ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
The Company’s Board of Directors (the
“Board”) and executive officers consist of the
persons named in the table below. Each director serves for a
one-year term, until his or her successor is elected and qualified,
or until earlier resignation or removal. Our Bylaws provide that
the authorized number of directors shall be fixed by the Board from
time to time. The directors and executive officers are as
follows:
Guy Dubois
|
|
61
|
|
Chair of the Board
|
Karen Macleod
|
|
56
|
|
Director
|
Karim Sehnaoui
|
|
41
|
|
Director
|
Derek Cassell
|
|
46
|
|
Chief Executive Officer
|
Peter K. Poli
|
|
58
|
|
Chief Financial Officer
|
Guy
Dubois was
appointed as a director in December 2012, and has served as Chair
of the Board since February 2013. In addition, Mr. Dubois
previously served as our Chief Executive Officer from September 2016 to
December 2017. Mr. Dubois is the Founder and Chairman of
Singapore-based Tetra House Pte. Ltd., a provider of bespoke
consulting and advisory services out of Singapore. He is co-founder
of Circo3,
a regulated capital arrangement company with a platform approach to
the investor capital raising business. Mr. Dubois is a former director and Chief
Executive Officer of Gategroup AG, and previously held various
executive leadership roles at Gate Gourmet Holding LLC. Mr. Dubois
has held executive management positions at Roche Vitamins Inc. in
New Jersey, as well as regional management roles in that
firm’s Asia Pacific operations. Mr. Dubois also served the
European Organization for Nuclear Research (CERN) team in
Switzerland in various roles, including as its Treasurer and Chief
Accountant. Additionally, Mr. Dubois worked with IBM in Sweden as
Product Support Specialist for Financial Applications. A Belgian
citizen, Mr. Dubois holds a degree in Financial Science and
Accountancy from the Limburg Business School in Diepenbeek,
Belgium.
Mr.
Dubois’ extensive financial and management expertise and
experience, in addition to his public company senior management and
board experience, and the leadership he has shown in his positions
with prior companies as well as his knowledge of the daily
operations of the Company having previously served as Chief
Executive Officer, make him a valuable asset to the Board and the
Company.
Karen
Macleod was appointed as a
director in January 2016 and currently serves as Chief Executive
Officer of Arete Group LLC, a professional services firm. Prior to
Arete Group, Ms. Macleod was President of Tatum LLC, a New
York-based professional services firm owned by Randstad, from 2011
to 2014, and was a co-founder of Resources Connection (NASDAQ:
RECN), now known as RGP, a multinational professional services firm
founded as a division of Deloitte in June 1996. Ms. Macleod served
in several positions for RGP, including as a director from 1999 to
2009 and President, North America from 2004 to 2009. Prior to RGP,
Ms. Macleod held several positions in the Audit Department of
Deloitte from 1985 to 1994. Ms. Macleod served as a director for
A-Connect (Schweiz) AG, a privately held, Swiss-based global
professional services firm, from 2014 to 2016, and was a director
for Overland Solutions from 2006 to 2013. Currently, Ms. Macleod is
serving as a director on the Board of the FWA (Financial
Women’s Association) in New York and is a member of their
Audit Committee. Ms. Macleod holds a Bachelor of Science in
Business/Managerial Economics from the University of California,
Santa Barbara.
Ms.
Macleod’s senior public company leadership experience along
with her finance and accounting background make her a significant
contributor to the Board and the strategic growth of the
Company.
Karim
Sehnaoui was appointed as a
director in February 2018. Mr. Sehnaoui is an entrepreneur and
investment professional, who specializes in private equity, venture
capital, and corporate finance. Currently, he serves as Chief
Investment Officer of ADS Securities LLC, a position he has held
since October 2018, and as a Director of ETS Limited. In addition,
Mr. Sehnaoui is the Founder and current Managing Director of Elham
Management and Investment Group, an investment firm founded in 2011
that is dedicated to sustainable strategic investing. From 2012 to
2016, Mr. Sehnaoui taught graduate level finance courses as a
visiting Assistant Professor at MSB Mediterranean School of
Business in Tunisia. Prior to that, Mr. Sehnaoui spent several
years in investment banking and private equity, serving as Acting
Chief Investment Officer of Abu Dhabi Investment House PJSC and
General Manager for Abu Dhabi Investment House S.A., and Business
Development Director at Ithmaar Bank. Mr. Sehnaoui is currently a
member of the Supervisory Board of Fyber N.V. (FRA: FBEN), an
advertising technology company. Mr. Sehnaoui holds Bachelor’s
and Master’s degrees in Civil Engineering from McGill
University in Montreal, Canada, and was a Global Leadership Fellow
at the World Economic Forum in Geneva, Switzerland from 2005 to
2007.
