TRCK Track Group Inc (QB)

FORWARD LOOKING STATEMENTS

 

This Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to our operations, results of operations, and other matters that are based on our current expectations, estimates, assumptions, and projections. Words such as “may” “will”, “should”, “likely”, “anticipates”, “expects”, “intends”, “plans”, “projects”, “believes”, “estimates”, and similar expressions are used to identify these forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. Forward-looking statements are based upon assumptions as to future events that might not prove to be accurate. Actual outcomes and results could differ materially from what is expressed or forecast in these forward-looking statements. Risks, uncertainties, and other factors that might cause such differences, some of which could be material, include, but are not limited to the factors discussed under the section of this Annual Report entitled “Risk Factors”.

 

 

PART I

 

Item 1.          Business

 

Track Group, Inc., (the “Company”, “we”, “us”, and “our”), a Delaware corporation since 2016 and previously incorporated in 1995 as a Utah corporation, has its principal place of business at 200 E. 5th Avenue Suite 100, Naperville, Illinois 60563. Our telephone number is (877) 260-2010. We maintain a corporate website at www.trackgrp.com. Our common stock, par value $0.0001 per share (“Common Stock”), is currently listed for quotation on the OTCQB Venture Markets (“OTCQB”) under the symbol “TRCK”. Unless specified otherwise, as used in this Annual Report, references to Track Group, Inc. include the Company and its subsidiaries: Track Group Americas, Inc., a Utah corporation; Track Group – Puerto Rico, Inc., a Puerto Rico corporation; Emerge Monitoring, Inc., a Florida corporation; Emerge Monitoring II LLC, a Florida limited liability company; Integrated Monitoring Systems, LLC, a Colorado limited liability company; Track Group Chile S.p.A, a corporation formed under the laws of the Republic of Chile; Track Group Analytics Limited, a corporation formed under the laws of Canada; and Track Group International Ltd., a company formed under the laws of Israel (collectively, the “Subsidiaries”).

 

Company Background

 

The Company designs, manufactures, and markets location tracking devices and develops and sells a variety of related software, services, accessories, networking solutions, and monitoring applications. Our products and services include a full-range of one-piece GPS tracking devices, a device-agnostic operating system, a portfolio of software applications including smartphone, alcohol and predictive analytics, and a variety of accessory, service and support offerings. Our products and services are currently available worldwide and are sold through our direct sales force, as well as through value-added resellers. The Company sells to government customers on federal, state and local levels in the U.S. and to members of the Ministry of Justice (“MOJ”) internationally. Track Group’s device-agnostic platform and expanded portfolio of integrated and complimentary monitoring-related services help reduce risk and make the administration of justice better, faster, and less expensive for taxpayers.

 

Business Strategy

 

We are committed to helping our customers improve offender rehabilitation and re-socialization outcomes through our innovative hardware, software and services. We treat our business as a service business. Although we still manufacture patented tracking technology, we see the physical goods as only a small part of the integrated offender monitoring solutions we provide. Accordingly, rather than receiving a payment just for a piece of manufactured equipment, the Company receives a recurring stream of revenue for ongoing device agnostic subscription contracts. As part of our strategy, we continue to expand our device-agnostic platform to not only collect, but also store, analyze, assess and correlate location data for both accountability and auditing reasons, as well as to use for predictive analytics and assessment of effective and emerging techniques in criminal behavior and rehabilitation. We believe a high-quality customer experience along with knowledgeable salespeople who can convey the value of our products and services greatly enhances our ability to attract and retain customers. Therefore, our strategy also includes building and expanding our own direct sales force and our third-party distribution network to effectively reach more customers and provide them with a world-class sales and post-sales support experience. In addition, we are developing related-service offerings to address adjacent market opportunities in both the public and private sectors. We believe continual investment in research and development (“R&D”), including smartphone applications and other monitoring services is critical to the development and sale of innovative technologies and integrated solutions today and in the future.

 

Recent Developments

 

On April 26, 2023, the Company and Conrent entered into an amendment to the facility agreement (the “Amendment”) originally executed by and between the parties on December 30, 2013 and amended multiple times (the “Amended Facility Agreement”). The latest Amendment: (i) extended the maturity date from July 1, 2024, to July 1, 2027; (ii) amended the applicable interest rate resulting in an escalating interest rate as follows: 4% through June 30, 2024, 5% through June 30, 2025, 5.5% through June 30, 2026, and 6% through the maturity date and (iii) removed section 7.3 “Change of Control” of the Amended Facility Agreement. In return, the Company agreed to pay certain fees to Conrent.

 

 

Products and Services

 

Devices

 

ReliAlert®XC4

ReliAlert®XC4 is our flagship GPS device, which is among the safest and most reliable monitoring devices ever made. It is the only one-piece GPS device with patented 3-way voice communication to assist intervention efforts, now on the LTE network with increased battery life. This device includes on-board processing, secondary location technology, a 95db siren, embedded RF technology, anti-tampering capabilities, increased battery life and sleep mode.

 

ReliAlert®XC3

Advanced features enable agencies to effectively track offender movements and communicate directly with offenders in real-time, through a patented, on-board two/three-way voice communication technology. This device includes an enhanced GPS antenna and GPS module for higher sensitivity GPS, enhanced voice audio quality, increased battery performance of 50+ hours, 3G cellular capabilities, improved tamper sensory and durability enhancements.

 

Operating System Software

 

IntelliTrack

IntelliTrack is a secure state of the art device-agnostic platform that provides the foundation for seamlessly and securely connecting devices, delivering trusted data to the cloud, with views of current or historical tracking provided by Google Maps® for use with predictive analytics.

 

TrackerPAL®

TrackerPAL® is a secure, cloud-based monitoring system that gives customers the ability to not only collect, but also store, analyze, assess and correlate offender data for both accountability and auditing reasons, as well as to use with predictive analytics applications and assess criminal behavior and rehabilitation opportunities.

 

Application Software

 

IntelliTrack Mobile

A mobile application of the IntelliTrack software is available for Android and iOS devices.

 

TrackerPAL® Mobile

A mobile application of the TrackerPAL® software is available for Android and iOS devices.

 

Data Analytics

Our data analytics services help facilitate the discovery and communication of meaningful patterns in diverse location and behavioral data that helps agencies reduce risks and improve decision making. Our analytics applications use various combinations of statistical analysis procedures, data and text mining, and predictive modeling to proactively analyze information on community-released offenders to discover hidden relationships and patterns in their behaviors and to predict future outcomes.

 

Real-Time Alcohol Monitoring

BACtrack is the world’s first smartphone-based remote alcohol monitoring system. The award-winning BACtrack Mobile integrates a smartphone app and police-grade breathalyzer branded for the Company to bring blood-alcohol content (“BAC”) wirelessly to a mobile device. We can quickly and easily estimate an enrollee’s BAC and track the results over time. The smartphone monitoring application allows supervisors to send scheduled or random notifications to enrollees to take BAC tests, providing photo/location-verified and time stamped results. It also includes an onboard calendar, reminding an enrollee of court dates, testing dates, medications to take, mandatory events to attend, and other matters.

 

Empower

Our Empower Smartphone Application provides victim and survivor support by creating a mobile geo-zone around a survivor of domestic abuse and communicates with the offender’s tracking device – providing an early-warning notification to the survivor if he or she is in proximity of the offender or group of offenders. 

 

Socrates

Socrates 360 is a multipurpose platform offering a wide range of content and services to people as they return to the community. The user-centric customizable capabilities include educational courses, health and wellbeing advice, secure video conferencing, access to local services, event scheduling, appointment reminders, and check-ins based on the individual’s needs.

 

 

Accessories

 

SecureCuff®

The SecureCuff® is a patented, optional accessory available exclusively for ReliAlert® and is the only uncuttable strap in the industry specifically made for high-risk offenders. SecureCuff® has encased, hardened steel bands that provide extreme cut-resistance and includes the same fiber-optic technology as the standard strap for tampering notification.

 

RF Beacon™

The RF Beacon™ is a completely self-contained, short-range transmitting station that provides a Radio Frequency (“RF”) signal communicating with assigned offender GPS devices to increase the ability to maintain critical offender location information and provide agencies with an effective way to more accurately “tether” an offender to a specific location.

 

Product Support and Services

 

Monitoring Centers

 

Our monitoring centers provide live 24/7/365 monitoring of all alarms generated from our devices, as well as customer and technical support. Our monitoring center operators play a vital role, and as such, are staffed with highly trained, bilingual individuals. These operators act as an extension of agency resources receiving alarms, communicating and intervening with offenders regarding violations and interacting with supervision staff, all pursuant to agency-established protocols. The facilities have redundant power sources, battery backup and triple redundancy in voice, data and IP. We have assisted in the establishment of monitoring centers for customers and local partners in the United States, Chile and other global locations.

 

Customer Care

 

We offer a range of support options for our customers. These include assistance that is built into software products, printed and electronic product manuals, in-person training, online support including comprehensive product information, as well as technical assistance.

 

Research and Development Program

 

During the fiscal year ended September 30, 2023 (“Fiscal 2023”), we incurred research and development expenses of $2,735,060, as compared to $2,432,448 recognized during the fiscal year ended September 30, 2022 (“Fiscal 2022”). The $302,612 increase in research and development was largely due to higher wages and payroll taxes of $298,846. The Company has now significantly enhanced its technology platform to improve the efficiency of its software, firmware, user interface, and automation and invested considerable time in developing a new device expected to be completed in calendar 2024. As a result of these improvements, $1,020,604 and $865,263 was capitalized as developed technology, in accordance with the accounting guidance for internal-use software, during Fiscal 2023 and Fiscal 2022, respectively.   

 

Competition

 

The markets for our products and services are highly competitive and we are confronted by aggressive competition in all areas of our business. These markets are characterized by frequent product introductions and technological advances. Our competitors selling tracking devices have aggressively cut prices and lowered their product margins to gain or maintain market share. Our financial condition and operating results could be adversely affected by these and other industry-wide downward pressures on gross margins. Principal competitive factors important to us include price, product features, relative price/performance, product quality and reliability, design innovation, a strong software ecosystem, service and support, and corporate reputation.

 

Our specific competitors vary from market to market and we compete against other international, national and regional companies, some of whom use local partners that may have more knowledge of the local markets and the government decision-making process. Some of our competitors are owned by large public companies with broader resources, while others are backed by private equity firms with large funds, or in some cases, work as part of a consortium with extensive international experience. We expect competition in these markets to intensify as competitors attempt to imitate some of the features of our products and applications within their own products or, alternatively, collaborate with third-party providers to offer solutions that are more competitive than those they currently offer.

 

 

Competitive Strengths

 

Relationships with High-Quality Government Customers. We have developed strong relationships with federal, state and county customers within the United States and with Ministries of Justice internationally and managed to bring in new, sizable customers in the past year.

 

Industry Leading Analytics Software. Our software remains a leader with fully functioning, revenue-generating analytics on the market today, specifically designed for the offender monitoring market. State departments of corrections, county probation agencies and sheriff’s offices have utilized this solution for multiple years.

 

Device Agnostic Software Platform. Our software platform is device agnostic and currently accommodates offender monitoring with new products that we introduce, integrates with case management software utilized by sheriff, probation and pre-trial departments, and supports devices manufactured by competitors.

 

Smartphone Monitoring Pioneers in Criminal Justice. Today’s prison system incarcerates too many individuals who pose little threat to public safety, at far too great a cost. They serve their sentences in overcrowded, outdated institutions that expose them to hardened criminals. Upon release, their opportunities and lives have changed forever. Now, low-risk offender populations can serve their sentences virtually, holding jobs and taking care of family members, yet still feeling the weight of their punishment while seeing a clear path to avoiding trouble in the future. Further, taxpayers gain a clear cost advantage. To date, we have developed apps targeting alcohol monitoring, domestic violence and our core monitoring platform.

 

Experienced Senior Management Team. Our top executives have extensive experience in both the offender monitoring marketplace and their specific fields of expertise, whether that be sales, customer care and/or technology. We also benefit from a diverse and experienced Board of Directors.

 

Recurring Revenue. Our revenue is generated in large part by long-term customer contracts based on the size of the offender monitoring program throughout each month, which creates a predictable, recurring revenue stream.

 

Extensive Product Suite. We have a large variety of products that appeal to a broad range of government customers and greatly enhance our ability to attract and retain clients. These products include different GPS devices, alcohol monitoring devices and applications, and new smartphone applications including those that address adjacent market opportunities in both the public and private sectors and analytics software.

 

National Footprint with International Presence. We operate in approximately 40 states (including Washington DC and Puerto Rico) as well as select international locations, including Chile, and Saudi Arabia and Bahamas. Our presence both within the United States and abroad better positions us to compete for new and expiring government contracts.

 

Sources and Availability of Raw Materials

 

We use various suppliers and contract manufacturers to supply parts and components for the manufacture and support of our product lines. Although our intention is to establish at least two sources of supply for materials whenever possible, for certain components we have sole or limited source supply arrangements. We may not be able to procure these components from alternative sources at acceptable prices and quality within a reasonable time, or at all; therefore, the risk of loss or interruption of such arrangements could impact our ability to deliver certain products on a timely basis.

 

The industry in which the Company operates continues to be impacted by the global semiconductor shortage initially caused by the slowdown of many chip makers and logistics companies due to COVID-19. However, the issues have lessened significantly and the Company has been able to purchase most components within reasonable lead times. See Item 1A Risk Factors.

