation | 2,055,798 | 2,562,323 | 2,530,591 |
Monitoring equipment accumulated amortization | 1,572,572 | 3,179,310 | 3,608,388 |
Intangible assets accumulated amortization | 1,035,017 | 801,905 | 485,393 |
Accounts payable to related party | ' | ' | 505,977 |
Series D 8% dividend, convertible, voting - par value | $0.00 | $0.00 | $0.00 |
Series D 8% dividend, convertible, voting - shares designated | 85,000 | 85,000 | 85,000 |
Series D 8% dividend, convertible, voting - shares outstanding | 468 | 48,763 | 44,845 |
Series D 8% dividend, convertible, voting - aggregate liquidation preference | $467,507 | $28,476,086 | ' |
Common stock - par value | $0.00 | $0.00 | $0.00 |
Common stock - shares authorized | 15,000,000 | 15,000,000 | 15,000,000 |
Common stock - shares outstanding | 5,896,294 | 3,096,642 | 2,518,117 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2011 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ' | ' | ' | ' | ' | ' |
Products (Revenues) | $165,029 | $151,610 | $464,076 | $1,544,015 | $2,013,155 | $1,551,511 |
Monitoring and other related services (Revenues) | 2,520,185 | 2,848,096 | 12,617,534 | 8,572,595 | 17,778,337 | 16,410,292 |
Total revenues | 2,685,214 | 2,999,706 | 13,081,610 | 10,116,610 | 19,791,492 | 17,961,803 |
Products (Cost of revenues) | 86,773 | 88,789 | 199,785 | 553,004 | 1,596,759 | 651,113 |
Monitoring and other related services (Cost of revenues) | 1,508,878 | 1,431,551 | 6,417,454 | 4,482,754 | 9,821,253 | 8,914,846 |
Impairment of monitoring equipment and parts (Note2) | ' | ' | ' | ' | 1,648,762 | 464,295 |
Total cost of revenues | 1,595,651 | 1,520,340 | 6,617,239 | 5,035,758 | 13,066,774 | 10,030,254 |
Gross profit | 1,089,563 | 1,479,366 | 6,464,371 | 5,080,852 | 6,724,718 | 7,931,549 |
Selling, general and administrative (including $3,576,194 and $1,530,646, respectively, of compensation expense paid in stock, stock options / warrants or as a result ofamortization of stock-based compensation) | 2,075,796 | 4,494,197 | 6,238,783 | 10,838,842 | 15,405,742 | 15,652,303 |
Research and development | 269,072 | 310,810 | 668,269 | 987,215 | 1,248,654 | 1,453,994 |
Settlement expense | ' | ' | 350,000 | ' | 403,678 | 276,712 |
Impairment of goodwill (Note 2) | ' | ' | ' | ' | 5,514,395 | ' |
Loss from operations | -1,255,305 | -3,325,641 | -792,681 | -6,745,205 | -15,847,751 | -9,451,460 |
Loss on disposal of equipment | -94 | ' | -1,459 | -216 | -205,489 | -95,583 |
Change from estimate to actual on acquisition costs | ' | ' | ' | ' | 110,342 | ' |
Redemption of SecureAlert Monitoring Series A Preferred | ' | ' | ' | ' | ' | 16,683 |
Interest income | ' | ' | ' | ' | 11,445 | 13,072 |
Interest expense (including $963,233 and $42,351, respectively, paid in stock,stock options / warrants)1 | 2,737,220 | 654,426 | 5,939,171 | 992,334 | -1,489,897 | -712,840 |
Currency exchange rate gain (loss) | -59,940 | 35,633 | -122,331 | -30,033 | -28,358 | -173 |
Other income, net | ' | ' | ' | ' | -190,023 | 576,232 |
Net loss | -4,132,763 | -4,147,909 | -6,194,027 | -7,729,774 | -17,458,107 | -9,890,574 |
Net loss (income) attributable to non-controlling interest | ' | ' | ' | ' | ' | -31,750 |
Dividends on Series D Preferred stock | -9,325 | -623,678 | -1,033,470 | -1,849,771 | -2,480,298 | -2,029,996 |
Net loss attributable to SecureAlert, Inc. common stockholders | ($4,142,088) | ($4,771,587) | ($7,227,497) | ($9,579,545) | ($19,938,405) | ($11,920,570) |
Net loss per common share, basic and diluted | ' | ' | ' | ' | ($0.04) | ($0.03) |
Weighted average common shares outstanding, basic and diluted | 5,886,000 | 2,624,305 | 4,387,000 | 2,584,315 | 547,034,000 | 380,659,000 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2011 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) | ' | ' | ' | ' | ' | ' |
Compensation expense paid in stock, stock options, warrants or as a result of amortization of stock-based compensation included in selling and general and administrative expenses | $100,964 | $2,471,664 | $233,474 | $3,777,921 | $3,576,194 | $1,530,646 |
Interest expense paid in stock, stock options, warrants, or repricing of warrants, and accretion of debt discount | $2,390,915 | $602,729 | $5,200,842 | $680,088 | $963,233 | $42,351 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Preferred Stock | Common Stock | Additional Paid-in Capital | Preferred Stock Subscription Receivable | Accumulated Deficit | Non-Controlling Interest | Total |
Total equity at Sep. 30, 2010 | $4 | $140 | $224,529,725 | ($50,000) | ($221,164,945) | ($185,073) | $3,129,851 |
Balance - shares at Sep. 30, 2010 | 35,407 | 1,400,116 | ' | ' | ' | ' | ' |
Issuance of common stock for conversion of Series D Preferred stock | -2 | 68 | -66 | ' | ' | ' | ' |
Issuance of common stock for conversion of Series D Preferred stock - shares | -22,735 | 682,050 | ' | ' | ' | ' | ' |
Issuance of common stock for dividends from SMI Series A Preferred stock | ' | ' | -97,349 | ' | ' | ' | -97,349 |
Issuance of common stock for dividends from SMI Series A Preferred stock -shares | ' | 4,908 | ' | ' | ' | ' | ' |
Issuance of common stock for services | ' | ' | 21,310 | ' | ' | ' | 21,310 |
Issuance of common stock for services - shares | ' | 1,250 | ' | ' | ' | ' | ' |
Issuance of common stock for acquisition of subsidiares | ' | 32 | 5,322,032 | ' | ' | 153,323 | 5,475,387 |
Issuance of common stock for acquisition of subsidiares - shares | ' | 323,526 | ' | ' | ' | ' | ' |
Issuance of common stock for dividends from Series D Preferred stock | ' | 11 | 2,043,298 | ' | ' | ' | 2,043,309 |
Issuance of common stock for dividends from Series D Preferred stock - shares | ' | 106,535 | ' | ' | ' | ' | ' |
Issuance of common stock for cancellation of shares - shares | ' | -269 | ' | ' | ' | ' | ' |
Vesting and re-pricing of stock options | ' | ' | 1,231,836 | ' | ' | ' | 1,231,836 |
Beneficial conversion feature recorded as interest expense | ' | ' | 42,351 | ' | ' | ' | 42,351 |
Series D Preferred dividends | ' | ' | -2,029,996 | ' | ' | ' | -2,029,996 |
Issuance of Series D Preferred stock in connection with forbearance agreements | ' | ' | 140,000 | ' | ' | ' | 140,000 |
Issuance of Series D Preferred stock in connection with forbearance agreements - shares | 280 | ' | ' | ' | ' | ' | ' |
Issuance of Series D Preferred stock for Board of Director fees | ' | ' | 12,500 | ' | ' | ' | 12,500 |
Issuance of Series D Preferred stock for Board of Director fees - shares | 25 | ' | ' | ' | ' | ' | ' |
Issuance of Series D Preferred stock for prepaid commissions | ' | ' | 493,500 | ' | ' | ' | 493,500 |
Issuance of Series D Preferred stock for prepaid commissions - shares | 987 | ' | ' | ' | ' | ' | ' |
Issuance of Series D Preferred stock in connection with debt and accrued interest | ' | ' | 2,334,632 | ' | ' | ' | 2,334,632 |
Issuance of Series D Preferred stock in connection with debt and accrued interest - shares | 4,669 | ' | ' | ' | ' | ' | ' |
Issuance of Series D Preferred stock for cash | 3 | ' | 10,344,600 | ' | ' | ' | 10,344,603 |
Issuance of Series D Preferred stock for cash - shares | 26,037 | ' | ' | ' | ' | ' | ' |
Cancellation of Series D Preferred stock | ' | ' | -50,000 | 50,000 | ' | ' | ' |
Cancellation of Series D Preferred stock - shares | -100 | ' | ' | ' | ' | ' | ' |
Issuance of Series D Preferred stock in connection with services | ' | ' | 137,500 | ' | ' | ' | 137,500 |
Issuance of Series D Preferred stock in connection with services - shares | 275 | ' | ' | ' | ' | ' | ' |
Net loss | ' | ' | ' | ' | -9,890,574 | 31,750 | -9,858,824 |
Total equity at Sep. 30, 2011 | 5 | 251 | 244,670,571 | ' | -231,055,519 | ' | 13,615,308 |
Balance - shares at Sep. 30, 2011 | 44,845 | 2,518,117 | ' | ' | ' | ' | ' |
Issuance of common stock for conversion of Series D Preferred stock - shares | -90 | 2,700 | ' | ' | ' | ' | ' |
Issuance of common stock for services | ' | ' | 40,000 | ' | ' | ' | 40,000 |
Issuance of common stock for services - shares | ' | 4,315 | ' | ' | ' | ' | ' |
Issuance of common stock for dividends from Series D Preferred stock | ' | 21 | 2,391,547 | ' | ' | ' | 2,391,568 |
Issuance of common stock for dividends from Series D Preferred stock - shares | ' | 210,689 | ' | ' | ' | ' | ' |
Vesting and re-pricing of stock options | ' | ' | 1,405,500 | ' | ' | ' | 1,405,500 |
Beneficial conversion feature recorded as interest expense | ' | ' | 1,475,000 | ' | ' | ' | 1,475,000 |
Issuance of common stock for royalty payment | ' | 7 | 819,965 | ' | ' | ' | 819,972 |
Issuance of common stock for royalty payment - shares | ' | 71,969 | ' | ' | ' | ' | ' |
Issuance of common stock for debt | ' | 1 | 118,279 | ' | ' | ' | 118,280 |
Issuance of common stock for debt - shares | ' | 8,449 | ' | ' | ' | ' | ' |
Issuance of common stock for employee compensation | ' | 12 | 732,622 | ' | ' | ' | 732,634 |
Issuance of common stock for employee compensation - shares | ' | 121,700 | ' | ' | ' | ' | ' |
Issuance of common stock for board of director fees | ' | ' | 48,060 | ' | ' | ' | 48,060 |
Issuance of common stock for board of director fees - shares | ' | 3,000 | ' | ' | ' | ' | ' |
Issuance of common stock for cash | ' | 17 | 1,032,983 | ' | ' | ' | 1,033,000 |
Issuance of common stock for cash - shares | ' | 155,707 | ' | ' | ' | ' | ' |
Acceleration of vesting and cancellation of stock warrants | ' | ' | 1,398,060 | ' | ' | ' | 1,398,060 |
Issuance of common stock warrant to settle a lawsuit | ' | ' | 253,046 | ' | ' | ' | 253,046 |
Issuance of common stock warrants for Board of Director fees | ' | ' | 105,042 | ' | ' | ' | 105,042 |
Issuance of common stock warrants for consulting fees | ' | ' | 33,357 | ' | ' | ' | 33,357 |
Repricing of common stock warrants in connection with debt and accrued interest | ' | ' | 39,965 | ' | ' | ' | 39,965 |
Commission paid in connection with capital raise | ' | ' | -1,147,250 | ' | ' | ' | -1,147,250 |
Series D Preferred dividends | ' | ' | -2,480,298 | ' | ' | ' | -2,480,298 |
Issuance of Series D Preferred stock for cash | ' | ' | 2,004,000 | ' | ' | ' | 2,004,000 |
Issuance of Series D Preferred stock for cash - shares | 4,008 | ' | ' | ' | ' | ' | ' |
Net loss | ' | ' | ' | ' | -17,458,107 | ' | -17,458,107 |
Total equity at Sep. 30, 2012 | $5 | $310 | $252,940,448 | ' | ($248,513,626) | ' | $4,427,137 |
Balance - shares at Sep. 30, 2012 | 48,763 | 3,096,642 | ' | ' | ' | ' | ' |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | 12 Months Ended | ||
Jun. 30, 2013 | Jun. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2011 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ' | ' | ' | ' |
Net Loss | ($6,194,027) | ' | ($17,458,107) | ($9,858,824) |
Depreciation and amortization | -1,922,243 | -1,641,289 | 2,078,127 | 1,793,557 |
Common stock issued for services | ' | ' | 40,000 | 21,310 |
Issuance of common stock to employees for cancellation of warrants | ' | ' | 2,130,694 | ' |
Series D Preferred stock issued for services | ' | ' | ' | 137,500 |
Vesting and re-pricing of stock options | ' | ' | 1,405,500 | 1,231,836 |
Amortization of debt discount | ' | ' | 923,268 | 61,493 |
Settlement expense | ' | ' | ' | 276,712 |
Origination fees recorded in connection with debt | ' | ' | ' | 25,000 |
Common stock warrants repriced in connection with related-party debt | ' | ' | 39,965 | ' |
Change in redemption value in connection with SMI Series A Preferred stock | ' | ' | ' | -16,682 |
Increases in related-party line of credit for services | ' | ' | ' | 515,536 |
Impairment of goodwill | ' | ' | 5,514,395 | ' |
Impairment of monitoring equipment and parts | -450,000 | 0 | 1,648,762 | 464,295 |
Issuance of Series D Preferred shares in connection with forbearance | ' | ' | ' | 140,000 |
Loss on disposal of property and equipment | ' | ' | 23,865 | 300,338 |
Disposal of property and equipment as employee compensation | ' | ' | 2,790 | ' |
Loss on forgiveness of note receivable | ' | ' | 22,750 | ' |
Loss on disposal of monitoring equipment and parts | 1,459 | 216 | 205,489 | 95,583 |
Change in accounts receivable, net | 736,579 | -946,040 | 1,054,267 | -2,726,576 |
Change in notes receivable | -72,566 | -69,011 | 88,061 | -170,000 |
Change in inventories | -186,845 | 189,139 | -410,521 | -502,648 |
Change in prepaid expenses and other assets | -107,538 | 1,391,551 | -892,897 | 232,014 |
Change in accounts payable | 1,524,922 | -8,355 | 487,264 | 1,042,579 |
Change in accrued expenses | -2,395,860 | 106,247 | 1,127,088 | 46,023 |
Change in deferred revenue | 345,862 | -482,110 | 259,852 | 81,441 |
Net cash used in operating activities | 1,438,750 | -1,894,016 | -1,709,388 | -6,809,513 |
Purchase of property and equipment | -32,968 | -99,846 | -112,163 | -215,528 |
Net proceeds from the sale of property and equipment | ' | ' | 136,618 | ' |
Purchase of monitoring equipment and parts | -490,153 | -1,545,649 | -2,745,399 | -3,066,026 |
Cash acquired through acquisition | ' | ' | ' | 10,000 |
Payment related to acquisition | ' | ' | ' | -400,000 |
Issuance of note receivable | ' | ' | ' | -45,000 |
Net cash used in investing activities | -523,121 | -1,645,495 | -2,720,944 | -3,716,554 |
Principal payments on related-party line of credit | ' | ' | ' | -188,634 |
Borrowings on related-party notes payable | 2,800,000 | 2,980,000 | 2,980,000 | 1,780,911 |
Principal payments on related-party notes payable | ' | -3,177,947 | -3,187,578 | -951,639 |
Proceeds from notes payable | ' | 2,000,000 | 3,962 | 1,283,800 |
Principal payments on notes payable | -287,888 | -738,380 | -910,440 | -1,919,457 |
Borrowings on related-party convertible debentures | ' | ' | 2,900,000 | ' |
Borrowings on convertible debentures | ' | 500,000 | 500,000 | ' |
Proceeds from issuance of common stock | ' | ' | 1,033,000 | ' |
Proceeds from issuance of Series D Convertible Preferred stock | ' | 1,612,000 | 2,004,000 | 10,344,603 |
Commissions paid in connection with capital raise | ' | ' | -1,147,250 | ' |
Net cash provided by financing activities | 2,512,112 | 3,175,673 | 4,175,694 | 10,349,584 |
Net increase (decrease) in cash | 3,572,931 | -131,232 | -254,638 | -176,483 |
Cash, beginning of year | 695,111 | 949,749 | 949,749 | 1,126,232 |
Cash, end of year | 4,030,960 | 454,969 | 695,111 | 949,749 |
Cash paid for interest | 222,262 | 259,844 | 444,644 | 816,178 |
Issuance of 0 and 4,908 shares of common stock, respectively for payment of SecureAlert Monitoring, Inc. Series A Preferred stock dividends | ' | ' | ' | 97,349 |
Note payable issued to acquire monitoring equipment and property and equipment | ' | 69,000 | 69,000 | 274,148 |
Issuance of shares of Series D Convertible Preferred stock for conversion of debt, accrued liabilities and interest | ' | ' | ' | 2,334,632 |
Issuance of 210,689 and 106,535 shares of common stock in connection with Series D Preferred stock dividends | ' | ' | 2,391,568 | 2,043,309 |
Non-controlling interest assumed through acquisition of subsidiaries | ' | ' | ' | 153,322 |
Issuance of 2,700 and 682,050 shares of common stock from the conversion of 90 and 22,735 shares of Series D Preferred stock | ' | ' | 54 | 13,641 |
Series D Preferred stock dividends earned | ' | ' | 2,480,298 | 2,029,996 |
Accrued liabilities and notes recorded in connection with the acquisition of Midwest Monitoring & Surveillance, Inc. | ' | ' | ' | 1,187,946 |
Cancellation of 0 and 269 shares of common stock, respectively, for services | ' | ' | ' | 5 |
Cancellation of subscription receivable | ' | ' | ' | 50,000 |
Issuance of 0 and 987 Series D Preferred stock for prepaid commissions | ' | ' | ' | 493,500 |
Issuance of 0 and 13,526 shares of common stock in connection with the acquisition of Midwest Monitoring & Surveillance, Inc. | ' | ' | ' | 238,064 |
Issuance of 0 and 310,000 shares of common stock in connection with the acquisition of International Surveillance Services Corp., net of cash acquired | ' | ' | ' | 5,087,921 |
Issuance of Series D Preferred stock to settle accrued liabilities | ' | ' | ' | 12,500 |
Acquisition of accounts receivable from International Surveillance Services Corp. ownership | ' | ' | ' | 84,338 |
Acquisition of accounts payable and accrued liabilities from International Surveillance Services Corp. ownership | ' | ' | ' | 13,921 |
Issuance of 30,000 and 0 stock warrants, respectively, for settlement of debt | ' | ' | 253,046 | ' |
Issuance of 18,500 and 0 common stock warrants, respectively, for Board of Director fees | ' | ' | 105,042 | ' |
Issuance of 3,000 and 0 shares of common stock, respectively, for Board of Director fees | ' | ' | 48,060 | ' |
Issuance of 71,969 and 0 shares of common stock, respectively, for related- party royalty | ' | ' | 819,972 | ' |
Issuance of 8,449 and 0 shares of common stock, respectively, for settlement of debt | ' | ' | 118,280 | ' |
Issuance of 6,000 and 0 common stock warrants, respectively, to a consultant for services | ' | ' | 33,357 | ' |
Beneficial conversion feature recorded with convertible debentures | ' | ' | 473,334 | ' |
Beneficial conversion feature recorded with related-party convertible debentures | ' | 368,333 | 1,001,666 | ' |
Note receivable issued for outstanding accounts receivable net of accounts payable due | ' | ' | 168,116 | ' |
Settlement of note payable upon sale of property and equipment | ' | 56,794 | 56,794 | ' |
Acquisition of property and equipment as payment against note receivable | ' | 3,623 | 3,623 | ' |
Liabilities and notes payable paid through issuance of related-party convertible debt debt | ' | ' | 1,000,000 | ' |
Acquisition of royalty purchase commitment through issuance of note payable | ' | ' | $10,768,555 | ' |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | 12 Months Ended | |
Sep. 30, 2012 | Sep. 30, 2011 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | ' | ' |
Stock warrants issued for settlement of debt | 30,000 | ' |
Common stock issued for payment of Series D Preferred stock dividends | 210,689 | 106,535 |
Warrants issued for Board of Director fees | 18,500 | ' |
Common stock issued for Board of Director fees | 3,000 | ' |
Common stock issued for related-party royalty | 71,969 | ' |
Common stock issued for settlement of debt | 8,449 | ' |
Warrants issued to a consultant for services | 6,000 | ' |
Common stock issued from the conversion of Series D Preferred stock | 2,700 | 682,050 |
Series D Preferred stock for prepaid commisions | ' | 987 |
Common stock issued with acquisition of Midwest Monitoring & Surveillance, Inc. | ' | 13,526 |
Common stock issued with acquisition of International Surveillance Services Corp., net of cash acquired | ' | 310,000 |
Common stock issued for payment of SecureAlert Monitoring, Inc.Series A Preferred stock dividends | ' | 4,908 |
Common stock cancelled | ' | 269 |
1_Basis_of_Presentation
(1) Basis of Presentation | 9 Months Ended |
Jun. 30, 2013 | |
Notes | ' |
(1) Basis of Presentation | ' |
(1) BASIS OF PRESENTATION | |
The unaudited interim condensed consolidated financial information of SecureAlert, Inc. and subsidiaries (collectively, the “Company” or “SecureAlert”) has been prepared in accordance with the Instructions to Form 10-Q and Article 8 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying interim consolidated financial information contains all adjustments, consisting only of normal recurring adjustments necessary to present fairly the Company’s financial position as of June 30, 2013, and results of its operations for the three and nine months ended June 30, 2013 and 2012. These financial statements should be read in conjunction with the annual consolidated financial statements and notes thereto that are included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2012. The results of operations for the three and nine months ended June 30, 2013 may not be indicative of the results for the fiscal year ending September 30, 2013. On February 28, 2013, the shareholders of the Company approved a reduction in the authorized share capital of the Company to 15,000,000 shares of common stock, and a reverse split reducing the outstanding shares of the Company. Share and per share information for the period covered by this report and for prior periods has been retroactively adjusted in this report to reflect the effects of a 200 for 1 reverse stock split of the Company’s common stock effective as of March 25, 2013. | |
2_Significant_Accounting_Polic
(2) Significant Accounting Policies (Scenario, Previously Reported) | 9 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Scenario, Previously Reported | ' | ||||||||
Notes | ' | ||||||||
(2) Significant Accounting Policies | ' | ||||||||
(2) Summary of Significant Accounting Policies | |||||||||
Principles of Consolidation | |||||||||
The accompanying consolidated financial statements include the accounts of SecureAlert, Inc. and its subsidiaries, SecureAlert Monitoring, Inc., Midwest Monitoring & Surveillance, Inc., Court Programs, Inc., Court Programs of Florida, Inc., and International Surveillance Services Corp (collectively, the “Company”). All intercompany balances and transactions have been eliminated in consolidation. | |||||||||
Use of Estimates in the Preparation of Financial Statements | |||||||||
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. | |||||||||
Fair Value of Financial Statements | |||||||||
The carrying amounts reported in the accompanying consolidated financial statements for cash, accounts receivable, accounts payable, accrued liabilities, and other debt obligations approximate fair values because of the immediate or short-term maturities of these financial instruments. The carrying amounts of the Company’s debt obligations approximate fair value as the interest rates approximate market interest rates. | |||||||||
Concentration of Credit Risk | |||||||||
In the normal course of business, the Company provides credit terms to its customers and requires no collateral. Accordingly, the Company performs ongoing credit evaluations of its customers' financial condition. | |||||||||
Based upon the expected collectability of its accounts receivable, the Company maintains an allowance for doubtful accounts receivable. | |||||||||
One customer accounted for $2,450,984 (12 percent) of total revenues for the fiscal year ended September 30, 2012 and the same customer accounted for $2,265,805 (13 percent) of total revenues for the fiscal year ended September 30, 2011. No other customer represented more than 10 percent of the Company’s total revenues for the fiscal years ended September 30, 2012 or 2011. | |||||||||
Concentration of credit risk associated with the Company’s total and outstanding accounts receivable as of September 30, 2012 and 2011, respectively, are shown in the table below: | |||||||||
2012 | % | 2011 | % | ||||||
Customer A | $ 681,781 | 24% | $ - | - | |||||
Customer B | $ 475,800 | 17% | $ 347,553 | 7% | |||||
Customer C | $ - | - | $ 1,995,804 | 39% | |||||
Cash Equivalents | |||||||||
The Company has cash in bank accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. | |||||||||
Cash equivalents consist of investments with original maturities to the Company of three months or less. The Company had $350,716 and $371,130 of cash deposits in excess of federally insured limits as of September 30, 2012 and 2011, respectively. | |||||||||
Accounts Receivable | |||||||||
Accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Specific reserves are estimated by management based on certain assumptions and variables, including the customer’s financial condition, age of the customer’s receivables and changes in payment histories. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when cash is received. A trade receivable is considered to be past due if any portion of the receivable balance has not been received by the Company within its normal terms. Interest income is not recorded on trade receivables that are past due, unless that interest is collected. | |||||||||
Inventory | |||||||||
Inventory is valued at the lower of the cost or market. Cost is determined using the first-in, first-out (“FIFO”) method. Market is determined based on the estimated net realizable value, which generally is the item selling price. Inventory is periodically reviewed in order to identify obsolete or damaged items or impaired values. The Company impaired its inventory by $359,734 and $268,398 during the fiscal years ended September 30, 2012 and 2011, respectively. | |||||||||
Inventory consists of raw materials that are used in the manufacturing of TrackerPAL® and ReliAlert devices. Completed TrackerPAL® and ReliAlert devices are reflected in Monitoring Equipment. As of September 30, 2012 and 2011, respectively, inventory consisted of the following: | |||||||||
2012 | 2011 | ||||||||
Raw materials | $ 822,566 | $ 706,795 | |||||||
Reserve for damaged or obsolete inventory | (192,000) | (127,016) | |||||||
Total inventory, net of reserves | $ 630,566 | $ 579,779 | |||||||
Note Receivable | |||||||||
Notes receivable are carried at the face amount of each note plus respective accrued interest receivable, less received payments. The Company does not typically carry notes receivable in the course of its regular business, but had entered into an agreement with one of its customers during the fiscal year ended September 30, 2012. Payments are recorded as they are received and are immediately offset against any outstanding accrued interest before they are applied against the outstanding principal balance on the respective note. The note requires monthly payments of $15,000 and matures in May 2014. Additionally, the note does not have a stated interest rate; therefore, the Company imputed interest according to GAAP. As of September 30, 2012, the outstanding balance of the note, net of note discount, was $268,682 and $1,325 of accrued interest. As of the date of this report, the Company expects to collect the outstanding amount. | |||||||||
Property and Equipment | |||||||||
Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are determined using the straight-line method over the estimated useful lives of the assets, typically three to seven years. Leasehold improvements are amortized over the shorter of the estimated useful life of the asset or the term of the lease. Expenditures for maintenance and repairs are expensed while renewals and improvements are capitalized. | |||||||||
Property and equipment consisted of the following as of September 30, 2012 and 2011, respectively: | |||||||||
2012 | 2011 | ||||||||
Equipment, software and tooling | $ 2,409,031 | $ 2,390,329 | |||||||
Automobiles | 372,339 | 398,890 | |||||||
Building | - | 377,555 | |||||||
Leasehold improvements | 134,941 | 132,820 | |||||||
Furniture and fixtures | 323,505 | 317,630 | |||||||
Total property and equipment before accumulated depreciation | 3,239,816 | 3,617,224 | |||||||
Accumulated depreciation | (2,562,323) | (2,530,591) | |||||||
Property and equipment, net of accumulated depreciation | $ 677,493 | $ 1,086,633 | |||||||
Property and equipment to be disposed of is reported at the lower of the carrying amount or fair value, less the estimated costs to sell and any gains or losses are included in the results of operations. During the fiscal years ended September 30, 2012 and 2011, the Company disposed of net property and equipment of $23,865 and $300,338, respectively. | |||||||||
Depreciation expense for the fiscal years ended September 30, 2012 and 2011 was $373,858 and $421,407, respectively. | |||||||||
Monitoring Equipment | |||||||||
Monitoring equipment as of September 30, 2012 and 2011 is as follows: | |||||||||
2012 | 2011 | ||||||||
Monitoring equipment | $ 6,504,420 | $ 7,070,373 | |||||||
Less: accumulated amortization | (3,179,310) | (3,608,388) | |||||||
Monitoring equipment, net of accumulated depreciation | $ 3,325,110 | $ 3,461,985 | |||||||
The Company began leasing monitoring equipment to agencies for offender tracking in April 2006 under operating lease arrangements. The monitoring equipment is depreciated using the straight-line method over an estimated useful life of 3 years. | |||||||||
Amortization expense for the fiscal years ended September 30, 2012 and 2011, was $1,387,756 and $1,160,920, respectively. These expenses were classified as a cost of revenues. | |||||||||
Assets to be disposed of are reported at the lower of the carrying amount or fair value, less the estimated costs to sell. During the fiscal years ended September 30, 2012 and 2011, the Company disposed and impaired lease monitoring equipment and parts of $1,494,518 and $291,479, respectively. These impairment costs were included in cost of revenues. This equipment will continue to be used. | |||||||||
Impairment of Long-Lived Assets and Goodwill | |||||||||
The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that the book value of an asset may not be recoverable and in the case of goodwill, at least annually. The Company evaluates whether events and circumstances have occurred which indicate possible impairment as of each balance sheet date. The Company uses an equity method of the related asset or group of assets in measuring whether the assets are recoverable. If the carrying amount of an asset exceeds its market value, an impairment charge is recognized for the amount by which the carrying amount exceeds the estimated fair value of the asset. Impairment of long-lived assets is assessed at the lowest levels for which there is an identifiable fair market value that is independent of other groups of assets. In reviewing historical financial performance and participating in recent discussions in selling Court Programs, Inc. and Midwest Monitoring & Surveillance, Inc., the Company recorded an impairment expense. | |||||||||
The following summarizes the changes in goodwill during the years ended September 30, 2012 and 2011: | |||||||||
Court Programs, Inc. | Midest Monitoring & Surveillance, Inc. | ||||||||
2012 | 2011 | 2012 | 2011 | ||||||
Gross carrying amount, beginning of period | $ 2,488,068 | $ 2,488,068 | $ 3,401,327 | $ 1,421,995 | |||||
Additions | - | - | - | 1,979,332 | |||||
Impairments | (2,488,068) | - | (3,026,327) | - | |||||
Gross carrying amount, end o3 period | $ - | $ 2,488,068 | $ 375,000 | $ 3,401,327 | |||||
Revenue Recognition | |||||||||
The Company’s revenue has historically been from two sources: (i) monitoring services; and (ii) product sales. | |||||||||
Monitoring Services | |||||||||
Monitoring services include two components: (a) lease contracts in which the Company provides monitoring services and leases devices to distributors or end users and the Company retains ownership of the leased device; and (b) monitoring services purchased by distributors or end users who have previously purchased monitoring devices and opt to use the Company’s monitoring services. | |||||||||
The Company typically leases its devices under one-year contracts with customers that opt to use the Company’s monitoring services. However, these contracts may be cancelled by either party at anytime with 30 days notice. Under the Company’s standard leasing contract, the leased device becomes billable on the date of activation or 7 to 21 days from the date the device is assigned to the lessee, and remains billable until the device is returned to the Company. The Company recognizes revenue on leased devices at the end of each month that monitoring services have been provided. In those circumstances in which the Company receives payment in advance, the Company records these payments as deferred revenue. | |||||||||
Product Sales | |||||||||
The Company may sell its monitoring devices in certain situations to its customers. In addition, the Company may sell equipment in connection with the building out and setting up a monitoring center on behalf of its customers. The Company recognizes product sales revenue when persuasive evidence of an arrangement with the customer exists, title passes to the customer and the customer cannot return the devices or equipment, prices are fixed or determinable (including sales not being made outside the normal payment terms) and collection is reasonably assured. When purchasing products (such as TrackerPAL® and ReliAlert devices) from the Company, customers may, but are not required to, enter into monitoring service contracts with the Company. The Company recognizes revenue on monitoring services for customers that have previously purchased devices at the end of each month that monitoring services have been provided. | |||||||||
The Company sells and installs standalone tracking systems that do not require ongoing monitoring by the Company. The Company has experience in component installation costs and direct labor hours related to this type of sale and can typically reasonably estimate costs, therefore the Company recognizes revenue over the period in which the installation services are performed using the percentage-of-completion method of accounting for material installations. The Company typically uses labor hours or costs incurred to date as a percentage of the total estimated labor hours or costs to fulfill the contract as the most reliable and meaningful measure that is available for determining a project’s progress toward completion. The Company evaluates its estimated labor hours and costs and determines the estimated gross profit or loss on each installation for each reporting period. If it is determined that total cost estimates are likely to exceed revenues, the Company accrues the estimated losses immediately. | |||||||||
Multiple Element Arrangements | |||||||||
The majority of the Company’s revenue transactions do not have multiple elements. However, on occasion, the Company enters into revenue transactions that have multiple elements. These may include different combinations of products or monitoring services that are included in a single billable rate. These products or monitoring services are delivered over time as the customer utilizes the Company's services. For revenue arrangements that have multiple elements, the Company considers whether the delivered devices have standalone value to the customer, there is objective and reliable evidence of the fair value of the undelivered monitoring services, which is generally determined by surveying the price of competitors’ comparable monitoring services, and the customer does not have a general right of return. Based on these criteria, the Company recognizes revenue from the sale of devices separately from the monitoring services provided to the customer as the products or monitoring services are delivered. | |||||||||
Other Matters | |||||||||
The Company considers an arrangement with payment terms longer than the Company’s normal terms not to be fixed or determinable, and revenue is recognized when the fee becomes due. Normal payment terms for the sale of monitoring services and products are due upon receipt to 30 days. The Company sells its devices and services directly to end users and to distributors. Distributors do not have general rights of return. Also, distributors have no price protection or stock protection rights with respect to devices sold to them by the Company. Generally, title and risk of loss pass to the buyer upon delivery of the devices. | |||||||||
The Company estimates its product returns based on historical experience and maintains an allowance for estimated returns, which is recorded as a reduction to accounts receivable and revenue. | |||||||||
Shipping and handling fees charged to customers are included as part of net revenues. The related freight costs and supplies directly associated with shipping products to customers are included as a component of cost of revenues. | |||||||||
Geographical Information | |||||||||
The Company recognized revenues from international sources from its products and monitoring services. Revenues are attributed to the geographic areas based on the location of the customers purchasing and leasing the products. The revenues recognized by geographic area for the fiscal years ended September 30, 2012 and 2011, are as follows: | |||||||||
Fiscal Years Ended | |||||||||
September 30, | |||||||||
2012 | 2011 | ||||||||
United States of America | $ 14,075,140 | $ 14,499,613 | |||||||
Latin American Countries | 2,450,984 | 2,533,483 | |||||||
Caribbean Countries and Commonwealths | 3,217,651 | 912,504 | |||||||
Other Foreign Countries | 47,717 | 16,203 | |||||||
Total | $ 19,791,492 | $ 17,961,803 | |||||||
The long-lived assets, net of accumulated depreciation and amortization, used in the generation of revenues by geographic area as of September 30, 2012 and 2011, were as follows: | |||||||||
Net Property and Equipment | Net Monitoring Equipment | ||||||||
2012 | 2011 | 2012 | 2011 | ||||||
United States of America | $ 677,493 | $ 1,082,453 | $ 2,328,139 | $ 3,352,614 | |||||
Latin American Countries | - | - | 719,171 | 32,919 | |||||
Caribbean Countries and Commonwealths | - | 4,180 | 263,782 | 71,687 | |||||
Other Foreign Countries | - | - | 14,018 | 4,765 | |||||
Total | $ 677,493 | $ 1,086,633 | $ 3,325,110 | $3,461,985 | |||||