Mr.
Sehnaoui was appointed as a director in connection with ETS Limited
becoming the Company’s largest stockholder of record in 2018.
Mr. Sehnaoui’s senior leadership experience, along with his
private equity and venture capital background make him a valued
member of the Board and a strong asset to the ongoing growth of the
Company.
Derek
Cassell joined the Company in
June 2014 through the strategic acquisition of Emerge Monitoring,
at which time he was appointed Divisional President, Americas. Mr.
Cassell was appointed to serve as our President in December 2016
and was promoted to the role of Chief Executive Officer effective
January 1, 2018. From September 2008 until June 2014, Mr. Cassell
served as an Executive Vice President of Emerge Monitoring, which
was part of the Bankers Surety Team. Mr. Cassell has over 20 years
of experience providing correctional solutions to the criminal
justice industry. His previous positions include Director of
Operations for ADT Correctional Services, Director of Customer
Support for G4S Justice Services, and National Sales and Marketing
Manager for ElmoTech Inc. He holds a Criminal Justice Degree from
Henry Ford College in Dearborn Heights,
Michigan.
Peter K.
Poli has served as our Chief
Financial Officer since January 2017. In addition, he has served as
the Chief Financial Officer and Treasurer of Emerge Monitoring,
Inc., Secretary and Treasurer of Track Group – Puerto Rico,
Inc., Secretary of Track Group Analytics, Limited and Manager of
Emerge Monitoring LLC, all of which are subsidiaries of the
Company, since May 2017. Before joining the Company, Mr. Poli
served as the Chief Financial Officer of Grand Banks Yachts Limited
from August 18, 2004 through December 31, 2015. In addition, he
served as an Executive Director of Grand Banks Yachts from March
31, 2008 through October 28, 2015. Prior to his time with Grand
Banks Yachts Limited, Mr. Poli served as the Chief Financial
Officer for Acumen Fund Inc., I-Works Inc., and as Vice
President and Chief Financial Officer of FTD.COM. Mr. Poli also
spent nine years as an Investment Banker with Dean Witter Reynolds,
Inc. and served as the CFO of a wholly-owned subsidiary of Morgan
Stanley Dean Witter from 1997 to 1999. In addition, Mr. Poli served
as an Independent Director of Leapnet, Inc. from 2000 to 2002. Mr.
Poli earned a Bachelor of Art in Economics and Engineering from
Brown University in 1983 and an MBA from Harvard Business School in
1987.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange Act
of 1934, as amended (the “Exchange
Act”), requires our
officers, directors, and persons who beneficially own more than ten
percent of our common stock to file reports of ownership and
changes in ownership with the SEC. Officers, directors, and
greater-than-ten-percent stockholders are also required by the SEC
to furnish us with copies of all Section 16(a) forms that they
file.
Based
solely upon a review of these forms that were furnished to us, we
believe that all reports required to be filed by these individuals
and persons under Section 16(a) were filed during fiscal year 2019
and that such filings were timely.
Code of Business Conduct and Ethics
We have established a Code of Business Conduct and
Ethics (the “Code”) that applies to our officers, directors
and employees. This Code contains general guidelines for
conducting our business consistent with the highest standards of
business ethics, and is intended to qualify as a “code of
ethics” within the meaning of Section 406 of the
Sarbanes-Oxley Act of 2002 and the rules promulgated
thereunder. A copy of our Code is available online at
www.trackgrp.com. Any
amendments to or waivers from a provision of our Code that apply to
our principal executive officer, principal financial officer,
principal accounting officer, controller or persons performing
similar functions and that relates to any element of the Code will
be made available to the public at the aforementioned
website..
Board Leadership Structure
Our
Board of Directors has the discretion to determine whether to
separate or combine the roles of Chief Executive Officer and Chair
of the Board. As previously mentioned, Mr. Dubois served in both
roles from September 11, 2016 through December 31, 2017. During
that time, our Board believed that his combined role was most
advantageous to the Company and our stockholders. Effective
January 1, 2018, the Board of Directors promoted the President of
the Company, Mr. Cassell, to the role of Chief Executive Officer,
and thereby separated the roles of Chief Executive Officer and
Chair of the Board. Mr. Dubois continues to serve as Chair of the
Board.
In
addition to Messrs. Cassell and Dubois’ leadership, the Board
maintains effective independent oversight through a number of
governance practices, including, open and direct communication with
management, input on meeting agendas, and regular executive
sessions.