 

Dependence on Major Customers

 

We had sales to two entities that each represent 10% or more of our gross revenue, as follows, for the years ended September 30, 2023 and 2022, respectively:

 

		2023				%				2022				%
Customer A		$	6,730,687				20	%		$	6,095,403				16	%
Customer B			3,804,951				11	%			4,871,073				13	%

 

 

No other customer represented more than 10% of our total revenue for the fiscal years ended September 30, 2023 or 2022.

 

Concentration of credit risk associated with our total and outstanding accounts receivable as of September 30, 2023 and 2022, respectively, are shown in the table below: 

 

		2023				%				2022				%
Customer A		$	490,848				11	%		$	1,346,854				22	%
Customer B			303,777				7	%			714,399				11	%
Customer C			630,494				14	%			675,725				11	%
Customer D			465,320				10	%			310,723				5	%

 

Dependence on Major Suppliers

 

We purchase cellular services from several major suppliers. The cost to us for these services during Fiscal 2023 and Fiscal 2022 was $1,569,639 and $2,063,075, respectively. The 24% decrease in cellular service expense in Fiscal 2023 compared to Fiscal 2022 was largely the result of lower sales volume and lower negotiated pricing.

 

During Fiscal 2023 and Fiscal 2022, we also purchased a significant portion of our monitoring equipment from certain suppliers. The cost of these purchases during Fiscal 2023 and Fiscal 2022 was $3,503,515 and $2,187,774, respectively. The increase in monitoring equipment was largely due to the replacement of all 3G devices with 4G LTE devices in the U.S.

 

Intellectual Property 

 

We currently hold rights to patents and copyrights relating to certain aspects of our hardware devices, accessories, software and services. We have registered or applied for trademarks and service marks in the U.S. and a number of foreign countries. Although we believe the ownership of such patents, copyrights, trademarks and service marks is an important factor in our business and that our success does depend in part on the ownership thereof, we rely primarily on the innovative skills, technical competence and marketing abilities of our personnel.

 

We file patent applications as needed to protect innovations arising from our research, development and design, and are currently pursuing numerous patent applications around the world. Over time, we have accumulated a large portfolio of issued patents around the world. We hold copyrights relating to certain aspects of our products and services. No single patent or copyright is solely responsible for protecting our products. We believe that the duration of our patents is adequate relative to the expected lives of our products.

 

Many of our products are designed to include intellectual property obtained from third parties. It may be necessary in the future to seek or renew licenses relating to various aspects of our products, processes and services. Although we have generally been able to obtain such licenses on commercially reasonable terms in the past, there is no guarantee that such licenses can be obtained in the future on reasonable terms, or at all. Because of technological changes in the industries in which we compete, current extensive patent coverage and the rapid rate of issuance of new patents, it is possible that certain components of our products, processes and services may unknowingly infringe existing patents or intellectual property rights of others. From time to time, we have been notified that we may be infringing certain patents or other intellectual property rights of third parties; however, no such notices have been received in the last two fiscal years.

 

Trademarks. We have developed and use trademarks in our business, particularly relating to our corporate and product names. We own seven trademarks that are registered with the United States Patent and Trademark Office, plus one trademark registered in Mexico and one in Canada. In addition, we have the Track Group trademark and design registered in various countries around the world.

 

We will file additional applications for the registration of our trademarks in foreign jurisdictions as our business expands under current and planned distribution arrangements. Protection of registered trademarks in some jurisdictions may not be as extensive as the protection provided by registration in the United States.

 

 

The following table summarizes our trademark registrations:

 

		Application			Registration			Status/
Trademark		Number			Number			Next Action
TrackerPAL®		78/843035				3345878		Registered
Mobile911®		78/851384				3212937		Registered
TrackerPAL®		CA 1315487				TMA 749417		Registered
TrackerPAL®		MX 805365				960954		Registered
ReliAlert®		85/238049				4200738		Registered
SecureCuff®		85/626037				4271621		Registered
Track Group®		86/301716				4701636		Registered
Track Group® and Design*		MP 1257077				1257077		Registered
Track Group®		88/852471				6198974		Registered
Track Group®		90/245541				6408353		Registered

 

* Track Group® and Design is also a registered trademark in the following jurisdictions/countries: European Union, Switzerland, Mexico, Canada and Chile.

 

Patents. We have 12 patents issued in the United States. At foreign patent offices, we have 9 patents issued. 

 

The following tables summarize information regarding our patents and patent applications. There are no assurances given that the pending applications will be granted or that they will, if granted, contain all of the claims currently included in the applications.

 

		Application
US Patents		Serial No.		Date Filed		Patent No.		Issue Date
Remote Tracking and Communication Device		11/202427		10-Aug-05		7330122		12-Feb-08
Remote Tracking and Communications Device		12/028088		8-Feb-08		7804412		28-Sep-10
Remote Tracking and Communications Device		12/875988		3-Sep-10		8031077		4-Oct-11
Alarm and Alarm Management System for Remote Tracking Devices		11/486992		14-Jul-06		7737841		15-Jun-10
Alarm and Alarm Management System for Remote Tracking Devices		12/792572		2-Jun-10		8013736		6-Sep-11
A Remote Tracking Device and a System and Method for Two-Way Voice Communication Between the Device and a Monitoring Center		11/486989		14-Jul-06		8797210		5-Aug-14
A Remote Tracking Device and a System and Method for Two-Way Voice Communication Between the Device and a Monitoring Center		14/323831		3-Jul-14		9491289		8-Nov-16
A Remote Tracking System with a Dedicated Monitoring Center		11/486976		14-Jul-06		7936262		3-May-11
Remote Tracking System and Device with Variable Sampling and Sending Capabilities Based on Environmental Factors		11/486991		14-Jul-06		7545318		9-Jun-09
Tracking Device Incorporating Enhanced Security Mounting Strap		12/818453		18-Jun-10		8514070		20-Aug-13
Tracking Device Incorporating Cuff with Cut Resistant Materials		14/307260		17-Jun-14		9129504		8-Sep-15
A System and Method for Monitoring Individuals Using a Beacon and Intelligent Remote Tracking Device		12/399151		6-Mar-09		8232876		31-Jul-12

 

 

		Application
International Patents		Serial No.			Date Filed		Patent No.		Issue Date
Remote Tracking and Communication Device - Canada			2617923		4-Feb-08		2617923		7-Jun-16
Remote Tracking and Communication Device - Mexico		MX/a/2008/001932			8-Feb-08		278405		24-Aug-10
Secure Strap Mounting System for an Offender Tracking Device - EPO			10009091.9		1-Sep-10		2466563		2-Nov-22
Secure Strap Mounting System for an Offender Tracking Device - Mexico		MX/a/2011/002283			28-Feb-11		319057		4-Apr-14
Secure Strap Mounting System for an Offender Tracking Device - Canada			2732654		23-Feb-11		2732654		1-May-18
A System and Method for Monitoring Individuals Using a Beacon and Intelligent Remote Tracking Device - Canada			2717866		3-Sep-10		2717866		17-May-16
A System and Method for Monitoring Individuals Using a Beacon and Intelligent Remote Tracking Device - EPO			09 716 860.3		6-Oct-10		2260482		9-Jan-13
A System and Method for Monitoring Individuals Using a Beacon and Intelligent Remote Tracking Device - United Kingdom		Refer to EP Patent # 2260482
A System and Method for Monitoring Individuals Using a Beacon and Intelligent Remote Tracking Device - Mexico		MX/a/2010/009680			2-Sep-10		306920		22-Jan-13

 

Trade Secrets. We own certain intellectual property, including trade secrets, which we seek to protect, in part, through confidentiality agreements with employees and other parties. Even where these agreements exist, there can be no assurance that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets will not otherwise become known to or independently developed by competitors.

 

We intend to protect our legal rights concerning intellectual property by all appropriate legal action. Consequently, we may become involved from time to time in litigation to determine the enforceability, scope, and validity of any of the foregoing proprietary rights. Any patent litigation could result in substantial cost and divert the efforts of management and technical personnel.

 

Government Regulation

 

Our operations are subject to various federal, state, local and international laws and regulations.

 

Currently, we are not involved in any pending or, to our knowledge, threatened governmental proceedings, which would require curtailment of our operations because of such laws and regulations.

 

Seasonality

 

Given the consistency in recurring domestic monitoring revenue by customers throughout Fiscal 2023, we detected no material seasonality in our business. However, as in previous years, incremental domestic device deployment opportunities typically slow down in the months of July and August. We believe this is due to the unavailability of judicial and corrections officials who observe a traditional vacation season during this period. In addition, the operation in Chile generally slows around Christmas time due to the courts willingness to permit offenders being monitored to visit family.

 

Employees

 

As of December 1, 2023, we had 162 full-time employees and 5 part-time employees. None of the employees are represented by a labor union or subject to a collective bargaining agreement. We have never experienced a work stoppage and management believes that relations with employees are good.

 

 

Additional Available Information

 

We make available, free of charge, at our corporate website (www.trackgrp.com) copies of our annual reports filed with the Securities and Exchange Commission (“SEC”) on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and all amendments to these reports, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act. We also provide copies of our Forms 8-K, 10-K, 10-Q, and proxy statements at no charge to investors upon request.

 

All reports filed by us with the SEC are available free of charge via EDGAR through the SEC website at www.sec.gov.

 

Item 1A.          Risk Factors

 

Our business is subject to significant risks. You should carefully consider the risks described below and the other information in this Annual Report, including our financial statements and related notes, before you decide to invest in our Common Stock. If any of the following risks or uncertainties actually occur, our business, results of operations or financial condition could be materially harmed, the trading price of our Common Stock could decline and you could lose all or part of your investment. The risks and uncertainties described below are those that we currently believe may materially affect us; however, they may not be the only ones that we face. Additional risks and uncertainties of which we are unaware or currently deem immaterial may also become important factors that may harm our business. Except as required by law, we undertake no obligations to update any risk factors.

 

Risks Related to Our Business, Operations and Industry 

 

We face risks related to our substantial indebtedness, including risk related to the repayment of our indebtedness.

 

As of September 30, 2023, excluding deferred financing costs, we had $43,247,660 of indebtedness outstanding, of which $322,915 becomes due and payable within the next 12 months, $60,745 matures in 2025, $0 matures in 2026 and $42,864,000 matures in 2027. We have $438,165 of interest accrued at September 30, 2023 related to our outstanding indebtedness. Our significant indebtedness could adversely affect our ability to raise additional capital to fund our operations, make interest payments as they come due, limit our ability to react to changes in the economy or our industry, and prevent us from meeting our obligations under our outstanding debt instruments. See “Recent Developments” and Note 7 to the Consolidated Financial Statements.

 

Our high degree of leverage could have adverse consequences to us, including:

 

●

making it more difficult for us to make payments on our debt;

 

●

increasing our vulnerability to general economic and industry conditions;

 

●

requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our debt, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures, and future business opportunities;

 

●

restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

 

●

limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions, and general corporate or other purposes; and

 

●

limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who may be less highly leveraged.

 

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

 

Our ability to make scheduled payments or to refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. While we are currently reviewing all options regarding our indebtedness, no assurances can be given that we will be successful in refinancing, extending or restructuring the debt, and we cannot assure you that we will maintain a level of cash flows sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

 

 

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, sell assets, seek additional capital, or restructure or refinance our indebtedness.

 

These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. In the absence of such operating results and resources, we could face substantial liquidity difficulties and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions or the proceeds that we realize from them may not be adequate to meet the debt service obligations then due.

 

There is no certainty that the market will continue to accept or expand the use of our products and services.

 

Our targeted markets may be slow to, or may never, expand the use of our products or services. Governmental organizations may not use our products unless they determine, based on experience, advertising or other factors, that our products are a preferable alternative to other available methods of tracking or incarceration. In addition, decisions to adopt new tracking devices can be influenced by government administrators, regulatory factors, and other factors largely outside of our control. No assurance can be given that key decision-makers will continue to accept or expand the use of our products, and if they do not, it could have a material adverse effect on our business, financial condition and results of operations.

 

Budgetary issues faced by government agencies could adversely impact our future revenue. 

 

Our revenue is primarily derived from contracts with state, local and county government agencies in the United States and governments of Caribbean and Latin American nations. Many of these government agencies are experiencing budget deficits and may continue to do so. As a result, we may experience delays in payment on customer invoices, the amount spent by our current clients on equipment and services that we supply may be reduced or grow at rates slower than anticipated, and it may be more difficult to attract additional government clients. In light of the recent hurricanes, and the destruction sustained by many Caribbean countries, this is of increasing risk. Furthermore, the industry has experienced a general decline in average daily lease rates for GPS tracking devices. As a result of these factors, our ability to maintain or increase our revenue may be negatively affected.

 

We rely on significant suppliers for key products and cellular access. If we do not renew these agreements when they expire, we may not continue to have access to these suppliers’ products or services at favorable prices or in volumes as we have in the past, which could adversely affect our results of operations or financial condition. 

 

We have entered into agreements with several national providers for cellular services. We also currently rely on a single source for the large majority of the manufacturing of our devices. If any of these significant suppliers were to cease providing products or services to us, we would be required to seek alternative sources. No assurances can be given that alternate sources could be located or that the delay or additional expense associated with locating alternative sources for these products or services would not materially and adversely affect our business and financial condition.

