Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Sep. 30, 2019 | Dec. 03, 2019 | Mar. 31, 2019 | |
Document and Entity Information: | |||
Entity Registrant Name | TRACK GROUP, INC. | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2019 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001045942 | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $ 2,400,000 | ||
Entity Common Stock, Shares Outstanding | 11,414,150 | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation State Country Code | DE | ||
Entity File Number | 0-23153 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2019 | Sep. 30, 2018 |
Current assets: | ||
Cash | $ 6,896,711 | $ 5,446,557 |
Accounts receivable, net of allowance for doubtful accounts of $2,454,281 and $3,152,966, respectively | 6,763,236 | 5,978,896 |
Notes receivable, net of allowances for doubtful accounts of $234,733, at September 30,2018 | 0 | 0 |
Prepaid expenses and other | 1,339,465 | 1,270,043 |
Inventory, net of reserves of $26,934, respectively | 274,501 | 277,119 |
Total current assets | 15,273,913 | 12,972,615 |
Property and equipment, net of accumulated depreciation of $2,248,913 and $1,999,222, respectively | 675,037 | 745,475 |
Monitoring equipment, net of accumulated amortization of $6,322,768 and $5,325,654, respectively | 2,624,900 | 3,162,542 |
Intangible assets, net of accumulated amortization of $12,016,512 and $9,839,032, respectively | 21,955,679 | 23,253,054 |
Goodwill | 8,187,911 | 8,076,759 |
Deferred tax asset | 540,563 | 0 |
Other assets | 124,187 | 145,839 |
Total assets | 49,382,190 | 48,356,284 |
Current liabilities: | ||
Accounts payable | 2,628,003 | 2,518,030 |
Accrued liabilities | 13,828,696 | 10,333,103 |
Current portion of long-term debt | 33,827,689 | 30,437,810 |
Total current liabilities | 50,284,388 | 43,288,943 |
Long-term debt, net of current portion | 0 | 3,428,975 |
Total liabilities | 50,284,388 | 46,717,918 |
Stockholders' equity: | ||
Common stock, $0.0001 par value: 30,000,000 shares authorized; 11,401,650 and shares outstanding, respectively | 1,140 | 1,140 |
Paid in capital | 302,250,556 | 302,102,866 |
Accumulated deficit | (302,152,292) | (299,495,370) |
Accumulated other comprehensive loss | (1,001,602) | (970,270) |
Total equity | (902,198) | 1,638,366 |
Total liabilities and stockholders' equity | 49,382,190 | 48,356,284 |
Series A Convertible Preferred stock | ||
Stockholders' equity: | ||
Series A Convertible Preferred stock, $0.0001 par value: 1,200,000 shares authorized; 0 shares outstanding | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2019 | Sep. 30, 2018 |
Accounts receivable, allowance for doubtful accounts | $ 2,454,281 | $ 3,152,966 |
Note receivable, allowance for doubtful accounts | 234,733 | 0 |
Inventory reserve | 26,934 | 26,934 |
Property and equipment accumulated depreciation | 2,248,913 | 1,999,222 |
Monitoring equipment accumulated amortization | 6,322,768 | 5,325,654 |
Intangible assets accumulated amortization | $ 14,157,090 | $ 12,016,512 |
Preferred stock, par value | $ 0.0001 | |
Preferred stock, shares authorized | 20,000,000 | |
Common stock - par value | $ 0.0001 | $ 0.0001 |
Common stock - shares authorized | 30,000,000 | 30,000,000 |
Common stock - shares outstanding | 11,401,650 | |
Series A Convertible Preferred stock | ||
Preferred stock, par value | $ .0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,200,000 | 1,200,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues: | ||
Monitoring services | $ 32,100,370 | $ 29,943,563 |
Other | 1,918,782 | 626,656 |
Total revenues | 34,019,152 | 30,570,219 |
Cost of revenues: | ||
Monitoring and other related service | 12,989,186 | 11,511,341 |
Depreciation and amortization included in cost of revenue | 2,012,975 | 1,856,734 |
Total cost of revenue | 15,002,161 | 13,368,075 |
Gross profit | 19,016,991 | 17,202,144 |
Operating expenses: | ||
General & administrative | 12,243,459 | 13,983,924 |
(Gain) / loss on sale of asset | (10,563) | (8,500) |
Selling & marketing | 2,257,101 | 1,895,452 |
Research & development | 1,313,499 | 862,142 |
Depreciation & amortization | 2,047,980 | 2,120,746 |
Total operating expense | 17,851,476 | 18,853,764 |
Loss from operations | 1,165,515 | (1,651,620) |
Other income (expense): | ||
Interest income | 23,929 | 242,973 |
Interest expense | (2,403,047) | (3,004,983) |
Currency exchange rate gain (loss) | (466,140) | (445,426) |
Other income/expense, net | 143 | 23,740 |
Total other income (expense) | (2,845,115) | (3,183,696) |
Net loss before income taxes | (1,679,600) | (4,835,316) |
Income tax expense | 884,353 | 592,725 |
Net loss attributable to common stockholders | (2,563,953) | (5,428,041) |
Foreign currency translation adjustments | (31,332) | (294,719) |
Comprehensive Loss | $ (2,595,285) | $ (5,722,760) |
Net loss per common share, basic and diluted | $ (0.23) | $ (0.51) |
Weighted average common shares outstanding, basic and diluted | 11,213,431 | 10,732,523 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Beginning Balance, Shares at Sep. 30, 2017 | 10,480,984 | ||||
Beginning balance, Amount at Sep. 30, 2017 | $ 1,048 | $ 300,717,861 | $ (294,067,329) | $ (675,822) | $ 5,975,758 |
Modification of warrants | 162,418 | $ 162,418 | |||
Cancellation of Common Stock issued to Board Member, Shares | (18,551) | ||||
Cancellation of Common Stock issued to Board Member, Amount | $ (2) | 2 | |||
Services, Shares | 672,859 | 672,859 | |||
Services, Amount | $ 67 | 638,848 | $ 638,915 | ||
Board of director fees, Shares | 266,358 | 266,358 | |||
Board of director fees, Amount | $ 27 | 364,696 | $ 364,723 | ||
Issuance of common stock warrants for Board of Director fees | 75,000 | 75,000 | |||
Amortization of equity-based compensation granted to employees | 144,041 | 144,041 | |||
Foreign currency translation adjustments | (294,448) | (294,448) | |||
Net Loss | (5,428,041) | (5,428,041) | |||
Ending Balance, Shares at Sep. 30, 2018 | 11,401,650 | ||||
Ending Balance, Amount at Sep. 30, 2018 | $ 1,140 | 302,102,866 | (299,495,370) | (970,270) | $ 1,638,366 |
Services, Shares | 0 | ||||
Services, Amount | $ 0 | ||||
Board of director fees, Shares | 0 | ||||
Board of director fees, Amount | $ 0 | ||||
ASC 606 modified retrospective adjustment | (92,969) | (92,969) | |||
Amortization of equity-based compensation granted to employees | 147,690 | 147,690 | |||
Foreign currency translation adjustments | (31,332) | (31,332) | |||
Ending Balance, Shares at Sep. 30, 2019 | 11,401,650 | ||||
Ending Balance, Amount at Sep. 30, 2019 | $ 1,140 | $ 302,250,556 | $ (302,152,292) | $ (1,001,602) | $ (902,198) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (2,563,953) | $ (5,428,041) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 4,060,955 | 3,977,480 |
Bad debt expense | 655,480 | 182,045 |
Accretion of debt discount | 0 | 185,811 |
Stock based compensation | 21,465 | 1,719,844 |
(Gain) / loss on disposal of property and equipment | (10,563) | (8,500) |
Loss on monitoring equipment included on cost of sales | 355,117 | 390,098 |
Foreign currency exchange loss | 466,140 | 445,426 |
Change in assets and liabilities: | ||
Accounts receivable, net | (1,418,487) | (556,160) |
Inventories | 498,936 | 0 |
Prepaid expenses and other assets | (755,050) | 2,187,162 |
Accounts payable, accured expense and other | 3,761,610 | 2,935,427 |
Net cash provided by operating activities | 5,071,650 | 6,030,592 |
Cash flow from investing activities: | ||
Purchases of property and equipment | (277,332) | (154,373) |
Capitalized software | (1,181,308) | (1,083,745) |
Purchases of monitoring equipment and parts | (1,820,206) | (1,305,586) |
Proceeds from sale of assets | 10,563 | 8,500 |
Net cash used in investing activities | (3,268,283) | (2,535,204) |
Cash flow from financing activities: | ||
Principal payments on notes payable | (65,317) | (66,252) |
Net cash provided by (used in) financing activities | (65,317) | (66,252) |
Effect of exchange rate changes on cash | (287,896) | (9,900) |
Net increase in cash | 1,450,154 | 3,419,236 |
Cash, beginning of year | 5,446,557 | 2,027,321 |
Cash, end of year | 6,896,711 | 5,446,557 |
Cash paid for interest | $ 27,215 | $ 226,079 |
Supplemental schedule of non-cash investing and financing activities: | ||
Issuance of warrants for accrued Board of Director fees | 0 | 75,000 |
Non-cash transfer of inventory to monitoring equipment | $ 733,617 | $ 305,481 |
Organization and Nature of Oper
Organization and Nature of Operations | 12 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Operations | General The Company’s business is based on the leasing of patented tracking and monitoring solutions to federal, state and local law enforcement agencies, both in the U.S. and abroad, for the electronic monitoring of offenders and offering unique data analytics services on a platform-as-a-service (PaaS) business model. Currently, the Company deploys offender-based management services that combine patented GPS tracking technologies, full-time 24/7/365 global monitoring capabilities, case management, and proprietary data analytics. The Company offers customizable tracking solutions that leverage real-time tracking data, best-practices monitoring, and analytics capabilities to create complete, end-to-end tracking solutions. Business Condition. Certain reclassifications of amounts previously reported have been made in the accompanying financial statements. The Company considers these reclassifications to be immaterial and they have no impact on total operating expense or net loss before income taxes. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Principles of Consolidation The consolidated financial statements include the accounts of Track Group, Inc. and its subsidiaries, Track Group Analytics Limited, Track Group Americas, Inc., Track Group International LTD., and Track Group - Chile SpA. All significant inter-company transactions have been eliminated in consolidation. Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the period presented. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Significant estimates made in the accompanying consolidated financial statements include, but are not limited to, allowances for doubtful accounts, certain assumptions related to the recoverability of intangible and long-lived assets. Business Combinations Business combinations are accounted for under the provisions of ASC 805-10, Business Combinations Goodwill represents costs in excess of purchase price over the fair value of the assets of businesses acquired, including other identifiable intangible assets. Foreign Currency Translation The Chilean Peso, New Israeli Shekel and the Canadian Dollar are used as functional currencies of the operating subsidiaries: (i) Track Group Chile SpA; (ii) Track Group International Ltd.; and (iii) Track Group Analytics Limited, respectively. The balance sheets of all subsidiaries have been converted into United States Dollars (“ USD Other Intangible Assets Other intangible assets principally consist of patents, royalty purchase agreements, developed technology acquired, customer relationships, trade name, capitalized software development costs, and capitalized website development costs. The Company accounts for other intangible assets in accordance with generally accepted accounting principles and does not amortize intangible assets with indefinite lives. Intangible assets with finite useful lives are amortized over their respective estimated useful lives, which range from three to twenty years. Intangible assets are reviewed for impairment annually or more frequently whenever events or changes in circumstances indicate possible impairment. Fair Value of Financial Investments The carrying amounts reported in the accompanying consolidated financial statements for accounts receivable, accounts payable, accrued liabilities and debt obligations approximate fair values because of the immediate or short-term maturities of these financial instruments. The carrying amounts of our 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 credit evaluations of our customers' financial condition. The Company had sales to entities, two of which each represent 10% or more of our gross revenue, as follows for the years ended September 30, 2019 and 2018. 2019 % 2018 % Customer A $ 8,570,404 25 % $ 9,201,502 30 % Customer B $ 3,549,273 10 % $ 3,772,540 12 % Customer C $ 2,507,577 7 % $ 2,468,472 8 % No other customer represented more than 10% of the Company’s total revenue for the fiscal years ended September 30, 2019 or 2018. Concentration of credit risk associated with the Company’s total and outstanding accounts receivable as of September 30, 2019 and 2018, respectively, are shown in the table below: 2019 % 2018 % Customer A $ 1,537,775 23 % $ 1,689,976 28 % Customer B $ 844,241 12 % $ 594,626 10 % Customer C $ 410,033 6 % $ 428,560 7 % Based upon the expected collectability of our accounts receivable, the Company maintains an allowance for doubtful accounts. Cash Equivalents Cash equivalents consist of investments with original maturities to the Company of three months or less. 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. The Company had $5,688,493 and $2,900,105 of cash deposits in excess of federally insured limits as of September 30, 2019 and 2018, respectively. Accounts Receivable Accounts receivable, which is made up of trade receivables for monitoring and other related services, 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. The allowance is 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. 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 entered into an agreement with one of its customers during the fiscal year ended September 30, 2012. Payments under the note 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 matured in May 2014. The note is currently in default and accrues interest at a rate of 17% per annum. As of June 30, 2016, the Company no longer accrues interest on the note. As of September 30, 2019, the fully reserved principal and interest due of $234,733 was determined to be uncollectable and was written off. Prepaid Expense and Other Prepaid assets and other is comprised largely of performance bond deposits, tax deposits, vendor deposits and other prepaid supplier expenses. We generally expect deposits to be returned to the Company as cash within 12 months and prepaid expenses to be allocated over the commitment. Inventory Inventory is valued at the lower of the cost or net realizable value. Cost is determined using the standard costing method. Net realizable value is determined based on the item selling price. Inventory is periodically reviewed in order to identify obsolete or damaged items or impaired values. The Company did not record impairment of inventory during the fiscal years ended September 30, 2019 and 2018, respectively. Inventory consists of finished goods that are to be shipped to customers and parts used for minor repairs of ReliAlert™, Shadow, and other tracking devices. Completed and shipped ReliAlert™ and other tracking devices are reflected in Monitoring Equipment. As of September 30, 2019 and September 30, 2018, inventory consisted of the following: 2019 2018 Finished goods inventory $ 301,435 $ 304,053 Reserve for damaged or obsolete inventory (26,934 ) (26,934 ) Total inventory, net of reserves $ 274,501 $ 277,119 The Company uses a third-party fulfillment service provider. As a result of this service, the Company’s employees do not actively assemble new product or repair damaged inventory or monitoring equipment shipped directly from suppliers. Purchases of monitoring equipment are recognized directly. Management believes this process reduces maintenance and fulfillment costs associated with inventory and monitoring 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, 2019 and 2018, respectively: 2019 2018 Equipment, software and tooling $ 1,210,583 $ 1,074,471 Automobiles 5,574 6,153 Leasehold improvements 1,393,976 1,358,984 Furniture and fixtures 313,817 305,089 Total property and equipment before accumulated depreciation 2,923,950 2,744,697 Accumulated depreciation (2,248,913 ) (1,999,222 ) Property and equipment, net of accumulated depreciation $ 675,037 $ 745,475 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, 2019 and 2018, the Company recognized a $10,563 and $8,500 gain, respectively on the disposal of property and equipment. Internally developed software costs related to the Company’s monitoring platform are recorded as intangible assets on the Consolidated Balance Sheet. Depreciation expense recognized for property and equipment for the fiscal years ended September 30, 2019 and 2018 was $315,380 and $348,162, respectively. Monitoring Equipment The Company leases monitoring equipment to agencies for offender tracking under contractual service agreements. The monitoring equipment is depreciated using the straight-line method over an estimated useful life of between one and five years. Monitoring equipment as of September 30, 2019 and 2018 is as follows: 2019 2018 Monitoring equipment $ 8,947,668 $ 8,488,196 Less: accumulated amortization (6,322,768 ) (5,325,654 ) Monitoring equipment, net of accumulated amortization $ 2,624,900 $ 3,162,542 Amortization expense for the fiscal years ended September 30, 2019 and 2018 was $1,509,166 and $1,360,753, respectively. This expense was classified as a cost of revenue. Monitoring equipment to be disposed of is reported at the lower of the carrying amount or fair value, less the estimated costs to sell. During the fiscal years ended September 30, 2019 and 2018, the Company disposed of leased monitoring equipment and parts of $355,117 and $390,098, respectively. Impairment of Long-Lived Assets and Goodwill The Company reviews 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. See Note 12. Revenue Recognition In May 2014, the FASB issued Accounting Standards Update (“ ASU Revenue from Contracts with Customers (Topic 606) Our revenue is predominantly derived from two sources: (i) monitoring services, and (ii) product sales. Monitoring and Other Related Services Monitoring services include two components: (i) lease contracts pursuant to which the Company provides monitoring services and lease devices to distributors or end users and the Company retains ownership of the leased device; and (ii) monitoring services purchased by distributors or end users who have previously purchased monitoring devices and opt to use the Company’s monitoring services. Sales of devices and leased GPS devices are required to use the Company’s monitoring service and both the GPS leased devices and monitoring services are accounted for as a single performance obligation. The rates for leased devices and monitoring services are considered to be stated at their individual stand-alone selling prices. The Company recognizes revenue on leased devices and monitoring services at the end of each month the services have been provided and payment terms are 30 days from invoice date. In those circumstances in which the Company receives payment in advance, the Company records these payments as deferred revenue. Product Sales and Other The Company sells devices and replacement parts to customers under certain contracts, as well as law enforcement software licenses and maintenance, and analytical software. The Company recognizes device and other product sales in the period when: (a) the Company has transferred physical possession of the products, (b) the Company has a present right to payment, (c) the customer has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products. The Company recognizes revenue from other services as the customer receives services and the Company has the right to payment. When purchasing products (such as ReliAlert™ and Shadow™ devices) from the Company, customers may, but are not required to, enter into monitoring service contracts with us. 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. Multiple Element Arrangements The majority of our revenue transactions do not have multiple elements. However, on occasion, the Company may enter into revenue transactions that have multiple elements. These may include different combinations of products or services that are included in a single billable rate. These products or services are delivered over time as the customer utilizes our services. In cases where obligations in a contract are distinct and thus require separation into multiple performance obligations, revenue recognition guidance requires that contract consideration be allocated to each distinct performance obligation based on its relative standalone selling price. The value allocated to each performance obligation is then recognized as revenue when the revenue recognition criteria for each distinct promise or bundle of promises has been met. 