Research and Development Costs | |||||||||
All expenditures for research and development are charged to expense as incurred. These expenditures in 2012 and 2011 were for the development of SecureAlert’s TrackerPAL® and ReliAlert device and associated services. For the fiscal years ended September 30, 2012 and 2011, research and development expenses were $1,248,654 and $1,453,994, respectively. | |||||||||
Advertising Costs | |||||||||
The Company expenses advertising costs as incurred. Advertising expense for the fiscal years ended September 30, 2012 and 2011, was $42,148 and $117,568, respectively. | |||||||||
Stock-Based Compensation | |||||||||
The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. The Company estimates the fair value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock. | |||||||||
Income Taxes | |||||||||
The Company recognizes deferred income tax assets or liabilities for the expected future tax consequences of events that have been recognized in the financial statements or income tax returns. Deferred income tax assets or liabilities are determined based upon the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to apply when the differences are expected to be settled or realized. Deferred income tax assets are reviewed periodically for recoverability and valuation allowances are provided as necessary. | |||||||||
Net Loss Per Common Share | |||||||||
Basic net loss per common share ("Basic EPS") is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. | |||||||||
Diluted net loss per common share ("Diluted EPS") is computed by dividing net loss attributable to common stockholders by the sum of the weighted-average number of common shares outstanding and the weighted-average dilutive common share equivalents outstanding. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect. | |||||||||
Common share equivalents consist of shares issuable upon the exercise of common stock options and warrants, and shares issuable upon conversion of preferred stock. As of September 30, 2012 and 2011, there were 565,034,215 and 399,448,202 outstanding common share equivalents, respectively, that were not included in the computation of diluted net loss per common share as their effect would be anti-dilutive. The common stock equivalents outstanding as of September 30, 2012 and 2011, consisted of the following: | |||||||||
2012 | 2011 | ||||||||
Conversion of debt and accrued interest and loan origination fees | 172,699,722 | - | |||||||
Conversion of Series D Preferred stock | 292,578,000 | 269,070,000 | |||||||
Exercise of outstanding common stock options and warrants | 67,356,493 | 99,178,202 | |||||||
Exercise and conversion of outstanding Series D Preferred stock | |||||||||
warrants | 32,400,000 | 31,200,000 | |||||||
Total common stock equivalents | 565,034,215 | 399,448,202 | |||||||
Recent Accounting Pronouncements | |||||||||
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies, which are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. | |||||||||
3_Acquisitions_Goodwill_and_Ot
(3) Acquisitions, Goodwill and Other Intangible Assets (Scenario, Previously Reported) | 9 Months Ended | ||||||||||||
Jun. 30, 2013 | |||||||||||||
Scenario, Previously Reported | ' | ||||||||||||
Notes | ' | ||||||||||||
(3) Acquisitions, Goodwill and Other Intangible Assets | ' | ||||||||||||
(3) Acquisitions, Goodwill and Other Intangible Assets | |||||||||||||
As of September 30, 2012, the Company had recorded goodwill and intangible assets related to the acquisition of controlling interest of Midwest, Court Programs, Bishop Rock Software, and International Surveillance Services Corp (“ISS”). The Company has also entered into a license agreement related to the use of certain patents. The following tables summarize the activity and balance of goodwill and intangible assets for the fiscal years ended September 30, 2012 and 2011: | |||||||||||||
Midwest Monitoring & Surveillance | Court Programs, Inc. | Bishop Rock Software | Patent | International Surveillance Services Corp. | Total | ||||||||
Goodwill | $ 375,000 | $ - | $ - | $ - | $ - | $375,000 | |||||||
Other intangible assets | |||||||||||||
Trade name | 120,000 | 99,000 | 10,000 | - | - | 229,000 | |||||||
Software | - | - | 380,001 | - | - | 380,001 | |||||||
Customer relationships | - | 6,000 | - | - | - | 6,000 | |||||||
Patent license agreement | - | - | - | 50,000 | - | 50,000 | |||||||
Non-compete agreements | 2,000 | 6,000 | - | - | - | 8,000 | |||||||
Royalty agreement | - | - | - | - | 5,003,583 | 5,003,583 | |||||||
Total other intangible assets | 122,000 | 111,000 | 390,001 | 50,000 | 5,003,583 | 5,676,584 | |||||||
Accumulated amortization | (40,664) | (43,700) | (390,001) | (14,816) | (312,724) | (801,905) | |||||||
Other intangible assets, net of accumulated amortization | 81,336 | 67,300 | - | 35,184 | 4,690,859 | 4,874,679 | |||||||
Total goodwill and other intangible assets, net of amortization | $ 456,336 | $ 67,300 | $ - | $35,184 | $4,690,859 | $5,249,679 | |||||||
Midwest Monitoring & Surveillance | Court Programs, Inc. | Bishop Rock Software | Patent | International Surveillance Services Corp. | Total | ||||||||
Goodwill | $ 3,401,327 | $ 2,488,068 | $ - | $ - | $ - | $ 5,889,395 | |||||||
Other intangible assets | |||||||||||||
Trade name | 120,000 | 99,000 | 10,000 | - | - | 229,000 | |||||||
Software | - | - | 380,001 | - | - | 380,001 | |||||||
Customer relationships | - | 6,000 | - | - | - | 6,000 | |||||||
Patent license agreement | - | - | - | 50,000 | - | 50,000 | |||||||
Non-compete agreements | 2,000 | 6,000 | - | - | - | 8,000 | |||||||
Royalty agreement | - | - | - | - | 5,003,583 | 5,003,583 | |||||||
Total other intangible assets | 122,000 | 111,000 | 390,001 | 50,000 | 5,003,583 | 5,676,584 | |||||||
Accumulated amortization | (32,667) | (35,900) | (345,022) | (9,259) | (62,545) | (485,393) | |||||||
Other intangible assets, net of accumulated amortization | 89,333 | 75,100 | 44,979 | 40,741 | 4,941,038 | 5,191,191 | |||||||
Total goodwill and other intangible assets, net of amortization | $ 3,490,660 | $ 2,563,168 | $ 44,979 | $ 40,741 | $ 4,941,038 | $ 11,080,586 | |||||||
The following table summarizes the future maturities of amortization of intangible assets as of September 30, 2012: | |||||||||||||
Fiscal Year | Midwest Monitoring & Surveillance | Court Programs, Inc. | Bishop Rock Software | Patent | International Surveillance Services Corp. | Total | |||||||
2013 | $ 8,000 | $ 6,800 | $ - | $ 5,556 | $ 250,179 | $ 270,535 | |||||||
2014 | 8,000 | 6,600 | - | 5,556 | 250,179 | 270,335 | |||||||
2015 | 8,000 | 6,600 | - | 5,556 | 250,179 | 270,335 | |||||||
2016 | 8,000 | 6,600 | - | 5,556 | 250,179 | 270,335 | |||||||
2017 | 8,000 | 6,600 | - | 5,556 | 250,179 | 270,335 | |||||||
Thereafter | 41,336 | 34,100 | - | 7,404 | 3,439,964 | 3,522,804 | |||||||
Total | $ 81,336 | $ 67,300 | $ - | $ 35,184 | $ 4,690,859 | $ 4,874,679 | |||||||
Midwest Monitoring & Surveillance | |||||||||||||
Effective December 1, 2007, the Company purchased a 51 percent ownership interest, including a voting interest, in Midwest Monitoring & Surveillance, Inc. (“Midwest”). Midwest provides electronic monitoring for individuals on parole. The Company completed the purchase of the remaining ownership interest effective June 30, 2011. | |||||||||||||
The Company recorded a goodwill impairment expense of $3,026,327 for the fiscal year ended September 30, 2012. As of September 30, 2012, the Company had a balance of goodwill of $375,000 and $122,000 of other intangible assets, as noted in the table above. | |||||||||||||
During the fiscal years ended 2012 and 2011, the Company recorded $7,997 and $8,000 of amortization expense for Midwest intangible assets, resulting in a total accumulated amortization of $40,664 and $32,667, and net other intangible assets of $81,336, and $89,333, respectively. | |||||||||||||
Subsequent to the fiscal year ended September 30, 2012, the Company entered into a Stock Purchase Agreement whereby two former principals of Midwest purchased from the Company all the issued and outstanding capital stock of Midwest for $750,000, payable as follows: (a) forgiveness of $650,000 in debt obligations owed by the Company to the former Midwest principals, and (b) cash of $100,000 payable under a note on or before April 1, 2013. | |||||||||||||
Court Programs | |||||||||||||
Effective December 1, 2007, the Company purchased a 51 percent ownership interest, including a voting interest, in Court Programs, Inc., a Mississippi corporation, Court Programs of Northern Florida, Inc., a Florida corporation, and Court Programs of Florida, Inc., a Florida corporation (collectively, “Court Programs”). The Company purchased the remaining 49 percent ownership interest effective March 1, 2010. Court Programs is a distributor of electronic monitoring devices to courts providing a solution to monitor individuals on probation. The Company acquired Court Programs to utilize its preexisting business relationships to gain more market share and expand available service offerings. During the fiscal year ended September 30, 2012, the Company sold various territories in the state of Florida to various distributors that were previously serviced by Court Programs of Florida, Inc., a wholly-owned subsidiary of SecureAlert. | |||||||||||||
The Company recorded goodwill impairment expense of $2,488,068 for the fiscal year ended September 30, 2012. As of September 30, 2012, the Company had a balance of goodwill of $0 and $111,000 of other intangible assets, as noted in the table above. | |||||||||||||
During the fiscal years ended 2012 and 2011, the Company recorded $7,800 and $7,800 of amortization expense on intangible assets for Court Programs, resulting in a total accumulated amortization of $43,700 and $35,900 and net other intangible assets of $67,300 and $75,100, respectively. | |||||||||||||
Bishop Rock Software | |||||||||||||
Effective January 14, 2009, the Company purchased all of the assets of Bishop Rock Software, Inc., a California corporation through a wholly-owned subsidiary, SecureAlert Enterprise Solutions, Inc. During the fiscal year ended 2011, SecureAlert Enterprise Solutions, Inc. merged into SecureAlert Monitoring, Inc. During the fiscal years ended 2012 and 2011, the Company recorded $44,979 and $127,334 of amortization expense on intangible assets for Bishop Rock Software, resulting in a total accumulated amortization of $390,001 and $345,022 and net intangible assets of $0 and $44,979, respectively. | |||||||||||||
Patent | |||||||||||||
On January 29, 2010, the Company and Satellite Tracking of People, LLC (“STOP”) entered into a license agreement whereby STOP granted to Company a non-exclusive license under U.S. Patent No. 6,405,213 and any and all patents issuing from continuation, continuation-in-part, divisional, reexamination and reissues thereof and along with all foreign counterparts, to make, have made, use, sell, offer to sell and import covered products in SecureAlert’s present and future business. The license granted will continue for so long as any of the licensed patents have enforceable rights. The license granted is not assignable or transferable except for sublicenses within the scope of its license to the Company’s subsidiaries. | |||||||||||||
The Company agreed to pay $50,000 as consideration for the use of this patent. Of the $50,000, $25,000 was paid during the fiscal year ended September 30, 2010 and the balance was paid on February 3, 2011. | |||||||||||||
During the fiscal years ended 2012 and 2011, the Company recorded $5,557 and $5,555 of amortization expense for the patent, resulting in a total accumulated amortization of $14,816 and $9,259, and net other intangible assets of $35,184, and $40,741, respectively. | |||||||||||||
International Surveillance Services Corp. | |||||||||||||
Effective July 1, 2011, the Company entered into a stock purchase agreement and purchased ISS, a Puerto Rico corporation, in consideration of 62,000,000 shares of its common stock. ISS is an international distributor of electronic monitoring devices to individuals on parole or probation. The Company acquired ISS to utilize the knowledge and connections the company has in Central and South America and to acquire the rights to its territorial commissions that were being paid to ISS. | |||||||||||||
As of September 30, 2012, the Company had a balance of goodwill of $0 and $5,003,583 of other intangible assets, as noted in the table above. | |||||||||||||
The Company recorded $250,179 of amortization expense on intangible assets for ISS during the fiscal year ended September 30, 2012, resulting in a total accumulated amortization of $312,724 and net other intangible assets of $4,690,859. |
4_Royalty_Purchase_Commitment
(4) Royalty Purchase Commitment (Scenario, Previously Reported) | 9 Months Ended |
Jun. 30, 2013 | |
Scenario, Previously Reported | ' |
Notes | ' |
(4) Royalty Purchase Commitment | ' |
(4) Royalty Purchase Commitment | |
On September 5, 2012, the Company entered into an agreement to redeem the royalty held by Borinquen Container Corporation pursuant to a royalty agreement dated July 1, 2011, as amended. Under the terms of the royalty, Borinquen Container Corporation had the right to 20 percent of net revenues derived within certain geographic territories. | |
The Company capitalized the total cost of the royalty purchase commitment, $10,768,555, as a non-current asset and recorded a loan payable to Borinquen (“Borinquen”) to reflect the obligation (see note 6 below). The Company will amortize the asset over the remaining term of the royalty agreement, subject to periodic analysis for impairment based on future expected revenues. The Company will annually calculate the amortization based on the effective royalty rate and on the revenues in the geographic territory subject to the royalty. The Company’s analysis will be based on such factors as historical revenue and expected revenue growth in the territory. Funds for the purchase of the royalty were to be provided under a Loan and Security Agreement from Sapinda Asia Limited (“Sapinda Asia”). The loan was not fully funded and the necessary payments were not made in full to Borinquen. Consequently, Borinquen terminated the agreement on December 26, 2012. Sapinda Asia and Borinquen are negotiating to cure the default and complete the purchase. |
5_Accounts_Payable_and_Accrued
(5) Accounts Payable and Accrued Liabilities Disclosure | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Notes | ' | ||||
(13) Accrued Expenses | ' | ||||
(13) ACCRUED EXPENSES | |||||
Accrued expenses consisted of the following as of June 30, 2013 and September 30, 2012: | |||||
June 30, | September 30, | ||||
2013 | 2012 | ||||
Accrued royalties | $ 845,656 | $ 641,446 | |||
Accrued taxes - foreign and domestic | 655,678 | 262,440 | |||
Accrued interest | 625,654 | 27,831 | |||
Accrued payroll, taxes and employee benefits | 347,161 | 540,931 | |||
Accrued consulting | 317,300 | 352,072 | |||
Accrued outside services | 151,839 | 38,630 | |||
Accrued travel costs | 85,756 | - | |||
Accrued settlement costs | 82,000 | 50,000 | |||
Accrued board of directors fees | 80,000 | 265,000 | |||
Accrued cellular costs | 50,500 | 27,662 | |||
Accrued legal costs | 47,779 | 14,628 | |||
Accrued warranty and manufacturing costs | 30,622 | 30,622 | |||
Accrued other expenses | 16,711 | 183,722 | |||
Accrued cost of revenues | - | 4,467 | |||
Total accrued expenses | $ 3,336,656 | $ 2,439,451 | |||
Scenario, Previously Reported | ' | ||||
Notes | ' | ||||
(13) Accrued Expenses | ' | ||||
(5) Accrued Expenses | |||||
Accrued expenses consisted of the following as of September 30, 2012 and 2011: | |||||
2012 | 2011 | ||||
Accrued payroll, taxes and employee benefits | $ 701,537 | $ 749,509 | |||
Accrued royalties | 641,446 | - | |||
Accrued consulting | 352,072 | 370,658 | |||
Accrued taxes - foreign and domestic | 271,240 | - | |||
Accrued board of directors fees | 265,000 | 153,101 | |||
Accrued other expenses | 197,512 | 110,810 | |||
Accrued acquisition costs payable in cash | 149,626 | 272,500 | |||
Accrued acquisition costs payable in cash to a related-party | 149,626 | 272,500 | |||
Accrued settlement costs | 50,000 | 276,712 | |||
Accrued outside services | 38,630 | 28,294 | |||
Accrued interest | 37,937 | 26,329 | |||
Accrued warranty and manufacturing costs | 30,622 | 66,622 | |||
Accrued indigent fees | 28,518 | 39,175 | |||
Accrued cost of revenues | 28,397 | 42,026 | |||
Accrued cellular costs | 27,662 | 32,299 | |||
Accrued administration fees | 16,609 | 29,900 | |||
Accrued legal costs | 14,628 | 215,895 | |||
Accrued inventory costs | - | 26,900 | |||
Total accrued expenses | $ 3,001,062 | $ 2,713,230 | |||
6_Certain_Relationships_and_Re
(6) Certain Relationships and Related Transactions (Scenario, Previously Reported) | 9 Months Ended | ||||||
Jun. 30, 2013 | |||||||
Scenario, Previously Reported | ' | ||||||
Notes | ' | ||||||
(6) Certain Relationships and Related Transactions | ' | ||||||
(6) Certain Relationships and Related Transactions | |||||||
The Company entered into certain transactions with related parties during the fiscal year ended September 30, 2012. These transactions consist mainly of financing transactions and consulting arrangements. Transactions with related parties are reviewed and approved by the independent members of the Board of Directors. | |||||||
2012 | 2011 | ||||||
Note payable in connection with the redemption of a royalty agreement for $10,768,555. | |||||||
The note requires installment payments and matured November 2012. Subsequent | |||||||
to the fiscal year end, this note was terminated. | $ 10,050,027 | $ - | |||||
Note payable in connection with the purchase of the remaining ownership of Midwest | |||||||
Monitoring & Surveillance, Inc. The payments are due quarterly ending in September | |||||||
2013. The Company imputed interest since the note has no stated interest rate, resulting in | |||||||
a debt discount balance as of September 30, 2012 and 2011 of $11,398 and $32,524, | |||||||
respectively. The note was paid off subsequent to September 30, 2012 through the | |||||||
sale of Midwest Monitoring & Surveillance, Inc. | 138,602 | 192,476 | |||||
Note payable in connection with the purchase of the remaining ownership of Court | |||||||
Programs, Inc., interest at 12% per annum, with monthly payments of $10,000. The note | |||||||
matured November 2012 and is currently in default. | 46,694 | 139,272 | |||||
The Company received $500,000 from Mr. Derrick, a shareholder and former officer. | |||||||
The terms of this financing have not been determined as of the date of this Report. | 500,000 | - | |||||
Convertible debenture with an interest rate of 8% per annum. The debenture matures | |||||||
December 17, 2012 and is secured by the domestic patents of the Company. The | |||||||
debenture may be converted into shares of common stock at a rate of $0.0225 per share. | |||||||
The debenture is currently in default. | 500,000 | - | |||||
Convertible debenture with an interest rate of 8% per annum. The debenture matures | |||||||
December 17, 2012 and is secured by the domestic patents of the Company. The | |||||||
debenture may be converted into shares of common stock at a rate of $0.0225 per share. | |||||||
The debenture is currently in default. | 2,000,000 | - | |||||
The Company received $1,900,000 through the issuance of convertible debentures | |||||||
with an interest rate of 8% per annum. The debentures mature on June 17, 2014. This | |||||||
debenture may convert into shares of common stock at a rate of $0.0225 per share. | |||||||
A debt discount of $633,333 was recorded to reflect a beneficial conversion feature. | |||||||
As of September 30, 2012, the remaining debt discount was $611,308. | 1,288,692 | - | |||||
The Company entered into a Loan a Security Agreement with an entity under which | |||||||
the Company could borrow up to $8,000,000 on a line of credit. Both the Company | |||||||
and the Lender agreed to terminate the agreement and enter into an agreement to | |||||||
raise additional equity on behalf of the Company through the sale of Series D | |||||||
Preferred stock. The loan was paid back and the line of credit was closed. | - | 500,000 | |||||
Note payable with an interest rate of 16% per annum and matured in November 2011. | - | 40,000 | |||||
Total related-party debt obligations | 14,524,015 | 871,748 | |||||
Less current portion | (12,793,303) | (754,896) | |||||
Long-term debt, net of current portion | $ 1,730,712 | $ 116,852 | |||||
Other Related-Party Transactions | |||||||
Notes #1 and #2 | |||||||
During the year ended September 30, 2012, the Company borrowed $2,000,000 from a significant shareholder, Borinquen, under two notes payable. The first note was unsecured and the second was secured by $1,530,000 of leased equipment and $1,529,808 of accounts receivable from an international customer. The notes bore interest of 15 percent per annum and the Company accrued a $50,000 origination fee. During the fiscal year ended 30, 2012, the Company paid $1,018,082 to pay in full all outstanding principal and accrued interest on the first note and $1,037,544 to pay in full all outstanding principal and accrued interest on the second note. | |||||||
Note #3 | |||||||
During the year ended September 30, 2012, the Company borrowed $50,000 from its then Chief Executive Officer, John Hastings, under an unsecured promissory note. The note bore interest of 15 percent per annum and was paid in full prior to September 30, 2012. In connection with this loan, the Company paid a $5,000 origination fee and agreed to re-price outstanding warrants and options previously granted to Mr. Hastings to an exercise price of $0.075 per share, valued at $15,237 and recorded as interest expense. The value of $15,237 was calculated based upon the following assumptions: volatility ranging from 100.02 percent to 109.24 percent, risk-free rate of 0.22 percent, exercise price of $0.075, and market price of Common Stock on grant date of $0.074 per share. | |||||||
Notes #4 and 5 | |||||||
During the year ended September 30, 2012, the Company borrowed $250,000 from its Chief Financial Officer, Chad Olsen, under two unsecured promissory notes payable. The notes bore interest of 15 percent per annum and were paid in full prior to September 30, 2012. The Company paid $15,000 in loan origination fees and agreed to re-price outstanding warrants and options previously granted to Mr. Olsen and other individuals to an exercise price of $0.075 per share, valued at $24,723 and recorded as interest expense. The value of $24,723 was calculated based upon the following assumptions: volatility ranging from 76.69 percent to 119.56 percent, risk-free rate ranging from 0.22 percent to 0.37 percent, exercise price of $0.075, and market price of Common Stock on grant date ranging from $0.074 to $0.075 per share. | |||||||
Note #6 | |||||||
During the year ended September 30, 2012, the Company borrowed $180,000 from Rene Klinkhammer, one of its directors, under an unsecured promissory note payable. The note bore interest of 10 percent per annum and the Company paid $193,220 of principal and interest to settle the note in full prior to September 30, 2012. Included in the payoff of $193,220 is $9,000 in loan origination fees. | |||||||
The following table summarizes the Company’s future maturities of related-party debt obligations as of September 30, 2012: | |||||||
Fiscal Year | Total | ||||||
2013 | $ 12,793,303 | ||||||
2014 | 1,730,712 | ||||||
Thereafter | - | ||||||
Total | $ 14,524,015 | ||||||
7_Debt_Obligations
(7) Debt Obligations (Scenario, Previously Reported) | 9 Months Ended | ||||||
Jun. 30, 2013 | |||||||
Scenario, Previously Reported | ' | ||||||
Notes | ' | ||||||
(7) Debt Obligations | ' | ||||||
(7) Debt Obligations | |||||||
Debt obligations as of September 30, 2012 and 2011, consisted of the following: | |||||||
2012 | 2011 | ||||||
Settlement liability from patent infringement suit and countersuit settled in February 2010. The liability will be paid quarterly through March 2013. | $ 200,000 | $ 500,000 | |||||
Notes issued in connection with the acquisition of a subsidiary. Quarterly cash payments mature on January 2014. These notes bear no interest. Balance on notes reflects debt discount of $16,939 and $55,388, respectively. The effective interest rate is 15% per annum. Subsequent to fiscalyear ended September 30, 2012, this debt was assumed through the sale of Midwest Monitoring & Surveillance, Inc. to former owners of the company. | 233,061 | 369,612 | |||||
Capital leases with effective interest rates that range between 8.51% and 17.44%. Leases mature between November 2012 and March 2016. | 272,508 | 335,366 | |||||
Note payable due to the Small Business Administration ("SBA"). Note bears interest at 4.00% and matures April 2037. The note is secured by Court Programs, Inc. | 201,204 | 215,288 | |||||
Automobile loans with several financial institutions secured by the vehicles. Interest rates range between 0.0% and 8.9%, due through February 2016. | 137,888 | 181,146 | |||||
Unsecured revolving line of credit with a bank, with an interest rate of 9.25%, $10,493 and $10,568, was available for withdrawal under the line of credit, respectively. | 39,507 | 39,432 | |||||
Secured note bearing an interest rate of 18%. The note matured in November 2011. | - | 225,000 | |||||
Note payable to a financial institution bearing interest at 6.37%. The note was secured by property which was sold during the fiscal year. | - | 70,156 | |||||
Notes payable for testing equipment with an interest rate of 8%. The notes were secured by testing equipment. The notes matured in December 2011. | - | 3,237 | |||||
Notes payable for monitoring equipment. Interest rates range between 7.8% to 18.5% and matured in November 2011. The notes were secured by monitoring equipment. | - | 753 | |||||
Total debt obligations | 1,084,168 | 1,939,990 | |||||
Less current portion | (634,218) | (1,041,392) | |||||
Long-term debt, net of current portion | $ 449,950 | $ 898,598 | |||||
The following table summarizes the Company’s future maturities of debt obligations as of September 30, 2012: | |||||||
Fiscal Year | Total | ||||||
2013 | $ 634,218 | ||||||
2014 | 154,142 | ||||||
2015 | 95,190 | ||||||
2016 | 24,536 | ||||||
2017 | 6,919 | ||||||
Thereafter | 169,163 | ||||||
Total | $ 1,084,168 | ||||||
The following table summarizes the Company’s capital lease obligations included in the schedules of debt and debt obligations above as of September 30, 2012: | |||||||
Fiscal Year | Total | ||||||
2013 | $ 161,857 | ||||||
2014 | 112,383 | ||||||
2015 | 55,916 | ||||||
2016 | 9,797 | ||||||
Thereafter | - | ||||||
Total minimum lease payments | 339,953 | ||||||
Less: amount representing interest | (67,445) | ||||||
Present value of net minimum lease payments | 272,508 | ||||||
Less: current portion | (131,072) | ||||||
Obligation under capital leases - long-term | $ 141,436 | ||||||
As of September 30, 2012 and 2011, the Company had total capital lease obligations of $272,508 and $335,366, the current portion being $131,072 and $117,138, respectively. Capital leases are secured by assets with a total original cost of $539,659 and $497,779 with related accumulated depreciation of $314,997 and $209,864 as of September 30, 2012 and 2011, respectively. |
8_Preferred_Stock
(8) Preferred Stock | 9 Months Ended |
Jun. 30, 2013 | |
Notes | ' |
(16) Preferred Stock | ' |
(16) PREFERRED STOCK | |
The Company is authorized to issue up to 20,000,000 shares of preferred stock, $0.0001 par value per share. The Company's Board of Directors has the authority to amend the Company's Articles of Incorporation, without further shareholder approval, to designate and determine, in whole or in part, the preferences, limitations and relative rights of the preferred stock before any issuance of the preferred stock and to create one or more series of preferred stock. | |
Series D Convertible Preferred Stock | |
On July 27, 2011, the Company amended its Articles of Incorporation and increased the total designated shares of Series D Preferred stock from 70,000 to 85,000 shares. During the nine months ended June 30, 2013, the Company did not issue any Series D Preferred stock. | |
Dividends | |
The Series D Preferred stock is entitled to dividends at the rate equal to 8 percent per annum calculated on the purchase amount actually paid for the shares or amount of debt converted. The dividend is payable in cash or shares of common stock at the sole discretion of the Board of Directors. If a dividend is paid in shares of common stock of the Company, the number of shares to be issued is based on the average per share market price of the common stock for the 14-day period immediately preceding the applicable accrual date (i.e., March 31, June 30, September 30, or December 31, as the case may be). Dividends are payable quarterly, no later than 30 days following the end of the accrual period. During the nine months ended June 30, 2013, the Company issued 181,033 shares of common stock to pay $1,654,673 of accrued dividends on the Series D Preferred stock earned. Subsequent to June 30, 2013, the Company issued 799 shares of common stock to pay $9,325 of accrued dividends on Series D Preferred stock earned during the three months ended June 30, 2013. | |
Convertibility | |
Each share of Series D Preferred stock may be converted into 30 shares of common stock, commencing after ninety days from the date of issue. | |
In February 2013, and as a condition to a loan agreement, the Company conducted an exchange offer (“Exchange Offer”) of Series D Preferred stock in order to simplify the capitalization structure. The Exchange Offer was conditioned upon at least 90 percent of the cumulative original issue price paid for all of the issued and outstanding shares of Series D Preferred stock. The shareholders were entitled to exchange their shares of Series D Preferred at a premium over the current conversion rate of 30 shares of common stock per Series D Preferred share as follows: 15 shares for each $1,000 of original price paid, 10 shares for each $676 of original price paid, and 8 shares for each $500 of original price paid. Under the Exchange Offer, 46,095 shares of Series D Preferred stock converted into 1,828,283 shares of common stock. | |
During the nine months ended June 30, 2013, a total of 48,295 shares of Series D Preferred stock (including shares exchanged for common stock in the Exchange Offer) were converted into 1,894,283 shares of common stock. As of June 30, 2013 and September 30, 2012, there were 468 and 48,763 Series D Preferred shares outstanding, respectively. | |
Voting Rights and Liquidation Preference | |
The holders of the Series D Preferred stock may vote their shares on an as-converted basis on any issue presented for a vote of the shareholders, including the election of directors and the approval of certain transactions such as a merger or other business combination of the Company. For the periods ended June 30, 2013 and September 30, 2012, there were 468 and 48,763 shares of Series D Preferred stock outstanding with voting rights equivalent to 14,040 and 1,462,890 shares of common stock, respectively. | |
Additionally, the holders are entitled to a liquidation preference equal to their original investment amount. In the event of the liquidation, dissolution or winding up of the affairs of the Company (including in connection with a permitted sale of all or substantially all of the Company’s assets), whether voluntary or involuntary, the holders of shares of Series D Preferred stock then outstanding will be entitled to receive, out of the assets of the Company available for distribution to its shareholders, an amount per share equal to original issue price, as adjusted to reflect any stock split, stock dividend, combination, recapitalization and the like with respect to the Series D Preferred stock. | |
Series D Preferred Stock Purchase Warrants | |
As of June 30, 2013 and September 30, 2012, the Company had warrants outstanding for the purchase of 5,400 shares of Series D Preferred stock at an exercise price of $16.67 per share. The warrants were issued in connection with a subscription to purchase Series D Preferred stock which expire beginning in November 2013 and ending July 2016. | |
Scenario, Previously Reported | ' |
Notes | ' |
(16) Preferred Stock | ' |
(8) Preferred Stock | |
The Company is authorized to issue up to 20,000,000 shares of preferred stock, $0.0001 par value per share. The Company's Board of Directors has the authority to amend the Company's Articles of Incorporation, without further shareholder approval, to designate and determine, in whole or in part, the preferences, limitations and relative rights of the preferred stock before any issuance of the preferred stock and to create one or more series of preferred stock. | |
Series D Convertible Preferred Stock | |
In July 2011, the Company designated 85,000 shares of preferred stock as Series D Convertible Preferred stock, $0.0001 par value per share (“Series D Preferred stock”). | |
During the fiscal year ended September 30, 2011, the Company issued 26,037 shares of Series D Preferred stock under securities purchase agreements for $10,344,600 in net cash proceeds, 4,669 shares in consideration for the conversion of $2,334,632 of debt, accrued liabilities and interest, 280 shares in consideration of shareholder forbearance agreements valued at $140,000, and 25 shares to members of the Company’s Board of Directors for fees. In addition, the issuance of 100 shares was cancelled in connection with a rescinded subscription receivable, 987 shares were issued for prepaid commissions valued at $493,500, and 275 shares valued at $137,500 were issued as payment for services rendered to the Company. | |
During the fiscal year ended September 30, 2012, the Company issued 4,008 shares of Series D Preferred stock under securities purchase agreements for $2,004,000 in net cash proceeds. As of September 30, 2012 and 2011, there were 48,763 and 44,845 Series D Preferred shares outstanding, respectively. | |
Dividends | |
The Series D Preferred stock is entitled to dividends at the rate equal to 8 percent per annum calculated on the purchase amount actually paid for the shares or amount of debt converted. The dividend is payable in cash or shares of common stock at the sole discretion of the Board of Directors. If a dividend is paid in shares of common stock of the Company, the number of shares to be issued is based on the average per share market price of the common stock for the 14-day period immediately preceding the applicable accrual date (i.e., March 31, June 30, September 30, or December 31, as the case may be). Dividends are payable quarterly, no later than 30 days following the end of the accrual period. | |
During the fiscal year ended September 30, 2012, the Company issued 42,137,711 shares of common stock to pay $2,391,568 of accrued dividends on the Series D Preferred stock earned for the twelve months between July 1, 2011 and June 30, 2012. Subsequent to September 30, 2012, the Company issued 20,760,551 shares of common stock to pay $630,528 of accrued dividends on Series D Preferred stock earned during the three months ended September 30, 2012. | |
During the fiscal year ended September 30, 2011, the Company issued 21,307,067 shares of common stock to pay $2,043,309 of accrued dividends on the Series D Preferred stock earned for the twelve months between July 1, 2010 and June 30, 2011. | |
Convertibility | |
Each share of Series D Preferred stock may be converted into 6,000 shares of common stock, commencing after ninety days from the date of issue. During the fiscal years ended September 30, 2012 and 2011, 90 and 22,735 shares of Series D Preferred stock were converted into 540,000 and 136,410,000 shares of common stock, respectively. | |
Voting Rights and Liquidation Preference | |
The holders of the Series D Preferred stock may vote their shares on an as-converted basis on any issue presented for a vote of the shareholders, including the election of directors and the approval of certain transactions such as a merger or other business combination of the Company. As of September 30, 2012 and 2011, there were 48,763 and 44,845 shares of Series D Preferred stock outstanding, respectively. Additionally, the holders are entitled to a liquidation preference equal to their original investment amount. | |
In the event of the liquidation, dissolution or winding up of the affairs of the Company (including in connection with a permitted sale of all or substantially all of the Company’s assets), whether voluntary or involuntary, the holders of shares of Series D Preferred Stock then outstanding will be entitled to receive, out of the assets of the Company available for distribution to its shareholders, an amount per share equal to original issue price, as adjusted to reflect any stock split, stock dividend, combination, recapitalization and the like with respect to the Series D Preferred Stock. | |
