Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Sep. 30, 2020 | Dec. 01, 2020 | Mar. 31, 2020 | |
Document and Entity Information: | |||
Entity Registrant Name | TRACK GROUP, INC. | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2020 | ||
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 Interactive Data Current | Yes | ||
Entity Incorporation State Country Code | DE | ||
Entity File Number | 0-23153 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $ 900,000 | ||
Entity Common Stock, Shares Outstanding | 11,414,150 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Current assets: | ||
Cash | $ 6,762,099 | $ 6,896,711 |
Accounts receivable, net of allowance for doubtful accounts of $2,654,173 and $2,454,281, respectively | 5,546,213 | 6,763,236 |
Prepaid expenses and other | 866,389 | 1,339,465 |
Inventory, net of reserves of $6,483 and $26,934, respectively | 124,606 | 274,501 |
Total current assets | 13,299,307 | 15,273,913 |
Property and equipment, net of accumulated depreciation of $2,531,631 and $2,248,913, respectively | 378,764 | 675,037 |
Monitoring equipment, net of accumulated depreciation of $6,639,883 and $6,322,768, respectively | 2,065,947 | 2,624,900 |
Intangible assets, net of accumulated amortization of $16,390,721 and $14,157,090, respectively | 21,171,045 | 21,955,679 |
Goodwill | 8,220,380 | 8,187,911 |
Deferred tax asset | 432,721 | 540,563 |
Other assets | 2,166,743 | 124,187 |
Total assets | 47,734,907 | 49,382,190 |
Current liabilities: | ||
Accounts payable | 2,199,215 | 2,628,003 |
Accrued liabilities | 14,958,628 | 13,828,696 |
Current portion of long-term debt | 30,914,625 | 33,827,689 |
Total current liabilities | 48,072,468 | 50,284,388 |
Long-term debt, net of current portion | 418,575 | 0 |
Long-term liabilities | 164,487 | 0 |
Total liabilities | 48,655,530 | 50,284,388 |
Stockholders' equity: | ||
Common stock, $0.0001 par value: 30,000,000 shares authorized; 11,414,150 and 11,401,650 shares outstanding, respectively | 1,141 | 1,140 |
Paid in capital | 302,270,242 | 302,250,556 |
Accumulated deficit | (302,270,933) | (302,152,292) |
Accumulated other comprehensive loss | (921,073) | (1,001,602) |
Total equity | (920,623) | (902,198) |
Total liabilities and stockholders' equity | 47,734,907 | 49,382,190 |
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, 2020 | Sep. 30, 2019 |
Accounts receivable, allowance for doubtful accounts | $ 2,654,173 | $ 2,454,281 |
Inventory reserve | 6,483 | 26,934 |
Property and equipment accumulated depreciation | 2,531,631 | 2,248,913 |
Monitoring equipment accumulated amortization | 6,639,883 | 6,322,768 |
Intangible assets accumulated amortization | $ 16,390,721 | $ 14,157,090 |
Common stock - par value | $ 0.0001 | $ 0.0001 |
Common stock - shares authorized | 30,000,000 | 30,000,000 |
Common stock - shares outstanding | 11,414,150 | 11,401,650 |
Series A Convertible Preferred stock | ||
Preferred stock, par value | $ 0.0001 | $ 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, 2020 | Sep. 30, 2019 | |
Revenues: | ||
Monitoring services | $ 33,217,661 | $ 32,100,370 |
Product sales and other | 657,506 | 1,918,782 |
Total revenues | 33,875,167 | 34,019,152 |
Cost of revenues: | ||
Monitoring and other related service | 13,306,108 | 12,989,186 |
Depreciation and amortization | 1,923,356 | 2,012,975 |
Total cost of revenue | 15,229,464 | 15,002,161 |
Gross profit | 18,645,703 | 19,016,991 |
Operating expenses: | ||
General & administrative | 10,381,859 | 12,243,459 |
Gain on sale of asset | 0 | (10,563) |
Selling & marketing | 2,257,667 | 2,257,101 |
Research & development | 1,182,542 | 1,313,499 |
Depreciation & amortization | 2,064,097 | 2,047,980 |
Total operating expense | 15,886,165 | 17,851,476 |
Operating income | 2,759,538 | 1,165,515 |
Other income (expense): | ||
Interest income | 39,592 | 23,929 |
Interest expense | (2,503,542) | (2,403,047) |
Currency exchange rate loss | (316,330) | (466,140) |
Other income/expense, net | 695,298 | 143 |
Total other income (expense) | (2,084,982) | (2,845,115) |
Net income (loss) before income taxes | 674,556 | (1,679,600) |
Income tax expense | 793,197 | 884,353 |
Net loss attributable to common stockholders | (118,641) | (2,563,953) |
Foreign currency translation adjustments | 80,529 | (31,332) |
Comprehensive Loss | $ (38,112) | $ (2,595,285) |
Net loss per common share, basic and diluted | $ (0.01) | $ (0.23) |
Weighted average common shares outstanding, basic and diluted | 11,413,535 | 11,213,431 |
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, 2018 | 11,401,650 | ||||
Beginning balance, amount at Sep. 30, 2018 | $ 1,140 | $ 302,102,866 | $ (299,495,370) | $ (970,270) | $ 1,638,366 |
ASC 606 modified retrospective adjustment | (92,969) | (92,969) | |||
Stock-based compensation | 147,690 | 147,690 | |||
Foreign currency translation adjustments | (31,332) | (31,332) | |||
Net loss | (2,563,953) | (2,563,953) | |||
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) |
Issuance of common stock to employees for services, shares | 12,500 | ||||
Issuance of common stock to employees for services, amount | $ 1 | (1) | 0 | ||
Stock-based compensation | 19,687 | 19,687 | |||
Foreign currency translation adjustments | 80,529 | 80,529 | |||
Net loss | (118,641) | (118,641) | |||
Ending balance, shares at Sep. 30, 2020 | 11,414,150 | ||||
Ending balance, amount at Sep. 30, 2020 | $ 1,141 | $ 302,270,242 | $ (302,270,933) | $ (921,073) | $ (920,623) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (118,641) | $ (2,563,953) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 3,987,453 | 4,060,955 |
Bad debt expense | (234,909) | (655,480) |
Stock based compensation | 19,687 | 21,465 |
Gain on disposal of property and equipment | 0 | (10,563) |
Loss on monitoring equipment included on cost of sales | 556,304 | 355,117 |
Gain on settlement of note payable | 699,644 | 0 |
Foreign currency exchange loss | 316,330 | 466,140 |
Change in assets and liabilities: | ||
Accounts receivable, net | 989,684 | (1,418,487) |
Inventories | 80,500 | 498,936 |
Prepaid expenses and other assets | (1,201,780) | (755,050) |
Accounts payable, accrued expense and other | 561,062 | 3,761,610 |
Net cash provided by operating activities | 4,725,864 | 5,071,650 |
Cash flow from investing activities: | ||
Purchases of property and equipment | (67,199) | (277,332) |
Capitalized software | (1,514,482) | (1,181,308) |
Purchases of monitoring equipment and parts | (1,360,514) | (1,820,206) |
Proceeds from sale of assets | 0 | 10,563 |
Net cash used in investing activities | (2,942,195) | (3,268,283) |