 

Our research, development, marketing and export activities are subject to government regulations. The cost of compliance or the failure to comply with these regulations could adversely affect our business, results of operations and financial condition. 

 

There can be no assurance that changes in the legal or regulatory framework or other subsequent developments will not result in limitation, suspension or revocation of regulatory approvals granted to us. Any such events, were they to occur, could have a material adverse effect on our business, financial condition and results of operations. We are required to comply with regulations for manufacturing and export practices, which mandate procedures for extensive control and documentation of product design, control and validation of the manufacturing process and overall product quality. If we, our management, or our third-party manufacturers fail to comply with applicable regulations regarding these manufacturing practices, we could be subject to a number of sanctions, including fines, injunctions, civil penalties, delays, suspensions or withdrawals of market approval, seizures or recalls of product, operating restrictions and in some cases, criminal prosecutions. 

 

We face intense competition, including competition from entities that are more established and may have greater financial resources than we do, which may make it difficult for us to establish and maintain a viable market presence.

 

Our current and expected markets are rapidly changing. Although we believe our technology has advantages over competing systems, there can be no assurance that those advantages are significant. Many of our competitors have products or techniques approved or in development and operate large, well-funded research and development programs in the field. Moreover, competitors may be in the process of developing technology that could be developed more quickly or ultimately be more effective than our products. There can be no assurance that our competitors will not develop more effective or more affordable products or achieve earlier patent protection or product commercialization.

 

 

We are dependent upon certain customers, the loss of which may adversely affect our results of operations and business condition.

 

During Fiscal 2023, our two top customers accounted for an aggregate of 31% of total sales. See Note 2 to the Consolidated Financial Statements. In the event any of our top customers were to terminate their agreements with the Company, our results of operations and financial condition may be adversely affected.

 

Our business plan is subject to the risks of technological uncertainty, which may result in our products failing to be competitive or readily accepted by our target markets.

 

There can be no assurance that our research and development efforts will be successful. In addition, the technology that we integrate or that we may expect to integrate with our product and service offerings is rapidly changing and developing. We face risks associated with the possibility that our technology may not function as intended and the possible obsolescence of our technology and the risks of delay in the further development of our own technologies. Cellular coverage is not uniform throughout our current and targeted markets. GPS technology depends upon “line-of-sight” access to satellite signals used to locate the user, which, under some circumstances, may limit the effectiveness of GPS tracking. In addition, the telecommunications industry continually updates its networks and technology which then requires the Company to update its devices to ensure compatibility with the new networks as is happening with the phase out of 3G cellular networks in the US.

 

We face risks of litigation and regulatory investigation and actions in connection with our operations.

 

Lawsuits, including regulatory actions, may seek recovery of large, indeterminate amounts or otherwise limit our operations, and their existence and magnitude may remain unknown for substantial periods of time. Relevant authorities in the markets in which we operate may investigate us in the future. These investigations may result in significant penalties in multiple jurisdictions, and we may become involved in disputes with private parties seeking compensation for damages resulting from the relevant violations. Such legal liability or regulatory action could have a material adverse effect on our business, results of operations, financial condition, cash flows, reputation and credibility. In addition, our business activities are subject to various governmental regulations in countries where we operate, which include investment approvals, export regulations, tariffs, antitrust, anti-bribery, intellectual property, consumer and business taxation, foreign trade, exchange controls, and environmental and recycling requirements. These regulations limit, and other new or amended regulations may further limit, our business activities or increase operating costs. In addition, the enforcement of such regulations, including the imposition of fines or surcharges for violation of such regulations, may adversely affect our results of operations, financial condition, cash flows, reputation and credibility.

 

Our products are subject to the risks and uncertainties associated with the protection of intellectual property and related proprietary rights.

 

We believe that our success depends in part on our ability to obtain and enforce patents, maintain trade secrets and operate without infringing on the proprietary rights of others, both in the United States and in other countries. Our inability to obtain or to maintain patents on our key products could adversely affect our business. We currently own 21 patents issued and have filed and may file additional patent applications in the United States and in key foreign jurisdictions relating to our technologies, improvements to those technologies, and for specific products we may develop. There can be no assurance that patents will issue on any of these applications or that, if issued, any patents will not be challenged, invalidated or circumvented. The enforcement of patent rights can be uncertain and involves complex legal and factual questions. The scope and enforceability of patent claims are not systematically predictable with absolute accuracy. The strength of our own patent rights depends, in part, upon the breadth and scope of protection provided by the patent and the validity of our patents, if any.

 

Our success will also depend, in part, on our ability to avoid infringing the patent rights of others. We must also avoid any material breach of technology licenses we may enter into with respect to our new products and services. Existing patent and license rights may require us to alter the designs of our products or processes, obtain licenses or cease certain activities. If patents have been issued to others that contain competitive or conflicting claims and such claims are ultimately determined to be valid and superior to our own, we may be required to obtain licenses to those patents or to develop or obtain alternative technology. If any licenses are required, there can be no assurance given that we will be able to obtain any necessary licenses on commercially favorable terms, if at all. Any breach of an existing license or failure to obtain a license to any technology that may be necessary in order to commercialize our products may have a material adverse impact on our business, results of operations and financial condition.

 

 

We also rely on trade secrets laws to protect portions of our technology for which patent protection has not yet been pursued or is not believed to be appropriate or obtainable. These laws may protect us against the unlawful or unpermitted disclosure of any information of a confidential and proprietary nature, including but not limited to our know-how, trade secrets, methods of operation, names and information relating to vendors or suppliers, and customer names and addresses. We seek to protect this un-patentable and unpatented proprietary technology and processes, in addition to other confidential and proprietary information in part, by entering into confidentiality agreements with employees, collaborative partners, consultants, and certain contractors. There can be no assurance that these agreements will not be breached, that we will have adequate remedies for any breach, or that our trade secrets and other confidential and proprietary information will not otherwise become known or be independently discovered or reverse-engineered by competitors.

 

We conduct business internationally with a variety of sovereign governments.

 

Our business is subject to a variety of regulations and political interests that could affect the timing of payment for services and the duration of our contracts. We face the risk of systems interruptions and capacity constraints, possibly resulting in adverse publicity, revenue loss and erosion of customer trust. The satisfactory performance, reliability and availability of our network infrastructure are critical to our reputation and our ability to attract and retain customers and to maintain adequate customer service levels. In addition, because our customers in these foreign jurisdictions are sovereign governments or governmental departments or agencies, it may be difficult for us to enforce our agreements with them in the event of a breach of those agreements, including, but not limited to, the failure to pay for services rendered or to complete projects that we have commenced.

 

Weakened global economic conditions may adversely affect our industry, business and results of operations.

 

The rate at which our customers purchase new or enhanced services depends on several factors, including general economic conditions in the US and abroad. These factors include overall business and consumer demand for a variety of goods and services, credit availability, interest rates, inflation rates, corporate profitability, equity and foreign exchange markets, the number of bankruptcies, and overall uncertainty with respect to the economy.  The trends and volatility of these economic factors will determine the stability and predictability of economic and market conditions. These conditions will affect the rate of information technology and government spending and could adversely affect our customers’ ability or willingness to purchase our services, delay prospective customers’ purchasing decisions, reduce the value or duration of their contracts or affect renewal rates, all of which could adversely affect our operating results.

 

Our business is subject to risks arising from epidemic diseases, such as the recent global outbreak of the COVID-19 coronavirus.

 

The COVID-19 pandemic has impacted worldwide economic activity. A pandemic, including COVID-19 or another public health epidemic, poses the risk that we or our employees, contractors, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time, including shutdowns that may be requested or mandated by governmental authorities. While it is not possible at this time to estimate the impact that COVID-19 had, or could have, on our business, the COVID-19 pandemic and mitigation measures have had and may continue to have an adverse impact on global economic conditions which could have an adverse effect on our business and financial condition, including impairing our ability to raise capital when needed. In addition, for a period of time we were under a shelter-in-place mandate which may be reinstated at the discretion of state or local authorities and many of our clients worldwide may be similarly impacted.

 

Climate change, and related legislative and regulatory responses to climate change, may adversely impact our business.

 

There is increasing concern that a gradual rise in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant changes in weather patterns around the globe, an increase in the frequency, severity, and duration of extreme weather conditions and natural disasters, and water scarcity and poor water quality. These events could adversely impact the delivery of raw materials required for our products, disrupt the operation of our supply chain and the productivity of our contract manufacturers, increase our production costs, impose capacity restraints and impact the purchases of our products and services. These events could also compound adverse economic conditions and impact consumer confidence and governmental budgets. As a result, the effects of climate change could have a long-term adverse impact on our business and results of operations. In many countries, governmental bodies are enacting new or additional legislation and regulations to reduce or mitigate the potential impacts of climate change. If we, our suppliers, or our contract manufacturers are required to comply with these laws and regulations, or if we choose to take voluntary steps to reduce or mitigate our impact on climate change, we may experience increased costs for energy, production, transportation, and raw materials, increased capital expenditures, or increased insurance premiums and deductibles, which could adversely impact our operations. Inconsistency of legislation and regulations among jurisdictions may also affect the costs of compliance with such laws and regulations. Any assessment of the potential impact of future climate change legislation, regulations or industry standards, as well as any international treaties and accords, is uncertain given the wide scope of potential regulatory change in the countries in which we operate.

 

 

Our results of operations can be adversely affected by labor shortages, turnover and labor cost increases.

 

Labor is a component of operating our business. A number of factors may adversely affect the labor force available to us or increase labor costs from time to time, including high employment levels, federal unemployment subsidies, and other government regulations. Although we have not experienced any material disruptions due to labor shortages to date, we have observed an overall tightening and increasingly competitive labor market. A sustained labor shortage or increased turnover rates within our employee base, could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, and could negatively affect our ability to complete our construction projects according to the required schedule or otherwise efficiently operate our business. If we are unable to hire and retain employees capable of performing at a high level, or if mitigation measures we may take to respond to a decrease in labor availability, such as overtime and third-party outsourcing, have unintended negative effects, our business could be adversely affected.

 

Additionally, our operations are subject to a variety of federal, state and local employment-related laws and regulations, including, but not limited to, the U.S. Fair Labor Standards Act, which governs such matters as minimum wages, the Family Medical Leave Act, overtime pay, compensable time, recordkeeping and other working conditions, Title VII of the Civil Rights Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act, the National Labor Relations Act, regulations of the Equal Employment Opportunity Commission, regulations of the Office of Civil Rights, regulations of the Department of Labor, regulations of state attorneys general, federal and state wage and hour laws, and a variety of similar laws enacted by the federal and state governments that govern these and other employment-related matters. As our employees are located in a number of states, compliance with these evolving federal, state and local laws and regulations, including increases in federal or state minimum wage laws, could substantially increase our cost of doing business while failure to do so could subject us to fines and lawsuits.

 

An overall labor shortage, lack of skilled labor, increased turnover or labor inflation, increase in federal or state minimum wages, or increase in general labor costs, caused by prolonged COVID-19 or as a result of general macroeconomic factors, could have a material adverse impact on our operations, results of operations, liquidity or cash flows.

 

The global semiconductor shortage could impact the Company’s future results.

 

The industry in which the Company operates, as well as many other industries (automotive, consumer products and medical devices), have been impacted by the global semiconductor shortage initially caused by the slowdown of many chip makers and logistics companies due to COVID-19. However, the issues have lessened significantly and the Company has been able to purchase most components within reasonable lead times.  

 

We may experience temporary service interruptions for a variety of reasons, including telecommunications or power failures, fire, water damage, vandalism, civil unrest, computer bugs or viruses, malicious cyber-attacks or hardware failures.

 

Any service interruption that results in the unavailability of our system or reduces its capacity could result in real or perceived public safety issues that may affect customer confidence in our services. Historically, we have experienced temporary interruptions of telecommunications or power outages, which were eventually mitigated, although our customer in Puerto Rico was again disrupted by another strong storm (Hurricane Fiona) which hit the island in September 2022. Such instances may result in the slowdown or loss of customer accounts or similar problems if they occur again in the future. Given rapidly changing technologies, we are not certain that we will be able to adapt the use of our services to permit, upgrade, and expand our systems or to integrate smoothly with new technologies. Network and information systems and other technologies are critical to our business activities. Network and information systems-related events, including those caused by us, our service providers or by third parties, such as computer hacking, cyber-attacks, computer viruses, or other destructive or disruptive software, process breakdowns, denial of service attacks, malicious social engineering or other malicious activities, or any combination of the foregoing could result in a degradation or disruption of our services. These types of events could result in a loss of customers and large expenditures to repair or replace the damaged properties, networks or information systems or to protect them from similar events.

 

 

We currently have one independent director sitting on our Board of Directors.

 

Our Board of Directors is currently comprised of two members, one of which would not be considered independent under the rules of the Nasdaq Capital Market and the OTC Markets. Additionally, we no longer maintain separate audit, compensation or nominating and governance committees, the duties of which are fulfilled by our entire Board of Directors. The rules of the OTC Markets require that companies whose securities are listed for quotation on the OTCQB maintain certain public float percentages and a minimum bid price for the Company’s shares. In the event that we fail to meet these standards, our Common Stock would no longer be eligible for quotation on the OTCQB, resulting in the quotation of our Common Stock on an alternative market, such as the OTC Pink Open Market. Such change may affect the number and type of investors eligible to purchase our Common Stock. As a result, the price of our Common Stock may be adversely affected.