Series D Preferred Stock Warrants | |
During the fiscal year ended September 30, 2011, the Company issued and fully vested warrants to purchase a total of 1,400 Series D Preferred stock at an exercise price of $500 per share. The warrants were valued using the Black-Scholes option-pricing model as if the shares were converted into common stock. The related value associated with these four-year warrants was $475,340 based upon the following inputs: volatility of 108.05 percent, risk-free rate of 0.50 percent, exercise price of $0.0833, and market price on grant date of $0.09. The warrants were issued in connection with a subscription to purchase Series D Preferred stock. | |
As of September 30, 2012, 5,400 warrants to purchase Series D Preferred stock at an exercise price of $500 per share were issued and outstanding. | |
SecureAlert Monitoring, Inc. Series A Preferred Shares | |
During the fiscal year ended September 30, 2007, and pursuant to Board of Directors approval, the Company amended the articles of incorporation of its subsidiary, SecureAlert Monitoring, Inc. (“SMI”) to designate 3,590,000 shares of preferred stock designated as Series A Convertible Redeemable Non-Voting Preferred stock (“SMI Series A Preferred stock”). | |
On March 24, 2008, SMI redeemed all outstanding shares of SMI Series A. The former SMI Series A shareholders were entitled to receive quarterly contingent payments through March 23, 2011, based on a rate of $1.54 per day times the number of parolee contracts calculated in days during the quarter, payable in either cash or common stock at the Company’s option. The Company was required to make quarterly adjustments as necessary to reflect the difference between the estimated and actual contingency payments to the former SMI Series A shareholders. During the fiscal years ended September 30, 2012 and 2011, the Company recorded income of $0 and $16,683, respectively, to reflect the change between the estimated and actual contingency payments. The Company no longer has any obligation for contingent or other payments to the former holders of the SMI Series A. |
9_Common_Stock
(9) Common Stock | 9 Months Ended |
Jun. 30, 2013 | |
Notes | ' |
(17) Common Stock | ' |
(17) COMMON STOCK | |
Authorized Shares | |
The Company held an Annual Shareholders meeting on February 28, 2013, at which time the shareholders approved a reverse stock split at a ratio of 200 for 1 and amended the total authorized shares of common stock to 15,000,000 shares. The effect of the reverse stock split has been reflected throughout these financial statements. | |
Common Stock Issuances | |
During the nine months ended June 30, 2013, the Company issued the following shares of common stock: 1,894,283 from the exchange or conversion of 48,295 shares of Series D Preferred stock, 701,444 shares from the conversion of $3,156,493 of debt and accrued interest, 181,033 shares to pay $1,654,673 of accrued dividends on Series D Preferred stock, 16,266 shares for services valued at $71,979, 2,981 shares issued to pay accrued board of director fees valued at $37,500, and 3,805 shares for commissions valued at $34,245. Subsequent to June 30, 2013, the Company issued 799 shares of common stock as payment of dividends on Series D Preferred stock for the 3rd fiscal quarter ended June 30, 2013. | |
Scenario, Previously Reported | ' |
Notes | ' |
(17) Common Stock | ' |
(9) Common Stock | |
Authorized Shares | |
Pursuit to an annual shareholders meeting held on December 21, 2011 whereby the shareholders approved an amendment, the Company increased its total authorized shares of common stock from 600,000,000 to 1,250,000,000 shares. | |
Common Stock Issuances | |
During the fiscal year ended September 30, 2012, the Company issued 115,704,871 shares of common stock. Of these shares, 540,000 shares were issued upon conversion of 90 shares of Series D Preferred stock; 14,393,860 shares were issued as part of a royalty agreement, valued at $819,972; 862,961 shares were issued for services rendered to the Company valued at $40,000; 1,689,714 shares were issued in connection with debt and accrued interest; 42,137,711 shares were issued to pay dividends from Series D Preferred stock; 24,340,000 shares were issued to employees for compensation; 600,000 shares were issued to pay Board of Director fees of $48,060 and 31,140,625 shares were issued for $1,033,000 in cash proceeds. | |
During the fiscal year ended September 30, 2011, the Company issued 223,653,951 shares of common stock. Of these shares, 136,410,000 shares were issued upon conversion of 22,735 shares of Series D Preferred stock; 250,000 shares were issued for services rendered to the Company valued at $21,310; 2,705,264 shares were issued as part of the agreement to purchase the remaining percentage of ownership of Midwest, valued at $238,064 (see Note 3); 62,000,000 shares were issued as part of the agreement to purchase the assets of ISS, valued at $5,084,000 (see Note 3); 981,620 shares were issued to pay contingency payments of $97,349 in connection with the redemption of SMI Series A Preferred stock; and 21,307,067 shares were issued to pay dividends from Series D Preferred stock. During the fiscal year ended September 30, 2011, the Company cancelled 53,778 shares of common stock previously issued. | |
10_Stock_Options_and_Warrants
(10) Stock Options and Warrants | 9 Months Ended | |||||||||
Jun. 30, 2013 | ||||||||||
Notes | ' | |||||||||
(18) Stock Options and Warrants | ' | |||||||||
(18) STOCK OPTIONS AND WARRANTS | ||||||||||
Stock Incentive Plan | ||||||||||
At the annual meeting of shareholders on December 21, 2011, the shareholders approved the 2012 Equity Compensation Plan (the “2012 Plan”), which had previously been adopted by the Board of Directors of the Company. The 2012 Plan provides for the grant of incentive stock options and nonqualified stock options, restricted stock, stock appreciation rights, performance shares, performance stock units, dividend equivalents, stock payments, deferred stock, restricted stock units, other stock-based awards and performance-based awards to employees and certain non-employees who have important relationships with the Company. A total of 90,000 shares are authorized for issuance pursuant to awards granted under the 2012 Plan. During the nine months ended June 30, 2013 and 2012, 0 and 30,000 options were issued under this 2012 Plan, respectively. As of June 30, 2013, 60,000 shares of common stock were available for future grants under the 2012 Plan. | ||||||||||
For the nine months ended June 30, 2013 and 2012, the Company calculated compensation expense of $22,032 and $199,755, respectively, related to the vesting of stock options previously granted under Company stock incentive plans in prior years. Compensation expense associated with unvested stock options and warrants of $7,644 will be recognized over the fiscal year ending September 30, 2013. | ||||||||||
All Options and Warrants | ||||||||||
The fair value of each stock option and warrant grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company granted warrants to purchase 129,649 and 54,500 shares of common stock during the nine months ended June 30, 2013 and 2012, respectively. The Company recorded $399,751 and $1,472,732 of expense for the nine months ended June 30, 2013 and 2012, respectively, related to the issuance, vesting and re-pricing of all stock options and warrants. As of June 30, 2013, $7,644 of compensation expense associated with unvested stock options and warrants issued previously to employees and $71,250 of expense associated with unvested warrants issued previously to board members will be recognized over the remaining fiscal year. | ||||||||||
The option and warrant grants for nine months ended June 30, 2013 and 2012 were valued using the Black-Scholes model with the following weighted-average assumptions: | ||||||||||
Nine Months Ended June 30, | ||||||||||
2013 | 2012 | |||||||||
Expected cash dividend yield | - | - | ||||||||
Expected stock price volatility | 108% | 95% | ||||||||
Risk-free interest rate | 0.15% | 0.36% | ||||||||
Expected life of options/warrants | 2 years | 2 years | ||||||||
The expected life of stock options (warrants) represents the period of time that the stock options or warrants are expected to be outstanding based on the simplified method allowed under GAAP. The expected volatility is based on the historical price volatility of the Company’s common stock. The Company changed from a daily volatility calculation for the nine months ended June 30, 2012 to a weekly volatility for the nine months ended June 30, 2013. The risk-free interest rate represents the U.S. Treasury bill rate for the expected life of the related stock options (warrants). The dividend yield represents the Company’s anticipated cash dividends over the expected life of the stock options (warrants). | ||||||||||
A summary of stock option activity for the nine months ended June 30, 2013 is presented below: | ||||||||||
Shares Under Option/ Warrant | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||
Outstanding as of September 30, 2012 | 336,782 | $ | 28 | |||||||
Granted | 129,651 | $ | 10.79 | |||||||
Expired / Cancelled | (29,000) | $ | 60.01 | |||||||
Outstanding as of June 30, 2013 | 437,433 | $ | 20.59 | 1.57 years | $ | 506,361 | ||||
Exercisable as of June 30, 2013 | 377,064 | $ | 22.19 | 1.54 years | $ | 214,560 | ||||
Subsequent to June 30, 2013, the Company granted warrants to purchase 14,286 shares of common stock for two years with an exercise price of $14.70 per share, valued on July 1, 2013 the date of the grant, to board members and valued at $82,715. These warrants are fully vested. | ||||||||||
Scenario, Previously Reported | ' | |||||||||
Notes | ' | |||||||||
(18) Stock Options and Warrants | ' | |||||||||
(10) Stock Options and Warrants | ||||||||||
Stock Incentive Plan | ||||||||||
At the annual meeting of shareholders on December 21, 2011, the shareholders approved the 2012 Equity Compensation Plan (the “2012 Plan”), which had previously been adopted by the Board of Directors of the Company. The 2012 Plan provides for the grant of incentive stock options and nonqualified stock options, restricted stock, stock appreciation rights, performance shares, performance stock units, dividend equivalents, stock payments, deferred stock, restricted stock units, other stock-based awards and performance-based awards to employees and certain non-employees who have important relationships with the Company. A total of 18,000,000 shares are authorized for issuance pursuant to awards granted under the 2012 Plan. To the extent that an award terminates, any shares subject to the award may be used again under the 2012 plan. During the fiscal year ended September 30, 2012, the Company ratified options to purchase 6,000,000 shares of common stock under this plan that were previously granted on September 30, 2011. As of September 30, 2012, options to purchase 13,713,333 shares of common stock were available to distribute under the 2012 Plan. | ||||||||||
Re-pricing of Warrants | ||||||||||
During the fiscal year ended September 30, 2012, the Company re-priced 4,893,000 previously issued warrants in connection with debt financing agreements with original exercise prices ranging from $0.10 to $0.30, revising the exercise price to $0.075, resulting in additional interest expense of $39,965. Of the 4,893,000 warrants re-priced, 4,211,000 warrants were in connection with related-party transactions (see Note 5). | ||||||||||
During the fiscal year ended September 30, 2011, the Company did not re-price any previously issued warrants. | ||||||||||
All Options and Warrants | ||||||||||
During the fiscal year ended September 30, 2012, the Company granted options and warrants to purchase 10,900,000 shares of common stock as follows: 3,700,000 to Board of Directors, valued at $105,042; 6,000,000 to settle a lawsuit, valued at $253,046; and 1,200,000 warrants to a consultant, valued at $33,357. The vesting periods for these options and warrants ranged from three to five years. Additionally during the fiscal year ended 2012, the Company cancelled 36,500,000 of unvested warrants held by executives of the Company and issued 24,340,000 shares of common stock and accelerated the vesting of 11,500,000 of warrants for services rendered as of March 31, 2012. The modification of the equity awards resulted in $2,130,694 of compensation expense which includes the immediate recognition of the unamortized portion of the cancelled unvested warrants. | ||||||||||
During the fiscal year ended September 30, 2011, the Company granted options and warrants to purchase 75,000,000 shares of common stock to employees, valued at $3,909,697. The vesting periods for these options and warrants ranged from immediate to three years. | ||||||||||
The Company recognized $2,803,560 and $1,231,836 of expense during the fiscal years ended September 30, 2012 and 2011, respectively, in connection with the issuance, vesting, and re-pricing of options and warrants. The remaining unamortized expense in connection with the options and warrants is $29,678, which will be recognized over the next year. | ||||||||||
The following are the weighted-average assumptions used for options granted during the fiscal years ended September 30, 2012 and 2011, respectively: | ||||||||||
Fiscal Years Ended | ||||||||||
September 30, | ||||||||||
2012 | 2011 | |||||||||
Expected cash dividend yield | - | - | ||||||||
Expected stock price volatility | 95% | 96% | ||||||||
Risk-free interest rate | 0.36% | 0.32% | ||||||||
Expected life of options | 2 Years | 2 Years | ||||||||
A summary of stock option activity for the fiscal years ended September 30, 2012 and 2011 is presented below: | ||||||||||
Shares Under Option | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||
Outstanding as of September 30, 2010 | 27,740,451 | $ 0.36 | ||||||||
Granted | 75,000,000 | $ 0.08 | ||||||||
Expired | (3,562,249) | $ 0.32 | ||||||||
Outstanding as of September 30, 2011 | 99,178,202 | $ 0.13 | ||||||||
Granted | 10,900,000 | $ 0.09 | ||||||||
Expired / Cancelled | -42,721,709 | $ 0.11 | ||||||||
Outstanding as of September 30, 2012 | 67,356,493 | $ 0.14 | 2.09 years | $ - | ||||||
Exercisable as of September 30, 2012 | 65,371,254 | $ 0.14 | 2.09 years | $ - | ||||||
The year-end intrinsic values are based on a September 30, 2012 closing price of $0.0301 per share. | ||||||||||
11_Income_Taxes
(11) Income Taxes (Scenario, Previously Reported) | 9 Months Ended | |||
Jun. 30, 2013 | ||||
Scenario, Previously Reported | ' | |||
Notes | ' | |||
(11) Income Taxes | ' | |||
(11) Income Taxes | ||||
The Company recognizes deferred income tax assets or liabilities for the expected future tax consequences of events that have been recognized in the financial statements or income tax returns. Deferred income tax assets or liabilities are determined based upon the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to apply when the differences are expected to be settled or realized. Deferred income tax assets are reviewed periodically for recoverability and valuation allowances are provided as necessary. Interest and penalties related to income tax liabilities, when incurred, are classified in interest expense and income tax provision, respectively. | ||||
For the fiscal years ended September 30, 2012 and 2011, the Company incurred net losses for income tax purposes of $8,693,769 and $7,627,477, respectively. The amount and ultimate realization of the benefits from the net operating losses is dependent, in part, upon the tax laws in effect, the Company's future earnings, and other future events, the effects of which cannot be determined. The Company has established a valuation allowance for all deferred income tax assets not offset by deferred income tax liabilities due to the uncertainty of their realization. Accordingly, there is no benefit for income taxes in the accompanying statements of operations. | ||||
At September 30, 2012, the Company had net carryforwards available to offset future taxable income of approximately $179,000,000 which will begin to expire in 2019. The utilization of the net loss carryforwards is dependent upon the tax laws in effect at the time the net operating loss carry forwards can be utilized. The Internal Revenue Code contains provisions that likely could reduce or limit the availability and utilization of these net operating loss carryforwards. For example, limitations are imposed on the utilization of net operating loss carryforwards if certain ownership changes have taken place or will take place. The Company will perform an analysis to determine whether any such limitations have occurred as the net operating losses are utilized. | ||||
The deferred income tax assets (liabilities) were comprised of the following for the periods indicated: | ||||
Fiscal Years Ended | ||||
September 30, | ||||
2012 | 2011 | |||
Net loss carryforwards | $ 66,696,000 | $ 63,453,000 | ||
Accruals and reserves | 529,000 | 678,000 | ||
Contributions | 6,000 | 3,000 | ||
Depreciation | 26,000 | 13,000 | ||
Stock-based compensation | 5,768,000 | 4,434,000 | ||
Valuation allowance | (73,025,000) | (68,581,000) | ||
Total | $ 0 | $ 0 | ||
Reconciliations between the benefit for income taxes at the federal statutory income tax rate and the Company's benefit for income taxes for the years ended September 30, 2012 and 2011 are as follows: | ||||
Fiscal Years Ended | ||||
September 30, | ||||
2012 | 2011 | |||
Federal income tax benefit at statutory rate | $ 5,936,000 | $ 3,363,000 | ||
State income tax benefit, net of federal income tax effect | 576,000 | 326,000 | ||
Change in estimated tax rate and gain (loss) on non-deductible expenses | (2,068,000) | (98,000) | ||
Change in valuation allowance | (4,444,000) | (3,591,000) | ||
Benefit for income taxes | $ 0 | $ 0 | ||
During the fiscal year ended September 30, 2012, the Company began recognizing revenues from international sources from its products and monitoring services. During the fiscal year ended September 30, 2012, the Company accrued $254,017 in value-added taxes which will be due upon collection. | ||||
The Company’s open tax years for its federal and state income tax returns are for the tax years ended September 30, 2008 through September 30, 2012. |
12_Commitments_and_Contingenci
(12) Commitments and Contingencies | 9 Months Ended | ||
Jun. 30, 2013 | |||
Notes | ' | ||
(20) Commitments and Contingencies | ' | ||
(20) COMMITMENTS AND CONTINGENCIES | |||
Legal Matters | |||
Lazar Leybovich et al v. SecureAlert, Inc. On March 29, 2012, Lazar Leybovich, Dovie Leybovich and Ben Leybovich filed a complaint in the 11th Circuit Court in and for Miami-Dade County, Florida alleging breach of contract with regard to certain stock redemption agreements with the Company. The complaint was subsequently withdrawn by the plaintiffs. An amended complaint was filed by the plaintiffs on November 15, 2012. The Company believes these allegations are inaccurate and intends to defend the case vigorously. The Company has not accrued any potential loss as the probability of incurring a material loss is deemed remote by management, after consultation with outside legal counsel. | |||
Camacho Melendez et al v. Commonwealth of Puerto Rico and International Surveillance Services Corporation. On April 24, 2012 the plaintiffs filed suit against the Commonwealth of Puerto Rico and ISS, claiming negligence by ISS and the government of the Commonwealth of Puerto Rico resulting in the death of a woman. The complaint seeks damages of $2,110,000. The Company is in discussions with the government of the Commonwealth of Puerto Rico to resolve this matter and to obtain a complete release of all claims; the Company expects to finalize this matter before the end of the fiscal year. | |||
Integratechs v. SecureAlert, Inc. On March 14, 2013, Integratechs, Inc., filed a suit in the Fourth Judicial District Court of Utah County, claiming the Company breached a contract for computer services and intentionally interfered with its economic relations. The Company believes the allegations are inaccurate and will defend the case vigorously. | |||
Christopher P. Baker v. SecureAlert, Inc. In February 2013, Mr. Baker filed suit against the Company in the Third Judicial District Court in and for Salt Lake County, State of Utah. Mr. Baker asserts that the Company breached a 2006 consulting agreement with him and claims damages of not less than $210,000. The Company disputes plaintiff’s claims and will defend the case vigorously. | |||
Scenario, Previously Reported | ' | ||
Notes | ' | ||
(20) Commitments and Contingencies | ' | ||
(12) Commitments and Contingencies | |||
Legal Matters | |||
Lazar Leybovich et al v. SecureAlert, Inc. On March 29, 2012, Lazar Leybovich, Dovie Leybovich and Ben Leybovich filed a complaint in the 11th Circuit Court in and for Miami-Dade County, Florida alleging breach of contract with regard to certain Stock Redemption Agreements with the Company. The complaint was subsequently withdrawn by the plaintiffs. An amended complaint was filed by the plaintiffs on November 15, 2012. The Company believes these allegations are inaccurate and intends to defend the case vigorously. The Company has not accrued any potential loss as the probability of incurring a material loss is deemed remote by management, after consultation with legal counsel. | |||
Larry C. Duggan v. Court Programs of Florida, Inc. and SecureAlert, Inc. On March 26, 2012, Mr. Duggan filed a complaint in the 9th Circuit Court in and for Orange County, Florida alleging malicious prosecution, abuse of process and negligent infliction of emotional distress against the Company and its subsidiary. The case resulted from actions of a former agent of the Company’s subsidiary. The Company intends to defend itself in this matter. The Company has not accrued any potential loss as the probability of incurring a material loss is deemed remote by management, after consultation with legal counsel. | |||
Camacho Melendez et al v. Commonwealth of Puerto Rico and International Surveillance Services Corporation On April 24, 2012 the plaintiffs filed suit against the Commonwealth of Puerto Rico and International Surveillance Services Corporation, a wholly-owned subsidiary of the Company, claiming negligence by the Company and the government of the Commonwealth of Puerto Rico resulting in the death of a woman. The complaint seeks damages of $2,110,000. The Company is vigorously defending this case and believes it acted appropriately. The Company has not accrued any potential loss as the probability of incurring a material loss is deemed remote by management, after consultation with legal counsel. | |||
RACO Wireless LLC v SecureAlert, Inc. On October 12, 2010, RACO Wireless, LLC (“RACO”) filed a complaint alleging that the Company breached a contract by failing to place a sufficient number of RACO SIM chips in its new activations of monitoring devices. The Company denied these allegations and filed a counterclaim against RACO. During the fiscal year ended September 30, 2011, the parties agreed to settle this litigation. As part of the settlement agreement, the Company granted RACO warrants to purchase 6,000,000 shares of the Company’s common stock at an exercise price of $0.098 per share, valued at $253,046 using the Black-Scholes valuation model during the quarter ended December 31, 2011. The Company was late in making some required payments to RACO and RACO filed a complaint on June 4, 2012. The Company is current on its payments and is disputing RACO’s claims. | |||
Grenier v. Court Programs of Florida, Inc. The estate of Brooke Grenier filed suit against Court Programs of Florida, Inc., a subsidiary or SecureAlert, in the Circuit Court of the 19th Judicial Circuit in and for Indian River County, Florida. The suit alleges negligence leading to the death of Ms. Grenier. We assert no negligence and are vigorously defending the claims made against Court Programs of Florida, Inc. | |||
Data Subscriber Service Agreement | |||
During the fiscal year ended September 30, 2012, the Company entered into a data subscriber service agreement wherein the Company agreed to a prepayment schedule with a vendor to provide Subscriber Identity Module (SIM) cards and mobile data services to the Company, at reduced rates, with the intent to settle a dispute and reduce communication costs in connection with the monitoring of the Company’s TrackerPAL® and ReliAlert devices. | |||
As of September 30, 2012, the future minimum payments under the data subscriber service agreements are as follows: | |||
Fiscal Years | Amount | ||
2013 | $ 300,000 | ||
2014 | 300,000 | ||
2015 | 300,000 | ||
Thereafter | - | ||
Total | $ 900,000 | ||
Operating Lease Obligations | |||
The following table summarizes the Company’s contractual obligations as of September 30, 2012: | |||
Fiscal Year | Total | ||
2013 | $ 463,902 | ||
2014 | 157,014 | ||
2015 | 22,113 | ||
Thereafter | 0 | ||
Total | $ 643,029 | ||
The total operating lease obligations of $643,029 consist of the following: $626,752 from facilities operating leases and $16,277 from equipment leases. During the fiscal years ended September 30, 2012 and 2011, the Company paid approximately $535,855 and $473,029, in lease payment obligations, respectively. | |||
Intellectual Property Settlement | |||
In January 2010, the Company entered into an intellectual property settlement agreement with an entity whereby the Company agreed to begin paying the greater of a 6 percent royalty or $0.35 per activated device of monitoring revenues, subject to certain adjustments. | |||
Indemnification Agreements | |||
In November 2001, the Company agreed to indemnify officers and directors of the Company against personal liability incurred by them in the conduct of their duties for the Company. In the event that any of the officers or directors of the Company are sued or claims or actions are brought against them in connection with the performance of their duties and the individual is required to pay an amount, the Company will immediately repay the obligation together with interest thereon at the greater of 10 percent per year or the interest rate of any funds borrowed by the individual to satisfy their liability. | |||
Cellular Access Agreement | |||
During the fiscal year ended September 30, 2010, the Company entered into several agreements with cellular organizations to provide communication services. The cost to the Company during the fiscal years ended September 30, 2012 and 2011 was $961,994 and $650,230, respectively. These amounts are included in cost of sales. |
13_Fair_Value_Measurements
(13) Fair Value Measurements (Scenario, Previously Reported) | 9 Months Ended | ||||||
Jun. 30, 2013 | |||||||
Scenario, Previously Reported | ' | ||||||
Notes | ' | ||||||
(13) Fair Value Measurements | ' | ||||||
(13) Fair Value Measurements | |||||||
For asset and liabilities measured at fair value, the Company uses the following hierarchy of inputs: | |||||||
· Level one — Quoted market prices in active markets for identical assets or liabilities; | |||||||
· Level two — Inputs other than level one inputs that are either directly or indirectly observable; and; | |||||||
· Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.; | |||||||
Assets measured at fair value on a non-recurring basis at September 30, 2012 are summarized as follows: | |||||||
Level 1 | Level 2 | Level 3 | Total | ||||
Fair Value of Goodwill | $ 0 | $ 0 | $ 375,000 | $ 375,000 | |||
14_Subsequent_Events
(14) Subsequent Events | 9 Months Ended | |
Jun. 30, 2013 | ||
Notes | ' | |
(22) Subsequent Events | ' | |
(22) SUBSEQUENT EVENTS | ||
The Company evaluated subsequent events through the date the accompanying consolidated financial statements were issued. Subsequent to June 30, 2013, the following events occurred: | ||
1) | 799 shares of common stock were issued for the 3rd fiscal quarter Series D Preferred stock dividends, valued at $9,325. | |
2) | Warrants to purchase 14,286 shares of common stock for two years with an exercise price of $14.70 per share, valued on July 1, 2013 the date of the grant, were issued to board members and valued at $82,715. These warrants are fully vested at date of issuance. | |
3) | 680 shares of common stock were issued to a board member for payment of services rendered from March 2013 through June 30, 2013, valued at $10,000. | |
4) | The Company entered into a related-party service agreement to provide a backup and disaster recovery system and other services (see Note 15). | |
5) | The Company entered into an acknowledgement and agreement with Sapinda Asia whereby the Company agreed to waive the penalties and any other “out of pocket” expenses owed by Sapinda Asia under the Loan and Sapinda Asia acknowledges that it is not owed an origination fee. Both Parties have also agreed to accelerate the conversion of the loan to reduce the accumulation of interest debt under the Loan. Sapinda Asia commits and is bound to convert all principal and accrued interest under the Loan into common stock of the Company no later than 15 calendar days following the effective date of a registration statement with the Securities and Exchange Commission to register such shares, which the Company has agreed to file in a timely manner. | |
Scenario, Previously Reported | ' | |
Notes | ' | |
(22) Subsequent Events | ' | |
(14) Subsequent Events | ||
The Company evaluated subsequent events through the date the accompanying consolidated financial statements were issued. Subsequent to September 30, 2012, the following events occurred: | ||
1) 20,760,551 shares of common stock were issued for fourth quarter Series D Preferred stock dividends, valued at $630,528. | ||
2) Effective October 1, 2012, the Company entered into a Stock Purchase Agreement whereby two former principals of Midwest purchased from the Company all the issued and outstanding capital stock of Midwest for $750,000, payable as follows: (a) forgiveness of $650,000 in debt obligations owed by the Company to the former Midwest principals, and (b) cash of $100,000 payable under a note on or before April 1, 2013. | ||
3) The Company’s Chief Executive Officer, John L. Hastings, III resigned from all executive positions with the Company and as a director. The Board of Directors formed an Executive Committee comprised of directors George Schmitt and Winfried Kunz to temporarily fulfill the duties of the principal executive officer until a new Chief Executive Officer is hired. | ||
4) On December 3, 2012 the Board of Directors appointed Guy Dubois as a director to fill the vacancy resulting from Mr. Hastings’ resignation and to fulfill a condition of the Loan and Security Agreement entered into with Sapinda Asia to appoint to the Board of Directors a representative of Tetra House Pte., Ltd. | ||
5) On December 3, 2012, SecureAlert entered into a Loan and Security Agreement with Sapinda Asia whereby Sapinda Asia will loan SecureAlert $16,640,000. The loan will accrue interest at a rate of 8 percent per annum and includes a loan origination fee of $640,000, which was forfeited under the terms of the Loan and Security Agreement when Sapinda Asia failed to timely fund the loan in full. The loan is convertible into shares of common stock at $0.0225 per share and matures on June 17, 2014. Subsequent to the fiscal year ended September 30, 2012, the Company received $2,800,000 under the Loan and Security Agreement. The proceeds of the loan will be used to redeem the royalty obligation previously granted to Borinquen and for general corporate purposes. The loan is secured, after such loan is fully funded, by all of the intellectual property and other assets of the Company and by the royalty. In the event of default of the Company, Sapinda Asia shall have the right to purchase a 20 percent royalty on revenues from certain countries by reducing the outstanding principal of the loan in amount of $10,739,426. The failure to fully fund the loan resulted in the Company’s default under the terms of the royalty buy-back agreement and Borinquen terminated the agreement on December 26, 2012. Sapinda Asia and Borinquen are negotiating to cure the default and complete the purchase on behalf of the Company. |
1_Basis_of_Presentation_Going_
(1) Basis of Presentation: Going Concern (Policies) (Scenario, Previously Reported) | 9 Months Ended |
Jun. 30, 2013 | |
Scenario, Previously Reported | ' |
Policies | ' |
Going Concern | ' |
Going Concern | |
The Company has incurred recurring net losses and negative cash flows from operating activities for the fiscal years ended September 30, 2012 and 2011, and we have several debt obligations currently in default. In addition, the Company has accumulated deficits of $248,513,626 and $231,055,51 as of September 30, 2012 and 2011, respectively. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. | |
In order for the Company to continue as a going concern, it must generate positive cash flows from operating activities and obtain the necessary funding to meet its projected capital investment requirements. Management’s plans with respect to this uncertainty include raising additional capital from the issuance of preferred or common stock or debt securities, and expanding its market for its ReliAlert portfolio of products. There can be no assurance that revenues will increase rapidly enough to offset operating losses and repay debts. If the Company is unable to increase cash flows from operating activities or obtain additional financing, it will be unable to continue the development of its products and may have to cease operations. |
2_Significant_Accounting_Polic1
(2) Significant Accounting Policies: Principles of Consolidation (Policies) | 9 Months Ended |
Jun. 30, 2013 | |
Policies | ' |
(3) Principles of Consolidation | ' |
(3) PRINCIPLES OF CONSOLIDATION | |
The condensed consolidated financial statements include the accounts of SecureAlert and its subsidiaries. All significant inter-company transactions have been eliminated in consolidation. | |
Scenario, Previously Reported | ' |
Policies | ' |
(3) Principles of Consolidation | ' |
Principles of Consolidation | |
The accompanying consolidated financial statements include the accounts of SecureAlert, Inc. and its subsidiaries, SecureAlert Monitoring, Inc., Midwest Monitoring & Surveillance, Inc., Court Programs, Inc., Court Programs of Florida, Inc., and International Surveillance Services Corp (collectively, the “Company”). All intercompany balances and transactions have been eliminated in consolidation. |
2_Significant_Accounting_Polic2
(2) Significant Accounting Policies: Use of Estimates in The Preparation of Financial Statements (Policies) (Scenario, Previously Reported) | 9 Months Ended |
Jun. 30, 2013 | |
Scenario, Previously Reported | ' |
Policies | ' |
Use of Estimates in The Preparation of Financial Statements | ' |
Use of Estimates in the Preparation of Financial Statements | |
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. |
2_Significant_Accounting_Polic3
(2) Significant Accounting Policies: Fair Value of Financial Statements (Policies) (Scenario, Previously Reported) | 9 Months Ended |
Jun. 30, 2013 | |
Scenario, Previously Reported | ' |
Policies | ' |
Fair Value of Financial Statements | ' |
Fair Value of Financial Statements | |
The carrying amounts reported in the accompanying consolidated financial statements for cash, accounts receivable, accounts payable, accrued liabilities, and other debt obligations approximate fair values because of the immediate or short-term maturities of these financial instruments. The carrying amounts of the Company’s debt obligations approximate fair value as the interest rates approximate market interest rates. |
2_Significant_Accounting_Polic4
(2) Significant Accounting Policies: Concentration of Credit Risk (Policies) (Scenario, Previously Reported) | 9 Months Ended | |||||||
Jun. 30, 2013 | ||||||||
Scenario, Previously Reported | ' | |||||||
Policies | ' | |||||||
Concentration of Credit Risk | ' | |||||||
Concentration of Credit Risk | ||||||||
In the normal course of business, the Company provides credit terms to its customers and requires no collateral. Accordingly, the Company performs ongoing credit evaluations of its customers' financial condition. | ||||||||
Based upon the expected collectability of its accounts receivable, the Company maintains an allowance for doubtful accounts receivable. | ||||||||
One customer accounted for $2,450,984 (12 percent) of total revenues for the fiscal year ended September 30, 2012 and the same customer accounted for $2,265,805 (13 percent) of total revenues for the fiscal year ended September 30, 2011. No other customer represented more than 10 percent of the Company’s total revenues for the fiscal years ended September 30, 2012 or 2011. | ||||||||