Cash flow from financing activities: | ||
Proceeds from note payable | 933,200 | 0 |
Principal payments on notes payable | (2,727,557) | (65,317) |
Net cash provided by (used in) financing activities | (1,794,357) | (65,317) |
Effect of exchange rate changes on cash | (123,924) | (287,896) |
Net increase in cash | (134,612) | 1,450,154 |
Cash, beginning of year | 6,896,711 | 5,446,557 |
Cash, end of year | 6,762,099 | 6,896,711 |
Cash paid for interest | $ 28,418 | $ 27,215 |
Organization and Nature of Oper
Organization and Nature of Operations | 12 Months Ended |
Sep. 30, 2020 | |
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. from the U.S. Small Business Administration (" SBA PPP CARES Act PPP Loan At September 30, 2020, the Company has a $30.4 million Amended Facility Agreement with Conrent Invest S.A. ( “Conrent” |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Principles of Consolidation The consolidated financial statements include the accounts of Track Group, Inc. and its wholly-owned 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, 2020 and 2019. 2020 % 2019 % Customer A $ 6,374,742 19 % $ 8,570,404 25 % Customer B $ 3,710,759 11 % $ 3,549,273 10 % No other customer represented more than 10% of the Company’s total revenue for the fiscal years ended September 30, 2020 or 2019. Concentration of credit risk associated with the Company’s total and outstanding accounts receivable as of September 30, 2020 and 2019, respectively, are shown in the table below: 2020 % 2019 % Customer A $ 536,587 10 % $ 1,538,775 23 % Customer B $ 374,809 7 % $ 844,241 12 % 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 $5,075,274 and $5,688,493 of cash deposits in excess of federally insured limits as of September 30, 2020 and 2019, 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. 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. 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, 2020 and September 30, 2019, inventory consisted of the following: 2020 2019 Finished goods inventory $ 131,089 $ 301,435 Reserve for damaged or obsolete inventory (6,483 ) (26,934 ) Total inventory, net of reserves $ 124,606 $ 274,501 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. Management reviews inventory regularly to identify damaged or obsolete inventory and reserves for potential losses. The Company recorded charges of $67,926 and $0 during the years ended September 30, 2020 and 2019, respectively, for inventory that was obsolete, lost or damaged. Obsolete, lost and damaged inventory items are included in Monitoring, products & other related services in the Consolidated Statement of Operations. 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, 2020 and 2019, respectively: 2020 2019 Equipment, software and tooling $ 1,272,635 $ 1,210,583 Automobiles 5,156 5,574 Leasehold improvements 1,290,708 1,393,976 Furniture and fixtures 341,896 313,817 Total property and equipment before accumulated depreciation 2,910,395 2,923,950 Accumulated depreciation (2,531,631 ) (2,248,913 ) Property and equipment, net of accumulated depreciation $ 378,764 $ 675,037 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, 2020 and 2019, the Company recognized a $0 and $10,563 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. See Note 13. Depreciation expense recognized for property and equipment for the fiscal years ended September 30, 2020 and 2019 was $336,666 and $315,380, 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, 2020 and 2019 is as follows: 2020 2019 Monitoring equipment $ 8,705,830 $ 8,947,668 Less: accumulated depreciation (6,639,883 ) (6,322,768 ) Monitoring equipment, net of accumulated depreciation $ 2,065,947 $ 2,624,900 Depreciation expense for the fiscal years ended September 30, 2020 and 2019 was $1,409,220 and $1,509,166, 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, 2020 and 2019, the Company disposed of leased monitoring equipment and parts of $488,378 and $355,117, 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 13. 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. Revenue transactions associated to the sale of devices and replacement parts comprise a single performance obligation. We satisfy the performance obligation when the Company has transferred control of the product to the customer and they receive substantially all of the benefits. Transfer of control passes to customers upon shipment or upon receipt depending on the country of the sale and the agreement with the customer. The transaction price is determined based upon the invoiced sales price and payment terms for the transaction depends on the agreement with the customer and payment is generally required within 60 days or less of shipment. 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 total 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, 2020 and September 30, 2019, the Company incurred research and development expense of $1,182,542 and $1,313,499, respectively. Advertising Costs The Company expenses advertising costs as incurred. Advertising expense for the fiscal years ended September 30, 2020 and 2019 was $16,445 and $19,642, 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, 2020 and September 30, 2019, 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 2020 2019 Issuable Common Stock options and warrants 685,259 685,259 Total Common Stock equivalents 685,259 685,259 At September 30, 2020 and September 30, 2019, all stock option and warrant exercise prices were above the market price of $0.3733 and $0.51, 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 February 2016, FASB issued ASU No. 2016-02, “ Leases (Topic 842) In August 2016, the FASB issued ASU 2016-15, “ Statement of Cash Flows (Topic 230) ( Recently Issued Accounting Standards In January 2017, the FASB issued ASU 2017-04, “ Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment In June 2016, the FASB issued ASU 2016-13, “ Measurement of Credit Losses on Financial Instruments CECL |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Sep. 30, 2020 | |
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, 2020 Twelve Months Ended September 30, 2019 Total Revenue % of Total Revenue Total Revenue % of Total Revenue United States $ 23,072,250 68 % $ 20,482,165 60 % Latin America 10,210,719 30 % 13,095,679 39 % Other 592,198 2 % 441,308 1 % Total $ 33,875,167 100 % $ 34,019,152 100 % The above table includes total revenue for the Company, of which monitoring and other related services is the majority (approximately 98%) of the Company’s revenue. Latin America includes Bahamas, Chile, Mexico, Puerto Rico and the U.S. Virgin Islands. Other includes Canada, New Zealand, Saudi Arabia, South Africa, the United Kingdom and Vietnam. |