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 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 us. Generally, title and risk of loss pass to the buyer upon delivery of the devices. The Company estimates 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 revenue. The related freight costs and supplies directly associated with shipping products to customers are included as a component of cost of revenue. Research and Development Costs During the fiscal year ended September 30, 2019 and September 30, 2018, the Company incurred research and development expense of $1,313,499 and $862,142, respectively. Advertising Costs The Company expenses advertising costs as incurred. Advertising expense for the fiscal years ended September 30, 2019 and 2018 was $19,642 and $8,264, 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 fair value of stock options is estimated 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. The tax effects from uncertain tax positions can be recognized in the financial statements, provided the position is more likely than not to be sustained on audit, based on the technical merits of the position. We recognize the financial statement benefits of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized, upon ultimate settlement with the relevant tax authority. The Company applied the foregoing accounting standard to all of our tax positions for which the statute of limitations remained open as of the date of the accompanying consolidated financial statements. The Company's policy is to recognize interest and penalties related to income tax issues as components of other noninterest expense. As of September 30, 2019 and September 30, 2018, we did not record a liability for uncertain tax positions. Net Income (Loss) Per Common Share Basic net income (loss) per common share (“ Basic EPS Diluted net income (loss) per common share (“ Diluted EPS Common share equivalents consist of shares issuable upon the exercise of options and warrants to purchase shares of the Company’s Common Stock, par value $0.0001 per share (“ Common Stock 2019 2018 Issuable Common Stock options and warrants 628,592 628,592 Total Common Stock equivalents 628,592 628,592 At September 30, 2019 and September 30, 2018, all stock option and warrant exercise prices were above the market price of $0.51 and $0.90, respectively, and thus have not been included in the basic earnings per share calculation. Recent Accounting Pronouncements Recently Adopted Accounting Standards In May 2014, the Financial Accounting Standards Board (“ FASB Revenue from Contracts with Customers (Topic 606) In July 2015, the FASB issued ASU No. 2015-11, “ Inventory (Topic 330) - Simplifying the Measurement of Inventory ASU 2015-11 In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity will account for the effects of a modification unless the fair value of the modified award is the same as the original award, the vesting conditions of the modified award are the same as the original award and the classification of the modified award as an equity instrument or liability instrument is the same as the original award. The update is effective for annual periods beginning after December 15, 2017. The update is to be adopted prospectively to an award modified on or after the adoption date. Early adoption is permitted. The Company’s adoption of ASU 2017-09 did not have an impact on its Consolidated Financial Statements. Recently Issued Accounting Standards In January 2017, the FASB issued ASU 2017-04, “ Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment In August 2016, the FASB issued ASU 2016-15, “ Statement of Cash Flows (Topic 230) In June 2016, the FASB issued ASU 2016-13, “ Measurement of Credit Losses on Financial Instruments CECL In February 2016, FASB issued ASU No. 2016-02, “ Leases (Topic 842) |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Sep. 30, 2019 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | In May 2014, the FASB issued ASU 2014-09 and related amendments, which superseded all prior revenue recognition methods and industry-specific guidance. The principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of control for promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue principles, an entity is required to identify the contract(s) with a customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue when the performance obligation is satisfied (i.e., either over time or at a point in time). ASU 2014-09 further requires that companies disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. On October 1, 2018, the Company adopted ASU 2014-09 using the modified retrospective method, whereby the adoption does not impact any prior periods. Monitoring and Other Related Services. Product Sales and Other. Multiple Element Arrangements. The standalone selling price for each performance obligation is an amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the good or service. When there is only one performance obligation associated with a contract, the entire sale value is attributed to that obligation. When a contract contains multiple performance obligations the transaction value is first allocated using the observable price, which is generally a list price net of applicable discount or the price used to sell in similar circumstances. In circumstances when a selling price is not directly observable, the Company will estimate the standalone selling price using information available to us. Effect of Adopting ASU 2014-09. The cumulative effect of the changes made to the Company’s Consolidated October 1, 2018 Balance Sheet for the adoption of ASU 2014-09 is as follows: Balance Sheet As Reported at September 30, 2018 Adjustments Balance as of October 1, 2018 LIABILITIES Accrued liabilities $ 10,333,103 $ 92,969 $ 10,426,072 Total current liabilities $ 43,288,943 $ 92,969 $ 43,381,912 Total liabilities $ 46,717,918 $ 92,969 $ 46,810,887 STOCKHOLDERS' EQUITY Accumulated deficit $ (299,495,370 ) $ (92,969 ) $ (299,588,339 ) Total equity $ 1,638,366 $ (92,969 ) $ 1,545,397 Total liabilities and stockholders’ equity $ 48,356,284 $ (92,969 ) $ 48,263,315 The following tables present the Company’s revenue disaggregated by geography, based on management’s assessment of available data: Twelve Months Ended September 30, 2019 Twelve Months Ended September 30, 2018 Total Revenue % of Total Revenue Total Revenue % of Total Revenue United States $ 20,482,165 60 % $ 19,585,956 64 % Latin America 13,095,679 39 % 10,729,349 35 % Other 441,308 1 % 254,914 1 % Total $ 34,019,152 100 % $ 30,570,219 100 % The above table includes total revenue for the Company, of which monitoring and other related services is the majority (approximately 94%) of the Company’s revenue. Latin America includes Bahamas, Chile, Mexico, Puerto Rico and the U.S. Virgin Islands. Other includes Canada, Saudi Arabia, United Kingdom and Vietnam. |
Accrued Liabilities
Accrued Liabilities | 12 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued liabilities consisted of the following as of September 30, 2019 and 2018: September 30, 2019 September 30, 2018 Accrued payroll, taxes and employee benefits 1,680,634 $ 1,937,021 Deferred revenue 389,229 150,604 Deposits payable 10,000 54,504 Accrued taxes - foreign and domestic 1,071,532 351,469 Accrued other expense 170,055 298,268 Accrued legal costs 1,057,305 473,777 Accrued costs of revenue 251,262 230,514 Accrued bond guarantee 142,405 157,199 Accrued interest 9,056,274 6,679,747 Total accrued liabilities $ 13,828,696 $ 10,333,103 |
Certain Relationships and Relat
Certain Relationships and Related Transactions | 12 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Certain Relationships and Related Transactions | ADS Securities became the beneficial owner of 4,734,607 shares of Company common stock (the "Pledged Shares") upon delivery to the Company of a notice of event of default on July 21, 2017 (the "Notice of Default") under the Pledge Agreement dated May 4, 2017 (the "Pledge Agreement") between Sapinda Asia Limited, a company incorporated in the British Virgin Islands ("Sapinda Asia"), and a director of Sapinda Asia, as pledgors (the "Pledgors"), and ADS Securities, as pledgee, by ADS Securities to the Pledgors. The Pledgors pledged the Pledged Shares to ADS Securities pursuant to the Pledge Agreement in order to secure their obligations under (i), with respect to Sapinda Asia, the Terms for Business for Wealth Management Services dated February 18, 2015 between ADS Securities and Sapinda Asia and the Margin Facility Arrangement Annex dated May 8, 2016 between ADS Securities and Sapinda Asia, and (ii). with respect to the director of Sapinda Asia, certain guarantees securing the obligations of Sapinda Asia to ADS Securities. ETS Limited became the beneficial owner of 4,871,745 shares of the Company’s common stock (“Track Group Shares”) held by ADS Securities pursuant to the Contribution Agreement dated September 28, 2017 (the “Contribution Agreement”) by and between ETS Limited and ADS Securities, pursuant to which ADS Securities transferred all of the Track Group Shares to ETS Limited in exchange for all of the outstanding shares of ETS Limited. ETS Limited is the Company’s largest stockholder with 4,871,745 (42.7%) shares of the Company’s Common Stock beneficially owned at September 30, 2019. A director of ETS Limited was elected to the Company’s Board of Directors on February 7, 2018. |
Debt Obligations