Concentration of credit risk associated with the Company’s total and outstanding accounts receivable as of September 30, 2012 and 2011, respectively, are shown in the table below: | ||||||||
2012 | % | 2011 | % | |||||
Customer A | $ 681,781 | 24% | $ - | - | ||||
Customer B | $ 475,800 | 17% | $ 347,553 | 7% | ||||
Customer C | $ - | - | $ 1,995,804 | 39% | ||||
2_Significant_Accounting_Polic5
(2) Significant Accounting Policies: Cash Equivalents (Policies) (Scenario, Previously Reported) | 9 Months Ended |
Jun. 30, 2013 | |
Scenario, Previously Reported | ' |
Policies | ' |
Cash Equivalents | ' |
Cash Equivalents | |
The Company has cash in bank accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. | |
Cash equivalents consist of investments with original maturities to the Company of three months or less. The Company had $350,716 and $371,130 of cash deposits in excess of federally insured limits as of September 30, 2012 and 2011, respectively. |
2_Significant_Accounting_Polic6
(2) Significant Accounting Policies: Accounts Receivable (Policies) (Scenario, Previously Reported) | 9 Months Ended |
Jun. 30, 2013 | |
Scenario, Previously Reported | ' |
Policies | ' |
Accounts Receivable | ' |
Accounts Receivable | |
Accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Specific reserves are estimated by management based on certain assumptions and variables, including the customer’s financial condition, age of the customer’s receivables and changes in payment histories. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when cash is received. A trade receivable is considered to be past due if any portion of the receivable balance has not been received by the Company within its normal terms. Interest income is not recorded on trade receivables that are past due, unless that interest is collected. |
2_Significant_Accounting_Polic7
(2) Significant Accounting Policies: Inventory (Policies) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Policies | ' | ||||
Inventory | ' | ||||
Inventory is valued at the lower of the cost or market. Cost is determined using the first-in, first-out (“FIFO”) method. Market is determined based on the estimated net realizable value, which generally is the item selling price. Inventory is periodically reviewed in order to identify obsolete or damaged items or impaired values. | |||||
Scenario, Previously Reported | ' | ||||
Policies | ' | ||||
Inventory | ' | ||||
Inventory | |||||
Inventory is valued at the lower of the cost or market. Cost is determined using the first-in, first-out (“FIFO”) method. Market is determined based on the estimated net realizable value, which generally is the item selling price. Inventory is periodically reviewed in order to identify obsolete or damaged items or impaired values. The Company impaired its inventory by $359,734 and $268,398 during the fiscal years ended September 30, 2012 and 2011, respectively. | |||||
Inventory consists of raw materials that are used in the manufacturing of TrackerPAL® and ReliAlert devices. Completed TrackerPAL® and ReliAlert devices are reflected in Monitoring Equipment. As of September 30, 2012 and 2011, respectively, inventory consisted of the following: | |||||
2012 | 2011 | ||||
Raw materials | $ 822,566 | $ 706,795 | |||
Reserve for damaged or obsolete inventory | (192,000) | (127,016) | |||
Total inventory, net of reserves | $ 630,566 | $ 579,779 | |||
2_Significant_Accounting_Polic8
(2) Significant Accounting Policies: Note Receivable (Policies) (Scenario, Previously Reported) | 9 Months Ended |
Jun. 30, 2013 | |
Scenario, Previously Reported | ' |
Policies | ' |
Note Receivable | ' |
Note Receivable | |
Notes receivable are carried at the face amount of each note plus respective accrued interest receivable, less received payments. The Company does not typically carry notes receivable in the course of its regular business, but had entered into an agreement with one of its customers during the fiscal year ended September 30, 2012. Payments are recorded as they are received and are immediately offset against any outstanding accrued interest before they are applied against the outstanding principal balance on the respective note. The note requires monthly payments of $15,000 and matures in May 2014. Additionally, the note does not have a stated interest rate; therefore, the Company imputed interest according to GAAP. As of September 30, 2012, the outstanding balance of the note, net of note discount, was $268,682 and $1,325 of accrued interest. As of the date of this report, the Company expects to collect the outstanding amount. |
2_Significant_Accounting_Polic9
(2) Significant Accounting Policies: Property and Equipment (Policies) (Scenario, Previously Reported) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Scenario, Previously Reported | ' | ||||
Policies | ' | ||||
Property and Equipment | ' | ||||
Property and Equipment | |||||
Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are determined using the straight-line method over the estimated useful lives of the assets, typically three to seven years. Leasehold improvements are amortized over the shorter of the estimated useful life of the asset or the term of the lease. Expenditures for maintenance and repairs are expensed while renewals and improvements are capitalized. | |||||
Property and equipment consisted of the following as of September 30, 2012 and 2011, respectively: | |||||
2012 | 2011 | ||||
Equipment, software and tooling | $ 2,409,031 | $ 2,390,329 | |||
Automobiles | 372,339 | 398,890 | |||
Building | - | 377,555 | |||
Leasehold improvements | 134,941 | 132,820 | |||
Furniture and fixtures | 323,505 | 317,630 | |||
Total property and equipment before accumulated depreciation | 3,239,816 | 3,617,224 | |||
Accumulated depreciation | (2,562,323) | (2,530,591) | |||
Property and equipment, net of accumulated depreciation | $ 677,493 | $ 1,086,633 | |||
Property and equipment to be disposed of is reported at the lower of the carrying amount or fair value, less the estimated costs to sell and any gains or losses are included in the results of operations. During the fiscal years ended September 30, 2012 and 2011, the Company disposed of net property and equipment of $23,865 and $300,338, respectively. | |||||
Depreciation expense for the fiscal years ended September 30, 2012 and 2011 was $373,858 and $421,407, respectively. | |||||
Monitoring Equipment | |||||
Monitoring equipment as of September 30, 2012 and 2011 is as follows: | |||||
2012 | 2011 | ||||
Monitoring equipment | $ 6,504,420 | $ 7,070,373 | |||
Less: accumulated amortization | (3,179,310) | (3,608,388) | |||
Monitoring equipment, net of accumulated depreciation | $ 3,325,110 | $ 3,461,985 | |||
The Company began leasing monitoring equipment to agencies for offender tracking in April 2006 under operating lease arrangements. The monitoring equipment is depreciated using the straight-line method over an estimated useful life of 3 years. | |||||
Amortization expense for the fiscal years ended September 30, 2012 and 2011, was $1,387,756 and $1,160,920, respectively. These expenses were classified as a cost of revenues. | |||||
Assets to be disposed of are reported at the lower of the carrying amount or fair value, less the estimated costs to sell. During the fiscal years ended September 30, 2012 and 2011, the Company disposed and impaired lease monitoring equipment and parts of $1,494,518 and $291,479, respectively. These impairment costs were included in cost of revenues. This equipment will continue to be used. |
Recovered_Sheet1
(2) Significant Accounting Policies: Impairment of Long-lived Assets and Goodwill (Policies) | 9 Months Ended | |||||||
Jun. 30, 2013 | ||||||||
Policies | ' | |||||||
(5) Impairment of Long-lived Assets | ' | |||||||
(5) IMPAIRMENT OF LONG-LIVED ASSETS | ||||||||
The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that the book value of an asset may not be recoverable and in the case of goodwill, at least annually. The Company evaluates whether events and circumstances have occurred which indicate possible impairment as of each balance sheet date. If the carrying amount of an asset exceeds its fair value, an impairment charge is recognized for the amount by which the carrying amount exceeds the estimated fair value of the asset. Impairment of long-lived assets is assessed at the lowest levels for which there is an identifiable fair value that is independent of other groups of assets. The Company recorded $450,000 and $0 of impairment expenses related to monitoring equipment for the nine months ended June 30, 2013 and 2012, respectively. | ||||||||
Scenario, Previously Reported | ' | |||||||
Policies | ' | |||||||
(5) Impairment of Long-lived Assets | ' | |||||||
Impairment of Long-Lived Assets and Goodwill | ||||||||
The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that the book value of an asset may not be recoverable and in the case of goodwill, at least annually. The Company evaluates whether events and circumstances have occurred which indicate possible impairment as of each balance sheet date. The Company uses an equity method of the related asset or group of assets in measuring whether the assets are recoverable. If the carrying amount of an asset exceeds its market value, an impairment charge is recognized for the amount by which the carrying amount exceeds the estimated fair value of the asset. Impairment of long-lived assets is assessed at the lowest levels for which there is an identifiable fair market value that is independent of other groups of assets. In reviewing historical financial performance and participating in recent discussions in selling Court Programs, Inc. and Midwest Monitoring & Surveillance, Inc., the Company recorded an impairment expense. | ||||||||
The following summarizes the changes in goodwill during the years ended September 30, 2012 and 2011: | ||||||||
Court Programs, Inc. | Midest Monitoring & Surveillance, Inc. | |||||||
2012 | 2011 | 2012 | 2011 | |||||
Gross carrying amount, beginning of period | $ 2,488,068 | $ 2,488,068 | $ 3,401,327 | $ 1,421,995 | ||||
Additions | - | - | - | 1,979,332 | ||||
Impairments | (2,488,068) | - | (3,026,327) | - | ||||
Gross carrying amount, end o3 period | $ - | $ 2,488,068 | $ 375,000 | $ 3,401,327 | ||||
Recovered_Sheet2
(2) Significant Accounting Policies: Revenue Recognition (Policies) (Scenario, Previously Reported) | 9 Months Ended |
Jun. 30, 2013 | |
Scenario, Previously Reported | ' |
Policies | ' |
Revenue Recognition | ' |
Revenue Recognition | |
The Company’s revenue has historically been from two sources: (i) monitoring services; and (ii) product sales. | |
Monitoring Services | |
Monitoring services include two components: (a) lease contracts in which the Company provides monitoring services and leases devices to distributors or end users and the Company retains ownership of the leased device; and (b) monitoring services purchased by distributors or end users who have previously purchased monitoring devices and opt to use the Company’s monitoring services. | |
The Company typically leases its devices under one-year contracts with customers that opt to use the Company’s monitoring services. However, these contracts may be cancelled by either party at anytime with 30 days notice. Under the Company’s standard leasing contract, the leased device becomes billable on the date of activation or 7 to 21 days from the date the device is assigned to the lessee, and remains billable until the device is returned to the Company. The Company recognizes revenue on leased devices at the end of each month that monitoring services have been provided. In those circumstances in which the Company receives payment in advance, the Company records these payments as deferred revenue. | |
Product Sales | |
The Company may sell its monitoring devices in certain situations to its customers. In addition, the Company may sell equipment in connection with the building out and setting up a monitoring center on behalf of its customers. The Company recognizes product sales revenue when persuasive evidence of an arrangement with the customer exists, title passes to the customer and the customer cannot return the devices or equipment, prices are fixed or determinable (including sales not being made outside the normal payment terms) and collection is reasonably assured. When purchasing products (such as TrackerPAL® and ReliAlert devices) from the Company, customers may, but are not required to, enter into monitoring service contracts with the Company. The Company recognizes revenue on monitoring services for customers that have previously purchased devices at the end of each month that monitoring services have been provided. | |
The Company sells and installs standalone tracking systems that do not require ongoing monitoring by the Company. The Company has experience in component installation costs and direct labor hours related to this type of sale and can typically reasonably estimate costs, therefore the Company recognizes revenue over the period in which the installation services are performed using the percentage-of-completion method of accounting for material installations. The Company typically uses labor hours or costs incurred to date as a percentage of the total estimated labor hours or costs to fulfill the contract as the most reliable and meaningful measure that is available for determining a project’s progress toward completion. The Company evaluates its estimated labor hours and costs and determines the estimated gross profit or loss on each installation for each reporting period. If it is determined that total cost estimates are likely to exceed revenues, the Company accrues the estimated losses immediately. | |
Multiple Element Arrangements | |
The majority of the Company’s revenue transactions do not have multiple elements. However, on occasion, the Company enters into revenue transactions that have multiple elements. These may include different combinations of products or monitoring services that are included in a single billable rate. These products or monitoring services are delivered over time as the customer utilizes the Company's services. For revenue arrangements that have multiple elements, the Company considers whether the delivered devices have standalone value to the customer, there is objective and reliable evidence of the fair value of the undelivered monitoring services, which is generally determined by surveying the price of competitors’ comparable monitoring services, and the customer does not have a general right of return. Based on these criteria, the Company recognizes revenue from the sale of devices separately from the monitoring services provided to the customer as the products or monitoring services are delivered. | |
Other Matters | |
The Company considers an arrangement with payment terms longer than the Company’s normal terms not to be fixed or determinable, and revenue is recognized when the fee becomes due. Normal payment terms for the sale of monitoring services and products are due upon receipt to 30 days. The Company sells its devices and services directly to end users and to distributors. Distributors do not have general rights of return. Also, distributors have no price protection or stock protection rights with respect to devices sold to them by the Company. Generally, title and risk of loss pass to the buyer upon delivery of the devices. | |
The Company estimates its product returns based on historical experience and maintains an allowance for estimated returns, which is recorded as a reduction to accounts receivable and revenue. | |
Shipping and handling fees charged to customers are included as part of net revenues. The related freight costs and supplies directly associated with shipping products to customers are included as a component of cost of revenues. |
Recovered_Sheet3
(2) Significant Accounting Policies: Geographical Information (Policies) (Scenario, Previously Reported) | 9 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Scenario, Previously Reported | ' | ||||||||
Policies | ' | ||||||||
Geographical Information | ' | ||||||||
Geographical Information | |||||||||
The Company recognized revenues from international sources from its products and monitoring services. Revenues are attributed to the geographic areas based on the location of the customers purchasing and leasing the products. The revenues recognized by geographic area for the fiscal years ended September 30, 2012 and 2011, are as follows: | |||||||||
Fiscal Years Ended | |||||||||
September 30, | |||||||||
2012 | 2011 | ||||||||
United States of America | $ 14,075,140 | $ 14,499,613 | |||||||
Latin American Countries | 2,450,984 | 2,533,483 | |||||||
Caribbean Countries and Commonwealths | 3,217,651 | 912,504 | |||||||
Other Foreign Countries | 47,717 | 16,203 | |||||||
Total | $ 19,791,492 | $ 17,961,803 | |||||||
The long-lived assets, net of accumulated depreciation and amortization, used in the generation of revenues by geographic area as of September 30, 2012 and 2011, were as follows: | |||||||||
Net Property and Equipment | Net Monitoring Equipment | ||||||||
2012 | 2011 | 2012 | 2011 | ||||||
United States of America | $ 677,493 | $ 1,082,453 | $ 2,328,139 | $ 3,352,614 | |||||
Latin American Countries | - | - | 719,171 | 32,919 | |||||
Caribbean Countries and Commonwealths | - | 4,180 | 263,782 | 71,687 | |||||
Other Foreign Countries | - | - | 14,018 | 4,765 | |||||
Total | $ 677,493 | $ 1,086,633 | $ 3,325,110 | $3,461,985 | |||||
Recovered_Sheet4
(2) Significant Accounting Policies: Research and Development Costs (Policies) (Scenario, Previously Reported) | 9 Months Ended |
Jun. 30, 2013 | |
Scenario, Previously Reported | ' |
Policies | ' |
Research and Development Costs | ' |
Research and Development Costs | |
All expenditures for research and development are charged to expense as incurred. These expenditures in 2012 and 2011 were for the development of SecureAlert’s TrackerPAL® and ReliAlert device and associated services. For the fiscal years ended September 30, 2012 and 2011, research and development expenses were $1,248,654 and $1,453,994, respectively. |
Recovered_Sheet5
(2) Significant Accounting Policies: Advertising Costs (Policies) (Scenario, Previously Reported) | 9 Months Ended |
Jun. 30, 2013 | |
Scenario, Previously Reported | ' |
Policies | ' |
Advertising Costs | ' |
Advertising Costs | |
The Company expenses advertising costs as incurred. Advertising expense for the fiscal years ended September 30, 2012 and 2011, was $42,148 and $117,568, respectively. |
Recovered_Sheet6
(2) Significant Accounting Policies: Stock-based Compensation (Policies) (Scenario, Previously Reported) | 9 Months Ended |
Jun. 30, 2013 | |
Scenario, Previously Reported | ' |
Policies | ' |
Stock-based Compensation | ' |
Stock-Based Compensation | |
The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. The Company estimates the fair value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock. |
Recovered_Sheet7
(2) Significant Accounting Policies: Income Taxes (Policies) (Scenario, Previously Reported) | 9 Months Ended |
Jun. 30, 2013 | |
Scenario, Previously Reported | ' |
Policies | ' |
Income Taxes | ' |
Income Taxes | |
The Company recognizes deferred income tax assets or liabilities for the expected future tax consequences of events that have been recognized in the financial statements or income tax returns. Deferred income tax assets or liabilities are determined based upon the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to apply when the differences are expected to be settled or realized. Deferred income tax assets are reviewed periodically for recoverability and valuation allowances are provided as necessary. |
Recovered_Sheet8
(2) Significant Accounting Policies: Net Loss Per Common Share (Policies) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Policies | ' | ||||
Earnings per share | ' | ||||
Basic net loss per common share ("Basic EPS") is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. | |||||
Diluted net loss per common share ("Diluted EPS") is computed by dividing net loss attributable to common shareholders by the sum of the weighted-average number of common shares outstanding and the weighted-average dilutive common share equivalents outstanding. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect. | |||||
Scenario, Previously Reported | ' | ||||
Policies | ' | ||||
Earnings per share | ' | ||||
Net Loss Per Common Share | |||||
Basic net loss per common share ("Basic EPS") is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. | |||||
Diluted net loss per common share ("Diluted EPS") is computed by dividing net loss attributable to common stockholders by the sum of the weighted-average number of common shares outstanding and the weighted-average dilutive common share equivalents outstanding. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect. | |||||
Common share equivalents consist of shares issuable upon the exercise of common stock options and warrants, and shares issuable upon conversion of preferred stock. As of September 30, 2012 and 2011, there were 565,034,215 and 399,448,202 outstanding common share equivalents, respectively, that were not included in the computation of diluted net loss per common share as their effect would be anti-dilutive. The common stock equivalents outstanding as of September 30, 2012 and 2011, consisted of the following: | |||||
2012 | 2011 | ||||
Conversion of debt and accrued interest and loan origination fees | 172,699,722 | - | |||
Conversion of Series D Preferred stock | 292,578,000 | 269,070,000 | |||
Exercise of outstanding common stock options and warrants | 67,356,493 | 99,178,202 | |||
Exercise and conversion of outstanding Series D Preferred stock | |||||
warrants | 32,400,000 | 31,200,000 | |||
Total common stock equivalents | 565,034,215 | 399,448,202 | |||
Recovered_Sheet9
(2) Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Jun. 30, 2013 | |
Policies | ' |
(4) Recently Issued Accounting Standards | ' |
(4) RECENTLY ISSUED ACCOUNTING STANDARDS | |
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies, which are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. | |
Scenario, Previously Reported | ' |
Policies | ' |
(4) Recently Issued Accounting Standards | ' |
Recent Accounting Pronouncements | |
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies, which are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. |
12_Commitments_and_Contingenci1
(12) Commitments and Contingencies: Data Subscriber Service Agreement (Policies) (Scenario, Previously Reported) | 9 Months Ended | ||
Jun. 30, 2013 | |||
Scenario, Previously Reported | ' | ||
Policies | ' | ||
Data Subscriber Service Agreement | ' | ||
Data Subscriber Service Agreement | |||
During the fiscal year ended September 30, 2012, the Company entered into a data subscriber service agreement wherein the Company agreed to a prepayment schedule with a vendor to provide Subscriber Identity Module (SIM) cards and mobile data services to the Company, at reduced rates, with the intent to settle a dispute and reduce communication costs in connection with the monitoring of the Company’s TrackerPAL® and ReliAlert devices. | |||
As of September 30, 2012, the future minimum payments under the data subscriber service agreements are as follows: | |||
Fiscal Years | Amount | ||
2013 | $ 300,000 | ||
2014 | 300,000 | ||
2015 | 300,000 | ||
Thereafter | - | ||
Total | $ 900,000 | ||
12_Commitments_and_Contingenci2
(12) Commitments and Contingencies: Intellectual Property Settlement (Policies) (Scenario, Previously Reported) | 9 Months Ended |
Jun. 30, 2013 | |
Scenario, Previously Reported | ' |
Policies | ' |
Intellectual Property Settlement | ' |
Intellectual Property Settlement | |
In January 2010, the Company entered into an intellectual property settlement agreement with an entity whereby the Company agreed to begin paying the greater of a 6 percent royalty or $0.35 per activated device of monitoring revenues, subject to certain adjustments. |
Recovered_Sheet10
(2) Significant Accounting Policies: Concentration of Credit Risk: Concentration of Credit Risk Associated to Accounts Receivable (Tables) (Scenario, Previously Reported) | 9 Months Ended | |||||||
Jun. 30, 2013 | ||||||||
Scenario, Previously Reported | ' | |||||||
Tables/Schedules | ' | |||||||
Concentration of Credit Risk Associated to Accounts Receivable | ' | |||||||
2012 | % | 2011 | % | |||||
Customer A | $ 681,781 | 24% | $ - | - | ||||
Customer B | $ 475,800 | 17% | $ 347,553 | 7% | ||||
Customer C | $ - | - | $ 1,995,804 | 39% |
Recovered_Sheet11
(2) Significant Accounting Policies: Inventory: Schedule of Inventory, Current (Tables) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Tables/Schedules | ' | ||||
Schedule of Inventory, Current | ' | ||||
June 30, | September 30, | ||||
2013 | 2012 | ||||
Raw materials | $ 635,721 | $ 822,566 | |||
Reserve for damaged or obsolete inventory | (192,000) | (192,000) | |||
Total inventory, net of reserves | $ 443,721 | $ 630,566 | |||
Scenario, Previously Reported | ' | ||||
Tables/Schedules | ' | ||||
Schedule of Inventory, Current | ' | ||||
2012 | 2011 | ||||
Raw materials | $ 822,566 | $ 706,795 | |||
Reserve for damaged or obsolete inventory | (192,000) | (127,016) | |||
Total inventory, net of reserves | $ 630,566 | $ 579,779 |
Recovered_Sheet12
(2) Significant Accounting Policies: Property and Equipment: Property, Plant and Equipment (Tables) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Tables/Schedules | ' | ||||
(10) Property and Equipment | ' | ||||
(10) PROPERTY AND EQUIPMENT | |||||
Property and equipment as of June 30, 2013 and September 30, 2012, were as follows: | |||||
June 30, | September 30, | ||||
2013 | 2012 | ||||
Equipment, software and tooling | $ | 2,000,340 | $ | 1,981,936 | |
Automobiles | 33,466 | 33,466 | |||
Leasehold improvements | 127,162 | 127,287 | |||
Furniture and fixtures | 247,218 | 252,951 | |||
Total property and equipment before accumulated depreciation | 2,408,186 | 2,395,640 | |||
Accumulated depreciation | (2,055,798) | (1,889,041) | |||
Property and equipment, net of accumulated depreciation | $ | 352,388 | $ | 506,599 | |
Depreciation expense for the three months ended June 30, 2013 and 2012, was $54,581 and $91,803, respectively. Furthermore, depreciation expense for the nine months ended June 30, 2013 and 2012, was $182,658 and $286,151, respectively. Property and equipment to be disposed of is reported at the lower of the carrying amount or fair value, less the estimated costs to sell and any gains or losses are included in the results of operations. During the nine months ended June 30, 2013 and 2012, the Company disposed of property and equipment with a net book value of $2,033 and $214,566, respectively. | |||||
Scenario, Previously Reported | ' | ||||
Tables/Schedules | ' | ||||
(10) Property and Equipment | ' | ||||
2012 | 2011 | ||||
Equipment, software and tooling | $ 2,409,031 | $ 2,390,329 | |||
Automobiles | 372,339 | 398,890 | |||
Building | - | 377,555 | |||
Leasehold improvements | 134,941 | 132,820 | |||
Furniture and fixtures | 323,505 | 317,630 | |||
Total property and equipment before accumulated depreciation | 3,239,816 | 3,617,224 | |||
Accumulated depreciation | (2,562,323) | (2,530,591) | |||
Property and equipment, net of accumulated depreciation | $ 677,493 | $ 1,086,633 |
Recovered_Sheet13
(2) Significant Accounting Policies: Property and Equipment: Schedule of Property Subject to or Available for Operating Lease (Tables) (Scenario, Previously Reported) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Scenario, Previously Reported | ' | ||||
Tables/Schedules | ' | ||||
Schedule of Property Subject to or Available for Operating Lease | ' | ||||
2012 | 2011 | ||||
Monitoring equipment | $ 6,504,420 | $ 7,070,373 | |||
Less: accumulated amortization | (3,179,310) | (3,608,388) | |||
Monitoring equipment, net of accumulated depreciation | $ 3,325,110 | $ 3,461,985 |
Recovered_Sheet14
(2) Significant Accounting Policies: Impairment of Long-lived Assets and Goodwill: Schedule of Intangible Assets and Goodwill (Tables) | 9 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Tables/Schedules | ' | ||||||||
Schedule of Intangible Assets and Goodwill | ' | ||||||||
Borinquen Container Corporation | International Surveillance Services Corp. | Patent | Total | ||||||
Other intangible assets: | |||||||||
Patent license agreement | $ | - | $ | - | $ | 50,000 | $ | 50,000 | |
Royalty agreement | 11,616,984 | 5,003,583 | - | 16,620,567 | |||||
Total intangible assets | 11,616,984 | 5,003,583 | 50,000 | 16,670,567 | |||||
Accumulated amortization | (515,676) | (500,358) | (18,983) | (1,035,017) | |||||
Intangible assets, net of | |||||||||
accumulated amortization | $ | 11,101,308 | $ | 4,503,225 | $ | 31,017 | $ | 15,635,550 | |
Scenario, Previously Reported | ' | ||||||||
Tables/Schedules | ' | ||||||||
Schedule of Intangible Assets and Goodwill | ' | ||||||||
Court Programs, Inc. | Midest Monitoring & Surveillance, Inc. | ||||||||
2012 | 2011 | 2012 | 2011 | ||||||
Gross carrying amount, beginning of period | $ 2,488,068 | $ 2,488,068 | $ 3,401,327 | $ 1,421,995 | |||||
Additions | - | - | - | 1,979,332 | |||||
Impairments | (2,488,068) | - | (3,026,327) | - | |||||
Gross carrying amount, end o3 period | $ - | $ 2,488,068 | $ 375,000 | $ 3,401,327 |
Recovered_Sheet15
(2) Significant Accounting Policies: Geographical Information: Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area (Tables) | 9 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Tables/Schedules | ' | ||||||||
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | ' | ||||||||
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||
2013 | 2012 | 2013 | 2012 | ||||||
United States of America | $ | 1,887,630 | $ | 1,812,588 | $ | 5,427,973 | $ | 5,674,412 | |
Latin American Countries | - | 283,045 | 5,252,960 | 2,167,938 | |||||
Caribbean Countries and Commonwealths | 778,450 | 891,335 | 2,348,245 | 2,241,591 | |||||
Other Foreign Countries | 19,134 | 12,738 | 52,432 | 32,669 | |||||
Total | $ | 2,685,214 | $ | 2,999,706 | $ | 13,081,610 | $ | 10,116,610 | |
Scenario, Previously Reported | ' | ||||||||
Tables/Schedules | ' | ||||||||
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | ' | ||||||||
Fiscal Years Ended | |||||||||
September 30, | |||||||||
2012 | 2011 | ||||||||
United States of America | $ 14,075,140 | $ 14,499,613 | |||||||
Latin American Countries | 2,450,984 | 2,533,483 | |||||||
Caribbean Countries and Commonwealths | 3,217,651 | 912,504 | |||||||
Other Foreign Countries | 47,717 | 16,203 | |||||||
Total | $ 19,791,492 | $ 17,961,803 |
Recovered_Sheet16
(2) Significant Accounting Policies: Geographical Information: Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas (Tables) (Scenario, Previously Reported) | 9 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Scenario, Previously Reported | ' | ||||||||
Tables/Schedules | ' | ||||||||
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas | ' | ||||||||
Net Property and Equipment | Net Monitoring Equipment | ||||||||
2012 | 2011 | 2012 | 2011 | ||||||
United States of America | $ 677,493 | $ 1,082,453 | $ 2,328,139 | $ 3,352,614 | |||||
Latin American Countries | - | - | 719,171 | 32,919 | |||||
Caribbean Countries and Commonwealths | - | 4,180 | 263,782 | 71,687 | |||||
Other Foreign Countries | - | - | 14,018 | 4,765 | |||||
Total | $ 677,493 | $ 1,086,633 | $ 3,325,110 | $3,461,985 |
Recovered_Sheet17
(2) Significant Accounting Policies: Net Loss Per Common Share: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Tables) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Tables/Schedules | ' | ||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | ' | ||||
30-Jun-13 | 30-Jun-12 | ||||
Conversion of debt and accrued interest | 3,846,758 | 416,667 | |||
Conversion of Series D Preferred stock | 14,040 | 1,463,490 | |||
Exercise of outstanding common stock options and warrants | 437,432 | 365,961 | |||
Exercise and conversion of outstanding Series D Preferred | |||||
stock warrants | 162,000 | 162,000 | |||
Total common stock equivalents | 4,460,230 | 2,408,118 | |||
Scenario, Previously Reported | ' | ||||
Tables/Schedules | ' | ||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | ' | ||||
2012 | 2011 | ||||
Conversion of debt and accrued interest and loan origination fees | 172,699,722 | - | |||
Conversion of Series D Preferred stock | 292,578,000 | 269,070,000 | |||
Exercise of outstanding common stock options and warrants | 67,356,493 | 99,178,202 | |||
Exercise and conversion of outstanding Series D Preferred stock | |||||
warrants | 32,400,000 | 31,200,000 | |||
Total common stock equivalents | 565,034,215 | 399,448,202 |
3_Acquisitions_Goodwill_and_Ot1
(3) Acquisitions, Goodwill and Other Intangible Assets: Goodwill and intangible assets 2012 (Tables) (Scenario, Previously Reported) | 9 Months Ended | |||||||||||
Jun. 30, 2013 | ||||||||||||
Scenario, Previously Reported | ' | |||||||||||
Tables/Schedules | ' | |||||||||||
Goodwill and intangible assets 2012 | ' | |||||||||||
Midwest Monitoring & Surveillance | Court Programs, Inc. | Bishop Rock Software | Patent | International Surveillance Services Corp. | Total | |||||||
Goodwill | $ 375,000 | $ - | $ - | $ - | $ - | $375,000 | ||||||
Other intangible assets | ||||||||||||
Trade name | 120,000 | 99,000 | 10,000 | - | - | 229,000 | ||||||
Software | - | - | 380,001 | - | - | 380,001 | ||||||
Customer relationships | - | 6,000 | - | - | - | 6,000 | ||||||
Patent license agreement | - | - | - | 50,000 | - | 50,000 | ||||||
Non-compete agreements | 2,000 | 6,000 | - | - | - | 8,000 | ||||||
Royalty agreement | - | - | - | - | 5,003,583 | 5,003,583 | ||||||
Total other intangible assets | 122,000 | 111,000 | 390,001 | 50,000 | 5,003,583 | 5,676,584 | ||||||
Accumulated amortization | (40,664) | (43,700) | (390,001) | (14,816) | (312,724) | (801,905) | ||||||
Other intangible assets, net of accumulated amortization | 81,336 | 67,300 | - | 35,184 | 4,690,859 | 4,874,679 | ||||||
Total goodwill and other intangible assets, net of amortization | $ 456,336 | $ 67,300 | $ - | $35,184 | $4,690,859 | $5,249,679 |
3_Acquisitions_Goodwill_and_Ot2
(3) Acquisitions, Goodwill and Other Intangible Assets: Goodwill and intangible assets 2011 (Tables) (Scenario, Previously Reported) | 9 Months Ended | |||||||||||
Jun. 30, 2013 | ||||||||||||
Scenario, Previously Reported | ' | |||||||||||
Tables/Schedules | ' | |||||||||||
Goodwill and intangible assets 2011 | ' | |||||||||||
Midwest Monitoring & Surveillance | Court Programs, Inc. | Bishop Rock Software | Patent | International Surveillance Services Corp. | Total | |||||||
Goodwill | $ 3,401,327 | $ 2,488,068 | $ - | $ - | $ - | $ 5,889,395 | ||||||
Other intangible assets | ||||||||||||
Trade name | 120,000 | 99,000 | 10,000 | - | - | 229,000 | ||||||
Software | - | - | 380,001 | - | - | 380,001 | ||||||
Customer relationships | - | 6,000 | - | - | - | 6,000 | ||||||
Patent license agreement | - | - | - | 50,000 | - | 50,000 | ||||||
Non-compete agreements | 2,000 | 6,000 | - | - | - | 8,000 | ||||||
Royalty agreement | - | - | - | - | 5,003,583 | 5,003,583 | ||||||
Total other intangible assets | 122,000 | 111,000 | 390,001 | 50,000 | 5,003,583 | 5,676,584 | ||||||
Accumulated amortization | (32,667) | (35,900) | (345,022) | (9,259) | (62,545) | (485,393) | ||||||
Other intangible assets, net of accumulated amortization | 89,333 | 75,100 | 44,979 | 40,741 | 4,941,038 | 5,191,191 | ||||||
Total goodwill and other intangible assets, net of amortization | $ 3,490,660 | $ 2,563,168 | $ 44,979 | $ 40,741 | $ 4,941,038 | $ 11,080,586 |
3_Acquisitions_Goodwill_and_Ot3
(3) Acquisitions, Goodwill and Other Intangible Assets: Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Tables) (Scenario, Previously Reported) | 9 Months Ended | ||||||||||||
Jun. 30, 2013 | |||||||||||||
Scenario, Previously Reported | ' | ||||||||||||
Tables/Schedules | ' | ||||||||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | ' | ||||||||||||
Fiscal Year | Midwest Monitoring & Surveillance | Court Programs, Inc. | Bishop Rock Software | Patent | International Surveillance Services Corp. | Total | |||||||
2013 | $ 8,000 | $ 6,800 | $ - | $ 5,556 | $ 250,179 | $ 270,535 | |||||||
2014 | 8,000 | 6,600 | - | 5,556 | 250,179 | 270,335 | |||||||
2015 | 8,000 | 6,600 | - | 5,556 | 250,179 | 270,335 | |||||||
2016 | 8,000 | 6,600 | - | 5,556 | 250,179 | 270,335 | |||||||
2017 | 8,000 | 6,600 | - | 5,556 | 250,179 | 270,335 | |||||||
Thereafter | 41,336 | 34,100 | - | 7,404 | 3,439,964 | 3,522,804 | |||||||
Total | $ 81,336 | $ 67,300 | $ - | $ 35,184 | $ 4,690,859 | $ 4,874,679 |
5_Accounts_Payable_and_Accrued1
(5) Accounts Payable and Accrued Liabilities Disclosure: Schedule of Accrued Liabilities (Tables) (Scenario, Previously Reported) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Scenario, Previously Reported | ' | ||||