Other Assets
Other Assets | 12 Months Ended |
Sep. 30, 2020 | |
Other Assets [Abstract] | |
Other Assets | As of September 30, 2020 and September 30, 2019, respectively, the outstanding balance of other assets was $2,166,743 and $124,187, respectively. Other assets at September 30, 2020 are comprised largely of two cash collateralized performance bonds for an international customer. The Company anticipates these performance bonds will be reimbursed to the Company upon completion of its contracts with the customer. |
Accrued Liabilities
Accrued Liabilities | 12 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued liabilities consisted of the following as of September 30, 2020 and 2019: September 30, 2020 September 30, 2019 Accrued payroll, taxes and employee benefits 1,607,920 $ 1,680,634 Deferred revenue 147,921 389,229 Deposits payable - 10,000 Accrued taxes - foreign and domestic 324,221 1,071,532 Accrued other expense 117,264 170,055 Accrued legal costs 725,547 1,057,305 Accrued right of use liabilities 210,910 - Accrued costs of revenue 309,470 251,262 Accrued bond guarantee - 142,405 Accrued interest 11,515,375 9,056,274 Total accrued liabilities $ 14,958,628 $ 13,828,696 |
Related Parties
Related Parties | 12 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Parties | ETS Limited is currently the beneficial owner of 4,871,745 shares of the Company's Common Stock (“ Track Group Shares ADS On September 8, 2020, the Company received a letter from ADS informing the Company that ADS had been assigned the right to payment under that certain Loan Facility dated September 14, 2015, by and between Sapinda Asia Limited and the Company (the “ Sapinda Loan Agreement |
Debt Obligations
Debt Obligations | 12 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt obligations as of September 30, 2020 and 2019 consisted of the following: 2020 2019 The unsecured Amended 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 July 1, 2021. The Company did not pay interest on this loan during the year ended September 30, 2020. $ 30,400,000 $ 30,400,000 Sapinda Loan Agreement with Sapinda Asia Limited whereby the Company can borrow up to $5.0 million at 8% interest per annum on borrowed funds maturing and repaid on September 30, 2020. $ - 3,399,644 Note payable with BMO Harris Bank for PPP loan with the SBA, bearing interest at a rate of 1% per annum, with a maturity of May 19, 2022 and principal payments beginning on December 19, 2020. 933,200 - Non-interest bearing notes payable to a Canadian governmental agency assumed in conjunction with the G2 acquisition. - 28,045 Total debt obligations 31,333,200 33,827,689 Less current portion (30,914,625 ) (33,827,689 ) Long-term debt, net of current portion $ 418,575 $ - On September 8, 2020, the Company received a letter from ADS informing the Company that ADS had been assigned the right to payment under that certain Loan Facility dated September 14, 2015, by and between Sapinda Asia Limited and the Company (the “ Sapinda Loan Agreement On October 21, 2020, the Company requested, in writing, an additional extension to the maturity date of the Amended Facility Agreement. On November 25, 2020, the Noteholders held a meeting to address the Company’s request and approved a new maturity date of July 1, 2024. On December 21, 2020, Conrent and the Company signed an Amendment to the Amended Facility Agreement which extends the maturity date of the agreement to July 1, 2024, capitalizes the accrued and unpaid interest increasing the outstanding principal amount and reduces the interest rate of the Amended Facility Agreement from 8% to 4%. See Note 14. The following table summarizes our future maturities of debt obligations, net of the amortization of debt discounts as of September 30, 2020: Fiscal Year Total 2021 $ 30,914,625 2022 418,575 Thereafter - Total $ 31,333,200 |
Preferred Stock
Preferred Stock | 12 Months Ended |
Sep. 30, 2020 | |
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 (“ Preferred Stock Series A Preferred Series A Convertible 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, 2020, no shares of Series A Preferred were issued and outstanding. |
Common Stock
Common Stock | 12 Months Ended |
Sep. 30, 2020 | |
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 October 18, 2019, the Company issued 12,500 shares from the 2012 Equity Compensation Plan (the “ 2012 Plan |
Stock Options and Warrants
Stock Options and Warrants | 12 Months Ended |
Sep. 30, 2020 | |
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 in fiscal year 2019. The Company issued an nominal amount of stock for fully vested stock awards in fiscal 2020 and possibly could issue stock in the future for warrants and options that have vested, but not been exercised at September 30, 2020. During the fiscal years ended September 30, 2020 and 2019, no options to purchase shares of Common Stock were granted under the 2012 Plan. As of September 30, 2020, 27,218 shares of Common Stock were available for future grants under the 2012 Plan. During the fiscal year 2020, the Company recorded $19,687 of expense related to restricted shares that were granted in fiscal year 2018 and $147,690 of expense in fiscal 2019 related to the restricted shares issued in 2018 previously mentioned, stock granted in fiscal 2017 and options granted in fiscal year 2017. All Options and Warrants The fair value of each stock option and warrant grant is estimated on the date of grant using the Black-Scholes option-pricing model. During the fiscal years ended September 30, 2020 and 2019, 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 $0 and $21,231 for the fiscal years ended September 30, 2020 and 2019, respectively, related to the issuance and vesting of outstanding stock options and warrants. All options and warrants have vested and are exercisable at September 30, 2020 and no future issuances are expected. As of September 30, 2020, 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. A summary of the compensation-based options and warrants activity for the fiscal years ended September 30, 2020 and 2019 is presented below: Shares Under Option Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value 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 - Granted - - - Expired - - - Exercised - $ - - Outstanding as of September 30, 2020 685,259 $ 1.56 1.90 years $ - Exercisable as of September 30, 2020 685,259 $ 1.56 1.90 years $ - The intrinsic value of options and warrants outstanding and exercisable is based on the Company’s share price of $0.3733 at September 30, 2020. |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2020 | |