Debt Obligations | 12 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt obligations as of September 30, 2019 and 2018 consisted of the following: 2019 2018 Unsecured facility agreement with Conrent whereby, as of June 30, 2015, the Company had borrowed $30.4 million, bearing interest at a rate of 8% per annum, payable in arrears semi-annually, with all principal and accrued and unpaid interest due on April 1, 2020. The Company did not pay interest on this loan during the year ended September 30, 2019. $ 30,400,000 $ 30,400,000 Loan Agreement whereby the Company can borrow up to $5.0 million at 8% interest per annum on borrowed funds maturing on September 30, 2020. 3,399,644 3,399,644 Non-interest bearing notes payable to a Canadian governmental agency assumed in conjunction with the G2 acquisition. 28,045 67,141 Total debt obligations 33,827,689 33,866,785 Less current portion (33,827,689 ) (30,437,810 ) Long-term debt, net of current portion $ - $ 3,428,975 The following table summarizes our future maturities of debt obligations, net of the amortization of debt discounts as of September 30, 2019: Fiscal Year Total 2019 $ 33,827,689 2020 - 2021 & thereafter - Total $ 33,827,689 |
Preferred Stock
Preferred Stock | 12 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Preferred Stock | The Company’s Certificate of Incorporation authorizes it to issue up to 20,000,000 shares of preferred stock, $0.0001 par value per share, of which 1,200,000 shares have been designated as Series A Convertible Preferred Stock (“ Series A Preferred Series A Preferred Stock On October 12, 2017, the Company filed a Certificate of Designation of the Relative Rights and Preferences (“ Certificate of Designation Except with respect to transactions upon which holders of the Series A Preferred are entitled to vote separately as a class under the terms of the Certificate of Designation, the Series A Preferred has no voting rights. The Series A Preferred has no separate dividend rights; however, whenever the Board declares a dividend on the Company’s Common Stock, if ever, each holder of record of a share of Series A Preferred shall be entitled to receive an amount equal to such dividend declared on one share of Common Stock multiplied by the number of shares of Common Stock into which such share of Series A Preferred could be converted on the Record Date. Each share of Series A Preferred has a Liquidation Preference of $35.00 per share, and is convertible, at the holder’s option, into ten shares of the Company’s Common Stock, subject to adjustments as set forth in the Certificate of Designation, at any time beginning five hundred and forty days after the date of issuance. As of September 30, 2019, no shares of Series A Preferred were issued and outstanding. |
Common Stock
Common Stock | 12 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Common Stock | Common Stock Issuances The Company is authorized to issue up to 30,000,000 shares of Common Stock, $0.0001 par value per share. On April 16, 2018, the Company issued 7,840 shares from the 2012 Equity Compensation Plan (the “ 2012 Plan In addition, the Company issued 30,797 warrants to a member of the Company’s Board of Directors in exchange for 18,551 shares of Common Stock the director previously received for services provided during the period of October 2016 to June 2017, which shares were therefore cancelled in the fiscal year ended September 30, 2018. |
Stock Options and Warrants
Stock Options and Warrants | 12 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options and Warrants | Stock Incentive Plan The 2012 Plan was approved at the Annual Meeting of Stockholders on December 21, 2011, and at the Annual Meeting of Stockholders on May 19, 2015, the Company’s stockholders approved an amendment increasing the number of shares of Common Stock available for issuance under the 2012 Plan. 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. All future grants of warrants and options will have an expiration period of five years. The warrants for directors serving on the Board vest immediately and warrants issued to employees vest annually over either a two or three year period after the grant date. A total of 803,262 shares are authorized for issuance pursuant to awards granted under the 2012 Plan; however, the Board of Directors suspended the 2012 Plan earlier in the fiscal year. During the fiscal years ended September 30, 2019 and 2018, options to purchase nil and 30,797 shares of Common Stock were granted under the 2012 Plan. As of September 30, 2019, 27,218 shares of Common Stock were available for future grants under the 2012 Plan. All Options and Warrants On November 30, 2017, the Board of Directors unanimously approved the adjustment of the exercise price of 605,678 unexercised warrants, with original exercise prices ranging from $1.81 to $19.46, issued under the 2012 Plan to $1.24, resulting in incremental stock-based compensation of $149,088, which was expensed in the fiscal year ended September 30, 2018. On January 26, 2018, the Board of Directors unanimously approved the adjustment of the exercise price of 65,617 unexercised warrants held by a member of the Company’s Board of Directors whose unexercised warrants were not repriced along with those that were adjusted on November 30, 2017, with original exercise prices ranging from $1.43 to $7.20, issued under the 2012 Plan to $1.15, resulting in incremental stock-based compensation of $12,530, which was expensed in the fiscal year ended September 30, 2018. The Company issued 30,797 warrants to a member of the Company’s Board of Directors under the 2012 Plan in exchange for 18,551 shares of common stock the director previously received for services provided during the period of October 2016 to June 2017, which shares were therefore cancelled in the fiscal year ended September 30, 2018. In addition, the Company issued 54,792 restricted warrants outside of the 2012 Plan for Board of Director services rendered in the first six months of fiscal year 2018 valued at $50,000. The fair value of each stock option and warrant grant is estimated on the date of grant using the Black-Scholes option-pricing model. During the fiscal years ended September 30, 2019 and 2018, the Company granted no options and warrants to purchase shares of common stock under the 2012 Plan. The warrants for Board members vest immediately and expire five years from grant date and warrants or options issued to employees vest annually over either a two to three-year period and expire five years after the final vesting date of the grant. The Company recorded expense of $21,231 and $169,041 for the fiscal years ended September 30, 2019 and 2018, respectively, related to the issuance and vesting of outstanding stock options and warrants. As of September 30, 2019, no compensation expense associated with unvested stock options and warrants issued previously to members of the Board of Directors 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, 2019 and 2018 using the Black-Scholes model, respectively: Fiscal Years Ended September 30, 2019 2018 Expected stock price volatility N/A 102 % Risk-free interest rate N/A 2.09 % Expected life of options/warrants 5 Years 5 Years 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 expected life of stock options and 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. In fiscal year 2014, the Company changed from a daily to weekly volatility. The risk-free interest rate represents the U.S. Treasury bill rate for the expected life of the related stock options and warrants. The dividend yield represents our anticipated cash dividends over the expected life of the stock options and warrants. A summary of the compensation-based options and warrants activity for the fiscal years ended September 30, 2019 and 2018 is presented below: Shares Under Option Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Outstanding as of September 30, 2017 600,842 $ 8.51 4.90 years $ - Granted 85,589 $ 1.13 Expired (1,172 ) $ (19.29 ) Exercised - - Outstanding as of September 30, 2018 685,259 $ 1.56 3.90 years - Granted - - Expired - - Exercised - $ - Outstanding as of September 30, 2019 685,259 $ 1.56 2.90 years $ - Exercisable as of September 30, 2019 685,259 $ 1.56 2.90 years $ - The fiscal year end intrinsic values are based on a September 30, 2019 closing price of $0.51 per share. |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
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. On December 22, 2017, the Tax Cuts and Jobs Act (the “ Tax Act SAB 118 For the fiscal years ended September 30, 2019 and 2018, the Company incurred net losses for income tax purposes of $2,563,953 and $5,428,041, respectively. The amount and ultimate realization of the benefits from the net operating losses is dependent, in part, upon the tax laws in effect, our 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, 2019, the Company had net carryforwards available to offset future taxable income of approximately $204,080,000 none of which expires in 2019. The utilization of the net loss carryforwards is dependent upon the tax laws in effect at the time the net operating loss carryforwards 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. An ownership change generally affects the rate at which NOLs and potentially other deferred tax assets are permitted to offset future taxable income. Since the Company maintains a full valuation allowance on all U.S. and state deferred tax assets, the impact of prior year ownership changes on the future realizability of U.S. and state deferred tax assets did not result in an impact to the provision for income taxes for the year ended September 30, 2019, or on net deferred tax asset as of September 30, 2019. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The tax provision for the year ended September 30, 2019 was due primarily to taxes on the income of a foreign-based subsidiary and U.S. state and local income taxes. The deferred income tax assets (liabilities) were comprised of the following for the periods indicated: Fiscal Years Ended September 30, 2019 2018 Net loss carryforwards $ 35,256,000 $ 34,748,000 Accruals and reserves 1,367,000 913,000 Contributions 16,000 16,000 Severance indemnity reserve 59,000 - Depreciation (389,000 ) 53,000 Stock-based compensation 639,000 1,018,000 Valuation allowance (36,407,000 ) (36,748,000 ) Total $ 541,000 $ - 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, 2019 and 2018 are as follows: Fiscal Years Ended September 30, 2019 2018 Federal income tax benefit at statutory rate $ (801,000 $ (1,700,000 ) State income tax benefit, net of federal income tax effect (141,000 ) (265,000 ) Effect of foreign income taxes 874,000 ) 593,000 Non-deductible expenses (199,000 (554,000 ) Rate change due to Tax Cuts and Jobs Act 760,000 17,574,000 Deferred only adjustment 954,000 7,382,000 Change in valuation allowance (563,000 (22,437,000 ) Provision for income taxes $ 884,000 $ 593,000 During the fiscal year ended September 30, 2014, the Company began recognizing revenue from international sources from our products and monitoring services. During the fiscal year ended September 30, 2014, the Company began recognizing a liability for value-added taxes, which will be due upon collection. At September 30, 2019, the Company had a net receivable related to payments on VAT tax of $173,230. During the year ended September 30, 2019, the Company recorded income tax expense of $359,658 related to a foreign jurisdiction, which is included in income tax expense on the Consolidated Statements of Operations. The Company’s open tax years for federal and state income tax returns are for the tax years ended September 30, 2016 through September 30, 2019. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Legal Matters The Company is, from time to time, involved in various legal proceedings incidental to the conduct of our business. Historically, the outcome of all such legal proceedings has not, in the aggregate, had a material adverse effect on our business, financial condition, results of operations or liquidity. Other than as set forth below, there are no additional pending or threatened legal proceedings at this time. Lazar Leybovich et al. v. SecureAlert, Inc. John Merrill v. Track Group, Inc. and Guy Dubois. SecureAlert, Inc. v. Federal Government of Mexico (Department of the Interior). Eli Sabag v. Track Group, Inc., Sapinda Asia Limited and Lars Windhorst . SPA” Erick Cerda v. Track Group, Inc. Blaike Anderson v. Track Group, Inc., et. al. Operating Lease Obligations The following table summarizes our contractual obligations as of September 30, 2019: Fiscal Year Total 2020 $ 257,450 2021 238,681 2022 168,730 2023 3,612 2024 - Thereafter - Total $ 668,473 The total operating lease obligations of $668,473 is largely related to facilities operating leases. During the years ended September 30, 2019 and 2018, the Company paid $474,673 and $476,152, in lease payment obligations, respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | The following table summarizes the activity of intangible assets for the years ended September 30, 2019 and 2018, respectively: 2019 Weighted Average Useful Life (yrs) Gross Carrying Amount Accumulated Amortization Net Book Value Patent & royalty agreements 7.99 $ 21,170,565 $ (9,084,569 ) $ 12,085,996 Developed technology 8.00 12,685,281 (3,441,289 ) 9,243,992 Customer relationships 7.70 1,860,000 (1,293,055 ) 566,945 Trade name 9.57 318,722 (259,976 ) 58,746 Website 3.00 78,201 (78,201 ) - Total $ 36,112,769 $ (14,157,090 ) $ 21,955,679 2018 Weighted Average Useful Life (yrs) Gross Carrying Amount Accumulated Amortization Net Book Value Patent & royalty agreements 7.99 $ 21,170,565 $ (7,751,751 ) $ 13,418,814 Developed technology 7.60 11,835,293 (2,885,092 ) 8,950,201 Customer relationships 7.70 1,860,000 (1,050,733 ) 809,267 Trade name 9.57 325,507 (250,735 ) 74,772 Website 3.00 78,201 (78,201 ) - Total $ 35,269,566 $ (12,016,512 ) $ 23,253,054 The intangible assets summarized above were purchased or developed on various dates from January 2010 through September 30, 2019. The assets have useful lives ranging from three to twenty years. Amortization expense for the years ended September 30, 2019 and 2018 was $2,236,410 and $2,268,946, respectively. There was no impairment indicated for the years ended September 30, 2019 or September 30, 2018. The following table summarizes the future maturities of amortization of intangible assets as of September 30, 2019: Fiscal Year Amortization STOP Royalty 2020 $ 2,726,950 $ 450,000 2021 2,707,504 450,000 2022 2,516,765 450,000 2023 2,403,946 450,000 2024 1,957,866 187,500 Thereafter 7,655,148 - Total $ 19,968,179 $ 1,987,500 Goodwill Goodwill, as of September 30 consisted of the following: September 30, 2019 2018 Balance - beginning of year $ 8,076,759 $ 8,226,714 Effect of foreign currency translation on goodwill 111,152 (149,955 ) Balance - end of year $ 8,187,911 $ 8,076,759 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | On December 4, 2019, the Company requested that Conrent extend the maturity of the Amended Facility Agreement from April 1, 2020 to July 1, 2021. On January 6, 2020 the investors who owned the securities from Conrent used to finance the debt (the “ Noteholders In accordance with the Subsequent Events Topic of the FASB ASC 855, we have evaluated subsequent events, through the filing date and noted that, other than as disclosed above, no additional subsequent events have occurred that are reasonably likely to impact the financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
General | The Company’s business is based on the leasing of patented tracking and monitoring solutions to federal, state and local law enforcement agencies, both in the U.S. and abroad, for the electronic monitoring of offenders and offering unique data analytics services on a platform-as-a-service (PaaS) business model. Currently, the Company deploys offender-based management services that combine patented GPS tracking technologies, full-time 24/7/365 global monitoring capabilities, case management, and proprietary data analytics. The Company offers customizable tracking solutions that leverage real-time tracking data, best-practices monitoring, and analytics capabilities to create complete, end-to-end tracking solutions. Business Condition. Certain reclassifications of amounts previously reported have been made in the accompanying financial statements. The Company considers these reclassifications to be immaterial and they have no impact on total operating expense or net loss before income taxes. |
Principles of Consolidation | The consolidated financial statements include the accounts of Track Group, Inc. and its subsidiaries, Track Group Analytics Limited, Track Group Americas, Inc., Track Group International LTD., and Track Group - Chile SpA. All significant inter-company transactions have been eliminated in consolidation. |
Use of Estimates in the Preparation of Financial Statements | The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the period presented. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Significant estimates made in the accompanying consolidated financial statements include, but are not limited to, allowances for doubtful accounts, certain assumptions related to the recoverability of intangible and long-lived assets. |
Business Combinations | Business combinations are accounted for under the provisions of ASC 805-10, Business Combinations Goodwill represents costs in excess of purchase price over the fair value of the assets of businesses acquired, including other identifiable intangible assets. |
Foreign Currency Translation | The Chilean Peso, New Israeli Shekel and the Canadian Dollar are used as functional currencies of the operating subsidiaries: (i) Track Group Chile SpA; (ii) Track Group International Ltd.; and (iii) Track Group Analytics Limited, respectively. The balance sheets of all subsidiaries have been converted into United States Dollars (“ USD |
Other Intangible Assets | Other intangible assets principally consist of patents, royalty purchase agreements, developed technology acquired, customer relationships, trade name, capitalized software development costs, and capitalized website development costs. The Company accounts for other intangible assets in accordance with generally accepted accounting principles and does not amortize intangible assets with indefinite lives. Intangible assets with finite useful lives are amortized over their respective estimated useful lives, which range from three to twenty years. Intangible assets are reviewed for impairment annually or more frequently whenever events or changes in circumstances indicate possible impairment. |
Fair Value of Financial Statements | The carrying amounts reported in the accompanying consolidated financial statements for accounts receivable, accounts payable, accrued liabilities and debt obligations approximate fair values because of the immediate or short-term maturities of these financial instruments. The carrying amounts of our 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 credit evaluations of our customers' financial condition. The Company had sales to entities, two of which each represent 10% or more of our gross revenue, as follows for the years ended September 30, 2019 and 2018. 2019 % 2018 % Customer A $ 8,570,404 25 % $ 9,201,502 30 % Customer B $ 3,549,273 10 % $ 3,772,540 12 % Customer C $ 2,507,577 7 % $ 2,468,472 8 % No other customer represented more than 10% of the Company’s total revenue for the fiscal years ended September 30, 2019 or 2018. Concentration of credit risk associated with the Company’s total and outstanding accounts receivable as of September 30, 2019 and 2018, respectively, are shown in the table below: 2019 % 2018 % Customer A $ 1,537,775 23 % $ 1,689,976 28 % Customer B $ 844,241 12 % $ 594,626 10 % Customer C $ 410,033 6 % $ 428,560 7 % Based upon the expected collectability of our accounts receivable, the Company maintains an allowance for doubtful accounts. |
Cash Equivalents | Cash equivalents consist of investments with original maturities to the Company of three months or less. 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. The Company had $5,688,493 and $2,900,105 of cash deposits in excess of federally insured limits as of September 30, 2019 and 2018, respectively. |
Accounts Receivable | Accounts receivable, which is made up of trade receivables for monitoring and other related services, 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. The allowance is 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. |
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 entered into an agreement with one of its customers during the fiscal year ended September 30, 2012. Payments under the note 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 matured in May 2014. The note is currently in default and accrues interest at a rate of 17% per annum. As of June 30, 2016, the Company no longer accrues interest on the note. As of September 30, 2019, the fully reserved principal and interest due of $234,733 was determined to be uncollectable and was written off. |