 

Risks Related to Acquisitions

 

The success of our business depends on achieving our strategic objectives, including acquisitions, dispositions and restructurings.

 

Our acquisitions, as well as potential restructuring actions, may not achieve expected returns and other benefits as a result of various factors, including integration and collaboration challenges, such as personnel and technology. In addition, we may not achieve anticipated cost savings from restructuring actions, which could result in lower operating margins. If we decide to sell assets or a business, we may encounter difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, which could delay the accomplishment of our strategic objectives. After reaching an agreement with a buyer or seller for the acquisition or disposition of a business, we are subject to satisfaction of pre-closing conditions as well as to necessary regulatory and governmental approvals on acceptable terms, which may prevent us from completing the transaction.

 

We may not be able to grow successfully through our recent acquisitions or through future acquisitions, we may not successfully manage future growth, and we may not be able to effectively integrate businesses that we may acquire.

 

We plan to continue to grow organically as well as through strategic acquisitions of other businesses. In order to complete acquisitions, we would expect to require additional debt and/or equity financing, which may increase our interest expense, leverage, and the number of shares of our Common Stock or other securities outstanding. Businesses that we acquire may not perform as expected. Future revenue, profits and cash flows of an acquired business may not materialize due to the failure or inability to capture expected synergies, increased competition, regulatory issues, changes in market conditions, or other factors beyond our control. In addition, we may not be successful in integrating these acquisitions into our existing operations. Competition for acquisition opportunities may escalate, increasing our cost of making further acquisitions or causing us to refrain from making additional acquisitions. Additional risks related to acquisitions include, but are not limited to:

 

●

the potential disruption of our existing business;

 

●

entering new markets or industries in which we have limited prior experience;

 

●

difficulties integrating and retaining key management, sales, research and development, production and other personnel or diversion of management attention from ongoing business concerns to integration matters;

 

●

difficulties integrating or expanding information technology systems and other business processes or administrative infrastructures to accommodate the acquired businesses;

 

●

complexities associated with managing the combined businesses due to multiple physical locations;

 

●

risks associated with integrating financial reporting and internal control systems; and

 

●

whether any necessary additional debt or equity financing will be available on terms acceptable to us, or at all, and the impact of such financing on our operating performance and results of operations.

 

 

Risks Related to International Operations

 

We are exposed to fluctuations in currency exchange rates.

 

Our financial results are reported in U.S. dollars, but operations are conducted internationally. Currency exchange rates have, and may continue to have, a significant impact on our operating results. We utilize limited hedging techniques to minimize our exposure. As a result, an investment in our Common Stock may expose stockholders to fluctuations in exchange rates.

 

The dollar cost of our operations internationally could increase as a result of increases or decreases in the rate of inflation or devaluation of the local currency in relation to the dollar, which may harm our results of operations.

 

The dollar cost of our international operations is expected to be influenced by any increase in inflation that is not offset by the devaluation of the local currency in relation to the dollar. As a result, we are exposed to the risk that foreign currencies will appreciate in relation to the dollar. We cannot predict whether the foreign currencies will appreciate or depreciate against the dollar in the future.

 

International political, economic and military instability may impede our ability to execute our plan of operations. 

 

Political, economic and military conditions, both domestic and abroad, may affect our business. We cannot predict whether or in what manner these problems may occur. Acts of random terrorism periodically occur, which could affect our operations or personnel. Ongoing or revived hostilities or other factors could harm our operations and could impede our ability to execute our plan of operations. Natural disasters, such as the hurricanes in the Caribbean or Florida, could render our affected customers financially unable to continue making payments or using our services. Moreover, in order to effectively compete in certain foreign jurisdictions, it is frequently necessary or required to establish joint ventures, strategic alliances or marketing arrangements with local operators, partners or agents. Reliance on local operators, partners or agents could expose us to the risk of being unable to control the scope or quality of our overseas services or products. In addition, our business insurance may not cover losses that may occur as a result of events associated with the security situation. Any losses or damages incurred by us could have a material adverse effect on our business and financial condition.

 

Risks Related to Our Common Stock

 

Certain individuals and groups own or control a significant number of our outstanding shares. 

 

Certain groups or persons, and in particular ETS Limited, who owned approximately 41% of our issued and outstanding Common Stock as of December 1, 2023, beneficially own a substantial number of shares of our outstanding Common Stock or securities and debt instruments. As a result, these persons have the ability, acting as a group, to influence substantially our affairs and business, including the election of our directors and subject to certain limitations, of fundamental corporate transactions. This concentration of ownership may also have the effect of delaying or preventing a change of control or making other transactions more difficult or impossible without their support. In addition, these equity holders may have an interest in pursuing acquisitions, divestitures, financing or other transactions that, in their judgment, could enhance their equity investments, even though such transactions may involve significant risk to us or our other stockholders. Additionally, they may make investments in businesses that directly or indirectly compete with us, or may pursue acquisition opportunities that may be complementary to our business and as a result, those acquisition opportunities may not be available to us. 

 

Sales by certain of our stockholders of a substantial number of shares of our Common Stock in the public market could adversely affect the market price of our Common Stock. 

 

A large number of outstanding shares of our Common Stock are held by several of our principal stockholders. If any of these principal stockholders were to decide to sell large amounts of Common Stock over a short period of time, such sales could cause the market price of our Common Stock to decline.

 

 

A decline in the price of our Common Stock could affect our ability to raise additional working capital and adversely impact our operations and would severely dilute existing or future investors if we were to raise funds at lower prices.

 

A prolonged decline in the price of our Common Stock could result in a reduction of our ability to raise capital. Because our operations have been financed in part through the sale of equity securities, a decline in the price of our Common Stock could be especially detrimental to our continued operations. Any reduction in our ability to raise equity capital in the future would force us to reallocate funds from other planned uses and would have a significant negative effect on our business plans and operations, including our ability to develop new products and continue our current operations. If our stock price declines, there can be no assurance that we can raise additional capital or generate funds from operations sufficient to meet our obligations. We believe the following factors could cause the market price of our Common Stock to fluctuate widely:

 

●

actual or anticipated variations in our interim or annual results;

 

●

announcements of new services, products, acquisitions or strategic relationships within the industry;

 

●

changes in accounting treatments or principles;

 

●

changes in earnings estimates by securities analysts and in analyst recommendations; and

 

●

general political, economic, regulatory and market conditions.

 

Any failure to meet these expectations, even if minor, could materially adversely affect the market price of our Common Stock.

 

If we issue additional shares of Common Stock in the future, it will result in the dilution of our existing stockholders.

 

Our Certificate of Incorporation authorizes the issuance of 30,000,000 shares of Common Stock. Our Board of Directors has the authority to issue additional shares of Common Stock up to the authorized capital stated in the Certificate of Incorporation. The issuance of any such shares of Common Stock will result in a reduction in value of our outstanding Common Stock. If we do issue any such additional shares of Common Stock, such issuance also will cause a reduction in the proportionate ownership and voting power of all other stockholders. Further, any such issuance may result in a change of control of the Company.

 

Our Board of Directors may authorize the issuance of preferred stock and designate rights and preferences that will dilute the ownership and voting interests of existing stockholders without their approval.

 

Our Certificate of Incorporation authorizes us to issue up to 20,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”), of which 1,200,000 shares have been designated as Series A Convertible Preferred Stock (“Series A Preferred”). Our Board of Directors is authorized to designate, and to determine the rights and preferences of any series or class of Preferred Stock, and may designate additional shares of Preferred Stock in the future. The Board of Directors may, without stockholder approval, issue shares of Preferred Stock with dividend, liquidation, conversion, voting or other rights which are senior to our Common Stock or which could adversely affect the voting power or other rights of the existing holders of outstanding shares of Preferred Stock or Common Stock. Additionally, the issuance of Preferred Stock may have the effect of decreasing the market price of the Common Stock and reduce the likelihood that holders of Common Stock will receive dividend payments and payments upon liquidation. The issuance of shares of Preferred Stock may also adversely affect an acquisition or change in control of the Company. As of December 1, 2023, there were no outstanding shares of Series A Preferred issued and outstanding.

 

Trading of our Common Stock may be volatile and sporadic, which could depress the market price of our Common Stock and make it difficult for our stockholders to resell their shares. 

 

There is currently a limited market for our Common Stock and the volume of our Common Stock traded on any day may vary significantly from one day to the other. Our Common Stock is quoted on the OTCQB. Trading in stock quoted on the OTCQB can be volatile, and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with the issuer’s operations, results or business prospects. The availability of buyers and sellers represented by this volatility could lead to a market price for our Common Stock that is unrelated to operating performance. Moreover, trading of securities quoted on the OTCQB can be more volatile than the trading of securities listed on a stock exchange like NASDAQ or NYSE.

 

Item 2.          Properties

 

Our headquarters is approximately 5,600 square feet of commercial office space located at 200 E. 5th Avenue Suite 100, Naperville, Illinois. The lease for this office space began on September 1, 2017 and expired on August 31, 2022, at which time the lease was extended for another five years. Base rent and common area maintenance payments are approximately $11,000 per month.

 

We lease commercial office space in Indianapolis, Indiana of approximately 5,751 square feet. This lease began on September 1, 2018 and terminated on August 31, 2022. The Company leased the same property for the period September 1, 2022 through August 31, 2024. Base rent and common area maintenance payments are approximately $8,000 per month.

 

 

The operations of Track Group Analytics Limited were conducted in approximately 1,157 square feet of office space in Bedford, Nova Scotia, Canada. The lease for this office space began on July 1, 2020 and terminated on June 30, 2022 with monthly lease payments of approximately $2,000. Track Group Analytics is now paying approximately $500 per month to use a co-working business center on a month-to-month basis.

 

At September 30, 2023, the operations of Track Group Chile S.p.A. were conducted in approximately 2,200 square feet of commercial office space and storage facilities located in Santiago, Chile with base rent and common area maintenance payments of approximately $4,100 per month. The lease for this space is scheduled to end on September 30, 2024 and contains an automatic annual renewal.

 

We lease commercial office space in Sandy, Utah of approximately 1,500 square feet. The lease for this office space began on September 1, 2017 and expired on August 31, 2018. We are currently leasing this property on a month-to-month basis. Lease payments are $1,500 per month.

 

Item 3.          Legal Proceedings

 

The Company is, from time to time, involved in various legal proceedings incidental to the conduct of our business. Historically, the outcome of nearly 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). On March 24, 2017, SecureAlert Inc. (a predecessor entity to Track Group, Inc. or the Company) filed a complaint before the Federal Administrative Tribunal, asserting the failure by defendants to pay claimant amounts agreed to, and due under, the Pluri Annual Contract for the Rendering of Monitoring Services of Internees, through Electric Bracelets, in the Islas Marias Penitentiary Complex dated July 15, 2011. Although preliminary rulings have been unfavorable to the Company, the Company’s counsel continues to review its remaining claims which are upwards of $4.0 million. Based upon the fee arrangement the Company has with its counsel, we anticipate the future liabilities attributable to legal expense will be minimal.

 

Commonwealth of Puerto Rico, through its Trustees v. International Surveillance Services Corporation. On January 23, 2020, the Company was served with a summons for an Adversary Action pending against International Surveillance Services Corporation (“ISS”), a subsidiary of the Company, now known as Track Group – Puerto Rico Inc., in the United States District Court for the District of Puerto Rico seeking to recover allegedly fraudulent transfers and to disallow claims pursuant to United States Bankruptcy and Puerto Rican law. The allegations stem from payments made to ISS between 2014 and 2017, which the Company believes were properly made in accordance with a contract between ISS and the government of Puerto Rico, through the Oficina de Servicios con Antelacion a Juicio, originally signed in 2011. The Company is confident that all payments it received were earned and due under applicable law and produced documentation supporting its position in an informal document exchange with the Commonwealth on July 6, 2020. At this time, the case remains stayed by Court order. The Company remains confident in its position and no accrual for a potential loss has been made, after consultation with legal counsel.

 

Jeffrey Mohamed Abed v. Track Group, Inc., et al. On June 7, 2021, Jeffrey Mohamed Abed filed a complaint seeking unspecified damages in the Superior Court of the State of California, alleging strict products liability, negligence and breach of implied warranty premised upon injuries sustained by Abed who was involved in an automobile accident while wearing a GPS tracking device of the Company. The Company was served on October 15, 2021 and subsequently filed its Answer and Affirmative Defenses and issued discovery. On July 17, 2023, the action was consolidated with a related case brought by Plaintiff against other motorists involved in the automobile accident. The Company disputes Abed’s claims and will defend the case vigorously. The Company remains confident in its position and no accrual for a potential loss has been made, after consultation with legal counsel.

 

Track Group Chile SpA. v. Republic of Chile. On January 24, 2022, Track Group Chile SpA. initiated a judicial action in the Court of Justice of Chile to settle a contract dispute with the Republic of Chile. The Company asserts that it has complied with its contractual obligations and that any delays in so doing were not attributable to the Company. The Company remains confident in its position and no accrual for a potential loss has been made, after consultation with legal counsel. 