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, 2020 and 2019, the Company incurred net losses for income tax purposes of $118,641 and $2,563,953, 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, 2020, the Company had net carryforwards available to offset future taxable income of approximately $205,218,000 of which $5,432,000 expires in 2021. 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, 2020, or on net deferred tax asset as of September 30, 2020. 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, 2020 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, 2020 2019 Net loss carryforwards $ 34,701,720 $ 35,256,000 Accruals and reserves 1,253,087 1,367,000 Contributions 321 16,000 Severance indemnity reserve 72,047 59,000 Depreciation (21,365 ) (389,000 ) Stock-based compensation 638,589 639,000 Valuation allowance (36,211,678 ) (36,407,000 ) Total $ 432,721 $ 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, 2020 and 2019 are as follows: Fiscal Years Ended September 30, 2020 2019 Federal income tax benefit at statutory rate $ (224,890 ) $ (801,000 ) State income tax benefit, net of federal income tax effect (27,875 ) (141,000 ) Effect of foreign income taxes 668,390 874,000 Non-deductible expenses 286,212 (199,000 ) Rate change due to Tax Cuts and Jobs Act - 760,000 Deferred only adjustment (393,510 ) 954,000 Return to provision 569,749 - Withholding taxes 110,382 - Change in valuation allowance (195,261 ) (563,000 ) Provision for income taxes $ 793,197 $ 884,000 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, 2020, the Company had a net receivable related to payments on VAT tax of $267,069. During the year ended September 30, 2020, the Company recorded income tax expense of $668,390 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, 2017 through September 30, 2020. The Company is currently under examination by the Internal Revenue Service for fiscal years ended September 30, 2018 and September 30, 2017. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2020 | |
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. SecureAlert, Inc. v. Federal Government of Mexico (Department of the Interior). Blaike Anderson v. Track Group, Inc., et. al. Commonwealth of Puerto Rico, through its Trustees v. International Surveillance Services Corporation . ISS Eli Sabag v. Track Group, Inc., et al. (“SPA” Leases Effective October 1, 2019, the Company adopted the new lease accounting guidance in ASU No. 2016-02, Leases (Topic 842) “ ASC Topic 842 Future maturities of lease liabilities under ASC 840 at September 30, 2019 were as follows: Operating Leases From October 2019 to September 2020 $ 196,245 From October 2020 to September 2021 233,107 From October 2021 to September 2022 167,325 From October 2022 to September 2023 3,612 Total minimum lease payments $ 597,289 The following table shows right of use assets and lease liabilities and the associated financial statement line items as of September 30, 2020. Operating lease asset Operating lease liability Other assets $ 375,397 $ - Accrued liabilities $ - $ 210,910 Long-term liabilities $ - $ 164,487 The following table summarizes the supplemental cash flow information for the year ended September 30, 2020: September 30, 2020 Cash paid for noncancelable operating leases included in operating cash flows $ 356,059 Right of use assets obtained in exchange for operating lease liabilities: $ - The future minimum lease payments under noncancelable operating leases with terms greater than one year as of September 30, 2020 are: Operating Leases From October 2020 to September 2021 $ 233,107 From October 2021 to September 2022 167,325 From October 2022 to September 2023 3,612 Undiscounted Cash Flow 404,044 Less: imputed interest (28,647 ) Total $ 375,397 Reconciliation to lease liabilities: Lease liabilities - current $ 210,910 Lease liabilities - long-term 164,487 Total Lease Liabilities $ 375,397 The weighted-average remaining lease term and discount rate related to the Company’s lease liabilities as of September 30, 2020 were 1.8 years and 8%, respectively. The Company’s lease discount rates are generally based on the estimates of its incremental borrowing rate as the discount rates implicit in the Company’s leases cannot be readily determined. Performance Bonds As of September 30, 2020, Company has two performance bonds in connection with a foreign customer totaling $2,351,304, of which $1,645,881 is held in an interest-bearing account on behalf of the customer and is recorded in Other Assets on the Consolidated Balance Sheet. The remaining amount of $705,423 is guaranteed by a foreign financial institution on behalf of the Company. The amounts held on the two bonds will be released upon expiration as follows: $307,383 on January 18, 2022 and $1,338,498 on July 2, 2024. As of September 30, 2019, the Company held one of the above performance bonds totaling $474,682, of which $332,277 was held in an interest-bearing account on behalf of the customer and is recorded in Other Current Assets on the Consolidated Balance Sheet, with the remainder guaranteed by a foreign financial institution on behalf of the Company. This performance bond was renewed in 2020, thus, is included in the totals above. The Company pays interest on the full amount of the bonds to the financial institution providing the guarantee at 3.5% interest for the bond expiring in January 2022 and 2.8% interest for the bond expiring in July 2024. Related interest expense recorded for the years ended September 30, 2020 and 2019 was $33,617 and $17,860, respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | The following table summarizes the activity of intangible assets for the years ended September 30, 2020 and 2019, respectively: 2020 Weighted Average Useful Life (yrs) Gross Carrying Amount Accumulated Amortization Net Book Value Patent & royalty agreements 7.99 21,170,565 (10,415,534 ) 10,755,031 Developed technology 7.90 14,134,562 (4,086,241 ) 10,048,321 Customer relationships 7.70 1,860,000 (1,535,376 ) 324,624 Trade name 9.57 318,438 (275,369 ) 43,069 Website 3.00 78,201 (78,201 ) - Total 37,561,766 (16,390,721 ) 21,171,045 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 The intangible assets summarized above were purchased or developed on various dates from January 2010 through September 30, 2020. The assets have useful lives ranging from three to twenty years. Amortization expense for the years ended September 30, 2020 and 2019 was $2,241,566 and $2,236,410, respectively. There was no impairment indicated for the years ended September 30, 2020 or September 30, 2019. The following table summarizes the future maturities of amortization of intangible assets as of September 30, 2020: Fiscal Year Amortization STOP Royalty 2021 $ 1,992,505 $ 450,000 2022 3,022,836 450,000 2023 2,808,750 450,000 2024 2,237,739 187,500 2025 1,915,214 - Thereafter 7,656,501 - Total $ 19,633,545 $ 1,537,500 Goodwill Goodwill, as of September 30 consisted of the following: September 30, 2020 2019 Balance - beginning of year $ 8,187,911 $ 8,076,759 Effect of foreign currency translation on goodwill 32,469 111,152 Balance - end of year $ 8,220,380 $ 8,187,911 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | On October 21, 2020, the Company requested, in writing, an additional extension to the maturity date of the Amended Facility Agreement. On November 25, 2020, the Noteholders held a meeting to address the Company’s request and approved a new maturity date of July 1, 2024. On December 21, 2020, Conrent and the Company signed an Amendment to the Amended Facility Agreement which extends the maturity date of the agreement to July 1, 2024, capitalizes the accrued and unpaid interest increasing the outstanding principal amount and reduces the interest rate of the Amended Facility Agreement from 8% to 4%. 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, 2020 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | The consolidated financial statements include the accounts of Track Group, Inc. and its wholly-owned 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, 2020 and 2019. 2020 % 2019 % Customer A $ 6,374,742 19 % $ 8,570,404 25 % Customer B $ 3,710,759 11 % $ 3,549,273 10 % No other customer represented more than 10% of the Company’s total revenue for the fiscal years ended September 30, 2020 or 2019. Concentration of credit risk associated with the Company’s total and outstanding accounts receivable as of September 30, 2020 and 2019, respectively, are shown in the table below: 2020 % 2019 % Customer A $ 536,587 10 % $ 1,538,775 23 % Customer B $ 374,809 7 % $ 844,241 12 % 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 $5,075,274 and $5,688,493 of cash deposits in excess of federally insured limits as of September 30, 2020 and 2019, 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. |
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. 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, 2020 and September 30, 2019, inventory consisted of the following: 2020 2019 Finished goods inventory $ 131,089 $ 301,435 Reserve for damaged or obsolete inventory (6,483 ) (26,934 ) Total inventory, net of reserves $ 124,606 $ 274,501 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. Management reviews inventory regularly to identify damaged or obsolete inventory and reserves for potential losses. The Company recorded charges of $67,926 and $0 during the years ended September 30, 2020 and 2019, respectively, for inventory that was obsolete, lost or damaged. Obsolete, lost and damaged inventory items are included in Monitoring, products & other related services in the Consolidated Statement of Operations. |
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, 2020 and 2019, respectively: 2020 2019 Equipment, software and tooling $ 1,272,635 $ 1,210,583 Automobiles 5,156 5,574 Leasehold improvements 1,290,708 1,393,976 Furniture and fixtures 341,896 313,817 Total property and equipment before accumulated depreciation 2,910,395 2,923,950 Accumulated depreciation (2,531,631 ) (2,248,913 ) Property and equipment, net of accumulated depreciation $ 378,764 $ 675,037 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, 2020 and 2019, the Company recognized a $0 and $10,563 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. See Note 13. Depreciation expense recognized for property and equipment for the fiscal years ended September 30, 2020 and 2019 was $336,666 and $315,380, 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, 2020 and 2019 is as follows: 2020 2019 Monitoring equipment $ 8,705,830 $ 8,947,668 Less: accumulated depreciation (6,639,883 ) (6,322,768 ) Monitoring equipment, net of accumulated depreciation $ 2,065,947 $ 2,624,900 Depreciation expense for the fiscal years ended September 30, 2020 and 2019 was $1,409,220 and $1,509,166, 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, 2020 and 2019, the Company disposed of leased monitoring equipment and parts of $488,378 and $355,117, 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 13. |
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. Revenue transactions associated to the sale of devices and replacement parts comprise a single performance obligation. We satisfy the performance obligation when the Company has transferred control of the product to the customer and they receive substantially all of the benefits. Transfer of control passes to customers upon shipment or upon receipt depending on the country of the sale and the agreement with the customer. The transaction price is determined based upon the invoiced sales price and payment terms for the transaction depends on the agreement with the customer and payment is generally required within 60 days or less of shipment. 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 total 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, 2020 and September 30, 2019, the Company incurred research and development expense of $1,182,542 and $1,313,499, respectively. |
Advertising Costs | The Company expenses advertising costs as incurred. Advertising expense for the fiscal years ended September 30, 2020 and 2019 was $16,445 and $19,642, 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, 2020 and September 30, 2019, 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 2020 2019 Issuable Common Stock options and warrants 685,259 685,259 Total Common Stock equivalents 685,259 685,259 At September 30, 2020 and September 30, 2019, all stock option and warrant exercise prices were above the market price of $0.3733 and $0.51, 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 February 2016, FASB issued ASU No. 2016-02, “ Leases (Topic 842) In August 2016, the FASB issued ASU 2016-15, “ Statement of Cash Flows (Topic 230) ( Recently Issued Accounting Standards In January 2017, the FASB issued ASU 2017-04, “ Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment In June 2016, the FASB issued ASU 2016-13, “ Measurement of Credit Losses on Financial Instruments CECL |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Concentration of credit risk | 2020 % 2019 % Customer A $ 6,374,742 19 % $ 8,570,404 25 % Customer B $ 3,710,759 11 % $ 3,549,273 10 % 2020 % 2019 % Customer A $ 536,587 10 % $ 1,538,775 23 % Customer B $ 374,809 7 % $ 844,241 12 % |