Prepaid Expense and Other | Prepaid assets and other is comprised largely of performance bond deposits, tax deposits, vendor deposits and other prepaid supplier expenses. We generally expect deposits to be returned to the Company as cash within 12 months and prepaid expenses to be allocated over the commitment. |
Inventory | Inventory is valued at the lower of the cost or net realizable value. Cost is determined using the standard costing method. Net realizable value is determined based on the item selling price. Inventory is periodically reviewed in order to identify obsolete or damaged items or impaired values. The Company did not record impairment of inventory during the fiscal years ended September 30, 2019 and 2018, respectively. Inventory consists of finished goods that are to be shipped to customers and parts used for minor repairs of ReliAlert™, Shadow, and other tracking devices. Completed and shipped ReliAlert™ and other tracking devices are reflected in Monitoring Equipment. As of September 30, 2019 and September 30, 2018, inventory consisted of the following: 2019 2018 Finished goods inventory $ 301,435 $ 304,053 Reserve for damaged or obsolete inventory (26,934 ) (26,934 ) Total inventory, net of reserves $ 274,501 $ 277,119 The Company uses a third-party fulfillment service provider. As a result of this service, the Company’s employees do not actively assemble new product or repair damaged inventory or monitoring equipment shipped directly from suppliers. Purchases of monitoring equipment are recognized directly. Management believes this process reduces maintenance and fulfillment costs associated with inventory and monitoring 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, 2019 and 2018, respectively: 2019 2018 Equipment, software and tooling $ 1,210,583 $ 1,074,471 Automobiles 5,574 6,153 Leasehold improvements 1,393,976 1,358,984 Furniture and fixtures 313,817 305,089 Total property and equipment before accumulated depreciation 2,923,950 2,744,697 Accumulated depreciation (2,248,913 ) (1,999,222 ) Property and equipment, net of accumulated depreciation $ 675,037 $ 745,475 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, 2019 and 2018, the Company recognized a $10,563 and $8,500 gain, respectively on the disposal of property and equipment. Internally developed software costs related to the Company’s monitoring platform are recorded as intangible assets on the Consolidated Balance Sheet. Depreciation expense recognized for property and equipment for the fiscal years ended September 30, 2019 and 2018 was $315,380 and $348,162, respectively. |
Monitoring Equipment | The Company leases monitoring equipment to agencies for offender tracking under contractual service agreements. The monitoring equipment is depreciated using the straight-line method over an estimated useful life of between one and five years. Monitoring equipment as of September 30, 2019 and 2018 is as follows: 2019 2018 Monitoring equipment $ 8,947,668 $ 8,488,196 Less: accumulated amortization (6,322,768 ) (5,325,654 ) Monitoring equipment, net of accumulated amortization $ 2,624,900 $ 3,162,542 Amortization expense for the fiscal years ended September 30, 2019 and 2018 was $1,509,166 and $1,360,753, respectively. This expense was classified as a cost of revenue. Monitoring equipment to be disposed of is reported at the lower of the carrying amount or fair value, less the estimated costs to sell. During the fiscal years ended September 30, 2019 and 2018, the Company disposed of leased monitoring equipment and parts of $355,117 and $390,098, respectively. |
Impairment of Long-Lived Assets and Goodwill | The Company reviews 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. See Note 12. |
Revenue Recognition | In May 2014, the FASB issued Accounting Standards Update (“ ASU Revenue from Contracts with Customers (Topic 606) Our revenue is predominantly derived from two sources: (i) monitoring services, and (ii) product sales. Monitoring and Other Related Services Monitoring services include two components: (i) lease contracts pursuant to which the Company provides monitoring services and lease devices to distributors or end users and the Company retains ownership of the leased device; and (ii) monitoring services purchased by distributors or end users who have previously purchased monitoring devices and opt to use the Company’s monitoring services. Sales of devices and leased GPS devices are required to use the Company’s monitoring service and both the GPS leased devices and monitoring services are accounted for as a single performance obligation. The rates for leased devices and monitoring services are considered to be stated at their individual stand-alone selling prices. The Company recognizes revenue on leased devices and monitoring services at the end of each month the services have been provided and payment terms are 30 days from invoice date. In those circumstances in which the Company receives payment in advance, the Company records these payments as deferred revenue. Product Sales and Other The Company sells devices and replacement parts to customers under certain contracts, as well as law enforcement software licenses and maintenance, and analytical software. The Company recognizes device and other product sales in the period when: (a) the Company has transferred physical possession of the products, (b) the Company has a present right to payment, (c) the customer has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products. The Company recognizes revenue from other services as the customer receives services and the Company has the right to payment. When purchasing products (such as ReliAlert™ and Shadow™ devices) from the Company, customers may, but are not required to, enter into monitoring service contracts with us. 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. Multiple Element Arrangements The majority of our revenue transactions do not have multiple elements. However, on occasion, the Company may enter into revenue transactions that have multiple elements. These may include different combinations of products or services that are included in a single billable rate. These products or services are delivered over time as the customer utilizes our services. In cases where obligations in a contract are distinct and thus require separation into multiple performance obligations, revenue recognition guidance requires that contract consideration be allocated to each distinct performance obligation based on its relative standalone selling price. The value allocated to each performance obligation is then recognized as revenue when the revenue recognition criteria for each distinct promise or bundle of promises has been met. 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 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 us. Generally, title and risk of loss pass to the buyer upon delivery of the devices. The Company estimates 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 revenue. The related freight costs and supplies directly associated with shipping products to customers are included as a component of cost of revenue. |
Research and Development Costs | During the fiscal year ended September 30, 2019 and September 30, 2018, the Company incurred research and development expense of $1,313,499 and $862,142, respectively. |
Advertising Costs | The Company expenses advertising costs as incurred. Advertising expense for the fiscal years ended September 30, 2019 and 2018 was $19,642 and $8,264, 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 fair value of stock options is estimated 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. The tax effects from uncertain tax positions can be recognized in the financial statements, provided the position is more likely than not to be sustained on audit, based on the technical merits of the position. We recognize the financial statement benefits of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized, upon ultimate settlement with the relevant tax authority. The Company applied the foregoing accounting standard to all of our tax positions for which the statute of limitations remained open as of the date of the accompanying consolidated financial statements. The Company's policy is to recognize interest and penalties related to income tax issues as components of other noninterest expense. As of September 30, 2019 and September 30, 2018, we did not record a liability for uncertain tax positions. |
Net Income (Loss) Per Common Share | Basic net income (loss) per common share (“ Basic EPS Diluted net income (loss) per common share (“ Diluted EPS Common share equivalents consist of shares issuable upon the exercise of options and warrants to purchase shares of the Company’s Common Stock, par value $0.0001 per share (“ Common Stock 2019 2018 Issuable Common Stock options and warrants 628,592 628,592 Total Common Stock equivalents 628,592 628,592 At September 30, 2019 and September 30, 2018, all stock option and warrant exercise prices were above the market price of $0.51 and $0.90, respectively, and thus have not been included in the basic earnings per share calculation. |
Recent Accounting Pronouncements | Recently Adopted Accounting Standards In May 2014, the Financial Accounting Standards Board (“ FASB Revenue from Contracts with Customers (Topic 606) In July 2015, the FASB issued ASU No. 2015-11, “ Inventory (Topic 330) - Simplifying the Measurement of Inventory ASU 2015-11 In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity will account for the effects of a modification unless the fair value of the modified award is the same as the original award, the vesting conditions of the modified award are the same as the original award and the classification of the modified award as an equity instrument or liability instrument is the same as the original award. The update is effective for annual periods beginning after December 15, 2017. The update is to be adopted prospectively to an award modified on or after the adoption date. Early adoption is permitted. The Company’s adoption of ASU 2017-09 did not have an impact on its Consolidated Financial Statements. Recently Issued Accounting Standards In January 2017, the FASB issued ASU 2017-04, “ Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment In August 2016, the FASB issued ASU 2016-15, “ Statement of Cash Flows (Topic 230) In June 2016, the FASB issued ASU 2016-13, “ Measurement of Credit Losses on Financial Instruments CECL In February 2016, FASB issued ASU No. 2016-02, “ Leases (Topic 842) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Concentration of Credit Risk | 2019 % 2018 % Customer A $ 8,570,404 25 % $ 9,201,502 30 % Customer B $ 3,549,273 10 % $ 3,772,540 12 % Customer C $ 2,507,577 7 % $ 2,468,472 8 % 2019 % 2018 % Customer A $ 1,537,775 23 % $ 1,689,976 28 % Customer B $ 844,241 12 % $ 594,626 10 % Customer C $ 410,033 6 % $ 428,560 7 % |