 

Jesus Valle Gonzalez, et al. v. Track Group-Puerto Rico, et al. On May 9, 2022, Plaintiff Jesus Valle Gonzalez filed a complaint in the Court of First Instance, San Juan Superior Court, Commonwealth of Puerto Rico against the Company, and associated parties alleging the death of his mother on June 8, 2016 was a result of the gross negligence of all the defendants. This claim follows a similar claim made against the Company in June 2017 by different relatives of the deceased which was settled on September 5, 2018. Plaintiff in this matter asserts his claim now having reached the age of majority and is requesting damages of $1.5 million. On August 22, 2023, the Superior Court dismissed the Plaintiffs’ case for lack of jurisdiction.

 

 

Michael Matthews v. Track Group, Inc., et al. On December 13, 2022, Plaintiff Michael Matthews filed a complaint in the Circuit Court of Cook County, Illinois, amended on July 23, 2023, against the Company and other defendants alleging wrongful arrest and incarceration and a deprivation of his rights following his purportedly erroneous violation of home monitoring program requirements. The Company disputes the allegations of the complaint, has retained counsel, and intends to vigorously defend the case. Based on the preliminary stage of the proceedings and after consultation with legal counsel, no accrual for a potential loss has been made.

 

PART II

 

Item 5.          Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

Market Information

 

Our Common Stock is traded on the OTCQB under the symbol “TRCK”. The following table sets forth the range of high and low sales prices of our Common Stock as reported on the OTCQB for the periods indicated.

 

Fiscal Year Ended September 30, 2023		High				Low
First Quarter ended December 31, 2022		$	0.66			$	0.30
Second Quarter ended March 31, 2023		$	1.25			$	0.34
Third Quarter ended June 30, 2023		$	0.70			$	0.25
Fourth Quarter ended September 30, 2023		$	0.85			$	0.18

 

Fiscal Year Ended September 30, 2022		High				Low
First Quarter ended December 31, 2021		$	3.00			$	1.76
Second Quarter ended March 31, 2022		$	2.48			$	0.71
Third Quarter ended June 30, 2022		$	3.30			$	0.70
Fourth Quarter ended September 30, 2022		$	0.99			$	0.34

 

Holders

 

As of December 1, 2023, we had 161 holders of record of our Common Stock and 11,863,758 shares of Common Stock outstanding. We also have outstanding options and warrants for the purchase of 4,688 shares of Common Stock.

 

Dividends

 

Since incorporation, we have not declared any cash dividends on our Common Stock. We do not anticipate declaring cash dividends on our Common Stock for the foreseeable future. 

 

Dilution

 

The Board of Directors determines when, under what conditions and at what prices to issue shares of Company stock. In addition, a significant number of shares of Common Stock are reserved for issuance upon exercise of outstanding options and warrants.

 

The issuance of any shares of Common Stock for any reason will result in dilution of the equity and voting interests of existing stockholders.

 

Transfer Agent and Registrar

 

The transfer agent and registrar for our Common Stock is Equiniti Trust Company, LLC, which is located at 48 Wall Street, Floor 23, New York, NY 10005.

 

 

Securities Authorized for Issuance under Equity Compensation Plans

 

The 2022 Stock Incentive Plan

 

At the annual meeting of stockholders on April 13, 2022, our stockholders approved the 2022 Omnibus Equity Incentive Plan (the “2022 Plan”), previously approved by the Company’s Board. The 2022 Plan provides for the grant of incentive options and nonqualified 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 provide services to the Company in lieu of cash. A total of 500,000 shares are authorized for issuance pursuant to awards granted under the 2022 Plan. The 2022 Plan supersedes and replaces the Company’s 2012 Equity Compensation Plan (the “2012 Plan”).

 

The 2012 Stock Incentive Plan

 

The 2022 Plan supersedes and replaces the 2012 Plan. As of June 30, 2020, the Board suspended further awards under the 2012 Plan. Any awards outstanding under the 2012 Plan will remain subject to the 2012 Plan. All shares of Common Stock remaining authorized and available for issuance under the 2012 Plan and any shares subject to outstanding awards under the 2012 Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares will automatically become available for issuance under our 2022 Plan.

 

There were no issuances of restricted shares in Fiscal 2023.

 

On April 13, 2022, the Company issued 285,000 restricted shares of Common Stock to members of its executive team pursuant to the 2022 Plan valued at $370,500. The Company recorded expense of $207,547 for the year ended September 30, 2022 in connection with the grant.

 

As of September 30, 2023, there were 215,000 shares of Common Stock remaining available for issuance under the 2022 Plan as well as 27,218 available under the 2012 plan.

 

The following table includes information as of September 30, 2023 for our equity compensation plans:

 

Plan category		Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)				Weighted- average exercise price of outstanding options, warrants and rights				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) (b)
Equity compensation plans approved by shareholders			4,688			$	1.24				242,218
Equity compensation plan not approved by shareholders			-				-				-
Total			4,688			$	1.24				242,218

 

	(a)	Consists of shares of our Common Stock issuable upon exercise of outstanding options issued under the Company’s 2012 Plan and the 2022 Plan.
	(b)	Consists of 215,000 shares of our Common Stock reserved for future issuance under the 2022 Plan and 27,218 shares of our Common Stock reserved for future issuance under the 2012 Plan.

 

Recent Sales of Unregistered Securities

 

No securities were issued without registration under the Securities Act during Fiscal 2023, nor were any securities issued subsequent to September 30, 2023, that were not reported in our Quarterly Reports on Form 10-Q and in our Current Reports on Form 8-K filed with the Securities and Exchange Commission.

 

 

Item 7.          Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). All statements contained in this Annual Report on Form 10-K (this “Annual Report”) other than statements of historical fact are forward-looking statements. When used in this Annual Report or elsewhere by management from time to time, the words “believe”, “anticipate”, “intend”, “plan”, “estimate”, “expect”, “may”, “will”, “should”, “seeks” and similar expressions are forward-looking statements. Such forward-looking statements are based on current expectations, but the absence of these words does not necessarily mean that a statement is not forward-looking. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors. For a more detailed discussion of such forward-looking statements and the potential risks and uncertainties that may impact upon their accuracy, see Item 1A entitled “Risk Factors” in Part I of this Annual Report and the “Overview” and “Liquidity and Capital Resources” sections of this Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. These forward-looking statements reflect our view only as of the date of this Annual Report. Except as required by law, we undertake no obligations to update any forward-looking statements. Accordingly, you should also carefully consider the factors set forth in other reports or documents that we file from time to time with the Securities and Exchange Commission (“SEC”).

 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (this “MD&A”) is intended to help the reader better understand Track Group, our operations and our present business environment. Our fiscal year ends on September 30 of each year. Reference to “Fiscal 2023” refers to the year ended September 30, 2023, and reference to “Fiscal 2022” refers to the year ended September 30, 2022 (Fiscal 2023 and Fiscal 2022 are collectively “Fiscal Years 2023 and 2022”). This MD&A is provided as a supplement to and should be read in conjunction with our consolidated financial statements for Fiscal Years 2023 and 2022, and the accompanying notes thereto contained in this Annual Report. This introduction summarizes MD&A, which includes the following sections:

 

●

Overview – a general description of our business and the markets in which we operate; our objectives; our areas of focus; and challenges and risks of our business.

 

●

Results of Operations – an analysis of our consolidated results of operations for the last two fiscal years presented in our consolidated financial statements.

 

●

Liquidity and Capital Resources – an analysis of cash flows; off-balance sheet arrangements and aggregate contractual obligations; and the impact of inflation and changing prices.

 

●

Off-Balance Sheet Arrangements

 

●

Critical Accounting Policies – a discussion of accounting policies that require critical judgments and estimates.

 

We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from year to year, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements.

 

Overview

 

Our core 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, we deploy offender-based management services that combine patented GPS tracking technologies, full-time 24/7/365 global monitoring capabilities, case management, and proprietary data analytics. We offer customizable tracking solutions that leverage real-time tracking data, best practices monitoring, and analytics capabilities to create complete, end-to-end tracking solutions.

 

 

Results of Operations

 

Continuing Operations - Fiscal 2023 Compared to Fiscal 2022

 

Revenue

 

During Fiscal 2023, we had revenue of $34,475,865 compared to revenue of $36,968,499 for Fiscal 2022, a decrease of $2,492,634, or approximately 7%. Of this revenue, $33,503,687 and $35,768,090 were from monitoring and other related services revenue during Fiscal 2023 and Fiscal 2022, respectively, representing a decrease of $2,264,403 or approximately 6%. The decrease in revenue from clients in Illinois, California, Canada, Mississippi was due to a reduction in people assigned to monitoring in those locations. This decline was partially offset by revenue increases for clients in Louisiana, Philadelphia, Nevada and Chile who experienced increases in the number of people assigned to monitoring. These increases and reductions from all of these locations represent typical fluctuations which occur daily. The Company’s partner in the Bahamas contributed a small amount of revenue in Fiscal 2022 which went away in Fiscal 2023 as the government elected to work with a different local partner.

 

Product and other revenue for Fiscal 2023 decreased to $972,178 from $1,200,409 in the same period in 2022, a decrease of $228,231 or approximately 19%. The decrease in product and other revenue was largely due to lower international product sales, principally in Saudi Arabia and lower IntelliTrack installation and training. We continue to largely focus on recurring subscription-based opportunities as opposed to equipment sales.

 

The industry in which the Company operates, as well as many other industries (automotive, consumer products and medical devices), have been impacted by the global semiconductor shortage. The availability of semiconductor parts has continued to improve in Fiscal 2023; however, long lead times remain with certain parts.

 

Cost of Revenue

 

During Fiscal 2023, cost of revenue totaled $19,178,790 compared to cost of revenue during Fiscal 2022 of $19,615,543, a decrease of $436,753, or approximately 2%. The decrease in cost of revenue was largely the result of lower communication costs of $493,436, lower monitoring center costs of $356,156, lower commission costs of $120,093 and lower product sales costs of $96,558. These decreases were offset by higher device maintenance costs related to regreasing some outstanding devices of $622,987.

 

Depreciation and amortization included in cost of revenue for Fiscal Years 2023 and 2022, totaled $3,263,490 and $3,237,970, respectively, an increase of $25,520, or approximately 1%. These costs represent the depreciation of ReliAlert® and other monitoring devices, as well as the amortization of monitoring software and certain royalty agreements. The increase in depreciation and amortization costs is largely due to an increase in device depreciation expense of $158,676, offset by a decrease in amortization of $133,156 for the discontinued products, Shadow and InTouch. Amortization of a patent related to GPS and satellite tracking are also included in depreciation and amortization. Devices are depreciated over either a three- or five-year useful life. Monitoring software is amortized over a seven-year life. Royalty agreements are being amortized over a ten-year useful life. The Company believes these lives are appropriate due to changes in electronic monitoring technology and the corresponding potential for obsolescence. Management periodically assesses the useful life of the devices for appropriateness. 

 

Gross Profit and Margin

 

During Fiscal 2023, gross profit totaled $15,297,075, resulting in a 44% gross margin, compared to $17,352,956, or a 47% gross margin, during Fiscal 2022. The decrease in absolute gross profit of $2,055,881 is due to a decrease in revenue of $2,492,634, higher device repair costs and nominally higher depreciation and amortization costs, partially offset by lower monitoring center costs, lower communication costs, lower commission costs and lower product sales costs. 

 

General and Administrative Expense

 

During Fiscal 2023, our general and administrative expense totaled $10,275,695, compared to $12,462,931 for Fiscal 2022. The decrease of $2,187,236, or approximately 18%, in general and administrative cost resulted largely from the impairment of intangible assets of $1,728,961 associated with the discontinuance of two product lines in Fiscal 2022, lower Board of Director fees of $153,257, and lower legal and professional fees of $909,499, partially offset by higher outside service costs of $124,218, higher payroll expense of $257,037 and higher bad debt of $183,550.

 

Selling and Marketing Expense

 

For Fiscal 2023, our selling and marketing expense was $2,842,661 compared to $2,993,749 for Fiscal 2022. The decrease of $151,088 or approximately 5% resulted largely from lower wages and related payroll taxes of $115,972 and lower outside services of $79,415, partially offset by higher travel and entertainment costs of $77,895. 

 

 

Research and Development Expense

 

During Fiscal 2023, we incurred research and development expense of $2,735,060 compared to those costs recognized during Fiscal 2022 totaling $2,432,448, an increase of $302,612 or approximately 12%. The increase was largely due to increased payroll and related tax expense of $298,846. The capitalization of developed technology, in accordance with the accounting guidance for internal-use software, was $865,263 during Fiscal 2022 and increased to $1,020,604 or 40% in Fiscal 2023 due to technology projects currently in development.

 

Depreciation and Amortization Expense

 

We maintain a significant portion of our tangible and intangible assets that are amortized or depreciated. During Fiscal 2023, depreciation and amortization included in operating expense totaled $987,472 compared to $1,563,729 for Fiscal 2022. This decrease of $576,257, or approximately 37%, was largely due to intangible assets that were fully amortized or fully impaired in Fiscal 2022.

 

Other Income (Expense)

 

During Fiscal 2023, total other expense was $1,219,845 compared to $4,406,973 during Fiscal 2022, a decrease of $3,187,128 or approximately 72%. The decrease in Fiscal 2023 was primarily due to positive currency exchange rate movements and a legal settlement of $1,600,000 in third quarter 2022 offset principally by the forgiveness of an accrued expense by a significant vendor of $633,471 in Fiscal 2022.

 

Income taxes

 

During Fiscal 2023, income tax expense totaled $627,850 compared to $883,488 during Fiscal 2022. Tax expense in both fiscal years are income taxes largely related to a foreign jurisdiction.