Tables/Schedules | ' | ||||
Schedule of Accrued Liabilities | ' | ||||
2012 | 2011 | ||||
Accrued payroll, taxes and employee benefits | $ 701,537 | $ 749,509 | |||
Accrued royalties | 641,446 | - | |||
Accrued consulting | 352,072 | 370,658 | |||
Accrued taxes - foreign and domestic | 271,240 | - | |||
Accrued board of directors fees | 265,000 | 153,101 | |||
Accrued other expenses | 197,512 | 110,810 | |||
Accrued acquisition costs payable in cash | 149,626 | 272,500 | |||
Accrued acquisition costs payable in cash to a related-party | 149,626 | 272,500 | |||
Accrued settlement costs | 50,000 | 276,712 | |||
Accrued outside services | 38,630 | 28,294 | |||
Accrued interest | 37,937 | 26,329 | |||
Accrued warranty and manufacturing costs | 30,622 | 66,622 | |||
Accrued indigent fees | 28,518 | 39,175 | |||
Accrued cost of revenues | 28,397 | 42,026 | |||
Accrued cellular costs | 27,662 | 32,299 | |||
Accrued administration fees | 16,609 | 29,900 | |||
Accrued legal costs | 14,628 | 215,895 | |||
Accrued inventory costs | - | 26,900 | |||
Total accrued expenses | $ 3,001,062 | $ 2,713,230 |
6_Certain_Relationships_and_Re1
(6) Certain Relationships and Related Transactions: Transactions with Related Parties Approved by Board of Directors (Tables) (Scenario, Previously Reported) | 9 Months Ended | ||||||
Jun. 30, 2013 | |||||||
Scenario, Previously Reported | ' | ||||||
Tables/Schedules | ' | ||||||
Transactions with Related Parties Approved by Board of Directors | ' | ||||||
2012 | 2011 | ||||||
Note payable in connection with the redemption of a royalty agreement for $10,768,555. | |||||||
The note requires installment payments and matured November 2012. Subsequent | |||||||
to the fiscal year end, this note was terminated. | $ 10,050,027 | $ - | |||||
Note payable in connection with the purchase of the remaining ownership of Midwest | |||||||
Monitoring & Surveillance, Inc. The payments are due quarterly ending in September | |||||||
2013. The Company imputed interest since the note has no stated interest rate, resulting in | |||||||
a debt discount balance as of September 30, 2012 and 2011 of $11,398 and $32,524, | |||||||
respectively. The note was paid off subsequent to September 30, 2012 through the | |||||||
sale of Midwest Monitoring & Surveillance, Inc. | 138,602 | 192,476 | |||||
Note payable in connection with the purchase of the remaining ownership of Court | |||||||
Programs, Inc., interest at 12% per annum, with monthly payments of $10,000. The note | |||||||
matured November 2012 and is currently in default. | 46,694 | 139,272 | |||||
The Company received $500,000 from Mr. Derrick, a shareholder and former officer. | |||||||
The terms of this financing have not been determined as of the date of this Report. | 500,000 | - | |||||
Convertible debenture with an interest rate of 8% per annum. The debenture matures | |||||||
December 17, 2012 and is secured by the domestic patents of the Company. The | |||||||
debenture may be converted into shares of common stock at a rate of $0.0225 per share. | |||||||
The debenture is currently in default. | 500,000 | - | |||||
Convertible debenture with an interest rate of 8% per annum. The debenture matures | |||||||
December 17, 2012 and is secured by the domestic patents of the Company. The | |||||||
debenture may be converted into shares of common stock at a rate of $0.0225 per share. | |||||||
The debenture is currently in default. | 2,000,000 | - | |||||
The Company received $1,900,000 through the issuance of convertible debentures | |||||||
with an interest rate of 8% per annum. The debentures mature on June 17, 2014. This | |||||||
debenture may convert into shares of common stock at a rate of $0.0225 per share. | |||||||
A debt discount of $633,333 was recorded to reflect a beneficial conversion feature. | |||||||
As of September 30, 2012, the remaining debt discount was $611,308. | 1,288,692 | - | |||||
The Company entered into a Loan a Security Agreement with an entity under which | |||||||
the Company could borrow up to $8,000,000 on a line of credit. Both the Company | |||||||
and the Lender agreed to terminate the agreement and enter into an agreement to | |||||||
raise additional equity on behalf of the Company through the sale of Series D | |||||||
Preferred stock. The loan was paid back and the line of credit was closed. | - | 500,000 | |||||
Note payable with an interest rate of 16% per annum and matured in November 2011. | - | 40,000 | |||||
Total related-party debt obligations | 14,524,015 | 871,748 | |||||
Less current portion | (12,793,303) | (754,896) | |||||
Long-term debt, net of current portion | $ 1,730,712 | $ 116,852 |
6_Certain_Relationships_and_Re2
(6) Certain Relationships and Related Transactions: Future Maturities for Related-Party Debt (Tables) (Scenario, Previously Reported) | 9 Months Ended | ||
Jun. 30, 2013 | |||
Scenario, Previously Reported | ' | ||
Tables/Schedules | ' | ||
Future Maturities for Related-Party Debt | ' | ||
Fiscal Year | Total | ||
2013 | $ 12,793,303 | ||
2014 | 1,730,712 | ||
Thereafter | - | ||
Total | $ 14,524,015 |
7_Debt_Obligations_Schedule_of
(7) Debt Obligations: Schedule of Debt Obligation (Tables) (Scenario, Previously Reported) | 9 Months Ended | ||||||
Jun. 30, 2013 | |||||||
Scenario, Previously Reported | ' | ||||||
Tables/Schedules | ' | ||||||
Schedule of Debt Obligation | ' | ||||||
2012 | 2011 | ||||||
Settlement liability from patent infringement suit and countersuit settled in February 2010. The liability will be paid quarterly through March 2013. | $ 200,000 | $ 500,000 | |||||
Notes issued in connection with the acquisition of a subsidiary. Quarterly cash payments mature on January 2014. These notes bear no interest. Balance on notes reflects debt discount of $16,939 and $55,388, respectively. The effective interest rate is 15% per annum. Subsequent to fiscalyear ended September 30, 2012, this debt was assumed through the sale of Midwest Monitoring & Surveillance, Inc. to former owners of the company. | 233,061 | 369,612 | |||||
Capital leases with effective interest rates that range between 8.51% and 17.44%. Leases mature between November 2012 and March 2016. | 272,508 | 335,366 | |||||
Note payable due to the Small Business Administration ("SBA"). Note bears interest at 4.00% and matures April 2037. The note is secured by Court Programs, Inc. | 201,204 | 215,288 | |||||
Automobile loans with several financial institutions secured by the vehicles. Interest rates range between 0.0% and 8.9%, due through February 2016. | 137,888 | 181,146 | |||||
Unsecured revolving line of credit with a bank, with an interest rate of 9.25%, $10,493 and $10,568, was available for withdrawal under the line of credit, respectively. | 39,507 | 39,432 | |||||
Secured note bearing an interest rate of 18%. The note matured in November 2011. | - | 225,000 | |||||
Note payable to a financial institution bearing interest at 6.37%. The note was secured by property which was sold during the fiscal year. | - | 70,156 | |||||
Notes payable for testing equipment with an interest rate of 8%. The notes were secured by testing equipment. The notes matured in December 2011. | - | 3,237 | |||||
Notes payable for monitoring equipment. Interest rates range between 7.8% to 18.5% and matured in November 2011. The notes were secured by monitoring equipment. | - | 753 | |||||
Total debt obligations | 1,084,168 | 1,939,990 | |||||
Less current portion | (634,218) | (1,041,392) | |||||
Long-term debt, net of current portion | $ 449,950 | $ 898,598 |
7_Debt_Obligations_Schedule_of1
(7) Debt Obligations: Schedule of Maturities of Long-term Debt (Tables) (Scenario, Previously Reported) | 9 Months Ended | ||
Jun. 30, 2013 | |||
Scenario, Previously Reported | ' | ||
Tables/Schedules | ' | ||
Schedule of Maturities of Long-term Debt | ' | ||
Fiscal Year | Total | ||
2013 | $ 634,218 | ||
2014 | 154,142 | ||
2015 | 95,190 | ||
2016 | 24,536 | ||
2017 | 6,919 | ||
Thereafter | 169,163 | ||
Total | $ 1,084,168 |
7_Debt_Obligations_Schedule_of2
(7) Debt Obligations: Schedule of Future Minimum Lease Payments for Capital Leases (Tables) (Scenario, Previously Reported) | 9 Months Ended | |
Jun. 30, 2013 | ||
Scenario, Previously Reported | ' | |
Tables/Schedules | ' | |
Schedule of Future Minimum Lease Payments for Capital Leases | ' | |
Fiscal Year | Total | |
2013 | $ 161,857 | |
2014 | 112,383 | |
2015 | 55,916 | |
2016 | 9,797 | |
Thereafter | - | |
Total minimum lease payments | 339,953 | |
Less: amount representing interest | (67,445) | |
Present value of net minimum lease payments | 272,508 | |
Less: current portion | (131,072) | |
Obligation under capital leases - long-term | $ 141,436 |
10_Stock_Options_and_Warrants_
(10) Stock Options and Warrants: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Tables) | 9 Months Ended | |||||
Jun. 30, 2013 | ||||||
Tables/Schedules | ' | |||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | ' | |||||
Nine Months Ended June 30, | ||||||
2013 | 2012 | |||||
Expected cash dividend yield | - | - | ||||
Expected stock price volatility | 108% | 95% | ||||
Risk-free interest rate | 0.15% | 0.36% | ||||
Expected life of options/warrants | 2 years | 2 years | ||||
Scenario, Previously Reported | ' | |||||
Tables/Schedules | ' | |||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | ' | |||||
Fiscal Years Ended | ||||||
September 30, | ||||||
2012 | 2011 | |||||
Expected cash dividend yield | - | - | ||||
Expected stock price volatility | 95% | 96% | ||||
Risk-free interest rate | 0.36% | 0.32% | ||||
Expected life of options | 2 Years | 2 Years |
10_Stock_Options_and_Warrants_1
(10) Stock Options and Warrants: Schedule of Stock Options Roll Forward (Tables) | 9 Months Ended | |||||||||
Jun. 30, 2013 | ||||||||||
Tables/Schedules | ' | |||||||||
Schedule of Stock Options Roll Forward | ' | |||||||||
Shares Under Option/ Warrant | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||
Outstanding as of September 30, 2012 | 336,782 | $ | 28 | |||||||
Granted | 129,651 | $ | 10.79 | |||||||
Expired / Cancelled | (29,000) | $ | 60.01 | |||||||
Outstanding as of June 30, 2013 | 437,433 | $ | 20.59 | 1.57 years | $ | 506,361 | ||||
Exercisable as of June 30, 2013 | 377,064 | $ | 22.19 | 1.54 years | $ | 214,560 | ||||
Scenario, Previously Reported | ' | |||||||||
Tables/Schedules | ' | |||||||||
Schedule of Stock Options Roll Forward | ' | |||||||||
Shares Under Option | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||
Outstanding as of September 30, 2010 | 27,740,451 | $ 0.36 | ||||||||
Granted | 75,000,000 | $ 0.08 | ||||||||
Expired | (3,562,249) | $ 0.32 | ||||||||
Outstanding as of September 30, 2011 | 99,178,202 | $ 0.13 | ||||||||
Granted | 10,900,000 | $ 0.09 | ||||||||
Expired / Cancelled | -42,721,709 | $ 0.11 | ||||||||
Outstanding as of September 30, 2012 | 67,356,493 | $ 0.14 | 2.09 years | $ - | ||||||
Exercisable as of September 30, 2012 | 65,371,254 | $ 0.14 | 2.09 years | $ - |
11_Income_Taxes_Schedule_of_De
(11) Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables) (Scenario, Previously Reported) | 9 Months Ended | |||
Jun. 30, 2013 | ||||
Scenario, Previously Reported | ' | |||
Tables/Schedules | ' | |||
Schedule of Deferred Tax Assets and Liabilities | ' | |||
Fiscal Years Ended | ||||
September 30, | ||||
2012 | 2011 | |||
Net loss carryforwards | $ 66,696,000 | $ 63,453,000 | ||
Accruals and reserves | 529,000 | 678,000 | ||
Contributions | 6,000 | 3,000 | ||
Depreciation | 26,000 | 13,000 | ||
Stock-based compensation | 5,768,000 | 4,434,000 | ||
Valuation allowance | (73,025,000) | (68,581,000) | ||
Total | $ 0 | $ 0 |
11_Income_Taxes_Schedule_of_Ef
(11) Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables) (Scenario, Previously Reported) | 9 Months Ended | |||
Jun. 30, 2013 | ||||
Scenario, Previously Reported | ' | |||
Tables/Schedules | ' | |||
Schedule of Effective Income Tax Rate Reconciliation | ' | |||
Fiscal Years Ended | ||||
September 30, | ||||
2012 | 2011 | |||
Federal income tax benefit at statutory rate | $ 5,936,000 | $ 3,363,000 | ||
State income tax benefit, net of federal income tax effect | 576,000 | 326,000 | ||
Change in estimated tax rate and gain (loss) on non-deductible expenses | (2,068,000) | (98,000) | ||
Change in valuation allowance | (4,444,000) | (3,591,000) | ||
Benefit for income taxes | $ 0 | $ 0 |
12_Commitments_and_Contingenci3
(12) Commitments and Contingencies: Data Subscriber Service Agreement: ScheduleOfDataSubscriberServiceAgreementPayment (Tables) (Scenario, Previously Reported) | 9 Months Ended | ||
Jun. 30, 2013 | |||
Scenario, Previously Reported | ' | ||
Tables/Schedules | ' | ||
ScheduleOfDataSubscriberServiceAgreementPayment | ' | ||
Fiscal Years | Amount | ||
2013 | $ 300,000 | ||
2014 | 300,000 | ||
2015 | 300,000 | ||
Thereafter | - | ||
Total | $ 900,000 |
12_Commitments_and_Contingenci4
(12) Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Tables) (Scenario, Previously Reported) | 9 Months Ended | |
Jun. 30, 2013 | ||
Scenario, Previously Reported | ' | |
Tables/Schedules | ' | |
Schedule of Future Minimum Rental Payments for Operating Leases | ' | |
Fiscal Year | Total | |
2013 | $ 463,902 | |
2014 | 157,014 | |
2015 | 22,113 | |
Thereafter | 0 | |
Total | $ 643,029 |
13_Fair_Value_Measurements_Sch
(13) Fair Value Measurements: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Tables) (Scenario, Previously Reported) | 9 Months Ended | ||||||
Jun. 30, 2013 | |||||||
Scenario, Previously Reported | ' | ||||||
Tables/Schedules | ' | ||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ||||||
Level 1 | Level 2 | Level 3 | Total | ||||
Fair Value of Goodwill | $ 0 | $ 0 | $ 375,000 | $ 375,000 |
1_Basis_of_Presentation_Going_1
(1) Basis of Presentation: Going Concern (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Accumulated deficit | $254,707,653 | $248,513,626 | $231,055,519 |
Scenario, Previously Reported | ' | ' | ' |
Accumulated deficit | ' | $248,513,626 | ' |
Recovered_Sheet18
(2) Significant Accounting Policies: Concentration of Credit Risk (Details) (Scenario, Previously Reported, USD $) | 12 Months Ended | |
Sep. 30, 2012 | Sep. 30, 2011 | |
Scenario, Previously Reported | ' | ' |
Concentration of Credit Risk as Percentage of Revenue | $2,450,984 | $2,265,805 |
Concentration Risk, Percentage | 12.00% | 13.00% |
Recovered_Sheet19
(2) Significant Accounting Policies: Concentration of Credit Risk: Concentration of Credit Risk Associated to Accounts Receivable (Details) (Scenario, Previously Reported, USD $) | 12 Months Ended | |
Sep. 30, 2012 | Sep. 30, 2011 | |
Scenario, Previously Reported | ' | ' |
Customer A Credit Risk Associated to AR | $681,781 | ' |
Customer A Credit Risk Percentage Associated to AR | 24.00% | ' |
Customer B Credit Risk Associated to AR | 475,800 | 347,553 |
Customer B Credit Risk Percentage Associated to AR | 17.00% | 7.00% |
Customer C Credit Risk Associated to AR | ' | $1,995,804 |
Customer C Credit Risk Percentage Associated to AR | ' | 39.00% |
Recovered_Sheet20
(2) Significant Accounting Policies: Cash Equivalents (Details) (Scenario, Previously Reported, USD $) | Sep. 30, 2012 | Sep. 30, 2011 |
Scenario, Previously Reported | ' | ' |
Deposits, Savings Deposits | $350,716 | $371,130 |
Recovered_Sheet21
(2) Significant Accounting Policies: Inventory (Details) (Scenario, Previously Reported, USD $) | 12 Months Ended | |
Sep. 30, 2012 | Sep. 30, 2011 | |
Scenario, Previously Reported | ' | ' |
Inventory Impairment | $359,734 | $268,398 |
Recovered_Sheet22
(2) Significant Accounting Policies: Inventory: Schedule of Inventory, Current (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Inventory, Raw Materials, Gross | $635,721 | $822,566 | ' |
Reserve for damaged or obsolete inventory | -192,000 | -192,000 | -127,016 |
Inventory, net of reserves of $192,000 and $192,000, respectively | 443,721 | 630,566 | 579,779 |
Scenario, Previously Reported | ' | ' | ' |
Inventory, Raw Materials, Gross | ' | 822,566 | 706,795 |
Reserve for damaged or obsolete inventory | ' | -192,000 | -127,016 |
Inventory, net of reserves of $192,000 and $192,000, respectively | ' | $630,566 | $579,779 |
Recovered_Sheet23
(2) Significant Accounting Policies: Note Receivable (Details) (Scenario, Previously Reported, USD $) | Sep. 30, 2012 | |
Scenario, Previously Reported | ' | |
Financing Receivable, Net | $268,682 | [1] |
Note Receivable Accrued Interest | $1,325 | |
[1] | Note requires monthly payments of $15,000 and matures in May 2014 |
Recovered_Sheet24
(2) Significant Accounting Policies: Property and Equipment: Property, Plant and Equipment (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Equipment, software and tooling | $2,000,340 | $1,981,936 | ' |
Automobiles | 33,466 | 33,466 | ' |
Leasehold Improvements, Gross | 127,162 | 127,287 | ' |
Furniture And Fixtures | 247,218 | 252,951 | ' |
Property, Plant and Equipment, Gross | 2,408,186 | 2,395,640 | ' |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | -2,055,798 | -1,889,041 | ' |
Property and equipment, net of accumulated depreciation of $2,055,798 and $1,889,041, respectively | 352,388 | 677,493 | 1,086,633 |
Scenario, Previously Reported | ' | ' | ' |
Equipment, software and tooling | ' | 2,409,031 | 2,390,329 |
Automobiles | ' | 372,339 | 398,890 |
Building | ' | ' | 377,555 |
Leasehold Improvements, Gross | ' | 134,941 | 132,820 |
Furniture And Fixtures | ' | 323,505 | 317,630 |
Property, Plant and Equipment, Gross | ' | 3,239,816 | 3,617,224 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | ' | -2,562,323 | -2,530,591 |
Property and equipment, net of accumulated depreciation of $2,055,798 and $1,889,041, respectively | ' | $677,493 | $1,086,633 |
Recovered_Sheet25
(2) Significant Accounting Policies: Property and Equipment (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2012 | Sep. 30, 2011 | |
Loss on disposal of property and equipment | $23,865 | $300,338 |
Scenario, Previously Reported | ' | ' |
Loss on disposal of property and equipment | 23,865 | 300,338 |
Segment Reporting Information, Significant Noncash Items Other than Depreciation, Depletion, and Amortization Expense | 1,387,756 | 1,160,920 |
Utilities Operating Expense, Impairments | $1,494,518 | $291,479 |
Recovered_Sheet26
(2) Significant Accounting Policies: Property and Equipment: Schedule of Property Subject to or Available for Operating Lease (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Property Subject to or Available for Operating Lease, Gross | $3,686,213 | $3,841,876 | ' |
Property Subject to or Available for Operating Lease, Accumulated Depreciation | -1,572,572 | -669,929 | ' |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | 2,113,641 | 3,325,110 | 3,461,985 |
Scenario, Previously Reported | ' | ' | ' |
Property Subject to or Available for Operating Lease, Gross | ' | 6,504,420 | 7,070,373 |
Property Subject to or Available for Operating Lease, Accumulated Depreciation | ' | -3,179,310 | -3,608,388 |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | ' | $3,325,110 | $3,461,985 |
Recovered_Sheet27
(2) Significant Accounting Policies: Impairment of Long-lived Assets and Goodwill: Schedule of Intangible Assets and Goodwill (Details) (USD $) | Sep. 30, 2012 | Sep. 30, 2011 |
Goodwill | $375,000 | $5,889,395 |
Scenario, Previously Reported | ' | ' |
Goodwill | 375,000 | 5,889,395 |
Scenario, Previously Reported | CPIMember | ' | ' |
Goodwill, Gross | 2,488,068 | 2,488,068 |
Goodwill, Impaired, Accumulated Impairment Loss | -2,488,068 | ' |
Goodwill | 0 | 2,488,068 |
Scenario, Previously Reported | MMSMember | ' | ' |
Goodwill, Gross | 3,401,327 | 1,421,995 |
Additions | ' | -1,979,332 |
Additions | ' | 1,979,332 |
Goodwill, Impaired, Accumulated Impairment Loss | -3,026,327 | ' |
Goodwill | $375,000 | $3,401,327 |
Recovered_Sheet28
(2) Significant Accounting Policies: Geographical Information: Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2011 | |
Scenario, Previously Reported | Scenario, Previously Reported | |||||
Revenues United States of America | ' | ' | ' | ' | $14,075,140 | $14,499,613 |
Revenues Latin American Countries | ' | ' | ' | ' | 2,450,984 | 2,533,483 |
Revenues Cabribbean and Commonweaths | ' | ' | ' | ' | 3,217,651 | 912,504 |
Other Foreign Countries | ' | ' | ' | ' | 47,717 | 16,203 |
Revenue, Net | $2,685,214 | $2,999,706 | $13,081,610 | $10,116,610 | $19,791,492 | $17,961,803 |
Recovered_Sheet29
(2) Significant Accounting Policies: Geographical Information: Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Property and equipment, net of accumulated depreciation of $2,055,798 and $1,889,041, respectively | $352,388 | $677,493 | $1,086,633 |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | 2,113,641 | 3,325,110 | 3,461,985 |
UnitedStatesOfAmericaMember | ' | ' | ' |
Property and equipment, net of accumulated depreciation of $2,055,798 and $1,889,041, respectively | 352,388 | 506,599 | ' |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | 1,038,215 | 2,174,976 | ' |
LatinAmericanCountiresMember | ' | ' | ' |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | 914,325 | 719,171 | ' |
CaribbeanCountriesAndCommonwealthMember | ' | ' | ' |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | 157,679 | 263,782 | ' |
OtherForeignCountriesMember | ' | ' | ' |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | 3,422 | 14,018 | ' |
Scenario, Previously Reported | ' | ' | ' |
Property and equipment, net of accumulated depreciation of $2,055,798 and $1,889,041, respectively | ' | 677,493 | 1,086,633 |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | ' | 3,325,110 | 3,461,985 |
Scenario, Previously Reported | UnitedStatesOfAmericaMember | ' | ' | ' |
Property and equipment, net of accumulated depreciation of $2,055,798 and $1,889,041, respectively | ' | 677,493 | 1,082,453 |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | ' | 2,328,139 | 3,352,614 |
Scenario, Previously Reported | LatinAmericanCountiresMember | ' | ' | ' |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | ' | 719,171 | 32,919 |
Scenario, Previously Reported | CaribbeanCountriesAndCommonwealthMember | ' | ' | ' |
Property and equipment, net of accumulated depreciation of $2,055,798 and $1,889,041, respectively | ' | ' | 4,180 |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | ' | 263,782 | 71,687 |
Scenario, Previously Reported | OtherForeignCountriesMember | ' | ' | ' |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | ' | $14,018 | $4,765 |
Recovered_Sheet30
(2) Significant Accounting Policies: Research and Development Costs (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2011 | |
Research and development | $269,072 | $310,810 | $668,269 | $987,215 | $1,248,654 | $1,453,994 |
Scenario, Previously Reported | ' | ' | ' | ' | ' | ' |
Research and development | ' | ' | ' | ' | $1,248,654 | $1,453,994 |
Recovered_Sheet31
(2) Significant Accounting Policies: Advertising Costs (Details) (Scenario, Previously Reported, USD $) | 12 Months Ended | |
Sep. 30, 2012 | Sep. 30, 2011 | |
Scenario, Previously Reported | ' | ' |
Advertising Revenue Cost | $42,148 | $117,568 |
Recovered_Sheet32
(2) Significant Accounting Policies: Net Loss Per Common Share: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) (USD $) | Jun. 30, 2013 | Jun. 30, 2012 |
Conversion of debt and accrued interest | $3,846,758 | $416,667 |
Conversion of Series D Preferred stock | 14,040 | 1,463,490 |
Exercise of outstanding common stock options and warrants | 437,432 | 365,961 |
Exercise and conversion of outstanding Series D Preferred stock warrants | 162,000 | 162,000 |
Total common stock equivalents | $4,460,230 | $2,408,118 |
3_Acquisitions_Goodwill_and_Ot4
(3) Acquisitions, Goodwill and Other Intangible Assets: Goodwill and intangible assets 2012 (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Goodwill | ' | $375,000 | $5,889,395 |
FiniteLivedRoyaltyAgreement | 16,620,567 | ' | ' |
Accumulated amortization | -1,035,017 | -801,905 | -485,393 |
Other intangible assets, net of accumulated amortization | 16,670,567 | ' | ' |
Intangible assets, net of accumulated amortization | 15,635,550 | ' | ' |
Patent | ' | ' | ' |
Other intangible assets, net of accumulated amortization | 50,000 | ' | ' |
Intangible assets, net of accumulated amortization | 31,017 | ' | ' |
International Surveillance Services Corp | ' | ' | ' |
FiniteLivedRoyaltyAgreement | 5,003,583 | ' | ' |
Other intangible assets, net of accumulated amortization | 5,003,583 | ' | ' |
Intangible assets, net of accumulated amortization | 4,503,225 | ' | ' |
Scenario, Previously Reported | MMSMember | ' | ' | ' |
Goodwill | ' | 375,000 | 3,401,327 |
Trade name | ' | 120,000 | 120,000 |
Non-compete agreements | ' | 2,000 | 2,000 |
Total other intangible assets | ' | 122,000 | 122,000 |
Accumulated amortization | ' | -40,664 | -32,667 |
Other intangible assets, net of accumulated amortization | ' | 81,336 | 89,333 |
Intangible assets, net of accumulated amortization | ' | 456,336 | 3,490,660 |
Scenario, Previously Reported | CPIMember | ' | ' | ' |
Goodwill | ' | 0 | 2,488,068 |
Trade name | ' | 99,000 | 99,000 |
Customer relationships | ' | 6,000 | 6,000 |
Non-compete agreements | ' | 6,000 | 6,000 |
Total other intangible assets | ' | 111,000 | 111,000 |
Accumulated amortization | ' | -43,700 | -35,900 |
Other intangible assets, net of accumulated amortization | ' | 67,300 | 75,100 |
Intangible assets, net of accumulated amortization | ' | 67,300 | 2,563,168 |
Scenario, Previously Reported | BRSMember | ' | ' | ' |
Trade name | ' | 10,000 | 10,000 |
Software | ' | 380,001 | 380,001 |
Total other intangible assets | ' | 390,001 | 390,001 |
Accumulated amortization | ' | -390,001 | -345,022 |
Other intangible assets, net of accumulated amortization | ' | ' | 44,979 |
Intangible assets, net of accumulated amortization | ' | ' | 44,979 |
Scenario, Previously Reported | ' | ' | ' |
Goodwill | ' | 375,000 | 5,889,395 |
Trade name | ' | 229,000 | 229,000 |
Software | ' | 380,001 | 380,001 |
Customer relationships | ' | 6,000 | 6,000 |
Patent license agreement | ' | 50,000 | 50,000 |
Non-compete agreements | ' | 8,000 | 8,000 |
FiniteLivedRoyaltyAgreement | ' | 5,003,583 | 5,003,583 |
Total other intangible assets | ' | 5,676,584 | 5,676,584 |
Accumulated amortization | ' | -801,905 | -485,393 |
Other intangible assets, net of accumulated amortization | ' | 4,874,679 | 5,191,191 |
Intangible assets, net of accumulated amortization | ' | 5,249,679 | 11,080,586 |
Scenario, Previously Reported | Patent | ' | ' | ' |
Patent license agreement | ' | 50,000 | 50,000 |
Total other intangible assets | ' | 50,000 | 50,000 |
Accumulated amortization | ' | -14,816 | -9,259 |
Other intangible assets, net of accumulated amortization | ' | 35,184 | 40,741 |
Intangible assets, net of accumulated amortization | ' | 35,184 | 40,741 |
Scenario, Previously Reported | International Surveillance Services Corp | ' | ' | ' |
FiniteLivedRoyaltyAgreement | ' | 5,003,583 | 5,003,583 |
Total other intangible assets | ' | 5,003,583 | 5,003,583 |
Accumulated amortization | ' | -312,724 | -62,545 |
Other intangible assets, net of accumulated amortization | ' | 4,690,859 | 4,941,038 |
Intangible assets, net of accumulated amortization | ' | $4,690,859 | $4,941,038 |
3_Acquisitions_Goodwill_and_Ot5
(3) Acquisitions, Goodwill and Other Intangible Assets: Goodwill and intangible assets 2011 (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Goodwill | ' | $375,000 | $5,889,395 |
FiniteLivedRoyaltyAgreement | 16,620,567 | ' | ' |
Accumulated amortization | -1,035,017 | -801,905 | -485,393 |
Other intangible assets, net of accumulated amortization | 16,670,567 | ' | ' |
Intangible assets, net of accumulated amortization | 15,635,550 | ' | ' |
Patent | ' | ' | ' |
Other intangible assets, net of accumulated amortization | 50,000 | ' | ' |
Intangible assets, net of accumulated amortization | 31,017 | ' | ' |
International Surveillance Services Corp | ' | ' | ' |
FiniteLivedRoyaltyAgreement | 5,003,583 | ' | ' |
Other intangible assets, net of accumulated amortization | 5,003,583 | ' | ' |
Intangible assets, net of accumulated amortization | 4,503,225 | ' | ' |
Scenario, Previously Reported | MMSMember | ' | ' | ' |
Goodwill | ' | 375,000 | 3,401,327 |
Trade name | ' | 120,000 | 120,000 |
Non-compete agreements | ' | 2,000 | 2,000 |
Total other intangible assets | ' | 122,000 | 122,000 |
Accumulated amortization | ' | -40,664 | -32,667 |
Other intangible assets, net of accumulated amortization | ' | 81,336 | 89,333 |
Intangible assets, net of accumulated amortization | ' | 456,336 | 3,490,660 |
Scenario, Previously Reported | CPIMember | ' | ' | ' |
Goodwill | ' | 0 | 2,488,068 |
Trade name | ' | 99,000 | 99,000 |
Customer relationships | ' | 6,000 | 6,000 |
Non-compete agreements | ' | 6,000 | 6,000 |
Total other intangible assets | ' | 111,000 | 111,000 |
Accumulated amortization | ' | -43,700 | -35,900 |
Other intangible assets, net of accumulated amortization | ' | 67,300 | 75,100 |
Intangible assets, net of accumulated amortization | ' | 67,300 | 2,563,168 |
Scenario, Previously Reported | BRSMember | ' | ' | ' |
Trade name | ' | 10,000 | 10,000 |
Software | ' | 380,001 | 380,001 |
Total other intangible assets | ' | 390,001 | 390,001 |
Accumulated amortization | ' | -390,001 | -345,022 |
Other intangible assets, net of accumulated amortization | ' | ' | 44,979 |
Intangible assets, net of accumulated amortization | ' | ' | 44,979 |
Scenario, Previously Reported | ' | ' | ' |
Goodwill | ' | 375,000 | 5,889,395 |
Trade name | ' | 229,000 | 229,000 |
Software | ' | 380,001 | 380,001 |
Customer relationships | ' | 6,000 | 6,000 |
Patent license agreement | ' | 50,000 | 50,000 |
Non-compete agreements | ' | 8,000 | 8,000 |
FiniteLivedRoyaltyAgreement | ' | 5,003,583 | 5,003,583 |
Total other intangible assets | ' | 5,676,584 | 5,676,584 |
Accumulated amortization | ' | -801,905 | -485,393 |
Other intangible assets, net of accumulated amortization | ' | 4,874,679 | 5,191,191 |
Intangible assets, net of accumulated amortization | ' | 5,249,679 | 11,080,586 |
Scenario, Previously Reported | Patent | ' | ' | ' |
Patent license agreement | ' | 50,000 | 50,000 |
Total other intangible assets | ' | 50,000 | 50,000 |
Accumulated amortization | ' | -14,816 | -9,259 |
Other intangible assets, net of accumulated amortization | ' | 35,184 | 40,741 |
Intangible assets, net of accumulated amortization | ' | 35,184 | 40,741 |
Scenario, Previously Reported | International Surveillance Services Corp | ' | ' | ' |
FiniteLivedRoyaltyAgreement | ' | 5,003,583 | 5,003,583 |
Total other intangible assets | ' | 5,003,583 | 5,003,583 |
Accumulated amortization | ' | -312,724 | -62,545 |
Other intangible assets, net of accumulated amortization | ' | 4,690,859 | 4,941,038 |
Intangible assets, net of accumulated amortization | ' | $4,690,859 | $4,941,038 |
3_Acquisitions_Goodwill_and_Ot6
(3) Acquisitions, Goodwill and Other Intangible Assets: Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) (Scenario, Previously Reported, USD $) | 9 Months Ended | 12 Months Ended | |||||
Jun. 30, 2013 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Finite-Lived Intangible Assets, Future Amortization Expense | ' | $270,335 | $270,335 | $270,335 | $270,335 | $270,535 | ' |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | ' | ' | ' | ' | ' | ' | 3,522,804 |
Amortization of Intangible Assets | 4,874,679 | ' | ' | ' | ' | ' | ' |
MMSMember | ' | ' | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets, Future Amortization Expense | ' | 8,000 | 8,000 | 8,000 | 8,000 | 8,000 | ' |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | ' | ' | ' | ' | ' | ' | 41,336 |
Amortization of Intangible Assets | 81,336 | ' | ' | ' | ' | ' | ' |
CPIMember | ' | ' | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets, Future Amortization Expense | ' | 6,600 | 6,600 | 6,600 | 6,600 | 6,800 | ' |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | ' | ' | ' | ' | ' | ' | 34,100 |
Amortization of Intangible Assets | 67,300 | ' | ' | ' | ' | ' | ' |
Patent | ' | ' | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets, Future Amortization Expense | ' | 5,556 | 5,556 | 5,556 | 5,556 | 5,556 | ' |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | ' | ' | ' | ' | ' | ' | 7,404 |
Amortization of Intangible Assets | 35,184 | ' | ' | ' | ' | ' | ' |
International Surveillance Services Corp | ' | ' | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets, Future Amortization Expense | ' | 250,179 | 250,179 | 250,179 | 250,179 | 250,179 | ' |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | ' | ' | ' | ' | ' | ' | 3,439,964 |
Amortization of Intangible Assets | $4,690,859 | ' | ' | ' | ' | ' | ' |
3_Acquisitions_Goodwill_and_Ot7
(3) Acquisitions, Goodwill and Other Intangible Assets (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2012 | Sep. 30, 2011 | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2012 | Sep. 30, 2011 | ||
Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | ||||||
MMSMember | MMSMember | CPIMember | CPIMember | BRSMember | BRSMember | Patent | Patent | International Surveillance Services Corp | International Surveillance Services Corp | |||||||||
Goodwill Impairment Expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $3,026,327 | ' | ' | ' | ' | ' | ||
Goodwill | ' | 375,000 | 5,889,395 | 375,000 | 3,401,327 | 0 | 2,488,068 | ' | ' | ' | 375,000 | 5,889,395 | ' | ' | ' | ' | ||
Total other intangible assets | ' | ' | ' | 122,000 | 122,000 | 111,000 | 111,000 | 390,001 | 390,001 | ' | 5,676,584 | 5,676,584 | 50,000 | 50,000 | 5,003,583 | 5,003,583 | ||
Amortization Expense | ' | ' | ' | 7,997 | 8,000 | 7,800 | 7,800 | 44,979 | 127,334 | ' | ' | ' | 5,557 | 5,555 | 250,179 | ' | ||
Intangible assets accumulated amortization | 1,035,017 | 801,905 | 485,393 | 40,664 | 32,667 | 43,700 | 35,900 | 390,001 | 345,022 | ' | 801,905 | 485,393 | 14,816 | 9,259 | 312,724 | 62,545 | ||
Other Intangible Assets, Net | ' | ' | ' | 81,336 | 89,333 | 67,300 | 75,100 | 0 | 44,979 | ' | ' | ' | 35,184 | 40,741 | 4,690,859 | ' | ||
Midwest Stock Purchase for 750,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 750,000 | [1] | ' | ' | ' | ' | ' | |
Goodwill and Intangible Asset Impairment | ' | ' | ' | ' | ' | 2,488,068 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Consideration paid for use of Patent | ' | ' | ' | ' | ' | ' | ' | ' | ' | $50,000 | [2] | ' | ' | ' | ' | ' | ' | |
[1] | Payable as follows: (a) forgiveness of $650,000 in debt obligations owed by the Company to the former Midwest principals, and (b) cash of $100,000 payable under a note on or before April 1, 2013. | |||||||||||||||||
[2] | $25,000 was paid during the fiscal year ended September 30, 2010 and the balance was paid on February 3, 2011 |
4_Royalty_Purchase_Commitment_
(4) Royalty Purchase Commitment (Details) (USD $) | Sep. 30, 2012 |
Royalty Purchase Commitment | $10,768,555 |
Scenario, Previously Reported | ' |
Royalty Purchase Commitment | $10,768,555 |
5_Accounts_Payable_and_Accrued2
(5) Accounts Payable and Accrued Liabilities Disclosure: Schedule of Accrued Liabilities (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2011 |
Scenario, Previously Reported | Scenario, Previously Reported | |||
Payroll, taxes and employee benefits | $347,161 | $540,931 | $701,537 | $749,509 |
Accrued Royalties, Current | 845,656 | 641,446 | 641,446 | ' |
Value added and business flat taxes | 655,678 | 262,440 | 271,240 | ' |
Board of Directors fees | 80,000 | 265,000 | 265,000 | 153,101 |
Other expenses | ' | ' | 197,512 | 110,810 |
Acquisition costs payable in cash | ' | ' | 149,626 | 272,500 |
Acquisition costs payable in cash to a related-party (see Note 16) | ' | ' | 149,626 | 272,500 |
Settlement costs | 82,000 | 50,000 | 50,000 | 276,712 |
Accrued outside services | 151,839 | 38,630 | 38,630 | 28,294 |
Total interest and fees | ' | ' | 37,937 | 26,329 |
Warranty and manufacturing costs | 30,622 | 30,622 | 30,622 | 66,622 |
Accrued indigent fees | ' | ' | 28,518 | 39,175 |
Accrued cost of revenues | ' | 4,467 | 28,397 | 42,026 |
Accrued cellular costs | 50,500 | 27,662 | 27,662 | 32,299 |
Accrued administration fees | ' | ' | 16,609 | 29,900 |
Legal costs | 47,779 | 14,628 | 14,628 | 215,895 |
Inventory costs | ' | ' | ' | $26,900 |
6_Certain_Relationships_and_Re3
(6) Certain Relationships and Related Transactions: Transactions with Related Parties Approved by Board of Directors (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2012 | Sep. 30, 2011 |
Scenario, Previously Reported | Scenario, Previously Reported | ||||
Note payable in connection with the redemption of a royalty agreement for $10,768,555 | ' | ' | ' | $10,050,027 | ' |
note payable connection purchase remaining ownership midwest monitoring surveillance inc | ' | ' | ' | 138,602 | 192,476 |
note payable connection purchase remaining ownership court programs inc | ' | ' | ' | 46,694 | 139,272 |