Inventory | 2020 2019 Finished goods inventory $ 131,089 $ 301,435 Reserve for damaged or obsolete inventory (6,483 ) (26,934 ) Total inventory, net of reserves $ 124,606 $ 274,501 |
Property, plant and equipment | 2020 2019 Equipment, software and tooling $ 1,272,635 $ 1,210,583 Automobiles 5,156 5,574 Leasehold improvements 1,290,708 1,393,976 Furniture and fixtures 341,896 313,817 Total property and equipment before accumulated depreciation 2,910,395 2,923,950 Accumulated depreciation (2,531,631 ) (2,248,913 ) Property and equipment, net of accumulated depreciation $ 378,764 $ 675,037 |
Monitoring equipment | 2020 2019 Monitoring equipment $ 8,705,830 $ 8,947,668 Less: accumulated depreciation (6,639,883 ) (6,322,768 ) Monitoring equipment, net of accumulated depreciation $ 2,065,947 $ 2,624,900 |
Anti-dilutive shares excluded from computation of earning per share | 2020 2019 Issuable Common Stock options and warrants 685,259 685,259 Total Common Stock equivalents 685,259 685,259 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
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, 2020 Twelve Months Ended September 30, 2019 Total Revenue % of Total Revenue Total Revenue % of Total Revenue United States $ 23,072,250 68 % $ 20,482,165 60 % Latin America 10,210,719 30 % 13,095,679 39 % Other 592,198 2 % 441,308 1 % Total $ 33,875,167 100 % $ 34,019,152 100 % |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accrued liabilities | September 30, 2020 September 30, 2019 Accrued payroll, taxes and employee benefits 1,607,920 $ 1,680,634 Deferred revenue 147,921 389,229 Deposits payable - 10,000 Accrued taxes - foreign and domestic 324,221 1,071,532 Accrued other expense 117,264 170,055 Accrued legal costs 725,547 1,057,305 Accrued right of use liabilities 210,910 - Accrued costs of revenue 309,470 251,262 Accrued bond guarantee - 142,405 Accrued interest 11,515,375 9,056,274 Total accrued liabilities $ 14,958,628 $ 13,828,696 |
Debt Obligations (Tables)
Debt Obligations (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 2020 2019 The unsecured Amended 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 July 1, 2021. The Company did not pay interest on this loan during the year ended September 30, 2020. $ 30,400,000 $ 30,400,000 Sapinda Loan Agreement with Sapinda Asia Limited whereby the Company can borrow up to $5.0 million at 8% interest per annum on borrowed funds maturing and repaid on September 30, 2020. $ - 3,399,644 Note payable with BMO Harris Bank for PPP loan with the SBA, bearing interest at a rate of 1% per annum, with a maturity of May 19, 2022 and principal payments beginning on December 19, 2020. 933,200 - Non-interest bearing notes payable to a Canadian governmental agency assumed in conjunction with the G2 acquisition. - 28,045 Total debt obligations 31,333,200 33,827,689 Less current portion (30,914,625 ) (33,827,689 ) Long-term debt, net of current portion $ 418,575 $ - |
Maturities of long-term debt | Fiscal Year Total 2021 $ 30,914,625 2022 418,575 Thereafter - Total $ 31,333,200 |
Stock Options and Warrants (Tab
Stock Options and Warrants (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock option activity | Shares Under Option Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value 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 - Granted - - - Expired - - - Exercised - $ - - Outstanding as of September 30, 2020 685,259 $ 1.56 1.90 years $ - Exercisable as of September 30, 2020 685,259 $ 1.56 1.90 years $ - |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Deferred income tax assets (liabilities) | Fiscal Years Ended September 30, 2020 2019 Net loss carryforwards $ 34,701,720 $ 35,256,000 Accruals and reserves 1,253,087 1,367,000 Contributions 321 16,000 Severance indemnity reserve 72,047 59,000 Depreciation (21,365 ) (389,000 ) Stock-based compensation 638,589 639,000 Valuation allowance (36,211,678 ) (36,407,000 ) Total $ 432,721 $ 541,000 |
Income tax benefit reconciliation | Fiscal Years Ended September 30, 2020 2019 Federal income tax benefit at statutory rate $ (224,890 ) $ (801,000 ) State income tax benefit, net of federal income tax effect (27,875 ) (141,000 ) Effect of foreign income taxes 668,390 874,000 Non-deductible expenses 286,212 (199,000 ) Rate change due to Tax Cuts and Jobs Act - 760,000 Deferred only adjustment (393,510 ) 954,000 Return to provision 569,749 - Withholding taxes 110,382 - Change in valuation allowance (195,261 ) (563,000 ) Provision for income taxes $ 793,197 $ 884,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease obligations | Operating Leases From October 2019 to September 2020 $ 196,245 From October 2020 to September 2021 233,107 From October 2021 to September 2022 167,325 From October 2022 to September 2023 3,612 Total minimum lease payments $ 597,289 |
Right of use assets and lease liabilities | Operating lease asset Operating lease liability Other assets $ 375,397 $ - Accrued liabilities $ - $ 210,910 Long-term liabilities $ - $ 164,487 |
Supplemental cash flow information | September 30, 2020 Cash paid for noncancelable operating leases included in operating cash flows $ 356,059 Right of use assets obtained in exchange for operating lease liabilities: $ - |
Future minimum lease payements | Operating Leases From October 2020 to September 2021 $ 233,107 From October 2021 to September 2022 167,325 From October 2022 to September 2023 3,612 Undiscounted Cash Flow 404,044 Less: imputed interest (28,647 ) Total $ 375,397 Reconciliation to lease liabilities: Lease liabilities - current $ 210,910 Lease liabilities - long-term 164,487 Total Lease Liabilities $ 375,397 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets | 2020 Weighted Average Useful Life (yrs) Gross Carrying Amount Accumulated Amortization Net Book Value Patent & royalty agreements 7.99 21,170,565 (10,415,534 ) 10,755,031 Developed technology 7.90 14,134,562 (4,086,241 ) 10,048,321 Customer relationships 7.70 1,860,000 (1,535,376 ) 324,624 Trade name 9.57 318,438 (275,369 ) 43,069 Website 3.00 78,201 (78,201 ) - Total 37,561,766 (16,390,721 ) 21,171,045 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 |
Future amortization | Fiscal Year Amortization STOP Royalty 2021 $ 1,992,505 $ 450,000 2022 3,022,836 450,000 2023 2,808,750 450,000 2024 2,237,739 187,500 2025 1,915,214 - Thereafter 7,656,501 - Total $ 19,633,545 $ 1,537,500 |