 

Net Income (Loss) Attributable to Common Stockholders

 

We had a net loss attributable to common stockholders for Fiscal 2023 totaling ($3,391,508), or ($0.30) and ($0.30) per basic and diluted common share, respectively, compared to net loss of ($7,390,362), or ($0.64) and ($0.64) per basic and diluted common share, respectively, for Fiscal 2022. This decrease in net loss is largely due to lower general and administrative expense, lower selling and marketing expense, lower depreciation and amortization, lower other expense and lower tax expense, partially offset by lower gross profit and higher research and development expense.

 

Liquidity and Capital Resources

 

The company believes that its existing cash and its future cash flow from operations will be sufficient to meet the cash requirements of its existing business for the foreseeable future.

 

On December 21, 2020, Conrent and the Company signed an amendment to the Amended Facility Agreement which extended the maturity date of the Amended Facility Agreement to July 1, 2024 (“Amended Facility”), capitalized the accrued and unpaid interest, increasing the outstanding principal amount and reduced the interest rate of the Amended Facility from 8% to 4%. On April 26, 2023, the Company and Conrent entered into another amendment to the facility agreement (the “Amendment”) originally executed by and between the parties on December 30, 2013 and amended multiple times (the “Amended Facility Agreement”). The latest Amendment: (i) extended the maturity date from July 1, 2024, to July 1, 2027; (ii) amended the applicable interest rate resulting in an escalating interest rate as follows: 4% through June 30, 2024, 5% through June 30, 2025, 5.5% through June 30, 2026, and 6% through the maturity date and (iii) removed section 7.3 “Change of Control” of the Amended Facility Agreement. In return, the Company agreed to pay total fees of EUR 225,000 in five annual installments to Conrent. As of September 30, 2023, $42,864,000 of principal and $438,165 of interest was owed to Conrent.

 

On January 6, 2021, the Company borrowed 70,443,375 Chilean Pesos (“CLP”) ($101,186USD) from HP Financial Services Chile Limitada. To facilitate the Loan, the Company entered into a Note Payable Agreement with HP Financial Services Chile Limitada as lender. The loan was used to purchase PABX (private automatic branch exchange phone equipment) for the construction of the Gendarmeria de Chile monitoring centers in Santiago and Puerto Montt, Chile. The loan bears an interest rate of 6.56% per annum, payable monthly with principal beginning February 2021 and a maturity date of February 6, 2024.

 

 

On January 12, 2021, the Company borrowed 347,198,500CLP ($482,965USD), net of 2,801,500CLP fees ($3,897USD), from Banco Santander. To facilitate the Loan, the Company entered into a Note Payable Agreement with Banco Santander as lender. The loan was used to comply with the construction of Gendarmeria de Chile monitoring center in Santiago, Chile and remodel a temporary monitoring center. The loan bears an interest rate of 5.04% per annum, payable monthly with principal beginning February 2021 and a maturity of May 11, 2024. The Company also paid 19,607,843CLP ($27,275USD) in broker fees which are amortized over the life of the loan.

 

On February 2, 2021, the Company borrowed 247,999,300CLP ($338,954USD), net of 2,000,700CLP fees ($2,734USD), from Banco Estado. To facilitate the Loan, the Company entered into a Note Payable Agreement with Banco Estado as lender. The loan was used for the construction of the Gendarmeria de Chile monitoring center in Santiago and computer equipment for Gendarmeria branch offices. The loan bears an interest rate of 3.50% per annum, initially having a 6-month grace period with the first payment including the 6 months of interest plus 1 month of principal on August 2, 2021, then monthly interest with principal and a maturity date of January 2, 2024. The Company also paid 14,124,294CLP ($19,304USD) in broker fees which are amortized over the life of the loan.

 

On February 4, 2021, the Company borrowed 149,794,432CLP ($205,330USD) from HP Financial Services Chile Limitada. To facilitate the Loan, the Company entered into a Note Payable Agreement with HP Financial Services Chile Limitada as lender. The loan was used to purchase computer equipment for the Gendarmeria de Chile monitoring center in Santiago, Chile. The loan bears interest at a rate of 6.61% per annum, payable monthly with principal beginning March 2021 and a maturity of March 4, 2024.

 

On February 5, 2021, the Company borrowed of 99,808,328CLP ($136,564USD), net of 210,485CLP fees ($286USD), from Banco de Chile. To facilitate the Loan, the Company entered into a Note Payable Agreement with Banco de Chile as lender. The loan was used to purchase HVAC equipment for Gendarmeria de Chile monitoring center in Santiago, Chile. The loan bears an interest rate of 2.54% per annum, payable monthly with principal beginning March 2021 and a maturity date of March 4, 2024.

 

On February 15, 2021, the Company borrowed 500,000,000CLP ($678,214USD) from Banco de Chile. To facilitate the Loan, the Company entered into a Note Payable Agreement with Banco de Chile as lender. The loan was used as working capital and to complete the construction of the Gendarmeria monitoring center in Puerto Montt, Chile. The loan bears an interest at a rate of 3.12% per annum, payable monthly with principal beginning March 2021 and a maturity of February 17, 2025. The Company also paid 28,248,588CLP ($38,317USD) in broker fees which are amortized over the life of the loan.

 

No borrowings or sales of equity securities occurred during the years ended September 30, 2023 or 2022.

 

Net Cash Flows Provided by Operating Activities.

 

During Fiscal 2023, we had cash flows from operating activities of $3,876,800, compared to cash flows from operating activities of $802,961 for Fiscal 2022, representing a $3,073,839 increase. The increase in cash from operations was largely the result of decreases in our net operating assets, mainly driven by decreases in accounts receivable, and prepaid expense, deposits and other assets.

 

Net Cash Flows used in Investing Activities.

 

The Company used $4,564,202 of cash for investing activities during Fiscal 2023, compared to $3,060,280 of cash used during Fiscal 2022, an increase of $1,503,922. Cash used for investing activities was primarily related to purchases of monitoring and other equipment to complete the swap of 3G devices and meet customer demand during the year ended September 30, 2023.

 

Net Cash Flows used in Financing Activities.

 

$511,474 of cash was used in financing activities during Fiscal 2023, which was the result of loan principal payments on Chile’s long-term debt and payment of deferred financing fees, compared to $515,500 of cash used in financing activities during Fiscal 2022. During the Fiscal Years 2023 and 2022, the Company received net proceeds of $0 from borrowings, and made principal payments of $467,323 and $494,626 on notes payable, respectively.

 

Liquidity, Working Capital and Management’s Plan

 

As of September 30, 2023, the Company had unrestricted cash of $4,057,195, compared to unrestricted cash of $5,311,104 as of September 30, 2022. As of September 30, 2023, we had working capital of $4,813,777, compared to working capital of $7,296,297 as of September 30, 2022. This decrease in working capital of $2,482,520 is principally due to the purchase of monitoring equipment, offset by a decrease in operating liabilities.

 

 

On December 21, 2020, Conrent and the Company signed an amendment to the Amended Facility Agreement which extended the maturity date of the Amended Facility Agreement to July 1, 2024 (“Amended Facility”), capitalized the accrued and unpaid interest, increasing the outstanding principal amount and reduced the interest rate of the Amended Facility from 8% to 4%. On April 26, 2023, the Company and Conrent entered into another amendment to the facility agreement (the “Amendment”) originally executed by and between the parties on December 30, 2013 and amended multiple times (the “Amended Facility Agreement”). The latest Amendment: (i) extended the maturity date from July 1, 2024, to July 1, 2027; (ii) amended the applicable interest rate resulting in an escalating interest rate as follows: 4% through June 30, 2024, 5% through June 30, 2025, 5.5% through June 30, 2026, and 6% through the maturity date and (iii) removed section 7.3 “Change of Control” of the Amended Facility Agreement. In return, the Company agreed to pay certain fees to Conrent. As of September 30, 2023, $42,864,000 of principal and $438,165 of interest was owed to Conrent. See Note 7 to the Consolidated Financial Statements.

 

As noted above, during the fiscal year ended September 30, 2021, the Company borrowed approximately $1.95 million through six notes payable to fund the construction of monitoring centers in Chile required by our new contract. These six notes mature between January 2024 to February 2025 and the principal repayments on these six notes have all commenced. No additional funds were borrowed during the years ended September 30, 2023 or 2022.

 

Inflation

 

The rise in inflation in Fiscal 2022 and Fiscal 2023 has adversely impacted the Company’s cost of labor, materials and other operating expense, but we anticipate continued operational changes to mitigate some or all of the inflationary pressures.

 

Off-Balance Sheet Financial Arrangements

 

The Company has not entered into any transactions with unconsolidated entities whereby the Company has financial guarantees, derivative instruments, or other contingent arrangements that expose the Company to material continuing risks, contingent liabilities, or any other obligation that provides financing, liquidity, market risk, or credit risk support to the Company, except as described below.

 

Bond guarantees

 

As of September 30, 2023, the Company has one performance bond in connection with a foreign customer totaling $1,654,134 (“Performance Bonds”) of which $1,157,867 is held in an interest-bearing account on behalf of the bank and is recorded in Other Assets on the Consolidated Balance Sheets. The amount held on this Performance Bond will be released after the expiration of the Performance Bond, all contract extensions have been exhausted, and the consent of the customer, but in no event before July 2024 and more likely in 2025.

 

The amounts held on two performance bonds were released in the second quarter of 2023 and the Company received $1,041,797, including interest.

 

The Company pays interest on the full amount of the Performance Bond to the financial institution providing the guarantee at 2.8% interest per annum for the Performance Bond expiring in July 2024. The Company recorded interest expense of $54,676 and $64,356 for the years ended September 30, 2023 and September 30, 2022, respectively.

 

Critical Accounting Policies

 

In Note 2, “Summary of Significant Accounting Policies” to the audited Consolidated Financial Statements included in this Annual Report, we discuss those accounting policies we consider to be significant in determining the results of operations and our financial position.

 

The preparation of financial statements requires management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expense. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. On an on-going basis, we evaluate our estimates, including those related to bad debts, inventories, intangible assets, warranty obligations, product liability, revenue, and income taxes. We base our estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.

 

 

With respect to revenue recognition, impairment of long-lived assets, leases, stock-based compensation and allowance for doubtful accounts receivable, we apply critical accounting policies discussed below in the preparation of our financial statements.

 

Revenue Recognition

 

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 leased 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. Monitoring revenue is recognized ratably over time, as the customer simultaneously receives and consumes the benefit of these services as they are performed. Payment due or received from the customers prior to rendering the associated services are recorded 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 from the sale of devices and parts is recognized upon their transfer of control to the customer, which is generally upon shipment, but may vary per contract. Payment terms are generally 30 days from invoice date. When purchasing products (such as ReliAlert® devices) from the Company, customers may, but are not required to, enter into monitoring service contracts with us. The Company recognizes revenue on monitoring services for customers that have previously purchased devices at the end of each month that monitoring services have been provided.

 

Multiple Element Arrangements

 

The majority of our revenue transactions do not have multiple elements. However, on occasion, the Company may enter into revenue transactions that have multiple elements. These may include different combinations of products or services that are included in a single billable rate. These products or services are delivered over time as the customer utilizes our services. In cases where obligations in a contract are distinct and thus require separation into multiple performance obligations, revenue recognition guidance requires that contract consideration be allocated to each distinct performance obligation based on its relative standalone selling price. The value allocated to each performance obligation is then recognized as revenue when the revenue recognition criteria for each distinct promise or bundle of promises has been met. There were no multiple element arrangements for the years ended September 30, 2023 and 2022.

 

Other Matters

 

The Company considers an arrangement with payment terms longer than the Company’s normal terms not to be fixed or determinable. 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 may not have 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.

 

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. Our revenue is predominantly derived from two sources: (i) monitoring services, and (ii) product sales.

 

Impairment of Long-Lived Assets and Goodwill

 

We review our long-lived assets including goodwill and intangibles 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. We evaluate whether events and circumstances have occurred which indicate possible impairment as of each balance sheet date. We use an equity method of the related asset or group of assets in measuring whether the assets are recoverable. If the carrying amount of an asset exceeds its market value, an impairment charge is recognized for the amount by which the carrying amount exceeds the estimated fair value of the asset. Impairment of long-lived assets is assessed at the lowest levels for which there are an identifiable fair market value that is independent of other groups of assets. See Note 13 to the Consolidated Financial Statements.

 

 

Allowance for Doubtful Accounts and Credit Memos

 

We must make estimates of the collectability of accounts receivable. In doing so, we analyze accounts receivable and historical bad debts, customer credit-worthiness, current macroeconomic and geopolitical trends, and changes in customer payment patterns when evaluating the adequacy of the allowance for doubtful accounts.

 

The Company also maintains an allowance for estimated credit memos to be issued against current sales. Estimates of allowance for credit memos are based upon the application of a historical issuance lag period to the average credit memos issued each month.

 

Recent Accounting Pronouncements 

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies, which are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

 

Accounting for Stock-Based Compensation

 

We recognize 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. We estimate the fair value of stock options using a Black-Scholes option pricing model which requires us 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.

 

Government Regulation

 

Our operations are subject to various federal, state, local and international laws and regulations. We are not involved in any pending or, to our knowledge, threatened governmental proceedings, which would require curtailment of our operations because of such laws and regulations.