The Company received $500,000 from Mr. Derrick, a shareholder and former officer | ' | ' | ' | 500,000 | ' |
Convertible debenture secured by patent | ' | ' | ' | 500,000 | ' |
Convertible debenture secured by domestic patent | ' | ' | ' | 2,000,000 | ' |
The Company received $1,900,000 through the issuance of convertible debentures | ' | ' | ' | 1,288,692 | ' |
Loan a Security Agreement with an entity | ' | ' | ' | ' | 500,000 |
Note payable with an interest rate of 16% per annum and matured in November 2011 | ' | ' | ' | ' | 40,000 |
Due to Related Parties | 5,934,012 | 14,385,413 | ' | 14,524,015 | 871,748 |
Current portion of long-term related-party debt | ' | -12,793,303 | -754,896 | -12,793,303 | -754,896 |
Long-term related-party debt, net of current portion and debt discount | $5,934,012 | $1,730,712 | $116,852 | $1,730,712 | $116,852 |
6_Certain_Relationships_and_Re4
(6) Certain Relationships and Related Transactions (Details) (USD $) | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | ||||
Jun. 30, 2013 | Jun. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2011 | Jun. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | |
Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | |||
RelatedPartyNoteAMember | RelatedPartyNoteAMember | RelatedPartyNoteCMember | RelatedPartyNoteDMember | RelatedPartyNoteEMember | |||||
Related party obligation | ' | ' | ' | ' | ' | $2,000,000 | $50,000 | $250,000 | $180,000 |
Secured by leased equipment | ' | ' | ' | ' | ' | 1,530,000 | ' | ' | ' |
Secured by accounts receivable | ' | ' | ' | ' | ' | 1,529,808 | ' | ' | ' |
Interest rate | ' | ' | ' | ' | 15.00% | ' | 15.00% | 15.00% | 10.00% |
Origination fee | ' | ' | ' | ' | ' | 50,000 | 5,000 | 15,000 | 9,000 |
Principal and interest paid in full | ' | ' | ' | ' | ' | 1,018,082 | ' | ' | 193,220 |
Principal and interest paid in full 2 | ' | ' | ' | ' | ' | 1,037,544 | ' | ' | ' |
Exercise price per share | ' | ' | ' | ' | ' | ' | $0.08 | $0.08 | ' |
Repriced warrants and options | ' | ' | ' | ' | ' | ' | $15,237 | $24,723 | ' |
Volatility lower limit | ' | ' | ' | ' | ' | ' | 100.02% | 76.69% | ' |
Volatility higher | ' | ' | ' | ' | ' | ' | 109.24% | 119.56% | ' |
Risk free interest rate | 0.15% | 0.36% | 0.36% | 0.32% | ' | ' | 0.22% | 0.22% | ' |
Exercise price | ' | ' | ' | ' | ' | ' | $0.08 | $0.08 | ' |
Market price | ' | ' | ' | ' | ' | ' | $0.07 | $0.07 | ' |
Risk free interest rate high | ' | ' | ' | ' | ' | ' | ' | 0.37% | ' |
Market price high | ' | ' | ' | ' | ' | ' | ' | $0.08 | ' |
6_Certain_Relationships_and_Re5
(6) Certain Relationships and Related Transactions: Future Maturities for Related-Party Debt (Details) (Scenario, Previously Reported, USD $) | Jun. 30, 2013 |
Scenario, Previously Reported | ' |
Future Maturities for Related-Party Debt 2013 | $12,793,303 |
Future Maturities for Related-Party Debt 2014 | 1,730,712 |
Future Maturities for Related-Party Debt Total | $14,524,015 |
7_Debt_Obligations_Schedule_of3
(7) Debt Obligations: Schedule of Debt Obligation (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |||
Settlement liability | ' | $200,000 | [1] | ' | ||
Note payable | 76,586 | 94,459 | ' | |||
Capital Lease Obligations | 68,870 | [2] | 118,098 | [2] | ' | |
Automobile loans | 7,090 | [3] | 12,274 | [3] | ' | |
Total debt obligations | 152,546 | 424,831 | ' | |||
Current portion of long-term debt, net of debt discount of $115,283 and $0, respectively | -90,617 | -634,218 | -1,041,392 | |||
Long-term debt, net of current portion | 61,929 | 449,950 | 898,598 | |||
Scenario, Previously Reported | ' | ' | ' | |||
Settlement liability | ' | 200,000 | [1] | 500,000 | [1] | |
Note payable | ' | 233,061 | [4] | 369,612 | [4] | |
Capital Lease Obligations | ' | 272,508 | [2] | 335,366 | [2] | |
Note payable to Small Business Administration | ' | 201,204 | [5] | 215,288 | [5] | |
Automobile loans | ' | 137,888 | [3] | 181,146 | [3] | |
Revolving line of credit | ' | 39,507 | [6] | 39,432 | [6] | |
Secured note | ' | ' | 225,000 | [7] | ||
Notes Payable | ' | ' | 70,156 | [8] | ||
Equipment testing notes payable | ' | ' | 3,237 | [9] | ||
Monitoring equipment notes payable | ' | ' | 753 | [10] | ||
Total debt obligations | ' | 1,084,168 | 1,939,990 | |||
Current portion of long-term debt, net of debt discount of $115,283 and $0, respectively | ' | -634,218 | -1,041,392 | |||
Long-term debt, net of current portion | ' | $449,950 | $898,598 | |||
[1] | Monthly payment through January 2013, non interest bearing. | |||||
[2] | Effective interest rates that range between 8.51% and 17.44%. Leases mature between November 2012 and March 2016. | |||||
[3] | Secured by vehicles. Interest rates range between 0.0% and 8.9%, due through February 2016. | |||||
[4] | Balance on notes reflects debt discount of $16,939 and $55,388, respectively. The effective interest rate is 15% per annum. | |||||
[5] | Note bears interest at 4.00% and matures April 2037. The note is secured by Court Programs, Inc. | |||||
[6] | Interest rate of 9.25%, $10,493 and $10,568, was available for withdrawal. | |||||
[7] | Interest rate of 18%. Paid in full during the nine months ended June 30, 2012. | |||||
[8] | Interest rate of 6.37%. The note was secured by property which was sold during fiscal year. | |||||
[9] | Interest rate of 8%. The notes were secured by testing equipment. The notes matured in December 2011. | |||||
[10] | Interest rates range between 7.8% and 18.5%, matured through November 2011. Secured by monitoring equipment. |
7_Debt_Obligations_Schedule_of4
(7) Debt Obligations: Schedule of Maturities of Long-term Debt (Details) (Scenario, Previously Reported, USD $) | Jun. 30, 2013 |
Scenario, Previously Reported | ' |
2013 | $634,218 |
2014 | 154,142 |
2015 | 95,190 |
2016 | 24,536 |
2017 | 6,919 |
Thereafter | 169,163 |
Debt obligations | $1,084,168 |
7_Debt_Obligations_Schedule_of5
(7) Debt Obligations: Schedule of Future Minimum Lease Payments for Capital Leases (Details) (Scenario, Previously Reported, USD $) | Jun. 30, 2013 |
Scenario, Previously Reported | ' |
Capital Leases, Future Minimum Payments Due, Next Twelve Months | $161,857 |
Capital Leases, Future Minimum Payments Due in Two Years | 112,383 |
Capital Leases, Future Minimum Payments Due in Three Years | 55,916 |
Capital Leases, Future Minimum Payments Due in Four Years | 9,797 |
Total minimum lease payments | 339,953 |
Total minimum lease payment interest | -67,445 |
Capital Leases, Future Minimum Payments, Present Value of Net Minimum Payments | 272,508 |
Total minimum lease payment Current Portion | -131,072 |
Total minimum lease payment Obligation | $141,436 |
7_Debt_Obligations_Details
(7) Debt Obligations (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2011 | ||||
Scenario, Previously Reported | Scenario, Previously Reported | |||||||
Capital Lease Obligations | $68,870 | [1] | $118,098 | [1] | $272,508 | [1] | $335,366 | [1] |
Capital Lease Obligations, Current | ' | ' | 131,072 | 117,138 | ||||
Assets Securing Capital Leases | ' | ' | 539,659 | 497,779 | ||||
Accumulated Depreciation of Assets Securing Capital Leases | ' | ' | $314,997 | $209,864 | ||||
[1] | Effective interest rates that range between 8.51% and 17.44%. Leases mature between November 2012 and March 2016. |
8_Preferred_Stock_Details
(8) Preferred Stock (Details) (USD $) | 9 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||
Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | Jul. 31, 2012 | Sep. 30, 2011 | Sep. 30, 2012 | Sep. 30, 2010 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2007 | Jun. 30, 2013 | Jul. 31, 2011 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2012 | Sep. 30, 2011 | |
Preferred Stock | Preferred Stock | Preferred Stock | Additional Paid-in Capital | Additional Paid-in Capital | Common Stock | Common Stock | Common Stock | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | |||||
Preferred Stock | Preferred Stock | Additional Paid-in Capital | Additional Paid-in Capital | Common Stock | Common Stock | ||||||||||||||||||
Preferred stock shares authorized | 20,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Series D 8% dividend, convertible, voting - par value | $0.00 | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.00 | ' | ' | ' | ' | ' | ' | ' |
Series D 8% dividend, convertible, voting - shares designated | 85,000 | 85,000 | 85,000 | 85,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 85,000 | ' | ' | ' | ' | ' | ' |
Preferred Stock, Shares Issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 26,037 | ' | ' | ' | ' |
Issuance of Series D Preferred stock for cash | ' | $2,004,000 | $10,344,603 | ' | $3 | ' | ' | $2,004,000 | $10,344,600 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $10,344,600 | ' | ' |
Issuance of Series D Preferred stock in connection with debt and accrued interest - shares | ' | ' | ' | ' | 4,669 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,669 | ' | ' | ' | ' |
Issuance of Series D Preferred stock in connection with debt and accrued interest | ' | ' | 2,334,632 | ' | ' | ' | ' | ' | 2,334,632 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,334,632 | ' | ' |
Issuance of Series D Preferred stock in connection with forbearance agreements - shares | ' | ' | ' | ' | 280 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 280 | ' | ' | ' | ' |
Issuance of Series D Preferred stock in connection with forbearance agreements | ' | ' | 140,000 | ' | ' | ' | ' | ' | 140,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 140,000 | ' | ' |
Issuance of Series D Preferred stock for Board of Director fees - shares | ' | ' | ' | ' | 25 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25 | ' | ' | ' | ' |
Cancellation of Series D Preferred stock - shares | ' | ' | ' | ' | -100 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100 | ' | ' | ' | ' |
Issuance of Series D Preferred stock for prepaid commissions - shares | ' | ' | ' | ' | 987 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 987 | ' | ' | ' | ' |
Issuance of Series D Preferred stock for prepaid commissions | ' | ' | 493,500 | ' | ' | ' | ' | ' | 493,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 493,500 | ' | ' |
Issuance of Series D Preferred stock in connection with services - shares | ' | ' | ' | ' | 275 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,008 | 275 | ' | ' | ' | ' |
Issuance of Series D Preferred stock in connection with services | ' | ' | 137,500 | ' | ' | ' | ' | ' | 137,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,004,000 | 137,500 | ' | ' |
Shares issued | ' | ' | ' | ' | 44,845 | 48,763 | 35,407 | ' | ' | 3,096,642 | 2,518,117 | 1,400,116 | ' | ' | ' | ' | ' | 48,763 | 44,845 | ' | ' | ' | ' |
Dividend rate on Series D Preferred stock | 8.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Issuance of common stock for dividends from Series D Preferred stock - shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | 210,689 | 106,535 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 42,137,711 | 21,307,067 |
Issuance of common stock for dividends from Series D Preferred stock | ' | 2,391,568 | 2,043,309 | ' | ' | ' | ' | 2,391,547 | 2,043,298 | 21 | 11 | ' | 2,391,568 | 2,043,309 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued for payment of Series D preferred stock dividends subsequent to year end | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20,760,551 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Series D Preferred stock dividends earned subsequent to year end | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 630,528 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common shares issued for each share of Series D Preferred stock | 30 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6,000 | ' | ' | ' | ' | ' | ' | ' |
Series D Preferred stock issued for conversion | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 90 | 22,735 | ' | ' | ' | ' |
Common stock issued in conversion of Series D Preferred | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 540,000 | 136,410,000 |
Warrants outstanding for the purchase of Series D Preferred stock | 5,400 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,400 | 1,400 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Investment Warrants, Exercise Price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Series D Preferred Stock Warrants Related Value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 475,340 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock Warrants Volatility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 108.05% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock Warrants risk free rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock Warrants exercise price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.08% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock Warrants market price grant date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.09 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock designated as Series A Convertible Redeemable Non-Voting Preferred Shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,590,000 | ' | ' | ' | ' | ' | ' | ' | ' |
SMI Series A Preferred stock Income | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0 | $16,683 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
9_Common_Stock_Details
(9) Common Stock (Details) (USD $) | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |
Common stock shares authorized prior to amendment | 15,000,000 | ' | ' |
Common stock - shares authorized | 15,000,000 | 15,000,000 | 15,000,000 |
Issuance of common stock for royalty payment | ' | $819,972 | ' |
Issuance of common stock for board of director fees | ' | 48,060 | ' |
Issuance of common stock for cash | ' | 1,033,000 | ' |
Common Stock | ' | ' | ' |
Issuance of common stock for royalty payment - shares | ' | 71,969 | ' |
Issuance of common stock for royalty payment | ' | 7 | ' |
Issuance of common stock for services - shares | ' | 4,315 | 1,250 |
Issuance of common stock for debt - shares | ' | 8,449 | ' |
Issuance of common stock for dividends from Series D Preferred stock - shares | ' | 210,689 | 106,535 |
Issuance of common stock for employee compensation - shares | ' | 121,700 | ' |
Issuance of common stock for board of director fees - shares | ' | 3,000 | ' |
Issuance of common stock for cash - shares | ' | 155,707 | ' |
Issuance of common stock for cash | ' | 17 | ' |
Scenario, Previously Reported | ' | ' | ' |
Common stock shares authorized prior to amendment | 600,000,000 | ' | ' |
Common stock - shares authorized | 1,250,000,000 | ' | ' |
Shares of common stock issued | ' | 115,704,871 | 223,653,951 |
Issuance of common stock for royalty payment | ' | 819,972 | ' |
IssuanceOfCommonStockForServices | ' | 40,000 | 21,310 |
Issuance of common stock for board of director fees | ' | 48,060 | ' |
Issuance of common stock for cash | ' | 1,033,000 | ' |
Issuance of Common Stock For Purchase Remaining Percentage of Midwest - Shares | ' | ' | 2,705,264 |
Issuance of Common Stock For Purchase Remaining Percentage of Midwest | ' | ' | 238,064 |
Issuance of Common Stock For Purchase Assets of ISS - shares | ' | ' | 62,000,000 |
Issuance of Common Stock For Purchase Assets of ISS | ' | ' | 5,084,000 |
IssuanceOfCommonStockForDividendsFromSMISeriesAPreferredStock | ' | ' | $97,349 |
CommonStockForCancellationOfSharesShares | ' | ' | 53,778 |
Scenario, Previously Reported | Common Stock | ' | ' | ' |
Common stock issued in conversion of Series D Preferred | ' | 540,000 | 136,410,000 |
Issuance of common stock for royalty payment - shares | ' | 14,393,860 | ' |
Issuance of common stock for services - shares | ' | 862,961 | 250,000 |
Issuance of common stock for debt - shares | ' | 1,689,714 | ' |
Issuance of common stock for dividends from Series D Preferred stock - shares | ' | 42,137,711 | 21,307,067 |
Issuance of common stock for employee compensation - shares | ' | 24,340,000 | ' |
Issuance of common stock for board of director fees - shares | ' | 600,000 | ' |
Issuance of common stock for cash - shares | ' | 31,140,625 | ' |
IssuanceOfCommonStockForDividendsFromSMISeriesAPreferredStockShares | ' | ' | 981,620 |
Scenario, Previously Reported | Preferred Stock | ' | ' | ' |
Series D Preferred stock issued for conversion | ' | 90 | 22,735 |
10_Stock_Options_and_Warrants_2
(10) Stock Options and Warrants (Details) (USD $) | 9 Months Ended | 12 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 12 Months Ended | ||||||||
Jun. 30, 2013 | Jun. 30, 2012 | Sep. 30, 2012 | Dec. 21, 2011 | Sep. 30, 2012 | Sep. 30, 2012 | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | Mar. 31, 2012 | Dec. 11, 2011 | Sep. 30, 2012 | Sep. 30, 2012 | ||
Additional Paid-in Capital | Common Stock | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | ||||||
Additional Paid-in Capital | Common Stock | |||||||||||||
Shares authorized for issuance under 2012 Plan | ' | ' | ' | 90,000 | ' | ' | ' | ' | ' | ' | 18,000,000 | ' | ' | |
Options previously granted ratified under the 2012 Plan | ' | ' | ' | ' | ' | ' | ' | 6,000,000 | ' | ' | ' | ' | ' | |
Options available to distribute under 2012 Plan | 60,000 | ' | ' | ' | ' | ' | 13,713,333 | ' | ' | ' | ' | ' | ' | |
Warrant Re-priced In Connection with Debt Financing Agreements | ' | ' | ' | ' | ' | ' | ' | 4,893,000 | [1] | ' | ' | ' | ' | ' |
Warrant Original Pricing Min | ' | ' | ' | ' | ' | ' | $0.10 | ' | ' | ' | ' | ' | ' | |
Warrant Original Pricing Max | ' | ' | ' | ' | ' | ' | $0.30 | ' | ' | ' | ' | ' | ' | |
Warrant Original Price | ' | ' | ' | ' | ' | ' | $0.08 | ' | ' | ' | ' | ' | ' | |
Repricing of common stock warrants in connection with debt and accrued interest | ' | ' | $39,965 | ' | $39,965 | ' | ' | ' | ' | ' | ' | $39,965 | ' | |
Warrants granted for accrued expenses | 129,649 | 54,500 | ' | ' | ' | ' | ' | 10,900,000 | 75,000,000 | ' | ' | ' | ' | |
Issuance of common stock warrants for Board of Director fees -shares | ' | ' | ' | ' | ' | ' | ' | 3,700,000 | ' | ' | ' | ' | ' | |
Issuance of common stock warrants for Board of Director fees | ' | ' | 105,042 | ' | 105,042 | ' | ' | ' | ' | ' | ' | 105,042 | ' | |
IssuanceOfCommonStockWarrantToSettleALawsuit - shares | ' | ' | ' | ' | ' | ' | ' | 6,000,000 | ' | ' | ' | ' | ' | |
Issuance of common stock warrant to settle a lawsuit | ' | ' | 253,046 | ' | 253,046 | ' | ' | ' | ' | ' | ' | 253,046 | ' | |
IssuanceOfCommonStockWarrantsForConsultingFees - warrants | ' | ' | ' | ' | ' | ' | ' | 1,200,000 | ' | ' | ' | ' | ' | |
Issuance of common stock warrants for consulting fees | ' | ' | 33,357 | ' | 33,357 | ' | ' | 33,357 | ' | ' | ' | ' | ' | |
Cancelled unvested warrants | ' | ' | ' | ' | ' | ' | ' | 36,500,000 | ' | ' | ' | ' | ' | |
Issuance of common stock for employee compensation - shares | ' | ' | ' | ' | ' | 121,700 | ' | ' | ' | ' | ' | ' | 24,340,000 | |
Accelerated the vesting of warrants for services | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11,500,000 | ' | ' | ' | |
Compensation expense | ' | ' | ' | ' | ' | ' | ' | 2,130,694 | ' | ' | ' | ' | ' | |
Value of options and warrants granted to employees | ' | ' | ' | ' | ' | ' | ' | ' | 3,909,697 | ' | ' | ' | ' | |
Vesting and re-pricing of stock options for services | ' | ' | ' | ' | ' | ' | ' | 2,803,560 | 1,231,836 | ' | ' | ' | ' | |
Compensation expense associated with unvested and unamortized stock options | ' | ' | ' | ' | ' | ' | 29,678 | ' | ' | ' | ' | ' | ' | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $214,560 | ' | ' | ' | ' | ' | ' | $0.03 | ' | ' | ' | ' | ' | |
[1] | 4,211,000 warrants were in connection with related-party transactions (see Note 5). |
10_Stock_Options_and_Warrants_3
(10) Stock Options and Warrants: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details) | 9 Months Ended | 12 Months Ended | ||
Jun. 30, 2013 | Jun. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2011 | |
Scenario, Previously Reported | Scenario, Previously Reported | |||
Expected stock price volatility | 108.00% | 95.00% | 95.00% | 96.00% |
Risk free interest rate | 0.15% | 0.36% | 0.36% | 0.32% |
Expected life of options and warrants | ' | ' | 2 | 2 |
10_Stock_Options_and_Warrants_4
(10) Stock Options and Warrants: Schedule of Stock Options Roll Forward (Details) (USD $) | 9 Months Ended | 0 Months Ended | 12 Months Ended | ||
Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2010 | |
Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | |||
Options outstanding | 437,433 | 336,782 | 67,356,493 | 99,178,202 | 27,740,451 |
Weighted average exercise price of options outstanding | $20.59 | $28 | $0.14 | $0.13 | $0.36 |
Options granted | 129,651 | ' | ' | 10,900,000 | 75,000,000 |
Weighted average exercise price of options granted | ' | ' | ' | $0.09 | $0.08 |
Options expired or cancelled | -29,000 | ' | ' | -42,721,709 | -3,562,249 |
Weighted average exercise price of options expired or cancelled | $60.01 | ' | ' | $0.11 | $0.32 |
Weighted average remaining contractual life of options outstanding | ' | ' | 2.09 | ' | ' |
Options exercisable | 377,064 | ' | 65,371,254 | ' | ' |
Weighted average exercise price of exercisable options | $22.19 | ' | $0.14 | ' | ' |
Weighted average remaining contractual life of exercisable options | ' | ' | 2.09 | ' | ' |
11_Income_Taxes_Details
(11) Income Taxes (Details) (Scenario, Previously Reported, USD $) | 12 Months Ended | ||
Sep. 30, 2012 | Sep. 30, 2011 | Jun. 30, 2013 | |
Scenario, Previously Reported | ' | ' | ' |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | $8,693,769 | $7,627,477 | ' |
Unrecognized Tax Benefits Resulting in Net Operating Loss Carryforward | 179,000,000 | ' | ' |
Unrecognized Tax Benefits, Interest on Income Taxes Accrued | ' | ' | $254,017 |
11_Income_Taxes_Schedule_of_De1
(11) Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) (Scenario, Previously Reported, USD $) | Sep. 30, 2012 | Sep. 30, 2011 |
Scenario, Previously Reported | ' | ' |
Deferred Tax Assets, Operating Loss Carryforwards | $66,696,000 | $63,453,000 |
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Reserves | 529,000 | 678,000 |
Deferred Tax Assets, Charitable Contribution Carryforwards | 6,000 | 3,000 |
Tax Basis of Investments, Gross, Unrealized Depreciation | 26,000 | 13,000 |
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-based Compensation Cost | 5,768,000 | 4,434,000 |
Deferred Tax Assets, Valuation Allowance | -73,025,000 | -68,581,000 |
Deferred Tax Assets, Net of Valuation Allowance | $0 | $0 |
11_Income_Taxes_Schedule_of_Ef1
(11) Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) (Scenario, Previously Reported, USD $) | 12 Months Ended | |
Sep. 30, 2012 | Sep. 30, 2011 | |
Scenario, Previously Reported | ' | ' |
Effective Income Tax Rate Reconciliation at Federal Statutory Income Tax Rate, Amount | $5,936,000 | $3,363,000 |
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Amount | 576,000 | 326,000 |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Amount | -2,068,000 | -98,000 |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | -4,444,000 | -3,591,000 |
Income Tax Expense (Benefit) | $0 | $0 |
12_Commitments_and_Contingenci5
(12) Commitments and Contingencies (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | |||
Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | Jun. 30, 2013 | Jun. 30, 2012 | |
Camacho Melendez et al v. Commonwealth of Puerto Rico and International Surveillance Services Corporation | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | Scenario, Previously Reported | ||
Camacho Melendez et al v. Commonwealth of Puerto Rico and International Surveillance Services Corporation | LegalMattersEMember | ||||||
Complaint seeking damages | '$210,000 | '$2,110,000 | ' | ' | ' | '$2,110,000 | ' |
Schedule of Loss Contingencies by Contingency | ' | ' | '6,000,000 | ' | ' | ' | ' |
Price per share of warrants issued to settle lawsuit | ' | ' | ' | $0.10 | ' | ' | ' |
Issuance of 6,000,000 and 0 stock warrants, respectively, for settlement of debt | ' | ' | ' | ' | ' | ' | $253,046 |
Total | ' | ' | ' | 643,029 | ' | ' | ' |
Facilities operating leases | ' | ' | 626,752 | ' | ' | ' | ' |
Repayments of Long-term Capital Lease Obligations | ' | ' | ' | 535,855 | 473,029 | ' | ' |
Other Cost of Services | ' | ' | ' | $961,994 | $650,230 | ' | ' |
12_Commitments_and_Contingenci6
(12) Commitments and Contingencies: Data Subscriber Service Agreement: ScheduleOfDataSubscriberServiceAgreementPayment (Details) (Scenario, Previously Reported, USD $) | Sep. 30, 2012 |
Scenario, Previously Reported | ' |
DataSubscriberServiceAgreementPayment Due | $300,000 |
DataSubscriberServiceAgreementPayment Year 2 | 300,000 |
DataSubscriberServiceAgreementPayment Year 3 | 300,000 |
DataSubscriberServiceAgreementPayment Total | $900,000 |
12_Commitments_and_Contingenci7
(12) Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Details) (Scenario, Previously Reported, USD $) | Sep. 30, 2012 |
Scenario, Previously Reported | ' |
2013 | $463,902 |
2014 | 157,014 |
2015 | 22,113 |
Thereafter | 0 |
Total | $643,029 |
13_Fair_Value_Measurements_Sch1
(13) Fair Value Measurements: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) (Scenario, Previously Reported, USD $) | Sep. 30, 2012 |
Level1Member | ' |
Goodwill, Fair Value Disclosure | $0 |
Level2Member | ' |
Goodwill, Fair Value Disclosure | 0 |
Level3Member | ' |
Goodwill, Fair Value Disclosure | 375,000 |
LevelTotalMember | ' |
Goodwill, Fair Value Disclosure | $375,000 |
14_Subsequent_Events_Details
(14) Subsequent Events (Details) (Scenario, Previously Reported, USD $) | Dec. 03, 2012 | Oct. 01, 2012 | Jun. 30, 2013 | ||
SubsequentEventAMember | |||||
Shares issued | ' | ' | 20,760,551 | ||
Value of shares issued | ' | ' | $630,528 | ||
Midwest Stock Purchase Agreement | ' | 750,000 | [1] | ' | |
Security Agreement with Sapinda Asia Limited | 16,640,000 | [2] | ' | ' | |
Security Agreement with Sapinda Asia Limited Origination Fee | 640,000 | ' | ' | ||
Security Agreement with Sapinda Asia Limited Convertible Price per Share | $0.02 | ' | ' | ||
Sapinda Royalty Revenue in event of default | $10,739,426 | ' | ' | ||
[1] | Payable as follows: (a) forgiveness of $650,000 in debt obligations owed by the Company to the former Midwest principals, and (b) cash of $100,000 payable under a note on or before April 1, 2013. | ||||
[2] | Loan will accrue interest at a rate of 8 percent per annum. |
2_Going_Concern
(2) Going Concern | 9 Months Ended |
Jun. 30, 2013 | |
Notes | ' |
(2) Going Concern | ' |
(2) GOING CONCERN | |
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which will depend considerably on the ability of the Company to retain and extend existing contracts with its customers. Management’s plan with respect to this uncertainty includes expanding the market for its ReliAlert portfolio of products and services and extending the terms to existing contracts. There can be no assurance that revenues will continue or increase in order to generate sufficient cash flow to repay the Company’s obligations. If the Company is unable to supplement its cash flows from operating activities, the Company may be required to obtain additional funding, and if it is unable to do so, the Company may have to cease operations. | |
3_Principles_of_Consolidation
(3) Principles of Consolidation | 9 Months Ended |
Jun. 30, 2013 | |
Notes | ' |
(3) Principles of Consolidation | ' |
(3) PRINCIPLES OF CONSOLIDATION | |
The condensed consolidated financial statements include the accounts of SecureAlert and its subsidiaries. All significant inter-company transactions have been eliminated in consolidation. | |
4_Recently_Issued_Accounting_S
(4) Recently Issued Accounting Standards | 9 Months Ended |
Jun. 30, 2013 | |
Notes | ' |
(4) Recently Issued Accounting Standards | ' |
(4) RECENTLY ISSUED ACCOUNTING STANDARDS | |
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies, which are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. | |
5_Impairment_of_Longlived_Asse
(5) Impairment of Long-lived Assets | 9 Months Ended |
Jun. 30, 2013 | |
Notes | ' |
(5) Impairment of Long-lived Assets | ' |
(5) IMPAIRMENT OF LONG-LIVED ASSETS | |
The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that the book value of an asset may not be recoverable and in the case of goodwill, at least annually. The Company evaluates whether events and circumstances have occurred which indicate possible impairment as of each balance sheet date. If the carrying amount of an asset exceeds its fair value, an impairment charge is recognized for the amount by which the carrying amount exceeds the estimated fair value of the asset. Impairment of long-lived assets is assessed at the lowest levels for which there is an identifiable fair value that is independent of other groups of assets. The Company recorded $450,000 and $0 of impairment expenses related to monitoring equipment for the nine months ended June 30, 2013 and 2012, respectively. |
6_Revenue_Recognition
(6) Revenue Recognition | 9 Months Ended |
Jun. 30, 2013 | |
Notes | ' |
(6) Revenue Recognition | ' |
(6) REVENUE RECOGNITION | |
The Company’s revenue has historically been from two sources: (i) monitoring services; and (ii) product sales. | |
Monitoring Services | |
Monitoring services include two components: (a) lease contracts in which the Company provides monitoring services and lease devices to distributors or end users and the Company retains ownership of the leased device; and (b) monitoring services purchased by distributors or end users who have previously purchased monitoring devices and opt to use the Company’s monitoring services. | |
The Company typically leases its devices under one-year contracts with customers that opt to use the Company’s monitoring services. However, these contracts may be cancelled by either party at anytime with 30 days notice. Under the Company’s standard leasing contract, the leased device becomes billable on the date of activation or 7 to 21 days from the date the device is assigned to the lessee, and remains billable until the device is returned to the Company. The Company recognizes revenue on leased devices at the end of each month that monitoring services have been provided. In those circumstances in which the Company receives payment in advance, the Company records these payments as deferred revenue. | |
Product Sales | |
The Company may sell its monitoring devices in certain situations to its customers. In addition, the Company may sell equipment in connection with the building out and setting up of a monitoring center on behalf of its customers. The Company recognizes product sales revenue when persuasive evidence of an arrangement with the customer exists, title passes to the customer and the customer cannot return the devices or equipment, prices are fixed or determinable (including sales not being made outside the normal payment terms) and collection is reasonably assured. When purchasing products (such as TrackerPAL® and ReliAlert devices) from the Company, customers may, but are not required to, enter into monitoring service contracts with the Company. The Company recognizes revenue on monitoring services for customers that have previously purchased devices at the end of each month that monitoring services have been provided. | |
The Company sells and installs standalone tracking systems that do not require ongoing monitoring by the Company. The Company has experience in component installation costs and direct labor hours related to this type of sale and can typically reasonably estimate costs, therefore the Company recognizes revenue over the period in which the installation services are performed using the percentage-of-completion method of accounting for material installations. The Company typically uses labor hours or costs incurred to date as a percentage of the total estimated labor hours or costs to fulfill the contract as the most reliable and meaningful measure that is available for determining a project’s progress toward completion. The Company evaluates its estimated labor hours and costs and determines the estimated gross profit or loss on each installation for each reporting period. If it is determined that total cost estimates are likely to exceed revenues, the Company accrues the estimated losses immediately. | |
Multiple Element Arrangements | |
The majority of the Company’s revenue transactions do not have multiple elements. However, on occasion, the Company enters into revenue transactions that have multiple elements. These may include different combinations of products or monitoring services that are included in a single billable rate. These products or monitoring services are delivered over time as the customer utilizes the Company's services. For revenue arrangements that have multiple elements, the Company considers whether the delivered devices have standalone value to the customer, there is objective and reliable evidence of the fair value of the undelivered monitoring services, which is generally determined by surveying the price of competitors’ comparable monitoring services, and the customer does not have a general right of return. Based on these criteria, the Company recognizes revenue from the sale of devices separately from the monitoring services provided to the customer as the products or monitoring services are delivered. | |
Other Matters | |
The Company considers an arrangement with payment terms longer than the Company’s normal terms not to be fixed or determinable, and revenue is recognized when the fee becomes due. Normal payment terms for the sale of monitoring services and products are due upon receipt to 30 days. The Company sells its devices and services directly to end users and to distributors. Distributors do not have general rights of return. Also, distributors have no price protection or stock protection rights with respect to devices sold to them by the Company. Generally, title and risk of loss pass to the buyer upon delivery of the devices. | |
The Company estimates its product returns based on historical experience and maintains an allowance for estimated returns, which is recorded as a reduction to accounts receivable and revenue. | |
Shipping and handling fees charged to customers are included as part of net revenues. The related freight costs and supplies directly associated with shipping products to customers are included as a component of cost of revenues. |
7_Geographic_Information
(7) Geographic Information | 9 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Notes | ' | ||||||||
(7) Geographic Information | ' | ||||||||
(7) GEOGRAPHIC INFORMATION | |||||||||
During the three and nine months ended June 30, 2013, the Company recognized revenues from international sources from its products and monitoring services. Revenues are attributed to the geographic areas based on the location of the customers purchasing and leasing the products and services. The revenues recognized by geographic area for the three and nine months ended June 30, 2013 and 2012, are as follows: | |||||||||
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||
2013 | 2012 | 2013 | 2012 | ||||||
United States of America | $ | 1,887,630 | $ | 1,812,588 | $ | 5,427,973 | $ | 5,674,412 | |
Latin American Countries | - | 283,045 | 5,252,960 | 2,167,938 | |||||
Caribbean Countries and Commonwealths | 778,450 | 891,335 | 2,348,245 | 2,241,591 | |||||
Other Foreign Countries | 19,134 | 12,738 | 52,432 | 32,669 | |||||
Total | $ | 2,685,214 | $ | 2,999,706 | $ | 13,081,610 | $ | 10,116,610 | |
The long-lived assets, net of accumulated depreciation, used in the generation of revenues by geographic area as of June 30, 2013 and September 30, 2012, were as follows: | |||||||||
Net Property and Equipment | Net Monitoring Equipment | ||||||||
June 30, 2013 | 30-Sep-12 | June 30, 2013 | 30-Sep-12 | ||||||
United States of America | $ | 352,388 | $ | 506,599 | $ | 1,038,215 | $ | 2,174,976 | |
Latin American Countries | - | - | 914,325 | 719,171 | |||||
Caribbean Countries and Commonwealths | - | - | 157,679 | 263,782 | |||||
Other Foreign Countries | - | - | 3,422 | 14,018 | |||||
Total | $ | 352,388 | $ | 506,599 | $ | 2,113,641 | $ | 3,171,947 | |
8_Net_Loss_Per_Common_Share
(8) Net Loss Per Common Share | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Notes | ' | ||||
(8) Net Loss Per Common Share | ' | ||||
(8) NET LOSS PER COMMON SHARE | |||||
Basic net loss per common share ("Basic EPS") is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. | |||||
Diluted net loss per common share ("Diluted EPS") is computed by dividing net loss attributable to common shareholders by the sum of the weighted-average number of common shares outstanding and the weighted-average dilutive common share equivalents outstanding. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect. | |||||