Board Role in Risk Assessment
Management,
in consultation with outside professionals, as applicable,
identifies risks associated with the Company’s operations,
strategies and financial statements. Risk assessment is also
performed through periodic reports received by the Board from
management, counsel and the Company’s independent registered
public accountants relating to risk assessment and management. Our
Board meets privately in executive sessions with representatives of
the Company’s independent registered public accountants. The
Board also provides risk oversight through its periodic reviews of
the financial and operational performance of the
Company.
Director Nominations
The
Board nominates directors for election at each annual meeting of
stockholders and appoints new directors to fill vacancies when they
arise, and has the responsibility to identify, evaluate and recruit
qualified candidates to the Board for such nomination or
appointment.
The
Board of Directors identifies director nominees by first
considering those current members of the Board who are willing to
continue service. Current members of the Board with skills and
experience that are relevant to our business and who are willing to
continue service are considered for re-nomination, balancing the
value of continuity of service by existing members of the Board
with that of obtaining a new perspective. Nominees for director are
selected by a majority of the members of the Board of Directors.
Although the Company does not have a formal diversity policy, in
considering the suitability of director nominees, the Board
considers such factors as it deems appropriate to develop a Board
that is diverse in nature and comprised of experienced and seasoned
advisors. Factors considered by the Board include judgment,
knowledge, skill, diversity, integrity, experience with businesses
and other organizations of comparable size, including experience in
the software and/or technology industries, software, intellectual
property, business, finance, administration or public service, the
relevance of a candidate’s experience to our needs and
experience of other Board members, experience with accounting rules
and practices, the desire to balance the considerable benefit of
continuity with the periodic injection of the fresh perspective
provided by new members, and the extent to which a candidate would
be a desirable addition to the Board and any committees of the
Board.
A
stockholder who wishes to suggest a prospective nominee for the
Board may notify the Secretary of the Company in writing with any
supporting material the stockholder considers appropriate. Nominees
suggested by stockholders are considered in the same way as
nominees suggested from other sources.
In addition, the Company’s Bylaws contain
provisions that address the process by which a stockholder may
nominate an individual to stand for election to the Board at the
Company’s annual meeting of stockholders. In order to
nominate a candidate for director, a stockholder must give timely
notice in writing to the Secretary of the Company and otherwise
comply with the provisions of the Company’s Bylaws.
Information required by the Company’s Bylaws to be in the
notice include: the name, contact information and share ownership
information for the candidate and the person making the nomination,
and other information about the nominee that must be disclosed in
proxy solicitations under Section 14 of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”) and its related
rules and regulations. The Board may also require any proposed
nominee to furnish such other information as may reasonably be
required by the Board to determine the eligibility of such proposed
nominee to serve as director of the Company. The recommendation
should be sent to: Secretary, Track Group, Inc., 200 E.
5th Avenue, Suite 100, Naperville, Illinois 60563. You can
obtain a copy of the Company’s Bylaws by writing to the
Secretary at this address.
Stockholder Communications
If
you wish to communicate with the Board, you may send your
communication in writing to: Secretary, Track Group, Inc., 200 E.
5th Avenue, Suite 100, Naperville, Illinois 60563. You must
include your name and address in the written communication and
indicate whether you are a stockholder of the Company. The
Secretary will review any communication received from a
stockholder, and all material and appropriate communications from
stockholders will be forwarded to the appropriate director or
directors or committee of the Board based on the subject
matter.
Board Meetings
Directors
are generally elected for a term of one year until the next annual
meeting of stockholders and until their successors have been
elected or appointed and duly qualified. Vacancies on the Board
which are created by the retirement, resignation or removal of a
director, may be filled by the vote of the remaining members of the
Board, with such new director serving the remainder of the term or
until his/her successor is elected and qualified.
The
Board of Directors is elected by and is accountable to our
stockholders. The Board establishes policy and provides
strategic direction, oversight, and control. The Board met
twelve times during the year ended September 30, 2019 and all
incumbent directors attended at least 75% of the aggregate number
of meetings of the Board.
Board Committees and Charters
Prior
to May 31, 2018, the Board of Directors had three standing
committees which consisted of the Audit Committee, the Compensation
Committee, and the Nominating and Corporate Governance Committee.
Due to the resignations of certain former directors during 2018 as
previously disclosed by the Company and the current size of the
Board, these committees are no longer active. Instead the full
Board administers the duties of each of these committees, and will
likely do so for the foreseeable future.