Goodwill | September 30, 2020 2019 Balance - beginning of year $ 8,187,911 $ 8,076,759 Effect of foreign currency translation on goodwill 32,469 111,152 Balance - end of year $ 8,220,380 $ 8,187,911 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Customer revenue amount | $ 33,875,167 | $ 34,019,152 |
Revenue | Customer A | ||
Customer revenue amount | $ 6,374,742 | $ 8,570,404 |
Customer concentration risk percentage | 19.00% | 25.00% |
Revenue | Customer B | ||
Customer revenue amount | $ 3,710,759 | $ 3,549,273 |
Customer concentration risk percentage | 11.00% | 10.00% |
Accounts Receivable | Customer A | ||
Customer concentration risk percentage | 10.00% | 23.00% |
Customer account receivable amount | $ 536,587 | $ 1,537,775 |
Accounts Receivable | Customer B | ||
Customer concentration risk percentage | 7.00% | 10.00% |
Customer account receivable amount | $ 374,809 | $ 844,241 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Accounting Policies [Abstract] | ||
Finished goods inventory | $ 131,089 | $ 301,435 |
Reserve for damaged or obsolete inventory | (6,483) | (26,934) |
Total inventory, net of reserves | $ 124,606 | $ 274,501 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Accounting Policies [Abstract] | ||
Equipment, software and tooling | $ 1,272,635 | $ 1,210,583 |
Automobiles | 5,156 | 5,574 |
Leasehold Improvements | 1,290,708 | 1,393,976 |
Furniture And Fixtures | 341,896 | 313,817 |
Total property and equipment before accumulated depreciation | 2,910,395 | 2,923,950 |
Accumulated Depreciation | (2,531,631) | (2,248,913) |
Property and equipment, net of accumulated depreciation | $ 378,764 | $ 675,037 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Accounting Policies [Abstract] | ||
Monitoring equipment | $ 8,705,830 | $ 8,947,668 |
Less: accumulated depreciation | (6,639,883) | (6,322,768) |
Monitoring equipment, net of accumulated amortization | $ 2,065,947 | $ 2,624,900 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details 4) - shares | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Common stock equivalents | 685,259 | 628,592 |
Stock Option and Warrants | ||
Common stock equivalents | 685,259 | 628,592 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Accounting Policies [Abstract] | ||
Cash deposits in excess of FDIC limit | $ 5,075,274 | $ 5,688,493 |
Principal and interest due write-off | 234,733 | |
Depreciation expense | 336,666 | 315,380 |
Amortization expense | 1,409,220 | 1,509,166 |
Gain on disposal of equipment | 0 | 10,563 |
Disposal of lease monitoring equipment | 488,378 | 355,117 |
Research and development expenses | 1,182,542 | 1,313,499 |
Advertising costs | $ 16,445 | $ 19,642 |
Antidilutive securities excluded from computation of earnings per share, amount | 685,259 | 628,592 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 |
Liabilities | |||
Accrued liabilities | $ 14,958,628 | $ 13,828,696 | |
Total current liabilities | 48,072,468 | 50,284,388 | |
Total liabilities | 48,655,530 | 50,284,388 | |
Stockholders' Equity | |||
Accumulated Deficit | (302,270,933) | (302,152,292) | |
Total equity | (920,623) | (902,198) | $ 1,638,366 |
Total liabilities and sctockholders' equity | $ 47,734,907 | 49,382,190 | |
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 | ||
Net Change | |||
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) | ||
RestatedMember | |||
Liabilities | |||
Accrued liabilities | 10,426,072 | ||
Total current liabilities | 43,381,912 | ||
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, 2020 | Sep. 30, 2019 | |
Customer revenue amount | $ 33,875,167 | $ 34,019,152 |
United States | ||
Customer revenue amount | $ 23,072,250 | $ 20,482,165 |
Customer concentration risk percentage | 68.00% | 60.00% |
Latin America | ||
Customer revenue amount | $ 10,210,719 | $ 13,095,679 |
Customer concentration risk percentage | 30.00% | 39.00% |
Other | ||
Customer revenue amount | $ 592,198 | $ 441,308 |
Customer concentration risk percentage | 2.00% | 1.00% |
Total | ||
Customer revenue amount | $ 33,875,167 | $ 34,019,152 |
Customer concentration risk percentage | 100.00% | 100.00% |
Other Assets (Details Narrative
Other Assets (Details Narrative) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Other Assets [Abstract] | ||
Other assets | $ 2,166,743 | $ 124,187 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Payables and Accruals [Abstract] | ||
Accrued payroll, taxes and employee benefits | $ 1,607,920 | $ 1,680,634 |
Deferred revenue | 147,921 | 389,229 |
Deposits payable | 0 | 10,000 |
Accrued taxes - foreign and domestic | 324,221 | 1,071,532 |
Accrued other expense | 117,264 | 170,055 |
Accrued legal costs | 725,547 | 1,057,305 |
Accrued right of use liabilities | 210,910 | 0 |
Accrued costs of revenue | 309,470 | 251,262 |
Accrued bond guarantee | 0 | 142,405 |
Accrued interest | 11,515,375 | 9,056,274 |
Total accrued liabilities | $ 14,958,628 | $ 13,828,696 |
Related Parties (Details Narrat
Related Parties (Details Narrative) | 12 Months Ended |
Sep. 30, 2020USD ($) | |
Related Party Transactions [Abstract] | |
Gain on settlement | $ 700,000 |
Debt Obligations (Details)
Debt Obligations (Details) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Total debt obligations | $ 31,333,200 | $ 33,827,689 |
Less current portion | (30,914,625) | (33,827,689) |
Long-term debt, net of current portion | 418,575 | 0 |
Debt Obligation 1 | ||
Total debt obligations | 30,400,000 | 30,400,000 |
Debt Obligation 2 | ||
Total debt obligations | 0 | 3,399,644 |
Debt Obligation 3 | ||
Total debt obligations | 933,200 | 0 |
Debt Obligation 4 | ||
Total debt obligations | $ 0 | $ 28,045 |
Debt Obligations (Details 1)
Debt Obligations (Details 1) | Sep. 30, 2020USD ($) |
Debt Disclosure [Abstract] | |
2021 | $ 30,914,625 |
2022 | 418,575 |
Thereafter | 0 |
Total | $ 31,333,200 |
Preferred Stock (Details Narrat
Preferred Stock (Details Narrative) - Series A Convertible Preferred stock - $ / shares | Sep. 30, 2020 | Sep. 30, 2019 |
Preferred stock, par value | $ 0.0001 | $ 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) - $ / shares | Sep. 30, 2020 | Sep. 30, 2019 |
Equity [Abstract] | ||
Common stock - par value | $ 0.0001 | $ 0.0001 |
Common stock - shares authorized | 30,000,000 | 30,000,000 |
Stock Options and Warrants (Det
Stock Options and Warrants (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Shares under option/warrant outstanding, beginning balance | 685,259 | 685,259 |
Shares under option/warrant granted | 0 | 0 |
Shares under option/warrant expired/cancelled | 0 | 0 |
Shares under option/warrant exercised | 0 | 0 |