 

Item 7A.          Quantitative and Qualitative Disclosures About Market Risk

 

Our business extends to countries outside the United States, and we intend to continue to expand our foreign operations. As a result, our revenue and results of operations are affected by fluctuations in currency exchange rates, interest rates, and other uncertainties inherent in doing business in more than one currency. In addition, our operations are exposed to risks that are associated with changes in social, political, and economic conditions in the foreign countries in which we operate, including changes in the laws and policies that govern foreign investment and the repatriation of cash to the parent company, as well as, to a lesser extent, changes in United States laws and regulations relating to foreign trade and investment.

 

Foreign Currency Risks

 

We had $6,383,735 and $6,095,403 in foreign currency revenue for Fiscal Years 2023 and 2022, respectively. We made and received payments in a foreign currency during the periods indicated, which resulted in a foreign exchange gain of $467,868 and foreign exchange expense of $1,619,018 in Fiscal Years 2023 and 2022, respectively. Fluctuations in the exchange loss or gain in any given period are due to the strengthening or weakening of the U.S. dollar against the Chilean Peso and Canadian dollar which have been magnified by global matters, inflation, and the government policies established to address those issues. Changes in currency exchange rates affect the relative prices at which we sell our products and purchase goods and services. Given the uncertainty of exchange rate fluctuations, we cannot estimate the effect of these fluctuations on our future business, product pricing, results of operations, or financial condition. We periodically enter into small, simple forward foreign currency exchange contracts or derivative financial instruments to mitigate the risk of repatriating funds converted from foreign currency into U.S. dollars. To the extent foreign sales become a more significant part of our business in the future, we may seek to implement additional strategies which make use of these or other instruments to minimize the effects of foreign currency exchange on our business and/or require some international customers to receive invoices and make payments in US dollars. The Company had no active foreign currency exchange contracts as of September 30, 2023.

 

 

Item 8.          Financial Statements and Supplementary Data

 

The Financial Statements and Supplementary Data required by this Item are set forth on the pages indicated under Item 15 below.

 

Item 9.          Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

None.

 

Item 9A.          Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We have established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) to ensure that material information relating to the Company is made known to the officers who certify our financial reports and to other members of senior management and the Board of Directors. These disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

 

Under the supervision and with the participation of management, including the principal executive officer and principal financial officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2023 was completed pursuant to Rules 13a-15(b) and 15d-15(b) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer concluded that our disclosure controls and procedures were effective and designed to provide reasonable assurance that the information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms as of September 30, 2023. 

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed under the supervision of our principal executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and preparation of our financial statements for external purposes in accordance with generally accepted accounting principles.

 

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable, not absolute, assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate as a result of changes in conditions or deterioration in the degree of compliance.

 

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) issued in May 2013 and related COSO guidance. Based on our evaluation under this framework, our management concluded that our internal control over financial reporting was effective as of September 30, 2023.

 

This report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the independent registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this Annual Report.

 

Changes in Internal Control over Financial Reporting

 

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during our fiscal year ended September 30, 2023, that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

 

Item 9B.          Other Information

 

None.

 

 

PART III

 

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:

 

Karen Macleod		60		Director
Karim Sehnaoui		45		Director
Derek Cassell		50		Chief Executive Officer
Peter K. Poli		62		Chief Financial Officer
Matthew Swando		48		Chief Revenue Officer

 

Karen Macleod was appointed as a director in January 2016 having previously served as the Chief Executive Officer of Arete Group LLC, a professional services firm. Ms. Macleod currently serves on the Board of Cyngn, Inc and is Chair of the Compensation Committee and additionally serves on the Board of the Lakeland Hills YMCA. 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. She additionally served as a director on the Board of the FWA (Financial Women’s Association) in New York and was a member of their Audit Committee from 2018-2021. 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 Mr. Sehnaoui is Senior Executive Officer and Board Director, ADS Investment Solutions since October 3, 2021, he also serves as Chief Investment Officer of ADS Securities LLC, a position he has held since October 2018, and as a Director of ETS Limited. 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 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 Arts in Economics and Engineering from Brown University in 1983 and an MBA from Harvard Business School in 1987.

 

 

Matthew Swando joined Track Group in 2017 as Vice President of Global Sales continuing a 21-year career in the electronic monitoring and offender supervision market. Prior to joining Track Group, Mr. Swando was employed as a Pretrial Services Investigator for Oakland County, MI; then spent 4 years with ProTech Monitoring, Inc. employed first as a Market Analyst, and later promoted to Regional Sales Manager. In April of 2004, Mr. Swando joined BI, Inc. as a Business Development Executive and became the Western Regional Sales Manager, National Sales Manager, and later Vice President of Sales overseeing all business development activities, strategy, and staff. In 2014, Mr. Swando was promoted to Divisional Vice President overseeing all divisional operations for BI, Inc. Mr. Swando holds both a B.S. in Criminal Justice from Central Michigan University with an emphasis on alternative corrections, and an M.A. in Criminology from the University of South Florida.

 

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, par value $0.0001 per share (“Common Stock”) to file reports of ownership and changes in ownership with the Securities and Exchange Commission (“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 2023 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

 

In addition to the CEO’s leadership, the Board maintains effective independent oversight through a number of governance practices, including, open and direct communication with management, input on meeting agendas, and regular executive sessions. 

 

Board Role in Risk Assessment

 

Management, in consultation with outside professionals, as applicable, identifies risks associated with the Company’s operations, strategies and financial statements. Risk assessment is also performed through periodic reports received by the 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 the annual meetings of stockholders held 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 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. 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 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 or more 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 is elected by and is accountable to our stockholders. The Board establishes policy and provides strategic direction, oversight, and control. The Board met 9 times during the year ended September 30, 2023 and incumbent directors attended 100% of the aggregate number of meetings of the Board exclusive of meetings where a Director was excused from attendance based upon the subject matter of discussion.

 

Board Committees and Charters

 

Prior to May 31, 2018, the Board 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 has a charter, a copy of which is available on our website at www.trackgrp.com.

 

Currently, the entire Board 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, 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 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. 

 

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, 2023 (“Fiscal 2023”) 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 applicable PCAOB standards, 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 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. The Board also has periodically retained outside benefit consultants to assess compensation policies and adjust as recommended.

 

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 and Corporate Governance Committee. Our Board 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 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, 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 stockholders may recommend nominees to our Board.

 

 

Independent Directors

 

The Board has determined that Ms. Macleod is an independent director of the Company as defined by the rules and regulations of the OTC Markets. Ms. Macleod meets the independence standards established by the OTC Markets and 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. 

 

Item 11.          Executive Compensation

 

The following discussion relates to the compensation of our Named Executive Officers (as defined below).

 

Summary Compensation Table

 

The following summary compensation table sets forth the compensation paid to the following persons for our fiscal years ended September 30, 2023 and 2022:

 

(a)

our principal executive officer;

 

(b)

our other two most highly compensated executive officers who were serving as executive officers at the end of Fiscal 2023 and who had total compensation exceeding $100,000; and

 

Name and Principal Position	Year		Salary ($)				Bonus ($)				Stock Awards ($)(1)				All Other Compensation ($)(2)				Total ($)
Derek Cassell	2023		$	300,000			$	60,000			$	-			$	100			$	360,100
Chief Executive Officer	2022		$	300,000			$	350,980			$	-			$	100			$	651,080
Peter Poli	2023		$	275,000			$	27,500			$	-			$	100			$	302,600
Chief Financial Officer	2022		$	275,000			$	160,230			$	-			$	100			$	435,330
Matt Swando	2023		$	275,000			$	26,407			$	-			$	100			$	301,507
Chief Revenue Officer	2022		$	262,885			$	138,103			$	240,500			$	100			$	641,615

 

(1)

This column represents the grant date fair value in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation. These amounts do not represent the actual value that may be realized by the Named Executive Officers.

 

(2)

This column represents the value of holiday gift cards received by employees.

 

Narrative Disclosure to the Summary Compensation Table

 

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 as well as certain COBRA benefits.

 

 

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 “Second 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 Second 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. 

 

A third amendment to the Cassell Employment Agreement was approved at a Board meeting held on December 18, 2020, and such amendment was executed on December 21, 2020 (the “Third Cassell Amendment”). Under the terms of the Third Cassell Amendment, effective January 1, 2021, Mr. Cassell’s employment was extended one year and on February 23, 2021, the Board approved an increase in Mr. Cassell’s base salary to $300,000 per year effective March 21, 2021. 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.

 

A fourth amendment to the Cassell Employment Agreement was approved at a Board meeting held on December 15, 2021 (the “Fourth Cassell Amendment”). Under the terms of the Fourth Cassell Amendment, Mr. Cassell’s employment will continue in effect until terminated by either party in accordance with the terms established under the Cassell Employment Agreement.

 

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 as well as certain COBRA benefits.

 

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.

 

The Poli Amendment renewed effective January 1, 2021 and on February 23, 2021 the Board approved an increase in Mr. Poli’s base salary to $275,000 per year effective March 21, 2021. 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.

 

 

Swando Employment Agreement

 

On December 6, 2016, the Company entered into an employment agreement with Mr. Swando (the “Swando Employment Agreement”). Under the terms and conditions of the Swando Employment Agreement, Mr. Swando received a base salary equal to $185,000 per annum and received a one-time grant of 25,000 registered shares of the Company’s Common Stock. One-half of these shares vested April 23, 2017, and the remaining one-half vested April 23, 2018. If the Company terminates Mr. Swando’s employment as a result of an involuntary termination, he would receive an amount equal to 6 months base salary, plus any annual bonus deemed to be vested and earned as well as certain COBRA benefits.

 

A first amendment to the Swando Employment Agreement was executed on April 23, 2018. Under the terms of the Swando Employment Agreement, as amended (the “First Swando Amendment”), effective April 23, 2018, (i) Mr. Swando’s base annual salary was increased to $205,000, and (ii) in the event of a change of control, Mr. Swando shall be entitled to a cash payment equal to 6 months of his base annual salary, plus all restricted stock, warrants and options previously issued to Mr. Swando shall become immediately vested and exercisable, and (iii) for the purposes of any severance payment, the target bonus shall be deemed to be vested and earned.

 

A second amendment to the Swando Employment Agreement was executed on January 15, 2022 (the “Second Swando Amendment”). Under the terms of the Second Swando Amendment, Mr. Swando was promoted to Chief Revenue Officer. Mr. Swando’s base salary was increased to $275,000 per calendar year, and Mr. Swando’s bonus target level was set at fifty percent of his new base salary. Additionally, in the event of a change of control, Mr. Swando shall be entitled to a cash payment equal to one year’s salary, plus all restricted stock, warrants and options previously issued to Mr. Swando shall become immediately vested and exercisable. Subject to the approval of the Company’s proposed 2022 Omnibus Equity Incentive Plan (the “Plan”) by the Board of Directors and the Company’s stockholders, Mr. Swando shall be entitled to a one-time grant of 185,000 share of common stock of the Company, subject to the terms and conditions of the Plan as approved.

 

Outstanding Equity Awards at September 30, 2023

 

The following table provides information regarding unvested shares underlying RSUs held by our Named Executive Officers as of September 30, 2023:

 

Option Awards

Stock Awards

Name

Grant Date

Number of Securities Underlying Unexercised Options (#) Exercisable

Number of Securities Underlying Unexercised Options (#) Unexercisable

Option Exercise Price

Option Expiration Date

Number of Shares of Stock That Have Not Vested (#) (1)

Market Value of Shares of Stock That Have Not Vested ($) (1)

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 ($)

Matthew Swando

4/13/2022

61,667

(1)

30,217

-

-

 

(1)

Represents grant of 185,000 shares of restricted stock, which shares were vested one-third on October 13, 2022, one-third vested on April 13, 2023, and the remaining 61,667 vested on October 13, 2023. The market value is computed based on the closing market price of our Common Stock on September 30, 2023 of $0.49 per share.

 

Director Compensation

 

During the fiscal year ended September 30, 2023, each of our non-employee directors received $25,000 per quarter for serving on the Board, which fees were payable in cash. The members of the Board 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, 2023:

 

		Stock Awards ($)				Warrant Awards ($)				Cash ($)				Total Fees Earned ($)
Guy Dubois (1)		$	-			$	-			$	25,000			$	25,000
Karen Macleod		$	-			$	-			$	100,000			$	100,000
Karim Sehnaoui		$	-			$	-			$	100,000			$	100,000

 

(1)

Mr. Dubois served as a member of the Board of Directors during Fiscal 2023 until his resignation as a director of the Company and as Chair of the Board, effective December 31, 2022.

 

Director Warrants

 

The following table lists the warrants to purchase shares of Common Stock held by each of our non-employee directors as of December 1, 2023, all of which were granted in connection with their services as directors:

 

Name

Grant Date

Expiration Date

Exercise price

Number of Warrants

Compensation Expense

Guy Dubois (1)

1/2/2014

12/31/2023

$

1.24

2,344

$

12,014

 

(1)

Mr. Dubois served as a member of the Board of Directors during Fiscal 2023 until his resignation as a director of the Company and as Chair of the Board, effective December 31, 2022.

 

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 12.          Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

Security Ownership of Certain Beneficial Owners

 

The following table presents information regarding beneficial ownership as of December 1, 2023 (the “Table Date”), of our Common Stock by (i) each stockholder known to us to be the beneficial owner of more than five percent of our Common Stock; (ii) each of our Named Executive Officers serving as of the Table Date; (iii) each of our directors serving as of the Table Date; and (iv) all of our executive officers and directors as a group.