Audit Committee
Prior to May 31, 2018, we had a separately
designated standing Audit Committee established in accordance with
Section 3(a)(58)(A) of the Exchange Act. The primary duties of the
Audit Committee were to oversee (i) management’s conduct
related to our financial reporting process, including reviewing the
financial reports and other financial information provided by the
Company, and reviewing our systems of internal accounting and
financial controls, (ii) our independent auditors’
qualifications and independence and the audit and non-audit
services provided to the Company, and (iii) the engagement and
performance of our independent auditors. The Audit Committee
assisted the Board in providing oversight of our financial and
related activities, including capital market transactions. The
Audit Committee had a charter, a copy of which is available on our
website at www.trackgrp.com.
Currently,
the entire Board of Directors serves in the capacity as an Audit
Committee with Ms. Macleod also serving as Committee Chair. With
the exception of Mr. Sehnaoui, each member of the Audit Committee,
satisfy, as determined by the full Board of Directors, the
definition of independent director as established in the OTC Rules
and all members are financially literate. In accordance with
Section 407 of the Sarbanes-Oxley Act of 2002, the Board of
Directors designated Ms. Macleod as the Audit Committee’s
“audit committee financial expert” as defined by the
applicable regulations promulgated by the SEC. The Audit
Committee met with our Chief Financial Officer and with our
independent registered public accounting firm and evaluated the
responses by the Chief Financial Officer, both to the facts
presented and to the judgments made by our independent registered
public accounting firm. The Audit Committee met four times
during the year ended September 30, 2019, and all members of the
Audit Committee attended at least 75% of the Committee’s
meetings.
Our full Board reviewed and discussed the matters
required by United States auditing standards required by the Public
Company Accounting Oversight Board (the “PCAOB”) and our audited financial statements for
the fiscal year ended September 30, 2019 with management and our
independent registered public accounting firm. Our Board received
the written disclosures and the letter from our independent
registered public accounting firm required by Independence
Standards Board No. 1, and our Board discussed with the independent
registered public accounting firm the independent registered public
accounting firm's independence.
Compensation Committee
We
currently do not have a compensation committee of the Board or a
committee performing similar functions. It is the view of the Board
that it is appropriate for us not to have such a committee because
of our size and because the Board participates in the consideration
of executive compensation. As such, the entire Board of Directors
has the responsibility for developing and maintaining an executive
compensation policy that creates a direct relationship between pay
levels and corporate performance and returns to stockholders. The
Board monitors the results of such policy to assure that the
compensation payable to our executive officers provides overall
competitive pay levels, creates proper incentives to enhance
stockholder value, rewards superior performance, and is justified
by the returns available to stockholders.
Additionally,
the Board administers compensation plans in a manner consistent
with the terms of such plans (including, as applicable, the
granting of stock options, restricted stock, stock units and other
awards, the review of performance goals established before the
start of the relevant plan year, and the determination of
performance compared to the goals at the end of the plan
year). None of our executive officers served as a director or
member of the compensation committee of any entity that has one or
more executive officers serving on our Board.
Nominating and Corporate Governance Committee
We
do not have a nominating committee. Our Board of Directors selects
individuals to stand for election as members of the Board and does
not have a policy with regards to the consideration of any director
candidates recommended by our stockholders. Our Board has
determined that it is in the best position to evaluate our
company’s requirements as well as the qualifications of each
candidate when it considers a nominee for a position on the Board.
As such, the entire Board of Directors has the responsibility for
identifying and recommending candidates to fill vacant and newly
created Board positions, setting corporate governance guidelines
regarding director qualifications and responsibilities, and
planning for senior management succession.
Currently,
our full Board is required to review the qualifications and
backgrounds of all directors and nominees (without regard to
whether a nominee has been recommended by stockholders), as well as
the overall composition of the Board of Directors, and recommend
director candidates to be nominated for election at the annual
meeting of stockholders, or, in the case of a vacancy on the Board,
elect a new director to fill such vacancy. If stockholders
wish to recommend candidates directly to our Board, they may do so
by communicating directly with our Secretary at the address
specified on the cover of this annual report. There has not been
any change to the procedures that our stockholder may recommend
nominees to our Board of Directors.
Independent Directors
The Board has determined that Mr. Dubois and Ms.
Macleod are currently the Company’s independent directors as
defined by the rules and regulations of the OTC Markets. Mr. Dubois
and Ms. Macleod meet the independence standards established by the
OTC Markets and the U.S. Securities and Exchange Commission (the
“SEC”). In addition, the Board has determined
that of its current directors, Ms. Macleod satisfies the definition
of an “audit committee financial expert” under SEC
rules and regulations. These designations do not impose any duties,
obligations or liabilities that are greater than those generally
imposed as members of the Board, and the designation as an audit
committee financial expert does not affect the duties, obligations
or liability of any other member of the Board.