Shares under option/warrant outstanding, ending balance | 685,259 | 685,259 |
Shares under option/warrant exercisable | 685,259 | |
Weighted average exercise price outstanding, beginning balance | $ 1.56 | $ 1.56 |
Weighted average exercise price granted | 0 | .00 |
Weighted average exercise price expired/cancelled | 0 | (.00) |
Weighted average exercise price exercised | 0 | .00 |
Weighted average exercise price outstanding, ending balance | 1.56 | $ 1.56 |
Weighted average exercise price exercisable | $ 1.56 | |
Weighted average remaining contractual life outstanding | 1 year 10 months 24 days | 2 years 10 months 24 days |
Weighted average remaining contractual life exercisable | 1 year 10 months 24 days | |
Aggregate intrinsic value outstanding, beginning balance | $ 0 | $ 0 |
Aggregate intrinsic value outstanding, ending balance | 0 | 0 |
Aggregate intrinsic value exercisable | $ 0 | $ 0 |
Stock Options and Warrants (D_2
Stock Options and Warrants (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Expense related to restricted shares | $ 19,687 | $ 147,690 |
2012 Plan | ||
Shares authorized for issuance | 803,262 | 0 |
Shares available under Plan | 27,218 | 27,218 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Income Tax Disclosure [Abstract] | ||
Net loss carryforwards | $ 34,701,720 | $ 35,256,000 |
Accruals and reserves | 1,253,087 | 1,367,000 |
Contributions | 321 | 16,000 |
Severance indemnity reserve | 72,047 | 59,000 |
Depreciation | (21,365) | (389,000) |
Stock-based compensation | 638,589 | 639,000 |
Valuation allowance | (36,211,678) | (36,407,000) |
Total | $ 432,721 | $ 541,000 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
Federal income tax benefit at statutory rate | $ (224,890) | $ (801,000) |
State income tax benefit, net of federal income tax effect | (27,875) | (141,000) |
Effect of foreign income taxes | 668,390 | 874,000 |
Non-deductible expenses | 286,212 | (199,000) |
Rate change due to Tax Cuts and Jobs Act | 0 | 760,000 |
Deferred only adjustment | (393,510) | 954,000 |
Return to provision | 569,749 | 0 |
Withholding taxes | 110,382 | 0 |
Change in valuation allowance | (195,261) | (563,000) |
Benefit for income taxes | $ 793,197 | $ 884,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
Income loss for tax purposes | $ 118,641 | $ 2,563,953 |
Net carryforwards | $ 205,218,000 | |
Carryforward expirations | Jan. 1, 2021 | |
Net receivable related to payments on VAT | $ 267,069 | |
Income tax expense related to foreign jurisdiction | $ 668,390 | $ 359,658 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Sep. 30, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
From October 2019 to September 2020 | $ 196,245 |
From October 2020 to September 2021 | 233,107 |
From October 2021 to September 2022 | 167,325 |
From October 2022 to September 2023 | 3,612 |
Total | $ 597,289 |
Commitments and Contingencies_3
Commitments and Contingencies (Details 1) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Other assets | $ 2,166,743 | $ 124,187 |
Accrued liabilities | 14,958,628 | 13,828,696 |
Long-term liabilities | 164,487 | $ 0 |
Operating lease asset | ||
Other assets | 375,397 | |
Accrued liabilities | 0 | |
Long-term liabilities | 0 | |
Operating lease liability | ||
Other assets | 0 | |
Accrued liabilities | 210,910 | |
Long-term liabilities | $ 164,487 |
Commitments and Contingencies_4
Commitments and Contingencies (Details 2) | 12 Months Ended |
Sep. 30, 2020USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Cash paid for noncancelable operating lease included in operating cash flows | $ 356,059 |
Right of use assets obtained in exchange for operating lease liabilities | $ 0 |
Commitments and Contingencies_5
Commitments and Contingencies (Details 3) | Sep. 30, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
From October 2020 to September 2021 | $ 233,107 |
From October 2021 to September 2022 | 167,325 |
From October 2022 to September 2023 | 3,612 |
Undiscounted cash flow | 404,044 |
Less: imputed interest | (28,647) |
Total | 375,397 |
Lease liabilities - current | 210,910 |
Lease liabilities - long term | 164,487 |
Total lease liabilities | $ 375,397 |
Commitments and Contingencies_6
Commitments and Contingencies (Details Narrative) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Weighted-average remaining lease term | 1 year 9 months 18 days | |
Discount rate | 8.00% | |
Performance bonds in connection with a foreign customer | $ 2,351,304 | $ 474,682 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2020 | |
Gross carrying amount | $ 36,112,769 | $ 37,561,766 |
Accumulated amortization | (14,157,090) | (16,390,721) |
Net book value | 21,955,679 | 21,171,045 |
Patent | ||
Gross carrying amount | 21,170,565 | 21,170,565 |
Accumulated amortization | (9,084,569) | (10,415,534) |
Net book value | $ 12,085,996 | 10,755,031 |
Weighted average useful life | 7 years 11 months 26 days | |
Developed Technology | ||
Gross carrying amount | $ 12,685,281 | 14,134,562 |
Accumulated amortization | (3,441,289) | (4,086,241) |
Net book value | $ 9,243,992 | 10,048,321 |
Weighted average useful life | 7 years 10 months 24 days | |
Customer Relationships | ||
Gross carrying amount | $ 1,860,000 | 1,860,000 |
Accumulated amortization | (1,293,055) | (1,535,376) |
Net book value | $ 566,945 | 324,624 |
Weighted average useful life | 7 years 8 months 12 days | |
Trade Name | ||
Gross carrying amount | $ 318,722 | 318,438 |
Accumulated amortization | (259,976) | (275,369) |
Net book value | $ 58,746 | 43,069 |
Weighted average useful life | 9 years 6 months 25 days | |
Website | ||
Gross carrying amount | $ 78,201 | 78,201 |
Accumulated amortization | (78,201) | (78,201) |
Net book value | $ 0 | $ 0 |
Weighted average useful life | 3 years |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Sep. 30, 2020 | Sep. 30, 2019 |
Total | $ 21,171,045 | $ 21,955,679 |
Amortization | ||
2021 | 1,992,505 | |
2022 | 3,022,836 | |
2023 | 2,808,750 | |
2024 | 2,237,739 | |
2025 | 1,915,214 | |
Thereafter | 7,656,501 | |
Total | 19,633,545 | |
Royalty Agreements | ||
2021 | 450,000 | |
2022 | 450,000 | |
2023 | 450,000 | |
2024 | 187,500 | |
2025 | 0 | |
Thereafter | 0 | |
Total | $ 1,537,500 |
Intangible Assets (Details 2)
Intangible Assets (Details 2) - USD ($) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill - beginning of period | $ 8,187,911 | $ 8,076,759 |
Effect of foreign currency translation on goodwill | 32,469 | 111,152 |
Goodwill - end of period | $ 8,220,380 | $ 8,187,911 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 2,241,566 | $ 2,236,410 |