Common share equivalents consist of shares issuable upon the exercise of common stock options and warrants, and shares issuable upon conversion of preferred stock. As of June 30, 2013 and 2012, there were 4,460,230 and 2,408,118 outstanding common share equivalents, respectively, that were not included in the computation of Diluted EPS as their effect would be anti-dilutive. No reconciliation for discontinued operations was provided since the impact was immaterial. The common stock equivalents outstanding as of June 30, 2013 and 2012, consisted of the following: | |||||
30-Jun-13 | 30-Jun-12 | ||||
Conversion of debt and accrued interest | 3,846,758 | 416,667 | |||
Conversion of Series D Preferred stock | 14,040 | 1,463,490 | |||
Exercise of outstanding common stock options and warrants | 437,432 | 365,961 | |||
Exercise and conversion of outstanding Series D Preferred | |||||
stock warrants | 162,000 | 162,000 | |||
Total common stock equivalents | 4,460,230 | 2,408,118 | |||
9_Inventory
(9) Inventory | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Notes | ' | ||||
(9) Inventory | ' | ||||
(9) INVENTORY | |||||
Inventory is valued at the lower of the cost or market. Cost is determined using the first-in, first-out (“FIFO”) method. Market is determined based on the estimated net realizable value, which generally is the item selling price. Inventory is periodically reviewed in order to identify obsolete or damaged items or impaired values. | |||||
Inventory consists of raw materials that are used in the manufacturing of TrackerPAL® and ReliAlert devices. Completed TrackerPAL® and ReliAlert devices are reflected in Monitoring Equipment. As of June 30, 2013 and September 30, 2012, respectively, inventory consisted of the following: | |||||
June 30, | September 30, | ||||
2013 | 2012 | ||||
Raw materials | $ 635,721 | $ 822,566 | |||
Reserve for damaged or obsolete inventory | (192,000) | (192,000) | |||
Total inventory, net of reserves | $ 443,721 | $ 630,566 | |||
10_Property_and_Equipment
(10) Property and Equipment | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Notes | ' | ||||
(10) Property and Equipment | ' | ||||
(10) PROPERTY AND EQUIPMENT | |||||
Property and equipment as of June 30, 2013 and September 30, 2012, were as follows: | |||||
June 30, | September 30, | ||||
2013 | 2012 | ||||
Equipment, software and tooling | $ | 2,000,340 | $ | 1,981,936 | |
Automobiles | 33,466 | 33,466 | |||
Leasehold improvements | 127,162 | 127,287 | |||
Furniture and fixtures | 247,218 | 252,951 | |||
Total property and equipment before accumulated depreciation | 2,408,186 | 2,395,640 | |||
Accumulated depreciation | (2,055,798) | (1,889,041) | |||
Property and equipment, net of accumulated depreciation | $ | 352,388 | $ | 506,599 | |
Depreciation expense for the three months ended June 30, 2013 and 2012, was $54,581 and $91,803, respectively. Furthermore, depreciation expense for the nine months ended June 30, 2013 and 2012, was $182,658 and $286,151, respectively. Property and equipment to be disposed of is reported at the lower of the carrying amount or fair value, less the estimated costs to sell and any gains or losses are included in the results of operations. During the nine months ended June 30, 2013 and 2012, the Company disposed of property and equipment with a net book value of $2,033 and $214,566, respectively. |
11_Monitoring_Equipment
(11) Monitoring Equipment | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Notes | ' | ||||
(11) Monitoring Equipment | ' | ||||
(11) MONITORING EQUIPMENT | |||||
Monitoring equipment as of June 30, 2013 and September 30, 2012, was as follows: | |||||
June 30, | September 30, | ||||
2013 | 2012 | ||||
Monitoring equipment | $ 3,686,213 | $ 3,841,876 | |||
Less: accumulated depreciation | (1,572,572) | (669,929) | |||
Monitoring equipment, net of accumulated depreciation | $ 2,113,641 | $ 3,171,947 | |||
The Company began leasing monitoring equipment to agencies for offender tracking in April 2006 under operating lease arrangements. The monitoring equipment is amortized using the straight-line method over an estimated useful life of three years. | |||||
Depreciation expense for the three months ended June 30, 2013 and 2012, was $342,676 and $319,411, respectively. Furthermore, depreciation expense for the nine months ended June 30, 2013 and 2012, was $1,010,757 and $1,106,509, respectively. Additionally, as of June 30, 2013, the Company reserved $450,000 for future monitoring equipment impairment. These expenses were classified as a cost of revenues. | |||||
Assets to be disposed of are reported at the lower of the carrying amount or fair value, less the estimated costs to sell. During the nine months ended June 30, 2013 and 2012, the Company recorded in cost of revenues disposal of lease monitoring equipment and parts of $89,093 and $88,839, respectively. |
12_Intangible_Assets
(12) Intangible Assets | 9 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Notes | ' | ||||||||
(12) Intangible Assets | ' | ||||||||
(12) INTANGIBLE ASSETS | |||||||||
As of June 30, 2013, the Company had recorded intangible assets related to an agreement to redeem the royalty held by Borinquen Container Corporation (“Borinquen”), the acquisition of International Surveillance Services Corp. (“ISS”) and a license agreement for the use of certain patents. The following table summarizes the balance of intangible assets as of June 30, 2013: | |||||||||
Borinquen Container Corporation | International Surveillance Services Corp. | Patent | Total | ||||||
Other intangible assets: | |||||||||
Patent license agreement | $ | - | $ | - | $ | 50,000 | $ | 50,000 | |
Royalty agreement | 11,616,984 | 5,003,583 | - | 16,620,567 | |||||
Total intangible assets | 11,616,984 | 5,003,583 | 50,000 | 16,670,567 | |||||
Accumulated amortization | (515,676) | (500,358) | (18,983) | (1,035,017) | |||||
Intangible assets, net of | |||||||||
accumulated amortization | $ | 11,101,308 | $ | 4,503,225 | $ | 31,017 | $ | 15,635,550 | |
Borinquen Container Corporation | |||||||||
On September 5, 2012, the Company entered into an agreement to redeem the royalty held by Borinquen pursuant to a royalty agreement dated July 1, 2011, as amended. Under the terms of the royalty, Borinquen had the right to receive 20 percent of net revenues derived within certain geographic territories. | |||||||||
On February 1, 2013, the Company completed the redemption of the royalty with Borinquen which was funded under a Loan and Security Agreement from Sapinda Asia Limited (“Sapinda Asia”), see Note 15. The Company capitalized the total cost of the royalty purchase commitment of $11,616,984, as a non-current asset and will amortize the asset over the remaining term of the royalty agreement, subject to periodic analysis for impairment based on future expected revenues. The Company will annually calculate the amortization based on the effective royalty rate and on the revenues in the geographic territory subject to the royalty. The Company’s analysis will be based on such factors as historical revenue and expected revenue growth in the territory. | |||||||||
As of June 30, 2013, the Company had a balance of $11,616,984 of intangible assets, as noted in the table above. The Company recorded $157,697 and $515,676 of amortization expense on intangible assets for ISS during the three and nine months ended June 30, 2013, resulting in a total accumulated amortization of $515,676 and net other intangible assets of $11,101,308. | |||||||||
International Surveillance Services Corp. | |||||||||
Effective July 1, 2011, the Company entered into a stock purchase agreement and purchased all of the issued and outstanding shares of International Surveillance Services Corp. (“ISS”), a Puerto Rico corporation, to utilize the knowledge and connections of ISS in Central and South America and to acquire the rights to certain territorial commissions that were payable by the Company to ISS. | |||||||||
As of June 30, 2013, the Company had a balance of $5,003,583 of intangible assets, as noted in the table above. The Company recorded $62,546 and $187,634 of amortization expense on intangible assets for ISS during the three and nine months ended June 30, 2013, resulting in a total accumulated amortization of $500,358 and net other intangible assets of $4,503,225. | |||||||||
Patent License | |||||||||
On January 29, 2010, the Company and Satellite Tracking of People, LLC (“STOP”) entered into a license agreement whereby STOP granted to the Company a non-exclusive license under U.S. Patent No. 6,405,213 and any and all patents issuing from continuation, continuation-in-part, divisional, reexamination and reissues thereof and along with all foreign counterparts, to make, have made, use, sell, offer to sell and import covered products in the Company’s present and future business. The license will continue for so long as any of the licensed patents have enforceable rights. The license is not assignable or transferable except for sublicenses within the scope of the license to the Company’s subsidiaries. | |||||||||
The Company paid $50,000 as consideration for the use of this patent. The Company recorded $1,389 and $4,167 of amortization expense for the patent during the three and nine months ended June 30, 2013, resulting in a total accumulated amortization relating to the patent of $18,983 and net intangible assets of $31,017. |
13_Accrued_Expenses
(13) Accrued Expenses | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Notes | ' | ||||
(13) Accrued Expenses | ' | ||||
(13) ACCRUED EXPENSES | |||||
Accrued expenses consisted of the following as of June 30, 2013 and September 30, 2012: | |||||
June 30, | September 30, | ||||
2013 | 2012 | ||||
Accrued royalties | $ 845,656 | $ 641,446 | |||
Accrued taxes - foreign and domestic | 655,678 | 262,440 | |||
Accrued interest | 625,654 | 27,831 | |||
Accrued payroll, taxes and employee benefits | 347,161 | 540,931 | |||
Accrued consulting | 317,300 | 352,072 | |||
Accrued outside services | 151,839 | 38,630 | |||
Accrued travel costs | 85,756 | - | |||
Accrued settlement costs | 82,000 | 50,000 | |||
Accrued board of directors fees | 80,000 | 265,000 | |||
Accrued cellular costs | 50,500 | 27,662 | |||
Accrued legal costs | 47,779 | 14,628 | |||
Accrued warranty and manufacturing costs | 30,622 | 30,622 | |||
Accrued other expenses | 16,711 | 183,722 | |||
Accrued cost of revenues | - | 4,467 | |||
Total accrued expenses | $ 3,336,656 | $ 2,439,451 | |||
14_Debt_Obligations
(14) Debt Obligations | 9 Months Ended | ||||||
Jun. 30, 2013 | |||||||
Notes | ' | ||||||
(14) Debt Obligations | ' | ||||||
(14) DEBT OBLIGATIONS | |||||||
Debt obligations as of June 30, 2013 and September 30, 2012, consisted of the following: | |||||||
June 30, | September 30, | ||||||
2013 | 2012 | ||||||
Settlement liability from patent infringement suit and countersuit settled in February 2010. The liability was paid in March 2013. | $ | - | $ | 200,000 | |||
Note issued in connection with the acquisition of a subsidiary and matures in December 2014. | 76,586 | 94,459 | |||||
Capital leases with effective interest rates that range between 8.51% and 17.44%. Leases mature between August 2013 and November 2015. $154,410 was assumed through the sale of Midwest Monitoring & Surveillance, Inc. to its former owners. | 68,870 | 118,098 | |||||
Automobile loan with a financial institution secured by the vehicle. Interest rate is 7.06%, due | |||||||
June 2014. $125,614 was assumed through the sale of Midwest Monitoring & Surveillance, Inc. | |||||||
to its former owners. | 7,090 | 12,274 | |||||
Total debt obligations | 152,546 | 424,831 | |||||
Less current portion | (90,617) | (339,151) | |||||
Long-term debt, net of current portion | $ | 61,929 | $ | 85,680 | |||
15_Relatedparty_Transactions
(15) Related-party Transactions | 9 Months Ended | ||||||
Jun. 30, 2013 | |||||||
Notes | ' | ||||||
(15) Related-party Transactions | ' | ||||||
(15) RELATED-PARTY TRANSACTIONS | |||||||
The Company entered into certain transactions with related parties during the nine months ended June 30, 2013. These transactions consist mainly of financing transactions and consulting arrangements. Transactions with related parties are reviewed and approved by the independent members of the Board of Directors. | |||||||
Royalty Agreement, Loan and Security Agreement and Revolving Loan | |||||||
On August 4, 2011, with an effective date of July 1, 2011, the Company entered into an agreement (the “Royalty Agreement”) with Borinquen (see Note 12) to purchase ISS in consideration of 310,000 shares of our common stock, valued at the market price on the date of the Royalty Agreement at $16.40 per share, or $5,084,000, and the grant to Borinquen of the royalty in the amount of 20 percent of the Company’s net revenues from the sale or lease of monitoring devices and monitoring services within a territory comprised of South and Central America, the Caribbean, Spain and Portugal, for a term of 20 years (see Note 12). The royalty payments were due quarterly through June 30, 2031. In the event the Company failed to make the royalty payments, in cash or in shares of common stock, at its discretion, the royalty rate would increase to 50 percent in certain portions of the territory, and 30 percent in others. | |||||||
On September 5, 2012, the Company entered into an agreement to redeem the royalty with Borinquen. On December 3, 2012, the Company entered into the Loan and Security Agreement (the “Loan”) with Sapinda Asia whereby Sapinda Asia agreed to loan to the Company $16,640,000 at a rate of 8 percent interest per annum. As a condition to the Loan, the Company appointed to the Board of Directors, Guy Dubois, a representative of Tetra House Pte. | |||||||
The Loan contains the following covenants: | |||||||
1) | SecureAlert shall provide to the director representing Tetra House Pte. a monthly cash flow report for each month throughout the term of this Loan showing the anticipated use of all loan proceeds and other cash outlays. After the conversion of the outstanding principal, accrued and unpaid interest and fees under the Loan into shares of SecureAlert’s Common Stock, Sapinda Asia shall have a right to require that all of the SecureAlert’s excess cash flow available after the payment of normal operating expenses and scheduled capital expenditures be applied to prepay the Loan without penalty. | ||||||
2) | SecureAlert shall provide to the director representing Tetra House Pte. a rolling twelve (12) months profit and loss and cash flow projections. | ||||||
3) | Each schedule and/or report required herein shall be updated monthly by SecureAlert and delivered to the director representing Tetra House Pte. no later than the twenty-fifth (25th) calendar day of each month. | ||||||
4) | SecureAlert covenants and agrees that it shall not enter into any convertible loan agreement, debenture or other agreement providing for the issuance of new shares of SecureAlert's Common Stock at a price lower than the conversion price without the consent of Sapinda Asia. | ||||||
Upon the occurrence of any one or more broken covenant outlined above or any other event of default, Sapinda Asia shall provide written notice of such event of default to SecureAlert who shall have thirty (30) days to cure such event(s) of default. | |||||||
Sapinda Asia failed to timely fund under the terms of the Loan. Sapinda Asia incurred penalties of $5,000 per day, payable to the Company, until the Loan was fully funded. As of March 31, 2013, the Company recorded a receivable of $245,000 from Sapinda Asia for the incurred penalties pursuant to the Loan. Subsequent to June 30, 2013, the Company entered into an acknowledgement and agreement with Sapinda Asia whereby the Company agreed to waive the penalties and any other “out of pocket” expenses owed by Sapinda Asia under the Loan and Sapinda Asia acknowledges that it is not owed an origination fee. Both Parties have also agreed to accelerate the conversion of the loan to reduce the accumulation of interest debt under the Loan. Sapinda Asia commits and is bound to convert all principal and accrued interest under the Loan into common stock of the Company no later than 15 calendar days following the effective date of a registration statement with the Securities and Exchange Commission to register such shares, which the Company has agreed to file in a timely manner. | |||||||
On February 1, 2013, the Company, Sapinda Asia and Borinquen entered into a Settlement and Royalty and Share Buy Back to complete the repurchase of the royalty ($11,616,982) and to pay accrued royalty expenses ($1,383,018) for a total payment of $13,000,000. The Company borrowed a total of $16,700,000 from Sapinda Asia. Of the $16,700,000, the Company used $13,000,000 toward the redemption of the royalty and to pay off accrued royalty fees and $3,700,000 for operating capital. The Loan is due on August 14, 2014. As a condition to the Loan, Sapinda Asia required the Company to name a nominee from Tetra House Pte. Ltd. (Guy Dubois) to its Board of Directors and to conduct an exchange offer to retire the Series D Preferred Stock. As of March 1, 2013, both of these conditions were met. Sapinda Asia has the right to convert the Loan principal and accrued interest into common stock at a rate of $4.50 per share, beginning March 1, 2013. The Loan is secured by all of the intellectual property and other assets of the Company. | |||||||
The Company capitalized the total cost of the royalty purchase commitment of $11,616,984, as a non-current asset and will amortize the asset over the remaining term of the royalty agreement, subject to periodic analysis for impairment based on future expected revenues. The Company will annually calculate the amortization based on the effective royalty rate and on the revenues in the geographic territory subject to the royalty. The Company’s analysis will be based on such factors as historical revenue and expected revenue growth in the territory. The Company recorded $515,676 of amortization expense during the nine months ended June 30, 2013, resulting in a net intangible asset of $11,101,308. | |||||||
On February 1, 2013, SecureAlert entered into a revolving loan agreement with Sapinda Asia wherein the Company may borrow up to $1,200,000 at an interest rate of 3 percent per annum for unused funds and 10 percent per annum for borrowed funds. As of June 30, 2013, no advances have been made under this loan. The loan terminates on June 30, 2014. As of June 30, 2013, the Company has accrued $14,795 in interest liability on this loan. | |||||||
Related-Party Service Agreement | |||||||
Subsequent to June 30, 2013, the Company entered into an agreement with Paranet, LLC to provide the following primary services: 1) procurement of hardware and software necessary to ensure that the Company’s vital databases are available in the event of a disaster (backup and disaster recovery system) and 2) ensure the security of all data and the integrity of such data of the Company against all loss of data, misappropriation of data by Paranet, its employees and affiliates and shall guarantee the Company that no unauthorized person or entity shall gain access to such data, wherever such data is located. | |||||||
The Company agreed to pay Paranet $4,500 per month for this service which can be terminated by either party for any reason upon ninety (90) days written notice by either party. The agreement is considered a related-party service agreement because a Company director and member of the Company’s executive committee is also the Chief Executive Officer of Paranet, LLC. | |||||||
Related-Party Notes Payable | |||||||
June 30, | September 30, | ||||||
2013 | 2012 | ||||||
Note payable in connection with the redemption of a royalty agreement for $10,768,555. The note required installment payments and was paid off by the proceeds of the Loan as discussed under Note 15. | $ | - | $ | 10,050,027 | |||
Note payable in connection with the purchase of the remaining ownership of Court Programs, Inc., interest at 12% per annum, with monthly payments of $10,000. This note was assumed through the sale of Court Programs, Inc. | - | 46,693 | |||||
The Company received $500,000 from Mr. Derrick, a shareholder and former officer. This was converted into 111,112 shares of common stock. | - | 500,000 | |||||
Convertible debenture with an interest rate of 8% per annum. The debenture matured December 17, 2012 and was secured by the domestic patents of the Company. The debenture and accrued interest was converted into 117,784 shares of common stock. | - | 500,000 | |||||
Convertible debenture with an interest rate of 8% per annum. The debenture matured December 17, 2012 and was secured by the domestic patents of the Company. The debenture and accrued interest was converted into 472,548 shares of common stock. | - | 2,000,000 | |||||
The Company received $16,700,000 through the issuance of a convertible debenture with an interest rate of 8% per annum. The debenture matures on June 17, 2014. This debenture may convert into shares of common stock at a rate of $4.50 per share. A debt discount of $14,566,667 and $633,333, respectively, was recorded to reflect a beneficial conversion feature. As of June 30, 2013, the remaining debt discount was $10,765,986. | 5,934,012 | 1,288,693 | |||||
Total related-party debt obligations | 5,934,012 | 14,385,413 | |||||
Less current portion | - | (12,654,701) | |||||
Long-term debt, net of current portion | $ | 5,934,012 | $ | 1,730,712 | |||
16_Preferred_Stock
(16) Preferred Stock | 9 Months Ended |
Jun. 30, 2013 | |
Notes | ' |
(16) Preferred Stock | ' |
(16) PREFERRED STOCK | |
The Company is authorized to issue up to 20,000,000 shares of preferred stock, $0.0001 par value per share. The Company's Board of Directors has the authority to amend the Company's Articles of Incorporation, without further shareholder approval, to designate and determine, in whole or in part, the preferences, limitations and relative rights of the preferred stock before any issuance of the preferred stock and to create one or more series of preferred stock. | |
Series D Convertible Preferred Stock | |
On July 27, 2011, the Company amended its Articles of Incorporation and increased the total designated shares of Series D Preferred stock from 70,000 to 85,000 shares. During the nine months ended June 30, 2013, the Company did not issue any Series D Preferred stock. | |
Dividends | |
The Series D Preferred stock is entitled to dividends at the rate equal to 8 percent per annum calculated on the purchase amount actually paid for the shares or amount of debt converted. The dividend is payable in cash or shares of common stock at the sole discretion of the Board of Directors. If a dividend is paid in shares of common stock of the Company, the number of shares to be issued is based on the average per share market price of the common stock for the 14-day period immediately preceding the applicable accrual date (i.e., March 31, June 30, September 30, or December 31, as the case may be). Dividends are payable quarterly, no later than 30 days following the end of the accrual period. During the nine months ended June 30, 2013, the Company issued 181,033 shares of common stock to pay $1,654,673 of accrued dividends on the Series D Preferred stock earned. Subsequent to June 30, 2013, the Company issued 799 shares of common stock to pay $9,325 of accrued dividends on Series D Preferred stock earned during the three months ended June 30, 2013. | |
Convertibility | |
Each share of Series D Preferred stock may be converted into 30 shares of common stock, commencing after ninety days from the date of issue. | |
In February 2013, and as a condition to a loan agreement, the Company conducted an exchange offer (“Exchange Offer”) of Series D Preferred stock in order to simplify the capitalization structure. The Exchange Offer was conditioned upon at least 90 percent of the cumulative original issue price paid for all of the issued and outstanding shares of Series D Preferred stock. The shareholders were entitled to exchange their shares of Series D Preferred at a premium over the current conversion rate of 30 shares of common stock per Series D Preferred share as follows: 15 shares for each $1,000 of original price paid, 10 shares for each $676 of original price paid, and 8 shares for each $500 of original price paid. Under the Exchange Offer, 46,095 shares of Series D Preferred stock converted into 1,828,283 shares of common stock. | |
During the nine months ended June 30, 2013, a total of 48,295 shares of Series D Preferred stock (including shares exchanged for common stock in the Exchange Offer) were converted into 1,894,283 shares of common stock. As of June 30, 2013 and September 30, 2012, there were 468 and 48,763 Series D Preferred shares outstanding, respectively. | |
Voting Rights and Liquidation Preference | |
The holders of the Series D Preferred stock may vote their shares on an as-converted basis on any issue presented for a vote of the shareholders, including the election of directors and the approval of certain transactions such as a merger or other business combination of the Company. For the periods ended June 30, 2013 and September 30, 2012, there were 468 and 48,763 shares of Series D Preferred stock outstanding with voting rights equivalent to 14,040 and 1,462,890 shares of common stock, respectively. | |
Additionally, the holders are entitled to a liquidation preference equal to their original investment amount. In the event of the liquidation, dissolution or winding up of the affairs of the Company (including in connection with a permitted sale of all or substantially all of the Company’s assets), whether voluntary or involuntary, the holders of shares of Series D Preferred stock then outstanding will be entitled to receive, out of the assets of the Company available for distribution to its shareholders, an amount per share equal to original issue price, as adjusted to reflect any stock split, stock dividend, combination, recapitalization and the like with respect to the Series D Preferred stock. | |
Series D Preferred Stock Purchase Warrants | |
As of June 30, 2013 and September 30, 2012, the Company had warrants outstanding for the purchase of 5,400 shares of Series D Preferred stock at an exercise price of $16.67 per share. The warrants were issued in connection with a subscription to purchase Series D Preferred stock which expire beginning in November 2013 and ending July 2016. |
17_Common_Stock
(17) Common Stock | 9 Months Ended |
Jun. 30, 2013 | |
Notes | ' |
(17) Common Stock | ' |
(17) COMMON STOCK | |
Authorized Shares | |
The Company held an Annual Shareholders meeting on February 28, 2013, at which time the shareholders approved a reverse stock split at a ratio of 200 for 1 and amended the total authorized shares of common stock to 15,000,000 shares. The effect of the reverse stock split has been reflected throughout these financial statements. | |
Common Stock Issuances | |
During the nine months ended June 30, 2013, the Company issued the following shares of common stock: 1,894,283 from the exchange or conversion of 48,295 shares of Series D Preferred stock, 701,444 shares from the conversion of $3,156,493 of debt and accrued interest, 181,033 shares to pay $1,654,673 of accrued dividends on Series D Preferred stock, 16,266 shares for services valued at $71,979, 2,981 shares issued to pay accrued board of director fees valued at $37,500, and 3,805 shares for commissions valued at $34,245. Subsequent to June 30, 2013, the Company issued 799 shares of common stock as payment of dividends on Series D Preferred stock for the 3rd fiscal quarter ended June 30, 2013. | |
18_Stock_Options_and_Warrants
(18) Stock Options and Warrants | 9 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Notes | ' | ||||||||
(18) Stock Options and Warrants | ' | ||||||||
(18) STOCK OPTIONS AND WARRANTS | |||||||||
Stock Incentive Plan | |||||||||
At the annual meeting of shareholders on December 21, 2011, the shareholders approved the 2012 Equity Compensation Plan (the “2012 Plan”), which had previously been adopted by the Board of Directors of the Company. The 2012 Plan provides for the grant of incentive stock options and nonqualified stock options, restricted stock, stock appreciation rights, performance shares, performance stock units, dividend equivalents, stock payments, deferred stock, restricted stock units, other stock-based awards and performance-based awards to employees and certain non-employees who have important relationships with the Company. A total of 90,000 shares are authorized for issuance pursuant to awards granted under the 2012 Plan. During the nine months ended June 30, 2013 and 2012, 0 and 30,000 options were issued under this 2012 Plan, respectively. As of June 30, 2013, 60,000 shares of common stock were available for future grants under the 2012 Plan. | |||||||||
For the nine months ended June 30, 2013 and 2012, the Company calculated compensation expense of $22,032 and $199,755, respectively, related to the vesting of stock options previously granted under Company stock incentive plans in prior years. Compensation expense associated with unvested stock options and warrants of $7,644 will be recognized over the fiscal year ending September 30, 2013. | |||||||||
All Options and Warrants | |||||||||
The fair value of each stock option and warrant grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company granted warrants to purchase 129,649 and 54,500 shares of common stock during the nine months ended June 30, 2013 and 2012, respectively. The Company recorded $399,751 and $1,472,732 of expense for the nine months ended June 30, 2013 and 2012, respectively, related to the issuance, vesting and re-pricing of all stock options and warrants. As of June 30, 2013, $7,644 of compensation expense associated with unvested stock options and warrants issued previously to employees and $71,250 of expense associated with unvested warrants issued previously to board members will be recognized over the remaining fiscal year. | |||||||||
The option and warrant grants for nine months ended June 30, 2013 and 2012 were valued using the Black-Scholes model with the following weighted-average assumptions: | |||||||||
Nine Months Ended June 30, | |||||||||
2013 | 2012 | ||||||||
Expected cash dividend yield | - | - | |||||||
Expected stock price volatility | 108% | 95% | |||||||
Risk-free interest rate | 0.15% | 0.36% | |||||||
Expected life of options/warrants | 2 years | 2 years | |||||||
The expected life of stock options (warrants) represents the period of time that the stock options or warrants are expected to be outstanding based on the simplified method allowed under GAAP. The expected volatility is based on the historical price volatility of the Company’s common stock. The Company changed from a daily volatility calculation for the nine months ended June 30, 2012 to a weekly volatility for the nine months ended June 30, 2013. The risk-free interest rate represents the U.S. Treasury bill rate for the expected life of the related stock options (warrants). The dividend yield represents the Company’s anticipated cash dividends over the expected life of the stock options (warrants). | |||||||||
A summary of stock option activity for the nine months ended June 30, 2013 is presented below: | |||||||||
Shares Under Option/ Warrant | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | ||||||
Outstanding as of September 30, 2012 | 336,782 | $ | 28 | ||||||
Granted | 129,651 | $ | 10.79 | ||||||
Expired / Cancelled | (29,000) | $ | 60.01 | ||||||
Outstanding as of June 30, 2013 | 437,433 | $ | 20.59 | 1.57 years | $ | 506,361 | |||
Exercisable as of June 30, 2013 | 377,064 | $ | 22.19 | 1.54 years | $ | 214,560 | |||
Subsequent to June 30, 2013, the Company granted warrants to purchase 14,286 shares of common stock for two years with an exercise price of $14.70 per share, valued on July 1, 2013 the date of the grant, to board members and valued at $82,715. These warrants are fully vested. |
19_Changes_in_Equity
(19) Changes in Equity | 9 Months Ended | ||
Jun. 30, 2013 | |||
Notes | ' | ||
(19) Changes in Equity | ' | ||
(19) CHANGES IN EQUITY | |||
A summary of the composition of equity of the Company as of June 30, 2013, and the changes during the nine months then ended is presented in the following table: | |||
Total Equity | |||
Balance at September 30, 2012 | $ | 4,427,137 | |
Issuance of common stock for: | |||
Dividends from Series D Preferred stock | 1,654,673 | ||
Services | 143,724 | ||
Debt | 3,156,493 | ||
Fractional shares disposed due to reverse stock split | (1,996) | ||
Issuance of warrants to a director for services rendered | 318,344 | ||
Vesting of stock options and warrants | 81,407 | ||
Series D Preferred dividends | (1,033,470) | ||
Beneficial conversion feature related to convertible debenture | 15,349,074 | ||
Net loss | (6,194,027) | ||
Balance at June 30, 2013 | $ | 17,901,359 | |
20_Commitments_and_Contingenci
(20) Commitments and Contingencies | 9 Months Ended |
Jun. 30, 2013 | |
Notes | ' |
(20) Commitments and Contingencies | ' |
(20) COMMITMENTS AND CONTINGENCIES | |
Legal Matters | |
Lazar Leybovich et al v. SecureAlert, Inc. On March 29, 2012, Lazar Leybovich, Dovie Leybovich and Ben Leybovich filed a complaint in the 11th Circuit Court in and for Miami-Dade County, Florida alleging breach of contract with regard to certain stock redemption agreements with the Company. The complaint was subsequently withdrawn by the plaintiffs. An amended complaint was filed by the plaintiffs on November 15, 2012. The Company believes these allegations are inaccurate and intends to defend the case vigorously. The Company has not accrued any potential loss as the probability of incurring a material loss is deemed remote by management, after consultation with outside legal counsel. | |
Camacho Melendez et al v. Commonwealth of Puerto Rico and International Surveillance Services Corporation. On April 24, 2012 the plaintiffs filed suit against the Commonwealth of Puerto Rico and ISS, claiming negligence by ISS and the government of the Commonwealth of Puerto Rico resulting in the death of a woman. The complaint seeks damages of $2,110,000. The Company is in discussions with the government of the Commonwealth of Puerto Rico to resolve this matter and to obtain a complete release of all claims; the Company expects to finalize this matter before the end of the fiscal year. | |
Integratechs v. SecureAlert, Inc. On March 14, 2013, Integratechs, Inc., filed a suit in the Fourth Judicial District Court of Utah County, claiming the Company breached a contract for computer services and intentionally interfered with its economic relations. The Company believes the allegations are inaccurate and will defend the case vigorously. | |
Christopher P. Baker v. SecureAlert, Inc. In February 2013, Mr. Baker filed suit against the Company in the Third Judicial District Court in and for Salt Lake County, State of Utah. Mr. Baker asserts that the Company breached a 2006 consulting agreement with him and claims damages of not less than $210,000. The Company disputes plaintiff’s claims and will defend the case vigorously. |
21_Discontinued_Operations
(21) Discontinued Operations | 9 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Notes | ' | ||||||||
(21) Discontinued Operations | ' | ||||||||
(21) DISCONTINUED OPERATIONS | |||||||||
SecureAlert entered into a Stock Purchase Agreement with certain of the former principals of its wholly-owned subsidiary, Midwest Monitoring & Surveillance, Inc. (“Midwest”) whereby they purchased from the Company all of the issued and outstanding capital stock of Midwest. The agreement was effective as of October 1, 2012. Additionally, the Company entered into a Stock Purchase Agreement to sell to a former principal all of the issued and outstanding stock of Court Programs Inc. (“Court Programs”), effective January 1, 2013. Midwest and Court Programs were components of the Company’s consolidated entity, and as a result of the sale of these entities, these financial statements include the applicable discontinued operations reporting treatment. | |||||||||
The following is a summary of the assets and liabilities of Midwest and Court Programs reported as discontinued operations for the June 30, 2013 and September 30, 2012 periods: | |||||||||
June 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Current assets: | |||||||||
Cash | $ | - | $ | 237,082 | |||||
Accounts receivable, net of allowance for doubtful accounts | - | 452,841 | |||||||
Note receivable | - | 81,389 | |||||||
Prepaid expenses and other assets | - | 218,593 | |||||||
Total current assets | $ | - | $ | 989,905 | |||||
Non-current assets: | |||||||||
Property and equipment, net of accumulated depreciation | $ | - | $ | 170,894 | |||||
Monitoring equipment, net of accumulated amortization | - | 153,163 | |||||||
Deposits | - | 9,218 | |||||||
Goodwill | - | 375,000 | |||||||
Intangible assets, net of accumulated amortization | - | 125,617 | |||||||
Total non-current assets | $ | - | $ | 833,892 | |||||
Current liabilities: | |||||||||