Indemnification of Officers and Directors
As
permitted by Delaware law, the Company will indemnify its
directors and officers against expenses and liabilities they
incur to defend, settle, or satisfy any civil or
criminal action brought against them on account of
their being or having been Company directors or officers
unless, in any such action, they are adjudged to have acted
with gross negligence or willful
misconduct.
The
following discussion relates to the compensation of our
“named executive officers”.
Summary Compensation Table
The following summary
compensation table sets forth the compensation paid to the
following persons for our fiscal years ended September 30, 2018 and
2019:
(a)
our
principal executive officer;
(b)
our
other two most highly compensated executive officers who were
serving as executive officers at the end of the fiscal year ended
September 30, 2019 and who had total compensation exceeding
$100,000; and
(c)
additional individuals for whom disclosure would
have been provided under (b) but for the fact that the individual
was not serving as an executive officer at the end of the most
recently completed financial year (together, the “Named Executive
Officers”).
|
|
|
|
|
|
|
Derek Cassell
(2)
|
2019
|
$275,000
|
$366,667
|
$-
|
$-
|
$641,667
|
Chief Executive Officer and Former President
|
2018
|
$266,923
|
$30,000
|
$315,000
|
$-
|
$611,923
|
|
|
|
|
|
|
Peter
Poli
|
2019
|
$250,000
|
$166,667
|
$-
|
$-
|
$416,667
|
Chief Financial Officer
|
2018
|
$247,692
|
$22,500
|
$157,500
|
$-
|
$427,692
|
Guy Dubois
(3)
|
2019
|
$-
|
$-
|
$-
|
$-
|
$-
|
Chair and Former Executive Chair
|
2018
|
$-
|
$60,000
|
$300,000
|
$-
|
$360,000
|
(1)
This
column
represents the grant date fair value in accordance with ASC 718.
These amounts do not represent the actual value that may be
realized by the named executive officers.
(2)
On
January 1, 2018, Mr. Cassell was appointed as the Company’s
Chief Executive Officer. Mr. Cassell previously served as the
Company’s President from December 19, 2016 to January 1,
2018.
(3)
Mr. Dubois served as Chief Executive Officer from
September 2016 to December 2017. The Company did not have an
employment agreement in place with Mr. Dubois for this role.
See "Director Compensation" below for fees paid to Mr. Dubois in
connection with his service as Chair of the Board for the twelve
months ended September 30, 2019.
Narrative Disclosure to the Summary Compensation Table
Compensation Paid to our Former Executive Chair
In
the fiscal year ended September 30, 2018, Mr. Dubois received a
$60,000 cash bonus and 241,935 shares of stock equal to $300,000
for services provided to the Company in his former role as
Executive Chair.
Poli Employment Agreement
On December 12, 2016,
the Company entered into a three-year employment agreement with Mr.
Poli (the “Poli Employment
Agreement”). Under the
terms and conditions of the Poli Employment Agreement, Mr. Poli
began receiving a base salary equal to $240,000 per annum beginning
in January 2017, and received an option to purchase 100,000 shares
of the Company’s common stock at an exercise price per share
equal to the closing price of the Company’s common stock on
the date approved by the Board. One-half of this option vested on
January 1, 2018, and the remaining one-half vested on January 1,
2019. If the Company terminates Mr. Poli’s employment as a
result of an involuntary termination, he would receive an amount
equal to 12 months base salary, plus any annual bonus deemed to be vested and
earned.
An amendment to the
Poli Employment Agreement was approved at a Board meeting on
December 13, 2017, and such amendment was executed on January 3,
2018. Pursuant to the terms of
the Poli Agreement, as amended (the “Poli
Amendment”), effective
January 1, 2018, Mr. Poli’s employment was extended three
years, and shall automatically renew for successive one year
periods thereafter unless either party provides the other with
notice of its intent not to renew the Poli Agreement at least six
months prior to termination. In addition, the Poli Amendment
provides: (i) an increase in Mr. Poli’s base salary to
$250,000 per year; (ii) the issuance of 150,000 unregistered
restricted shares of the Company’s common stock, which shall
vest annually in increments of 50,000 beginning January 1, 2018;
and (iii) in the event of a change of control, Mr. Poli shall be
entitled to a cash payment equal to one year’s salary, plus
all restricted stock, warrants and options previously issued to Mr.