Schedule of Inventory | 2019 2018 Finished goods inventory $ 301,435 $ 304,053 Reserve for damaged or obsolete inventory (26,934 ) (26,934 ) Total inventory, net of reserves $ 274,501 $ 277,119 |
Property, Plant and Equipment | 2019 2018 Equipment, software and tooling $ 1,210,583 $ 1,074,471 Automobiles 5,574 6,153 Leasehold improvements 1,393,976 1,358,984 Furniture and fixtures 313,817 305,089 Total property and equipment before accumulated depreciation 2,923,950 2,744,697 Accumulated depreciation (2,248,913 ) (1,999,222 ) Property and equipment, net of accumulated depreciation $ 675,037 $ 745,475 |
Schedule of Monitoring Equipment | 2019 2018 Monitoring equipment $ 8,947,668 $ 8,488,196 Less: accumulated amortization (6,322,768 ) (5,325,654 ) Monitoring equipment, net of accumulated amortization $ 2,624,900 $ 3,162,542 |
Anti Dilutive Shares Excluded from Computation of Earning per Share | 2019 2018 Issuable Common Stock options and warrants 628,592 628,592 Total Common Stock equivalents 628,592 628,592 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Revenue Recognition [Abstract] | |
Change on Balance Sheet | Balance Sheet As Reported at September 30, 2018 Adjustments Balance as of October 1, 2018 LIABILITIES Accrued liabilities $ 10,333,103 $ 92,969 $ 10,426,072 Total current liabilities $ 43,288,943 $ 92,969 $ 43,381,912 Total liabilities $ 46,717,918 $ 92,969 $ 46,810,887 STOCKHOLDERS' EQUITY Accumulated deficit $ (299,495,370 ) $ (92,969 ) $ (299,588,339 ) Total equity $ 1,638,366 $ (92,969 ) $ 1,545,397 Total liabilities and stockholders’ equity $ 48,356,284 $ (92,969 ) $ 48,263,315 |
Disaggregated revenue by geography | Twelve Months Ended September 30, 2019 Twelve Months Ended September 30, 2018 Total Revenue % of Total Revenue Total Revenue % of Total Revenue United States $ 20,482,165 60 % $ 19,585,956 64 % Latin America 13,095,679 39 % 10,729,349 35 % Other 441,308 1 % 254,914 1 % Total $ 34,019,152 100 % $ 30,570,219 100 % |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | September 30, 2019 September 30, 2018 Accrued payroll, taxes and employee benefits 1,680,634 $ 1,937,021 Deferred revenue 389,229 150,604 Deposits payable 10,000 54,504 Accrued taxes - foreign and domestic 1,071,532 351,469 Accrued other expense 170,055 298,268 Accrued legal costs 1,057,305 473,777 Accrued costs of revenue 251,262 230,514 Accrued bond guarantee 142,405 157,199 Accrued interest 9,056,274 6,679,747 Total accrued liabilities $ 13,828,696 $ 10,333,103 |
Debt Obligations (Tables)
Debt Obligations (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | 2019 2018 Unsecured facility agreement with Conrent whereby, as of June 30, 2015, the Company had borrowed $30.4 million, bearing interest at a rate of 8% per annum, payable in arrears semi-annually, with all principal and accrued and unpaid interest due on April 1, 2020. The Company did not pay interest on this loan during the year ended September 30, 2019. $ 30,400,000 $ 30,400,000 Loan Agreement whereby the Company can borrow up to $5.0 million at 8% interest per annum on borrowed funds maturing on September 30, 2020. 3,399,644 3,399,644 Non-interest bearing notes payable to a Canadian governmental agency assumed in conjunction with the G2 acquisition. 28,045 67,141 Total debt obligations 33,827,689 33,866,785 Less current portion (33,827,689 ) (30,437,810 ) Long-term debt, net of current portion $ - $ 3,428,975 |
Schedule of Maturities of Long-term Debt | Fiscal Year Total 2019 $ 33,827,689 2020 - 2021 & thereafter - Total $ 33,827,689 |
Stock Options and Warrants (Tab
Stock Options and Warrants (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | Fiscal Years Ended September 30, 2019 2018 Expected stock price volatility N/A 102 % Risk-free interest rate N/A 2.09 % Expected life of options/warrants 5 Years 5 Years |
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, 2017 600,842 $ 8.51 4.90 years $ - Granted 85,589 $ 1.13 Expired (1,172 ) $ (19.29 ) Exercised - - Outstanding as of September 30, 2018 685,259 $ 1.56 3.90 years - Granted - - Expired - - Exercised - $ - Outstanding as of September 30, 2019 685,259 $ 1.56 2.90 years $ - Exercisable as of September 30, 2019 685,259 $ 1.56 2.90 years $ - |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Deferred Income Tax Assets (Liabilities) | Fiscal Years Ended September 30, 2019 2018 Net loss carryforwards $ 35,256,000 $ 34,748,000 Accruals and reserves 1,367,000 913,000 Contributions 16,000 16,000 Severance indemnity reserve 59,000 - Depreciation (389,000 ) 53,000 Stock-based compensation 639,000 1,018,000 Valuation allowance (36,407,000 ) (36,748,000 ) Total $ 541,000 $ - |
Income Tax Benefit Reconciliation | Fiscal Years Ended September 30, 2019 2018 Federal income tax benefit at statutory rate $ (801,000 $ (1,700,000 ) State income tax benefit, net of federal income tax effect (141,000 ) (265,000 ) Effect of foreign income taxes 874,000 ) 593,000 Non-deductible expenses (199,000 (554,000 ) Rate change due to Tax Cuts and Jobs Act 760,000 17,574,000 Deferred only adjustment 954,000 7,382,000 Change in valuation allowance (563,000 (22,437,000 ) Provision for income taxes $ 884,000 $ 593,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating Lease Obligations | Fiscal Year Total 2020 $ 257,450 2021 238,681 2022 168,730 2023 3,612 2024 - Thereafter - Total $ 668,473 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 2019 Weighted Average Useful Life (yrs) Gross Carrying Amount Accumulated Amortization Net Book Value Patent & royalty agreements 7.99 $ 21,170,565 $ (9,084,569 ) $ 12,085,996 Developed technology 8.00 12,685,281 (3,441,289 ) 9,243,992 Customer relationships 7.70 1,860,000 (1,293,055 ) 566,945 Trade name 9.57 318,722 (259,976 ) 58,746 Website 3.00 78,201 (78,201 ) - Total $ 36,112,769 $ (14,157,090 ) $ 21,955,679 2018 Weighted Average Useful Life (yrs) Gross Carrying Amount Accumulated Amortization Net Book Value Patent & royalty agreements 7.99 $ 21,170,565 $ (7,751,751 ) $ 13,418,814 Developed technology 7.60 11,835,293 (2,885,092 ) 8,950,201 Customer relationships 7.70 1,860,000 (1,050,733 ) 809,267 Trade name 9.57 325,507 (250,735 ) 74,772 Website 3.00 78,201 (78,201 ) - Total $ 35,269,566 $ (12,016,512 ) $ 23,253,054 |
Future Amortization | Fiscal Year Amortization STOP Royalty 2020 $ 2,726,950 $ 450,000 2021 2,707,504 450,000 2022 2,516,765 450,000 2023 2,403,946 450,000 2024 1,957,866 187,500 Thereafter 7,655,148 - Total $ 19,968,179 $ 1,987,500 |
Goodwill | September 30, 2019 2018 Balance - beginning of year $ 8,076,759 $ 8,226,714 Effect of foreign currency translation on goodwill 111,152 (149,955 ) Balance - end of year $ 8,187,911 $ 8,076,759 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Customer revenue amount | $ 34,019,152 | $ 30,570,219 |
Revenue [Member] | Customer A [Member] | ||
Customer revenue amount | $ 8,570,404 | $ 9,201,502 |
Customer concentration risk percentage | 25.00% | 30.00% |
Revenue [Member] | Customer B [Member] | ||
Customer revenue amount | $ 3,549,273 | $ 3,772,540 |
Customer concentration risk percentage | 10.00% | 12.00% |
Revenue [Member] | Customer C [Member] | ||
Customer revenue amount | $ 2,507,577 | $ 2,468,472 |
Customer concentration risk percentage | 7.00% | 8.00% |
Accounts Receivable [Member] | Customer A [Member] | ||
Customer concentration risk percentage | 23.00% | 28.00% |
Customer account receivable amount | $ 1,537,775 | $ 1,689,976 |
Accounts Receivable [Member] | Customer B [Member] | ||
Customer concentration risk percentage | 10.00% | 10.00% |
Customer account receivable amount | $ 844,241 | $ 594,626 |
Accounts Receivable [Member] | Customer C [Member] | ||
Customer concentration risk percentage | 6.00% | 7.00% |
Customer account receivable amount | $ 410,033 | $ 428,560 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | Sep. 30, 2019 | Sep. 30, 2018 |
Accounting Policies [Abstract] | ||
Finished goods inventory | $ 301,435 | $ 304,053 |
Reserve for damaged or obsolete inventory | (26,934) | (26,934) |
Total inventory, net of reserves | $ 274,501 | $ 277,119 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - USD ($) | Sep. 30, 2019 | Sep. 30, 2018 |
Accounting Policies [Abstract] | ||
Equipment, software and tooling | $ 1,210,583 | $ 1,074,471 |
Automobiles | 5,574 | 6,153 |
Leasehold Improvements | 1,393,976 | 1,358,984 |
Furniture And Fixtures | 313,817 | 305,089 |
Total property and equipment before accumulated depreciation | 2,923,950 | 2,744,697 |
Accumulated Depreciation | (2,248,913) | (1,999,222) |
Property and equipment, net of accumulated depreciation | $ 675,037 | $ 745,475 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) - USD ($) | Sep. 30, 2019 | Sep. 30, 2018 |
Accounting Policies [Abstract] | ||
Monitoring equipment | $ 8,947,668 | $ 8,488,196 |
Less: accumulated depreciation | (6,322,768) | (5,325,654) |
Monitoring equipment, net of accumulated amortization | $ 2,624,900 | $ 3,162,542 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details 4) - shares | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Common stock equivalents | 628,592 | 628,592 |
Stock Option and Warrants [Member] | ||
Common stock equivalents | 628,592 | 628,592 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Accounting Policies [Abstract] | ||
Cash deposits in excess of FDIC limit | $ 5,688,493 | $ 2,900,105 |
Principal and interest due write-off | 234,733 | 0 |
Depreciation expense | 315,380 | 348,162 |