Accounts payable | $ | - | $ | 614,557 | |||||
Accrued liabilities | - | 561,611 | |||||||
Deferred revenue | - | 67,613 | |||||||
Current portion of long-term related-party debt | - | 138,602 | |||||||
Current portion of long-term debt | - | 295,067 | |||||||
Total current liabilities | $ | - | $ | 1,677,450 | |||||
Long-term liabilities: | |||||||||
Long-term portion of related-party debt | - | - | |||||||
Long-term portion of debt | - | 364,270 | |||||||
Total long-term liabilities | $ | - | $ | 364,270 | |||||
The following is a summary of the operating results of discontinued operations for the nine months ended June 30, 2013 and 2012: | |||||||||
Three Months Ended March 31, | Nine Months Ended June 30, | ||||||||
June 30, | June 30, | ||||||||
2013 | 2012 | 2013 | 2012 | ||||||
Revenues | $ | - | $ | 1,794,133 | $ | 477,298 | $ | 5,135,887 | |
Cost of revenues | - | (1,105,363) | (163,487) | (3,102,773) | |||||
Gross profit | - | 688,770 | 313,811 | 2,033,114 | |||||
Selling, general and administrative | - | (911,802) | (319,976) | (2,166,014) | |||||
Income from operations | - | (223,032) | (6,165) | (132,900) | |||||
Other income | - | (22,946) | (295) | (45,715) | |||||
Net loss from discontinued operations | $ | - | $ | (245,978) | $ | (6,460) | $ | (178,615) | |
22_Subsequent_Events
(22) Subsequent Events | 9 Months Ended | |
Jun. 30, 2013 | ||
Notes | ' | |
(22) Subsequent Events | ' | |
(22) SUBSEQUENT EVENTS | ||
The Company evaluated subsequent events through the date the accompanying consolidated financial statements were issued. Subsequent to June 30, 2013, the following events occurred: | ||
1) | 799 shares of common stock were issued for the 3rd fiscal quarter Series D Preferred stock dividends, valued at $9,325. | |
2) | Warrants to purchase 14,286 shares of common stock for two years with an exercise price of $14.70 per share, valued on July 1, 2013 the date of the grant, were issued to board members and valued at $82,715. These warrants are fully vested at date of issuance. | |
3) | 680 shares of common stock were issued to a board member for payment of services rendered from March 2013 through June 30, 2013, valued at $10,000. | |
4) | The Company entered into a related-party service agreement to provide a backup and disaster recovery system and other services (see Note 15). | |
5) | The Company entered into an acknowledgement and agreement with Sapinda Asia whereby the Company agreed to waive the penalties and any other “out of pocket” expenses owed by Sapinda Asia under the Loan and Sapinda Asia acknowledges that it is not owed an origination fee. Both Parties have also agreed to accelerate the conversion of the loan to reduce the accumulation of interest debt under the Loan. Sapinda Asia commits and is bound to convert all principal and accrued interest under the Loan into common stock of the Company no later than 15 calendar days following the effective date of a registration statement with the Securities and Exchange Commission to register such shares, which the Company has agreed to file in a timely manner. | |
8_Net_Loss_Per_Common_Share_Ea
(8) Net Loss Per Common Share: Earnings per share (Policies) | 9 Months Ended |
Jun. 30, 2013 | |
Policies | ' |
Earnings per share | ' |
Basic net loss per common share ("Basic EPS") is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. | |
Diluted net loss per common share ("Diluted EPS") is computed by dividing net loss attributable to common shareholders by the sum of the weighted-average number of common shares outstanding and the weighted-average dilutive common share equivalents outstanding. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect. |
9_Inventory_Inventory_Policies
(9) Inventory: Inventory (Policies) | 9 Months Ended |
Jun. 30, 2013 | |
Policies | ' |
Inventory | ' |
Inventory is valued at the lower of the cost or market. Cost is determined using the first-in, first-out (“FIFO”) method. Market is determined based on the estimated net realizable value, which generally is the item selling price. Inventory is periodically reviewed in order to identify obsolete or damaged items or impaired values. | |
7_Geographic_Information_Sched
(7) Geographic Information: Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area (Tables) | 9 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Tables/Schedules | ' | ||||||||
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | ' | ||||||||
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||
2013 | 2012 | 2013 | 2012 | ||||||
United States of America | $ | 1,887,630 | $ | 1,812,588 | $ | 5,427,973 | $ | 5,674,412 | |
Latin American Countries | - | 283,045 | 5,252,960 | 2,167,938 | |||||
Caribbean Countries and Commonwealths | 778,450 | 891,335 | 2,348,245 | 2,241,591 | |||||
Other Foreign Countries | 19,134 | 12,738 | 52,432 | 32,669 | |||||
Total | $ | 2,685,214 | $ | 2,999,706 | $ | 13,081,610 | $ | 10,116,610 |
7_Geographic_Information_Sched1
(7) Geographic Information: Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country (Tables) | 9 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Tables/Schedules | ' | ||||||||
Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country | ' | ||||||||
Net Property and Equipment | Net Monitoring Equipment | ||||||||
June 30, 2013 | 30-Sep-12 | June 30, 2013 | 30-Sep-12 | ||||||
United States of America | $ | 352,388 | $ | 506,599 | $ | 1,038,215 | $ | 2,174,976 | |
Latin American Countries | - | - | 914,325 | 719,171 | |||||
Caribbean Countries and Commonwealths | - | - | 157,679 | 263,782 | |||||
Other Foreign Countries | - | - | 3,422 | 14,018 | |||||
Total | $ | 352,388 | $ | 506,599 | $ | 2,113,641 | $ | 3,171,947 |
8_Net_Loss_Per_Common_Share_Sc
(8) Net Loss Per Common Share: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Tables) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Tables/Schedules | ' | ||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | ' | ||||
30-Jun-13 | 30-Jun-12 | ||||
Conversion of debt and accrued interest | 3,846,758 | 416,667 | |||
Conversion of Series D Preferred stock | 14,040 | 1,463,490 | |||
Exercise of outstanding common stock options and warrants | 437,432 | 365,961 | |||
Exercise and conversion of outstanding Series D Preferred | |||||
stock warrants | 162,000 | 162,000 | |||
Total common stock equivalents | 4,460,230 | 2,408,118 |
9_Inventory_Schedule_of_Invent
(9) Inventory: Schedule of Inventory, Current (Tables) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Tables/Schedules | ' | ||||
Schedule of Inventory, Current | ' | ||||
June 30, | September 30, | ||||
2013 | 2012 | ||||
Raw materials | $ 635,721 | $ 822,566 | |||
Reserve for damaged or obsolete inventory | (192,000) | (192,000) | |||
Total inventory, net of reserves | $ 443,721 | $ 630,566 |
10_Property_and_Equipment_Sche
(10) Property and Equipment: Schedule Of Property And Equipment (Tables) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Tables/Schedules | ' | ||||
Schedule Of Property And Equipment | ' | ||||
June 30, | September 30, | ||||
2013 | 2012 | ||||
Equipment, software and tooling | $ | 2,000,340 | $ | 1,981,936 | |
Automobiles | 33,466 | 33,466 | |||
Leasehold improvements | 127,162 | 127,287 | |||
Furniture and fixtures | 247,218 | 252,951 | |||
Total property and equipment before accumulated depreciation | 2,408,186 | 2,395,640 | |||
Accumulated depreciation | (2,055,798) | (1,889,041) | |||
Property and equipment, net of accumulated depreciation | $ | 352,388 | $ | 506,599 |
11_Monitoring_Equipment_Schedu
(11) Monitoring Equipment: Schedule Of Monitoring Property And Equipment (Tables) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Tables/Schedules | ' | ||||
Schedule Of Monitoring Property And Equipment | ' | ||||
June 30, | September 30, | ||||
2013 | 2012 | ||||
Monitoring equipment | $ 3,686,213 | $ 3,841,876 | |||
Less: accumulated depreciation | (1,572,572) | (669,929) | |||
Monitoring equipment, net of accumulated depreciation | $ 2,113,641 | $ 3,171,947 |
12_Intangible_Assets_Schedule_
(12) Intangible Assets: Schedule of Intangible Assets and Goodwill (Tables) | 9 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Tables/Schedules | ' | ||||||||
Schedule of Intangible Assets and Goodwill | ' | ||||||||
Borinquen Container Corporation | International Surveillance Services Corp. | Patent | Total | ||||||
Other intangible assets: | |||||||||
Patent license agreement | $ | - | $ | - | $ | 50,000 | $ | 50,000 | |
Royalty agreement | 11,616,984 | 5,003,583 | - | 16,620,567 | |||||
Total intangible assets | 11,616,984 | 5,003,583 | 50,000 | 16,670,567 | |||||
Accumulated amortization | (515,676) | (500,358) | (18,983) | (1,035,017) | |||||
Intangible assets, net of | |||||||||
accumulated amortization | $ | 11,101,308 | $ | 4,503,225 | $ | 31,017 | $ | 15,635,550 | |
13_Accrued_Expenses_Schedule_O
(13) Accrued Expenses: Schedule Of Accrued Expenses (Tables) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Tables/Schedules | ' | ||||
Schedule Of Accrued Expenses | ' | ||||
June 30, | September 30, | ||||
2013 | 2012 | ||||
Accrued royalties | $ 845,656 | $ 641,446 | |||
Accrued taxes - foreign and domestic | 655,678 | 262,440 | |||
Accrued interest | 625,654 | 27,831 | |||
Accrued payroll, taxes and employee benefits | 347,161 | 540,931 | |||
Accrued consulting | 317,300 | 352,072 | |||
Accrued outside services | 151,839 | 38,630 | |||
Accrued travel costs | 85,756 | - | |||
Accrued settlement costs | 82,000 | 50,000 | |||
Accrued board of directors fees | 80,000 | 265,000 | |||
Accrued cellular costs | 50,500 | 27,662 | |||
Accrued legal costs | 47,779 | 14,628 | |||
Accrued warranty and manufacturing costs | 30,622 | 30,622 | |||
Accrued other expenses | 16,711 | 183,722 | |||
Accrued cost of revenues | - | 4,467 | |||
Total accrued expenses | $ 3,336,656 | $ 2,439,451 | |||
14_Debt_Obligations_Schedule_O
(14) Debt Obligations: Schedule Of Debt Obligation (Tables) | 9 Months Ended | ||||||
Jun. 30, 2013 | |||||||
Tables/Schedules | ' | ||||||
Schedule Of Debt Obligation | ' | ||||||
June 30, | September 30, | ||||||
2013 | 2012 | ||||||
Settlement liability from patent infringement suit and countersuit settled in February 2010. The liability was paid in March 2013. | $ | - | $ | 200,000 | |||
Note issued in connection with the acquisition of a subsidiary and matures in December 2014. | 76,586 | 94,459 | |||||
Capital leases with effective interest rates that range between 8.51% and 17.44%. Leases mature between August 2013 and November 2015. $154,410 was assumed through the sale of Midwest Monitoring & Surveillance, Inc. to its former owners. | 68,870 | 118,098 | |||||
Automobile loan with a financial institution secured by the vehicle. Interest rate is 7.06%, due | |||||||
June 2014. $125,614 was assumed through the sale of Midwest Monitoring & Surveillance, Inc. | |||||||
to its former owners. | 7,090 | 12,274 | |||||
Total debt obligations | 152,546 | 424,831 | |||||
Less current portion | (90,617) | (339,151) | |||||
Long-term debt, net of current portion | $ | 61,929 | $ | 85,680 |
15_Relatedparty_Transactions_S
(15) Related-party Transactions: Schedule of Related Party Notes Payable (Tables) | 9 Months Ended | ||||||
Jun. 30, 2013 | |||||||
Tables/Schedules | ' | ||||||
Schedule of Related Party Notes Payable | ' | ||||||
June 30, | September 30, | ||||||
2013 | 2012 | ||||||
Note payable in connection with the redemption of a royalty agreement for $10,768,555. The note required installment payments and was paid off by the proceeds of the Loan as discussed under Note 15. | $ | - | $ | 10,050,027 | |||
Note payable in connection with the purchase of the remaining ownership of Court Programs, Inc., interest at 12% per annum, with monthly payments of $10,000. This note was assumed through the sale of Court Programs, Inc. | - | 46,693 | |||||
The Company received $500,000 from Mr. Derrick, a shareholder and former officer. This was converted into 111,112 shares of common stock. | - | 500,000 | |||||
Convertible debenture with an interest rate of 8% per annum. The debenture matured December 17, 2012 and was secured by the domestic patents of the Company. The debenture and accrued interest was converted into 117,784 shares of common stock. | - | 500,000 | |||||
Convertible debenture with an interest rate of 8% per annum. The debenture matured December 17, 2012 and was secured by the domestic patents of the Company. The debenture and accrued interest was converted into 472,548 shares of common stock. | - | 2,000,000 | |||||
The Company received $16,700,000 through the issuance of a convertible debenture with an interest rate of 8% per annum. The debenture matures on June 17, 2014. This debenture may convert into shares of common stock at a rate of $4.50 per share. A debt discount of $14,566,667 and $633,333, respectively, was recorded to reflect a beneficial conversion feature. As of June 30, 2013, the remaining debt discount was $10,765,986. | 5,934,012 | 1,288,693 | |||||
Total related-party debt obligations | 5,934,012 | 14,385,413 | |||||
Less current portion | - | (12,654,701) | |||||
Long-term debt, net of current portion | $ | 5,934,012 | $ | 1,730,712 |
18_Stock_Options_and_Warrants_
(18) Stock Options and Warrants: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Tables) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Tables/Schedules | ' | ||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | ' | ||||
Nine Months Ended June 30, | |||||
2013 | 2012 | ||||
Expected cash dividend yield | - | - | |||
Expected stock price volatility | 108% | 95% | |||
Risk-free interest rate | 0.15% | 0.36% | |||
Expected life of options/warrants | 2 years | 2 years |
18_Stock_Options_and_Warrants_1
(18) Stock Options and Warrants: Schedule of Stock Options Roll Forward (Tables) | 9 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Tables/Schedules | ' | ||||||||
Schedule of Stock Options Roll Forward | ' | ||||||||
Shares Under Option/ Warrant | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | ||||||
Outstanding as of September 30, 2012 | 336,782 | $ | 28 | ||||||
Granted | 129,651 | $ | 10.79 | ||||||
Expired / Cancelled | (29,000) | $ | 60.01 | ||||||
Outstanding as of June 30, 2013 | 437,433 | $ | 20.59 | 1.57 years | $ | 506,361 | |||
Exercisable as of June 30, 2013 | 377,064 | $ | 22.19 | 1.54 years | $ | 214,560 |
19_Changes_in_Equity_Schedule_
(19) Changes in Equity: Schedule Of The Composition Of Equity (Tables) | 9 Months Ended | ||
Jun. 30, 2013 | |||
Tables/Schedules | ' | ||
Schedule Of The Composition Of Equity | ' | ||
Total Equity | |||
Balance at September 30, 2012 | $ | 4,427,137 | |
Issuance of common stock for: | |||
Dividends from Series D Preferred stock | 1,654,673 | ||
Services | 143,724 | ||
Debt | 3,156,493 | ||
Fractional shares disposed due to reverse stock split | (1,996) | ||
Issuance of warrants to a director for services rendered | 318,344 | ||
Vesting of stock options and warrants | 81,407 | ||
Series D Preferred dividends | (1,033,470) | ||
Beneficial conversion feature related to convertible debenture | 15,349,074 | ||
Net loss | (6,194,027) | ||
Balance at June 30, 2013 | $ | 17,901,359 |
21_Discontinued_Operations_Sch
(21) Discontinued Operations: Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures (Tables) | 9 Months Ended | ||||
Jun. 30, 2013 | |||||
Tables/Schedules | ' | ||||
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | ' | ||||
June 30, | September 30, | ||||
2013 | 2012 | ||||
Current assets: | |||||
Cash | $ | - | $ | 237,082 | |
Accounts receivable, net of allowance for doubtful accounts | - | 452,841 | |||
Note receivable | - | 81,389 | |||
Prepaid expenses and other assets | - | 218,593 | |||
Total current assets | $ | - | $ | 989,905 | |
Non-current assets: | |||||
Property and equipment, net of accumulated depreciation | $ | - | $ | 170,894 | |
Monitoring equipment, net of accumulated amortization | - | 153,163 | |||
Deposits | - | 9,218 | |||
Goodwill | - | 375,000 | |||
Intangible assets, net of accumulated amortization | - | 125,617 | |||
Total non-current assets | $ | - | $ | 833,892 | |
Current liabilities: | |||||
Accounts payable | $ | - | $ | 614,557 | |
Accrued liabilities | - | 561,611 | |||
Deferred revenue | - | 67,613 | |||
Current portion of long-term related-party debt | - | 138,602 | |||
Current portion of long-term debt | - | 295,067 | |||
Total current liabilities | $ | - | $ | 1,677,450 | |
Long-term liabilities: | |||||
Long-term portion of related-party debt | - | - | |||
Long-term portion of debt | - | 364,270 | |||
Total long-term liabilities | $ | - | $ | 364,270 | |
5_Impairment_of_Longlived_Asse1
(5) Impairment of Long-lived Assets (Details) (USD $) | 9 Months Ended | 12 Months Ended | ||
Jun. 30, 2013 | Jun. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2011 | |
Details | ' | ' | ' | ' |
Impairment of monitoring equipment and parts | $450,000 | $0 | ($1,648,762) | ($464,295) |
7_Geographic_Information_Sched2
(7) Geographic Information: Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | |
Revenue, Net | $2,685,214 | $2,999,706 | $13,081,610 | $10,116,610 |
UnitedStatesOfAmericaMember | ' | ' | ' | ' |
Revenue, Net | 1,887,630 | 1,812,588 | 5,427,973 | 5,674,412 |
LatinAmericanCountiresMember | ' | ' | ' | ' |
Revenue, Net | ' | 283,045 | 5,252,960 | 2,167,938 |
CaribbeanCountriesAndCommonwealthMember | ' | ' | ' | ' |
Revenue, Net | 778,450 | 891,335 | 2,348,245 | 2,241,591 |
OtherForeignCountriesMember | ' | ' | ' | ' |
Revenue, Net | $19,134 | $12,738 | $52,432 | $32,669 |
7_Geographic_Information_Sched3
(7) Geographic Information: Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Property and equipment, net of accumulated depreciation of $2,055,798 and $1,889,041, respectively | $352,388 | $677,493 | $1,086,633 |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | 2,113,641 | 3,325,110 | 3,461,985 |
UnitedStatesOfAmericaMember | ' | ' | ' |
Property and equipment, net of accumulated depreciation of $2,055,798 and $1,889,041, respectively | 352,388 | 506,599 | ' |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | 1,038,215 | 2,174,976 | ' |
LatinAmericanCountiresMember | ' | ' | ' |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | 914,325 | 719,171 | ' |
CaribbeanCountriesAndCommonwealthMember | ' | ' | ' |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | 157,679 | 263,782 | ' |
OtherForeignCountriesMember | ' | ' | ' |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | $3,422 | $14,018 | ' |
8_Net_Loss_Per_Common_Share_De
(8) Net Loss Per Common Share (Details) | 9 Months Ended | |
Jun. 30, 2013 | Jun. 30, 2012 | |
Details | ' | ' |
Outstanding common share equivalents | 4,460,230 | 2,408,118 |
8_Net_Loss_Per_Common_Share_Sc1
(8) Net Loss Per Common Share: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) (USD $) | Jun. 30, 2013 | Jun. 30, 2012 |
Details | ' | ' |
Conversion of debt and accrued interest | $3,846,758 | $416,667 |
Conversion of Series D Preferred stock | 14,040 | 1,463,490 |
Exercise of outstanding common stock options and warrants | 437,432 | 365,961 |
Exercise and conversion of outstanding Series D Preferred stock warrants | 162,000 | 162,000 |
Total common stock equivalents | $4,460,230 | $2,408,118 |
9_Inventory_Schedule_of_Invent1
(9) Inventory: Schedule of Inventory, Current (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Details | ' | ' | ' |
Inventory, Raw Materials, Gross | $635,721 | $822,566 | ' |
Reserve for damaged or obsolete inventory | -192,000 | -192,000 | -127,016 |
Inventory, net of reserves of $192,000 and $192,000, respectively | $443,721 | $630,566 | $579,779 |
10_Property_and_Equipment_Sche1
(10) Property and Equipment: Schedule Of Property And Equipment (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Details | ' | ' | ' |
Equipment, software and tooling | $2,000,340 | $1,981,936 | ' |
Automobiles | 33,466 | 33,466 | ' |
Leasehold Improvements, Gross | 127,162 | 127,287 | ' |
Furniture And Fixtures | 247,218 | 252,951 | ' |
Property, Plant and Equipment, Gross | 2,408,186 | 2,395,640 | ' |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | -2,055,798 | -1,889,041 | ' |
Property and equipment, net of accumulated depreciation of $2,055,798 and $1,889,041, respectively | $352,388 | $677,493 | $1,086,633 |
10_Property_and_Equipment_Deta
(10) Property and Equipment (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | |
Details | ' | ' | ' | ' |
Depreciation | $54,581 | $91,803 | $182,658 | $286,151 |
Impaired Assets to be Disposed of by Method Other than Sale, Amount of Impairment Loss | ' | ' | $2,033 | $214,566 |
11_Monitoring_Equipment_Schedu1
(11) Monitoring Equipment: Schedule Of Monitoring Property And Equipment (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Details | ' | ' | ' |
Property Subject to or Available for Operating Lease, Gross | $3,686,213 | $3,841,876 | ' |
Property Subject to or Available for Operating Lease, Accumulated Depreciation | -1,572,572 | -669,929 | ' |
Monitoring equipment, net of accumulated depreciation of $1,572,572 and $669,929, respectively | $2,113,641 | $3,325,110 | $3,461,985 |
11_Monitoring_Equipment_Detail
(11) Monitoring Equipment (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | |
Details | ' | ' | ' | ' |
Depreciation Expense | $342,676 | $319,411 | $1,010,757 | $1,106,509 |
Reserve for future monitoring equipment impairment | ' | ' | 450,000 | ' |
Disposal of lease monitoring equipment | ' | ' | $89,093 | $88,839 |
12_Intangible_Assets_Schedule_1
(12) Intangible Assets: Schedule of Intangible Assets and Goodwill (Details) (USD $) | Jun. 30, 2013 |
Patent license agreement | $50,000 |
FiniteLivedRoyaltyAgreement | 16,620,567 |
Other intangible assets, net of accumulated amortization | 16,670,567 |
Accumulated amortization | -1,035,017 |
Intangible assets, net of accumulated amortization | 15,635,550 |
Boriquen Container Corporation | ' |
FiniteLivedRoyaltyAgreement | 11,616,984 |
Other intangible assets, net of accumulated amortization | 11,616,984 |
Accumulated amortization | -515,676 |
Intangible assets, net of accumulated amortization | 11,101,308 |
International Surveillance Services Corp | ' |
FiniteLivedRoyaltyAgreement | 5,003,583 |
Other intangible assets, net of accumulated amortization | 5,003,583 |
Accumulated amortization | -500,358 |
Intangible assets, net of accumulated amortization | 4,503,225 |
Patent | ' |
Patent license agreement | 50,000 |
Other intangible assets, net of accumulated amortization | 50,000 |
Accumulated amortization | -18,983 |
Intangible assets, net of accumulated amortization | $31,017 |
12_Intangible_Assets_Details
(12) Intangible Assets (Details) (USD $) | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | |
Boriquen Container Corporation | Boriquen Container Corporation | International Surveillance Services Corp | International Surveillance Services Corp | Patent | Patent | |
Finite-Lived Intangible Assets, Amortization Expense | $157,697 | $515,676 | $62,546 | $187,634 | $1,389 | $4,167 |
13_Accrued_Expenses_Schedule_O1
(13) Accrued Expenses: Schedule Of Accrued Expenses (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Details | ' | ' | ' |
Accrued Royalties, Current | $845,656 | $641,446 | ' |
Value added and business flat taxes | 655,678 | 262,440 | ' |
Accrued interest | 625,654 | 27,831 | ' |
Payroll, taxes and employee benefits | 347,161 | 540,931 | ' |
Accrued Professional Fees, Current | 317,300 | 352,072 | ' |
Accrued outside services | 151,839 | 38,630 | ' |
Accrued travel costs | 85,756 | ' | ' |
Settlement costs | 82,000 | 50,000 | ' |
Board of Directors fees | 80,000 | 265,000 | ' |
Accrued cellular costs | 50,500 | 27,662 | ' |
Legal costs | 47,779 | 14,628 | ' |
Warranty and manufacturing costs | 30,622 | 30,622 | ' |
Accrued other expenses | 16,711 | 183,722 | ' |
Accrued cost of revenues | ' | 4,467 | ' |
Accrued liabilities | $3,336,656 | $3,001,062 | $2,713,230 |
14_Debt_Obligations_Schedule_O1
(14) Debt Obligations: Schedule Of Debt Obligation (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | ||
Details | ' | ' | ' | ||
Settlement liability | ' | $200,000 | [1] | ' | |
Note payable | 76,586 | 94,459 | ' | ||
Capital Lease Obligations | 68,870 | [2] | 118,098 | [2] | ' |
Automobile loans | 7,090 | [3] | 12,274 | [3] | ' |
Total debt obligations | 152,546 | 424,831 | ' | ||
Current portion of long-term debt, net of debt discount of $115,283 and $0, respectively | -90,617 | -634,218 | -1,041,392 | ||
Long-term debt, net of current portion | $61,929 | $449,950 | $898,598 | ||
[1] | Monthly payment through January 2013, non interest bearing. | ||||
[2] | Effective interest rates that range between 8.51% and 17.44%. Leases mature between November 2012 and March 2016. | ||||
[3] | Secured by vehicles. Interest rates range between 0.0% and 8.9%, due through February 2016. |
15_Relatedparty_Transactions_D
(15) Related-party Transactions (Details) (USD $) | 9 Months Ended | |
Jun. 30, 2013 | Jan. 31, 2013 | |
Details | ' | ' |
Line of Credit Facility, Maximum Borrowing Capacity | ' | $1,200,000 |
Line of Credit Facility, Interest Rate During Period | 3.00% | ' |
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 10.00% | ' |
15_Relatedparty_Transactions_S1
(15) Related-party Transactions: Schedule of Related Party Notes Payable (Details) (USD $) | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Details | ' | ' | ' |
Note payable in connection with the redemption of a royalty agreement for $10,768,555. The note required installment payments and matured December 17, 2012. Subsequent to December 31, 2012, this note was paid off | ' | $10,050,027 | ' |
Note payable in connection with the purchase of the remaining ownership of Court Programs, Inc., interest at 12% per annum, with monthly payments of $10,000. The note matured November 2012. Subsequent to December 31, 2012, the note was paid off. | ' | 46,693 | ' |
The Company received $500,000 from Mr. Derrick, a shareholder and former officer. The terms of this financing have not been determined as of the date of this filing. | ' | 500,000 | ' |
Convertible debenture with an interest rate of 8% per annum. The debenture matured December 17, 2012 and is secured by the domestic patents of the Company. Subsequent to December 31 | ' | 500,000 | ' |
Convertible debenture with an interest rate of 8% per annum. The debenture matured December 17, 2012 and is secured by the domestic patents of the Company. | ' | 2,000,000 | ' |
The Company received $3,700,000 through the issuance of convertible debentures with an interest rate of 8% per annum. The debentures mature on June 17, 2014. This debenture may convert into shares of common stock at a rate of $0.0225 per share. | 5,934,012 | 1,288,693 | ' |
Due to Related Parties | 5,934,012 | 14,385,413 | ' |
Less current portion | ' | -12,654,701 | ' |
Long-term related-party debt, net of current portion and debt discount | $5,934,012 | $1,730,712 | $116,852 |
16_Preferred_Stock_Details
(16) Preferred Stock (Details) (USD $) | 9 Months Ended | |||
Jun. 30, 2013 | Sep. 30, 2012 | Jul. 31, 2012 | Sep. 30, 2011 | |
Details | ' | ' | ' | ' |
Preferred stock shares authorized | 20,000,000 | ' | ' | ' |
Series D 8% dividend, convertible, voting - par value | $0.00 | $0.00 | ' | $0.00 |
Series D 8% dividend, convertible, voting - shares designated | 85,000 | 85,000 | 85,000 | 85,000 |
16_Preferred_Stock_Dividends_D
(16) Preferred Stock: Dividends (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |
Details | ' | ' | ' | ' |
Dividend rate on Series D Preferred stock | ' | 8.00% | ' | ' |
Common stock issued for payment of Series D preferred stock dividends | ' | 181,033 | 210,689 | 106,535 |
Issuance of 25,084,008 and 16,463,474 shares of common stock in connection with Series D Preferred stock dividends | ' | $1,654,673 | ' | ' |
Shares Issued Common Stock to pay accrued dividends | 799 | ' | ' | ' |
Shares Issued Common Stock to pay accrued dividends Value | $9,325 | ' | ' | ' |
16_Preferred_Stock_Convertibil
(16) Preferred Stock: Convertibility (Details) | 1 Months Ended | 9 Months Ended | ||
Feb. 28, 2013 | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |
Details | ' | ' | ' | ' |
Common shares issued for each share of Series D Preferred stock | ' | 30 | ' | ' |
Exchange Offer Exchange Description | ' | 'The shareholders were entitled to exchange their shares of Series D Preferred at a premium over the current conversion rate of 30 shares of common stock per Series D Preferred share as follows: 15 shares for each $1,000 of original price paid, 10 shares for each $676 of original price paid, and 8 shares for each $500 of original price paid. | ' | ' |
Exchange Offer Number of Series D Preferred Shares | 46,095 | 48,295 | ' | ' |
Exchange Offer Number of Series D Preferred Converted to Common Stock Shares | 1,828,283 | 1,894,283 | ' | ' |
Series D 8% dividend, convertible, voting - shares outstanding | ' | 468 | 48,763 | 44,845 |
16_Preferred_Stock_Series_D_Pr
(16) Preferred Stock: Series D Preferred Stock Purchase Warrants (Details) (USD $) | 9 Months Ended | |
Jun. 30, 2013 | Jun. 30, 2012 | |
Details | ' | ' |
Warrants outstanding for the purchase of Series D Preferred stock | 5,400 | ' |
WarrantsOutstandingForThePurchaseOfSeriesDPreferredStockExercisePrice | ' | $16.67 |
17_Common_Stock_Details
(17) Common Stock (Details) (USD $) | 9 Months Ended |
Jun. 30, 2013 | |
Details | ' |
Stockholders' Equity, Reverse Stock Split | '200 for 1 |
Common stock shares authorized prior to amendment | 15,000,000 |
Common Shares Issued from conversion of Series D Preferred Stock | $1,894,283 |
Common Shares Issued for debt and accrued interested | $701,444 |
Debt and accrued interest amount | $3,156,493 |
Shares issued to pay accrued dividends | 181,033 |
Accrued Dividends On Series D Preferred Stock | 1,654,673 |
CommonSharesIssuedForServices | 16,266 |
Services Rendered Value | $71,979 |
CommonSharesIssuedPaymentOfSeriesDDividends | 799 |
18_Stock_Options_and_Warrants_2
(18) Stock Options and Warrants: Stock Incentive Plan (Details) (USD $) | 9 Months Ended | ||
Jun. 30, 2013 | Jun. 30, 2012 | Dec. 21, 2011 | |
Details | ' | ' | ' |
Shares authorized for issuance under 2012 Plan | ' | ' | 90,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 0 | 30,000 | ' |
Options available to distribute under 2012 Plan | 60,000 | ' | ' |
Compensation expense | $22,032 | $199,755 | ' |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $7,644 | ' | ' |
18_Stock_Options_and_Warrants_3
(18) Stock Options and Warrants: All Options and Warrants (Details) (USD $) | 9 Months Ended | |
Jun. 30, 2013 | Jun. 30, 2012 | |
Details | ' | ' |
Warrants granted for accrued expenses | 129,649 | 54,500 |
Expense related to the vesting and re-pricing of all stock options and warrants granted in prior years | $399,751 | $1,472,732 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | 7,644 | ' |
Compensation Expense Associated With Unvested Warrants | $71,250 | ' |
18_Stock_Options_and_Warrants_4
(18) Stock Options and Warrants: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details) | 9 Months Ended | |
Jun. 30, 2013 | Jun. 30, 2012 | |
Details | ' | ' |
Expected stock price volatility | 108.00% | 95.00% |
Risk free interest rate | 0.15% | 0.36% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | '2 years | '2 years |
18_Stock_Options_and_Warrants_5
(18) Stock Options and Warrants: Schedule of Stock Options Roll Forward (Details) (USD $) | 9 Months Ended | |
Jun. 30, 2013 | Sep. 30, 2012 | |
Details | ' | ' |
Options outstanding | 336,782 | ' |
Weighted average exercise price of options outstanding | $20.59 | $28 |
Options granted | 129,651 | ' |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $10.79 | ' |
Options expired or cancelled | -29,000 | ' |
Weighted average exercise price of options expired or cancelled | $60.01 | ' |
Options outstanding | 437,433 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | '1 year 6 months 25 days | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $506,361 | ' |
Options exercisable | 377,064 | ' |
Weighted average exercise price of exercisable options | $22.19 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | '1 year 6 months 14 days | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $214,560 | ' |
18_Stock_Options_and_Warrants_6
(18) Stock Options and Warrants (Details) (USD $) | 9 Months Ended |
Jun. 30, 2013 | |
Details | ' |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 14,286 |
Warrants To Purchase Common Stock Exercise Price | $14.70 |
Stock and Warrants Issued During Period, Value, Preferred Stock and Warrants | $82,715 |
19_Changes_in_Equity_Schedule_1
(19) Changes in Equity: Schedule Of The Composition Of Equity (Details) (USD $) | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |
Details | ' | ' | ' |
Total equity | $4,427,137 | $13,615,308 | $3,129,851 |
Issuance Of Common Stock Due To Conversion Of Preferred Stock | 1,654,673 | ' | ' |
Services | 143,724 | ' | ' |
Debt and accrued interest amount | 3,156,493 | ' | ' |
Factional shares of common stock paid in cash | -1,996 | ' | ' |
Issuance of warrants to a director for services rendered | 318,344 | ' | ' |
Vesting of stock options and warrants | 81,407 | ' | ' |
Series D Preferred stock dividends earned | -1,033,470 | ' | ' |
Beneficial conversion feature expense third party | 15,349,074 | ' | ' |
Net loss | -6,194,027 | -17,458,107 | -9,858,824 |
Total equity | $17,901,359 | $4,427,137 | $13,615,308 |
20_Commitments_and_Contingenci1
(20) Commitments and Contingencies (Details) | 3 Months Ended | 9 Months Ended |
Mar. 31, 2013 | Jun. 30, 2013 | |
Camacho Melendez et al v. Commonwealth of Puerto Rico and International Surveillance Services Corporation | ||
Complaint seeking damages | '$210,000 | '$2,110,000 |
21_Discontinued_Operations_Sch1
(21) Discontinued Operations: Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures (Details) (USD $) | Sep. 30, 2012 |
Details | ' |
Disposal Group, Including Discontinued Operation, Cash and Cash Equivalents | $237,082 |
Disposal Group, Including Discontinued Operation, Accounts, Notes and Loans Receivable, Net | 452,841 |
Disposal Group Including Discontinued Operation Accounts Notes Receivable Net | 81,389 |
Disposal Group, Including Discontinued Operation, Other Current Assets | 218,593 |
Current assets from discontinued operations | 989,905 |
Disposal Group, Including Discontinued Operation, Property, Plant, and Equipment, Net | 170,894 |
DisposalGroupIncludingDiscontinuedOperationMonitoringEquipmentNet | 153,163 |
Disposal Group Including Discontinued Operation Deposits | 9,218 |
Disposal Group, Including Discontinued Operation, Goodwill | 375,000 |
Disposal Group, Including Discontinued Operation, Intangible Assets, Net | 125,617 |
Non-current assets from discontinued operations, net of accumulated depreciation of $0 and $2,837,498, respectively | 833,892 |
Disposal Group, Including Discontinued Operation, Accounts Payable | 614,557 |
Disposal Group, Including Discontinued Operation, Accrued Liabilities | 561,611 |
Disposal Group, Including Discontinued Operation, Deferred Revenue, Current | 67,613 |
Disposal Group Including Discontinued Operation Current Portion of Long Term Related-party Debt | 138,602 |
Disposal Group Including Discontinued Operation Current Portion of Long Term Debt | 295,067 |
Current liabilities from discontinued operations | 1,677,450 |
Disposal Group Including Discontinued Operation Long-term Portion of Debt | 364,270 |
Long-term liabilities from discontinued operations | $364,270 |
21_Discontinued_Operations_Det
(21) Discontinued Operations (Details) (USD $) | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | |
Details | ' | ' | ' |
Disposal Group, Including Discontinued Operation, Revenue | $1,794,133 | $477,298 | $5,135,887 |
Disposal Group, Including Discontinued Operation, Costs of Goods Sold | -1,105,363 | -163,487 | -3,102,773 |
Disposal Group, Including Discontinued Operation, Gross Profit (Loss) | 688,770 | 313,811 | 2,033,114 |
Disposal Group Including Discontinued Operation Selling General and Administrative | -911,802 | -319,976 | -2,166,014 |
Disposal Group Including Discontinued Operation Income From Operations | -223,032 | -6,165 | -132,900 |
Disposal Group, Including Discontinued Operation, Other Income | -22,946 | -295 | -45,715 |
Disposal Group Including Discontinued Operation Net Income | ($245,978) | ($6,460) | ($178,615) |
22_Subsequent_Events_Details
(22) Subsequent Events (Details) (USD $) | 3 Months Ended | 9 Months Ended |
Jun. 30, 2013 | Jun. 30, 2013 | |
Details | ' | ' |
Shares Issued Common Stock to pay accrued dividends | 799 | ' |
Shares Issued Common Stock to pay accrued dividends Value | $9,325 | ' |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 14,286 | 14,286 |
Warrants To Purchase Common Stock Exercise Price | $14.70 | $14.70 |
Stock and Warrants Issued During Period, Value, Preferred Stock and Warrants | ' | 82,715 |
Shares issued to board member for services value | ' | $10,000 |