Poli shall become immediately vested and
exercisable.
Cassell Employment Agreement
On December 1, 2016,
the Company entered into an employment agreement with Mr. Cassell,
which was subsequently amended on February 13, 2017 (the
“Cassell Employment
Agreement”). Under the
terms and conditions of the Cassell Employment Agreement, Mr.
Cassell received a base salary equal to $240,000 per annum, and
received 60,000 unregistered restricted shares of the
Company’s common stock. One-half of these shares vested
immediately upon issuance, and the remaining one-half vested on
March 30, 2018. If the Company terminates Mr. Cassel’s
employment as a result of an involuntary termination, he would
receive an amount equal to 12 months base salary, plus
any annual bonus deemed to be vested
and earned.
A second amendment to
the Cassell Employment Agreement was approved at a Board meeting
held on December 13, 2017, and such amendment was executed on
January 4, 2018. Under the terms of the Cassell Agreement, as
amended (the “Cassell
Amendment”), effective
January 1, 2018, Mr. Cassell was promoted from President to Chief
Executive Officer of the Company, a position which he shall hold
until December 31, 2020, unless earlier terminated or extended.
Should Mr. Cassell elect to voluntarily terminate his employment
with the Company, he must provide written notice of his intent to
do so at least 180 days prior to terminating his
employment. In addition,
the Cassell Amendment provides: (i) an increase in Mr.
Cassell’s base salary to $275,000 per year; (ii) an increase,
to 100% of his base salary, in his annual bonus effective for bonus
plan year 2018 and thereafter; (iii) the issuance of 300,000
unregistered restricted shares of the Company’s common stock,
which shall vest annually in increments of 100,000 beginning
January 1, 2018; and (iv) in the event of a change of control, Mr.
Cassell shall be entitled to a cash payment equal to one
year’s salary, plus all restricted stock, warrants and
options previously issued to Mr. Cassell shall become immediately
vested and exercisable.
Outstanding Equity Awards at September 30, 2019
The
following table discloses outstanding shares, stock option awards
and warrants held by each of the Named Executive Officers as of
September 30, 2019:
Outstanding Equity Awards at Fiscal Year-End 2019
|
Number of securities underlying unexercised options (#)
exercisable
|
Number of securities underlying unexercised options (#)
unexercisable
|
Equity incentive plan awards: Number of underlying unexercised
unearned options (#)
|
Option exercise price
($)(1)
|
|
Number of shares or units of stock that have not vested
(#)
|
Market value of shares or units of stock that have not vested
($)
|
Equity incentive plan awards: Number of Unearned shares, units or
other rights that have not vested (#)
|
Equity incentive plan awards: Market or Payout value of unearned
shares, units or other rights that have not vested ($)
|
Guy
Dubois
|
2,385
|
-
|
-
|
$1.24
|
3/21/2022
|
-
|
-
|
-
|
-
|
|
64,665
|
-
|
-
|
$1.24
|
4/14/2022
|
-
|
-
|
-
|
-
|
|
4,083
|
-
|
-
|
$1.24
|
6/30/2022
|
-
|
-
|
-
|
-
|
|
2,280
|
-
|
-
|
$1.24
|
9/30/2022
|
-
|
-
|
-
|
-
|
|
2,344
|
-
|
-
|
$1.24
|
12/31/2023
|
-
|
-
|
-
|
-
|
|
2,432
|
-
|
-
|
$1.24
|
3/31/2023
|
-
|
-
|
-
|
-
|
|
51,576
|
-
|
-
|
$1.24
|
6/02/2023
|
-
|
|
-
|
-
|
|
2,647
|
-
|
-
|
$1.24
|
6/30/2023
|
-
|
-
|
-
|
-
|
|
14,988
|
-
|
-
|
$1.24
|
1/27/2022
|
-
|
-
|
-
|
-
|
|
8,868
|
-
|
-
|
$1.24
|
4/20/2022
|
-
|
-
|
-
|
-
|
|
113,310
|
-
|
-
|
$1.24
|
8/14/2022
|
-
|
-
|
-
|
-
|
|
8,571
|
-
|
-
|
$1.24
|
9/30/2022
|
-
|
-
|
-
|
-
|
|
12,676
|
-
|
-
|
$1.24
|
10/14/2022
|
-
|
-
|
-
|
-
|
|
15,126
|
-
|
-
|
$1.24
|
1/15/2023
|
-
|
-
|
-
|
-
|
|
14,286
|
-
|
-
|
$1.24
|
3/31/2023
|
-
|
-
|
-
|
-
|
|
18,000
|
-
|
-
|
$1.24
|
6/30/2023
|
-
|
-
|
-
|
-
|
Peter
Poli
|
100,000
|
-
|
-
|
$1.24
|
1/1/2022
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
50,000(2)
|
$52,500
|
|
|
|
-
|
-
|
-
|
-
|
-
|
100,000(2)
|
$105,000
|
-
|
-
|
(1)
On
November 30, 2017, the Board of Directors approved the repricing of
the exercise price of all outstanding stock options and warrants
held by the Company’s officers and directors on such date. As
such, all of the stock options reported in this table that were
outstanding at November 30, 2017 have an exercise price of $1.24,
the closing price of the Company’s Common Stock as reported
by the OTCQX Marketplace on November 30, 2017.