Amortization expense | 1,509,166 | 1,360,753 |
Disposal of lease monitoring equipment | 355,117 | 390,098 |
Research and development expenses | 1,313,499 | 862,142 |
Advertising costs | $ 19,642 | $ 8,264 |
Antidilutive securities excluded from computation of earnings per share, amount | 628,592 | 628,592 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 |
Liabilities | |||
Accrued liabilities | $ 13,828,696 | $ 10,333,103 | |
Total current liabilities | 50,284,388 | 43,288,943 | |
Total liabilities | 50,284,388 | 46,717,918 | |
Stockholders' Equity | |||
Accumulated Deficit | (302,152,292) | (299,495,370) | |
Total equity | (902,198) | 1,638,366 | $ 5,975,758 |
Total liabilities and sctockholders' equity | $ 49,382,190 | 48,356,284 | |
Previously Reported | |||
Liabilities | |||
Accrued liabilities | 10,333,103 | ||
Total current liabilities | 43,288,943 | ||
Total liabilities | 46,717,918 | ||
Stockholders' Equity | |||
Accumulated Deficit | (299,495,370) | ||
Total equity | 1,638,366 | ||
Total liabilities and sctockholders' equity | 48,356,284 | ||
Adjustment | |||
Liabilities | |||
Accrued liabilities | 92,969 | ||
Total current liabilities | 92,969 | ||
Total liabilities | 92,969 | ||
Stockholders' Equity | |||
Accumulated Deficit | (92,969) | ||
Total equity | (92,969) | ||
Total liabilities and sctockholders' equity | (92,969) | ||
Balance October 2018 | |||
Liabilities | |||
Accrued liabilities | 10,426,072 | ||
Total current liabilities | 4,381,912 | ||
Total liabilities | 46,810,887 | ||
Stockholders' Equity | |||
Accumulated Deficit | (299,588,339) | ||
Total equity | 1,545,397 | ||
Total liabilities and sctockholders' equity | $ 48,263,315 |
Revenue Recognition (Details 1)
Revenue Recognition (Details 1) - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Customer revenue amount | $ 34,019,152 | $ 30,570,219 |
United States | ||
Customer revenue amount | $ 20,482,165 | $ 19,585,956 |
Customer concentration risk percentage | 60.00% | 64.00% |
Latin America | ||
Customer revenue amount | $ 13,095,679 | $ 10,729,349 |
Customer concentration risk percentage | 39.00% | 35.00% |
Other | ||
Customer revenue amount | $ 441,308 | $ 254,914 |
Customer concentration risk percentage | 1.00% | 1.00% |
Total | ||
Customer revenue amount | $ 34,019,152 | $ 30,570,219 |
Customer concentration risk percentage | 100.00% | 100.00% |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) | Sep. 30, 2019 | Sep. 30, 2018 |
Payables and Accruals [Abstract] | ||
Accrued payroll, taxes and employee benefits | $ 1,680,634 | $ 1,937,021 |
Deferred revenue | 389,229 | 150,604 |
Deposits payable | 10,000 | 54,504 |
Accrued taxes - foreign and domestic | 1,071,532 | 351,469 |
Accrued other expense | 170,055 | 298,268 |
Accrued legal costs | 1,057,305 | 473,777 |
Accrued costs of revenue | 251,262 | 230,514 |
Accrued bond guarantee | 142,405 | 157,199 |
Accrued interest | 9,056,274 | 6,679,747 |
Total accrued liabilities | $ 13,828,696 | $ 10,333,103 |
Certain Relationships and Rel_2
Certain Relationships and Related Transactions (Details Narrative) | Sep. 30, 2019shares |
Related Party Transactions [Abstract] | |
Common Stock Ownership Percentage | 42.70% |
Common stock held | 4,871,745 |
Debt Obligations (Details)
Debt Obligations (Details) - USD ($) | Sep. 30, 2019 | Sep. 30, 2018 |
Total debt obligations | $ 33,827,689 | $ 33,866,785 |
Less current portion | (33,827,689) | (30,437,810) |
Long-term debt, net of current portion | 0 | 3,428,975 |
Debt Obligation 1 | ||
Total debt obligations | 30,400,000 | 30,400,000 |
Debt Obligation 2 | ||
Total debt obligations | 3,399,644 | 3,399,644 |
Debt Obligation 3 | ||
Total debt obligations | $ 28,045 | $ 67,141 |
Debt Obligations (Details 1)
Debt Obligations (Details 1) | Sep. 30, 2019USD ($) |
Debt Disclosure [Abstract] | |
2019 | $ 33,827,689 |
2020 | 0 |
2021 & thereafter | 0 |
Total | $ 33,827,689 |
Preferred Stock (Details Narrat
Preferred Stock (Details Narrative) - $ / shares | Sep. 30, 2019 | Sep. 30, 2018 |
Preferred stock, par value | $ 0.0001 | |
Preferred stock, authorized | 20,000,000 | |
Series A Convertible Preferred stock | ||
Preferred stock, par value | $ .0001 | $ 0.0001 |
Preferred stock, authorized | 1,200,000 | 1,200,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common Stock (Details Narrative
Common Stock (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Equity [Abstract] | ||
Common stock - par value | $ 0.0001 | $ 0.0001 |
Common stock - shares authorized | 30,000,000 | 30,000,000 |
Shares issued for services, Shares | 0 | 672,859 |
Shares issued for services, Amount | $ 0 | $ 638,915 |
Shares issued for board of director fees, Shares | 0 | 266,358 |
Shares issued for board of director fees, Amount | $ 0 | $ 364,723 |
Stock Options and Warrants (Det
Stock Options and Warrants (Details) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Expected stock price volatility | 0.00% | 102.00% |
Risk free interest rate | 0.00% | 2.09% |
Expected life of options/warrants | 5 years | 5 years |
Stock Options and Warrants (D_2
Stock Options and Warrants (Details 1) - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Shares Under Option/ Warrant outstanding, Beginning Balance | 685,259 | 600,842 |
Shares Under Option/ Warrant Granted | 0 | 85,589 |
Shares Under Option/ Warrant Expired | 0 | (1,172) |
Shares Under Option/ Warrant Exercised | 0 | 0 |
Shares Under Option/ Warrant Outstanding, Ending Balance | 685,259 | 685,259 |
Weighted Average Exercise Price Outstanding, Beginging Balance | $ 1.56 | $ 8.51 |
Weighted Average Exercise Price Granted | 0 | 1.13 |
Weighted Average Exercise Price Expired | 0 | (19.29) |
Weighted Average Exercise Price Exercised | 0 | 0 |
Weighted Average Exercise Price Outstanding, Ending Balance | $ 1.56 | $ 1.56 |
Weighted Average Remaining Contractual Life Outstanding | 2 years 10 months 24 days | 3 years 10 months 24 days |
Aggregate Intrinsic Value Outstanding | $ 0 | $ 0 |
Stock Options and Warrants (D_3
Stock Options and Warrants (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Stock based compensation | $ 0 | $ 149,088 |
2012 Plan | ||
Shares authorized for issuance | 0 | 30,797 |
Shares available under Plan | 27,218 | 27,218 |
Board of Directors [Member] | ||
Warrants granted for services, shares | 0 | 65,617 |
Warrants granted for services, value | $ 0 | $ 12,530 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Sep. 30, 2019 | Sep. 30, 2018 |
Income Tax Disclosure [Abstract] | ||
Net loss carryforwards | $ 35,256,000 | $ 34,748,000 |
Accruals and reserves | 1,367,000 | 913,000 |
Contributions | 16,000 | 16,000 |
Severance indemnity reserve | 59,000 | 0 |
Depreciation | (389,000) | 53,000 |
Stock-based compensation | 639,000 | 1,018,000 |
Valuation allowance | (36,407,000) | (36,748,000) |
Total | $ 541,000 | $ 0 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Federal income tax benefit at statutory rate | $ (801,000) | $ (1,700,000) |
State income tax benefit, net of federal income tax effect | (141,000) | (265,000) |
Effect of foreign income taxes | 874,000 | 593,000 |
Non-deductible expenses | (199,000) | (554,000) |
Rate change due to Tax Cuts and Jobs Act | 760,000 | 17,574,000 |
Deferred only adjustment | 954,000 | 7,382,000 |
Change in valuation allowance | (563,000) | (22,437,000) |
Benefit for income taxes | $ 884,000 | $ 593,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income loss for tax purposes | $ 2,563,953 | $ 5,428,041 |
Net carryforwards | 204,080,000 | |
Net receivable related to payments on VAT | 173,230 | |
Income tax expense related to foreign jurisdiction | $ 359,658 | $ 0 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Sep. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2020 | $ 257,450 |
2021 | 238,681 |
2022 | 168,730 |
2023 | 3,612 |
2024 | 0 |
Thereafter | 0 |
Total | $ 668,473 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease obligations | $ 668,473 | |
Lease payment obligations | $ 474,673 | $ 476,152 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Gross carrying amount | $ 36,112,769 | $ 35,269,566 |
Accumulated amortization | (14,157,090) | (12,016,512) |
Net book value | 21,955,679 | 23,253,054 |
Patent [Member] | ||
Gross carrying amount | 21,170,565 | 21,170,565 |
Accumulated amortization | (9,084,569) | (7,751,751) |
Net book value | $ 12,085,996 | $ 13,418,814 |
Weighted average useful life | 7 years 11 months 26 days | 7 years 11 months 26 days |
Developed technology [Member] | ||
Gross carrying amount | $ 12,685,281 | $ 11,835,293 |
Accumulated amortization | (3,441,289) | (2,885,092) |
Net book value | $ 9,243,992 | $ 8,950,201 |
Weighted average useful life | 8 years | 7 years 7 months 6 days |
Customer Relationships [Member] | ||
Gross carrying amount | $ 1,860,000 | $ 1,860,000 |
Accumulated amortization | (1,293,055) | (1,050,733) |
Net book value | $ 566,945 | $ 809,267 |
Weighted average useful life | 7 years 8 months 12 days | 7 years 8 months 12 days |
Trade Name [Member] | ||
Gross carrying amount | $ 318,722 | $ 325,507 |
Accumulated amortization | (259,976) | (250,735) |
Net book value | $ 58,746 | $ 74,772 |
Weighted average useful life | 9 years 6 months 25 days | 9 years 6 months 25 days |
Website [Member] | ||
Gross carrying amount | $ 78,201 | $ 78,201 |
Accumulated amortization | (78,201) | (78,201) |
Net book value | $ 0 | $ 0 |
Weighted average useful life | 3 years | 3 years |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Sep. 30, 2019 | Sep. 30, 2018 |
Total | $ 21,955,679 | $ 23,253,054 |
Amortization [Member] | ||
2020 | 2,726,950 | |
2021 | 2,707,504 | |
2022 | 2,516,765 | |
2023 | 2,403,946 | |
2024 | 1,957,866 | |
Thereafter | 7,655,148 | |
Total | 19,968,179 | |
Royalty Agreements [Member] | ||
2020 | 450,000 | |
2021 | 450,000 | |
2022 | 450,000 | |
2023 | 450,000 | |
2024 | 187,500 | |
Thereafter | 0 | |
Total | $ 1,987,500 |
Intangible Assets (Details 2)
Intangible Assets (Details 2) - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill - beginning of period | $ 8,076,759 | $ 8,226,714 |
Effect of foreign currency translation on goodwill | 111,152 | (149,955) |
Goodwill - end of period | $ 8,187,911 | $ 8,076,759 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 2,236,410 | $ 2,268,846 |