(2)
Such
shares vested on January 1, 2020, subsequent to the year ended
September 30, 2019.
Director Compensation
During the fiscal year ended September 30, 2019,
each of our non-employee directors received $25,000 per quarter for
serving on the Board of Directors, which fees were
payable in
cash. The members of the Board
of Directors are also eligible for reimbursement of their expenses
incurred in attending Board meetings in accordance with our
policies.
The
following table sets forth the compensation awarded to, earned by,
or paid to each non-employee director having served during the
fiscal year ended September 30, 2019:
|
|
|
|
|
Name
|
|
|
|
|
|
|
|
|
|
Guy Dubois
|
$-
|
$-
|
$100,000
|
$100,000
|
Karen Macleod
|
$-
|
$-
|
$100,000
|
$100,000
|
Karim Sehnaoui
|
$-
|
$-
|
$100,000
|
$100,000
|
Director
Warrants
The following table lists the warrants to purchase shares of common
stock held by each of our non-employee directors as of January 28,
2020, all of which were granted in connection with their services
as directors:
|
|
|
|
|
|
|
|
|
|
|
|
Guy
Dubois (1)
|
3/22/13
|
3/21/22
|
$1.24
|
2,385
|
$11,682
|
|
4/16/13
|
4/14/22
|
$1.24
|
64,665
|
$285,003
|
|
7/1/13
|
6/30/22
|
$1.24
|
4,083
|
$23,640
|
|
10/1/13
|
9/30/22
|
$1.24
|
2,280
|
$17,982
|
|
1/2/14
|
12/31/23
|
$1.24
|
2,344
|
$12,014
|
|
4/1/14
|
3/31/23
|
$1.24
|
2,432
|
$8,684
|
|
6/3/14
|
6/02/23
|
$1.24
|
51,576
|
$300,326
|
|
7/1/14
|
6/30/23
|
$1.24
|
2,647
|
$7,270
|
|
1/27/14
|
1/27/22
|
$1.24
|
14,988
|
$61,918
|
|
4/20/15
|
4/20/22
|
$1.24
|
8,868
|
$27,464
|
|
8/14/15
|
8/14/22
|
$1.24
|
113,310
|
$300,000
|
|
10/1/15
|
9/30/22
|
$1.24
|
8,571
|
$25,114
|
|
10/15/15
|
10/14/22
|
$1.24
|
12,676
|
$25,859
|
|
1/15/16
|
1/15/23
|
$1.24
|
15,126
|
$45,008
|
|
4/1/16
|
3/31/23
|
$1.24
|
14,286
|
$47,572
|
|
7/1/16
|
6/30/23
|
$1.24
|
18,000
|
$53,454
|
Karen
Macleod
|
7/1/16
|
6/30/23
|
$1.24
|
9,000
|
$37,154
|
|
9/30/16
|
9/30/21
|
$1.15
|
3,529
|
$15,000
|
|
10/1/16
|
9/30/21
|
$1.15
|
5,882
|
$25,000
|
|
1/1/17
|
12/31/21
|
$1.15
|
9,191
|
$25,000
|
|
4/1/17
|
3/31/22
|
$1.15
|
12,195
|
$25,000
|
(1)
Mr.
Dubois served as the Company’s Chief Executive Officer from
September 2016 until December 31, 2017. Effective January 1, 2018
he resigned from such position but continues to serve as Chair of
the Board.
Compensation Risks Assessment
As
required by rules adopted by the SEC, management has assessed our
compensation policies and practices with respect to all employees
to determine whether risks arising from those policies and
practices are reasonably likely to have a material adverse effect
on us. In doing so, management considered various features and
elements of the compensation policies and practices that discourage
excessive or unnecessary risk taking. As a result of the
assessment, we have determined that our compensation policies and
practices do not create risks that are reasonably likely to have
material adverse effects.
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Related-Party Loan Agreements
Amended and Restated Facility Agreement and Debt Exchange Agreement
with Conrent Invest, S.A. On July 14, 2015, the
Company entered into an Amended and Restated Facility Agreement
(the “Amended
Facility Agreement”) with Conrent
Invest S.A., a public limited liability company incorporated under
the laws of the Grand Duchy of Luxembourg
(“Conrent”),
pursuant to which the Company may borrow up to $29.4 million of
unsecured debt, which accrues interest at a rate of 8% per annum
and matures on July 31, 2018. The Amended Facility Agreement also
provides the Company with a voluntary prepayment option, wherein
the Company may pay the amounts borrowed under the debt facility,
including all accrued but unpaid interest, prior to the maturity
date without any penalty or prepayment fee.
On October 9, 2017, the
Company entered into a Debt Exchange Agreement with Conrent
regarding total debt and unpaid interest of approximately $34.7
million due under the Amended Facility Agreement as of October 31,
2017 (the “Debt”)
(the “Debt
Exchange”). The Debt
Exchange called for the Company to exchange newly issued shares of
preferred stock for the entire Debt subject to approval by the
investors who purchased securities from Conrent to finance the Debt
(the “Noteholders”).
On November 2, 2017, Conrent convened a meeting of the Noteholders
to approve the Debt Exchange; however, the quorum required to
approve the Debt Exchange was not achieved.
On February 26, 2018, the Company proposed that
the maturity date of the Amended Facility Agreement be extended
from July 31, 2018 to April 1, 2019. On April 26, 2018, the
Noteholders approved the extension of the Facility Agreement from
July 31, 2018 to April 1, 2019, subject to the satisfaction of
certain conditions (the “Debt
Extension”). On June 14,
2018, the Company received a letter from Conrent acknowledging that
certain conditions had been met, and indicating that Conrent would
proceed with the Debt Extension.
On July 19, 2018 the
Company and Conrent, amended the facility agreement again, thereby
(i) extending the Maturity Date to the earlier of either April 1,
2019 or the date upon which the Outstanding Principal Amount, as
defined therein, is repaid by the Company, and (ii) provided that
in the event of a Change of Control, as defined therein, Conrent
shall immediately cancel the facility and declare the Outstanding
Principal Amount, together with unpaid interest, immediately due
and payable.
On
November 14, 2018, the Company requested that Conrent further
extend the maturity of the Amended Facility Agreement from April 1,
2019 to April 1, 2020. On December 3, 2018, Conrent agreed to
convene meetings of the Noteholders and subsequently issued a
notice of a meeting of Noteholders for each series of Notes, which
meetings were held on January 16, 2019. Conrent notified the
Company (via telephone), that the Noteholders agreed to extend the
maturity of the Amended Facility Agreement to April 1, 2020,
subject to the signing of a written agreement.
Subsequent to the year ended September 30, 2019,
on December 4, 2019, the
Company requested that Conrent extend the maturity of the Amended
Facility Agreement from April 1, 2020 to July 1, 2021. On
January 6, 2020 the investors
who purchased the securities from Conrent to finance the debt (the
“Noteholders”)
held a meeting and on January 7, 2020, Conrent notified the Company
in writing that the Noteholders agreed to extend the maturity of
the Amended Facility Agreement from April 1, 2020 to July 1, 2021.
On January 10, 2020, the Company and Conrent entered into an
amendment to the Facility Agreement which extends the maturity of
the Facility to July 1, 2021.
Conrent
Loan Agreement. On May 1,
2016, the Company entered into an unsecured Loan Agreement with
Conrent, acting with respect to its Compartment Safety III
(the “Conrent Loan
Agreement”). Pursuant to its terms, available
borrowing capacity under the Conrent Loan Agreement was $5.0
million; however, due to the failure of the lender to satisfy
certain conditions precedent to its obligation to fund, the Company
had not received funds under the Conrent Loan Agreement as of
January 28, 2020, and no proceeds thereunder are
anticipated.
ETS Limited is currently the beneficial owner of
4,871,745 shares of the Company's Common Stock
(“Track Group
Shares”) held by ADS
Securities under an agreement dated September 28, 2017, pursuant to
which ADS Securities transferred all of the Track Group Shares to
ETS Limited in exchange for all of the outstanding shares of ETS
Limited.
In
the fiscal year ended September 30, 2018, the Company paid $60,000
to Tetra House Pte. Ltd. for services. Our Chair, Mr. Dubois, is
the founder and Chairman of Tetra House Pte. Ltd.