 

We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and dispositive power with respect to all securities they beneficially own. As of the Table Date, the applicable percentage ownership is based on 11,863,758 shares of our Common Stock issued and outstanding.

 

 

		Common Stock
		Shares				%
Name and Address of Beneficial Owner (1)
5% Beneficial Owners:
ETS Limited (2)			4,706,579				39.7	%
Conrent Invest S.A., Compartment Track-PPN (3)			1,815,697				15.3	%
CRC Founders Fund, LP (4)			691,691				5.8	%
Directors and Named Executive Officers:
Karen Macleod (5)			73,744				0.6	%
Karim Sehnaoui (6)			14,021				0.1	%
Derek Cassell (7)			317,209				2.7	%
Peter Poli (8)			187,241				1.6	%
Matt Swando (9)			205,340				1.7	%
All directors and executive officers as a group (5 persons)			1,263,886				10.7	%

 

(1)

Except as otherwise indicated, the business address for these beneficial owners is c/o the Company, 200 E. 5th Avenue, Suite 100, Naperville, Illinois 60563.

 

(2)

The business address of ETS Limited, a wholly owned subsidiary of ADS Securites LLC, is c/o Mourant Ozannes Corporate Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, PO Box 1348, Grand Cayman KY1-1108, Cayman Islands. As controlling shareholder of ADS Holding LLC, the controlling shareholder of ADS Securities, LLC, Mahmood Ebraheem Al Mahmood may be deemed to have beneficial ownership over the shares reported herein. Information is based on Amendment No. 4 to Schedule 13D filed by ADS Securities LLC on July 1, 2022.

 

(3)

Includes 75,000 shares held directly by Conrent Invest S.A. (“Conrent”). Holding information is based on Schedule 13D/A filed on July 17, 2023. The business address of each of Conrent is 2, Rue des Gaulois, L-1618 Luxembourg (Luxembourg). Information is based on Amendment No. 1 to Schedule 13D filed by Conrent on July 17, 2023.

 

(4)

Denver J. Smith is the Lead Manager for the CRC Founders Fund, LP, an investment partnership, and has the shared power to vote and dispose of the shares held by the CRC Founders Fund, LP. The business address of CRC Founders Fund, LP is 1040 S Gaylord Street, Suite 25, Denver, CO, 80209. Information is based on the Schedule 13G filed by CRC Founders Fund, LP on June 22, 2023.

 

(5)

Holdings include 73,744 shares of Common Stock owned of record.

 

(6)

Holdings include 14,021 shares of Common Stock owned of record.

 

(7)

Holdings include 317,209 shares of Common Stock owned of record.

 

(8)

Holdings include 187,241 shares of Common Stock owned of record.

 

(9)

Holdings include 205,340 shares of Common Stock owned of record.

 

Item 13.  Certain Relationships and Related Transactions, and Director Independence

 

ETS Limited is currently the beneficial owner of 4,706,579 shares of the Company's Common Stock (“Track Group Shares”) held by ADS Securities LLC (“ADS”) under an agreement dated September 28, 2017 pursuant to which ADS transferred all of the Track Group Shares to ETS Limited in exchange for all of the outstanding shares of ETS Limited. A Director of ETS Limited was elected to the Company's Board of Directors on February 7, 2018.

 

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 September 30, 2020, the Company and ADS settled the outstanding amount due under the Sapinda Loan Agreement for $2.7 million. The Company recorded a gain of approximately $0.7 million during the fiscal year ended September 30, 2020.

 

 

Item 14. Principal Accounting Fees and Services

 

During the years ended September 30, 2023 and 2022, Eide Bailly, LLP (“Eide Bailly”) served as our independent registered public accounting firm. The following table presents approximate aggregate fees and other expenses for professional services rendered by Eide Bailly, our independent registered public accounting firm, for the audit of the Company’s annual financial statements for the years ended September 30, 2023 and 2022 and fees and other expenses for other services rendered during those periods.

 

		2023				2022
Audit Fees (1)		$	226,150			$	192,135
Audit-Related Fees (2)		$	-			$	-
Tax Fees (3)		$	37,214			$	44,220
All Other Fees (4)		$	21,050			$	20,080
Total		$	284,414			$	256,435

 

	(1)	Audit services in 2023 and 2022 consisted of the audit of our annual consolidated financial statements, and other services related to filings and registration statements filed by us and our subsidiaries, and other pertinent matters including reviews of interim financial statements from our quarterly reports. Eide Bailly has served as our independent registered public accounting firm since September 24, 2013.
	(2)	There were no audit-related fees for the years ended September 30, 2023 and 2022.
	(3)	For permissible professional services related to income tax return preparation and compliance.
	(4)	All other fees are related to the audit of the 401(k) financial statements and an S-8 registration in 2022.

 

Audit Committee Pre-Approval Policies and Procedures

 

Prior to May 31, 2018, our former Audit Committee had, and subsequent to such date our entire Board of Directors has, established pre-approval policies and procedures, pursuant to which the Audit Committee approved the foregoing audit and permissible non-audit services provided by Eide Bailly in the fiscal year ended September 30, 2018, and the full Board approved the foregoing audit and permissible non-audit services provided by Eide Bailly in the fiscal year ended September 30, 2023 (“Fiscal 2023”). Such procedures govern the ways in which the Audit Committee pre-approved, and the full Board of Directors now pre-approves, audit and various categories of non-audit services that the auditor provides to the Company. Services that have not received pre-approval must receive specific approval of the full Board for Fiscal 2023.

 

Auditor Independence

 

Our Audit Committee and the full Board of Directors considered that the work done for us in Fiscal 2023 and Fiscal 2022, respectively, by Eide Bailly was compatible with maintaining Eide Bailly’s independence.

 

Report of the Audit Committee of the Board of Directors

Date: December 20, 2023

 

The full Board of Directors of Track Group, Inc. (the “Board”), serving in the capacity of the Company’s Audit Committee, has reviewed and discussed with management and Eide Bailly, LLP, our independent registered public accounting firm, the audited consolidated financial statements in the Track Group, Inc. Annual Report on Form 10-K for the year ended September 30, 2023. The Board has also discussed with Eide Bailly, LLP those matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”).

 

Eide Bailly, LLP also provided the Board with the written disclosures and the letter required by the applicable requirements of the PCAOB regarding the independent auditor’s communication with the Board concerning independence. The Board has discussed with the registered public accounting firm their independence from our Company. 

 

Based on its discussions with management and the registered public accounting firm, and its review of the representations and information provided by management and the registered public accounting firm, including as set forth above, the Board determined that the audited financial statements should be included in our Annual Report on Form 10-K for the year ended September 30, 2023.

 

Respectfully Submitted,   Karen Macleod, Committee Chair Karim Sehnaoui

 

The information contained above under the caption “Report of the Audit Committee of the Board of Directors” shall not be deemed to be soliciting material or to be filed with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate it by reference into such filing.

 

 

PART IV

 

Item 15.    Exhibits and Financial Statement Schedules

 

(a) The following documents are filed as part of this report:

 

1. Financial Statements

 

Report of Eide Bailly LLP			F-2
Consolidated Balance Sheets			F-4
Consolidated Statements of Operations and Comprehensive Income (Loss)			F-5
Consolidated Statements of Stockholders’ Equity (Deficit)			F-6
Consolidated Statements of Cash Flows			F-7
Notes to the Consolidated Financial Statements			F-8

 

2.   Financial Statement Schedules.

 

3. Exhibits. The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Commission:

 

		Incorporated by Reference
Exhibit Number	Exhibit Description	Filed Herewith	Form	Filing Date
3(i)(1)	Articles of Transfer of Track Group, Inc., a Utah corporation, dated August 5, 2016		Exhibit 3(i)(3) to the Company’s Current Report on Form 8-K	August 9, 2016
3(i)(2)	Certificate of Conversion Converting Track Group, Inc., a Utah corporation, to Track Group, Inc., a Delaware corporation, dated August 5, 2016		Exhibit 3(i)(4) to the Company’s Quarterly Report on Form 10-Q	August 9, 2016
3(i)(3)	Certificate of Incorporation of Track Group, Inc., a Delaware corporation, dated August 6, 2016		Exhibit 3(i)(5) to the Company’s Quarterly Report on Form 10-Q	August 9, 2016
3(1)(4)	Certificate of Designation of the Relative Rights and Preferences of the Series A Convertible Preferred Stock, dated October 12, 2017		Exhibit 3.1 to the Company’s Current Report on Form 8-K	October 13, 2017
3(ii)(2)	Bylaws of Track Group, Inc., a Delaware corporation		Exhibit 3(ii)(2) to the Company’s Quarterly Report on Form 10-Q	August 9, 2016
10.1	2012 Equity Incentive Award Plan		Appendix II to the Company’s Definitive Proxy Statement on Schedule 14A filed on October 25, 2011, amended in accordance with the Company’s Definitive Proxy Statement on Schedule 14A filed on April 9, 2015
10.2	Amended and Restated Facility Agreement, dated June 30, 2015, by and between Track Group, Inc. and Conrent Invest S.A, acting on behalf of its compartment “Safety 2”, dated June 30, 2015		Exhibit 10.1 to the Company’s Current Report on Form 8-K	July 15, 2015
10.4	Loan Agreement, by and between Conrent Invest S.A., acting with respect to its Compartment Safety III, and Track Group, Inc., dated May 1, 2016		Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q	May 9, 2016
10.5	Employment agreement, by and between Track Group Inc. and Peter Poli, dated December 12, 2016		Exhibit 10.1 to the Company’s Current Report on Form 8-K	December 16, 2016

 

 

10.6	Employment Agreement by and between Track Group, Inc. and Derek Cassell dated, December 1, 2016		Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q	February 14, 2017
10.7	Services Agreement, dated December 7, 2016		Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q	February 14, 2017
10.8	Amendment No. 1 to Employment Agreement by and between Track Group Inc. and Derek Cassell, dated February 13, 2017		Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q	February 14, 2017
10.9	Amendment No. 1 to Employment Agreement by and between Track Group, Inc. and Peter K. Poli dated, January 3, 2018		Exhibit 10.1 to the Company’s Current Report on Form 8-K	January 5, 2018
10.10	Amendment No. 2 to Employment Agreement by and between Track Group Inc. and Derek Cassell, dated January 3, 2018		Exhibit 10.2 the Company’s Current Report on Form 8-K	January 5, 2018
10.11	Monitoring Services Agreement by and between Track Group, Inc. and Marion County Community Corrections Agency, dated December 18, 2017		Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q	February 8, 2018
10.12	Monitoring Services Agreement by and between Track Group, Inc. and Gendarmeria of Chile, the Republic of Chile’s uniformed prison service, dated July 29, 2020		Exhibit 10.1 to the Company’s Current Report on Form 8-K	August 17, 2020
10.13	Amendment Agreement by and between Track Group, Inc. and Conrent Invest S.A., dated July 19, 2018		Exhibit 10.1 to the Company’s Current Report on Form 8-K	July 19, 2018
10.14	Amendment Agreement by and between Track Group, Inc. and Conrent Invest S.A., dated February 24, 2019		Exhibit 10.1 to the Company’s Current Report on Form 8-K	February 28, 2019
10.15	Amendment Agreement by and between Track Group, Inc. and Conrent Invest S.A., dated January 10, 2020		Exhibit 10.1 to the Company’s Current Report on Form 8-K	January 15, 2020
10.17	Monitoring Services Agreement between Track Group, Inc. and Gendarmeria de Chile, the Republic of Chile’s uniform prison service, dated July 29, 2020		Exhibit 10.1 to the Company’s Current Report on Form 8-K	August 17, 2020
10.18	Amendment No. 3 to Employment Agreement between Track Group, Inc. and Derek Cassell, dated December 1, 2016		Exhibit 10.19 to the Company’s Annual Report on Form 10-K	December 23, 2020
10.19	Amendment to Facility Agreement by and between Track Group, Inc. and Conrent Invest S.A., acting on behalf of its compartment, “Safety 2”, dated December 21, 2020		Exhibit 10.1 to the Company’s Current Report on Form 8-K	December 23, 2020
10.20	Amendment No. 4 to the Executive Employment Agreement between Track Group, Inc. and Derek Cassell Dated December 15, 2021 (incorporated by reference to Exhibit 10.19 to our Annual Report on Form 10-K, filed).		Exhibit 10.19 to the Company’s Annual Report on Form 10-K	December 16, 2021
10.21	Employment Agreement by and Between Track Group Inc. and Matthew Swando dated December 6, 2016.		Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q	February 10, 2022
10.22	Amendment No. 1 to Employment Agreement by and Between Track Group Inc. and Matthew Swando dated April 23, 2018.		Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q	February 10, 2022
10.23	Amendment No.2 to Employment Agreement by and Between Track Group Inc. and Matthew Swando dated January 15, 2022.		Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q	February 10, 2022
10.24	2022 Omnibus Equity Incentive Plan (incorporated by reference to Annex A to our Definitive Proxy Statement on Schedule 14A, filed).		Annex A to the Company’s Definitive Proxy Statement on Schedule 14A	February 24, 2022

 

 

10.25	Settlement Agreement and Mutual Release entered into by the Company, Eli Sabag, Sapinda Asia Limited and Lars Windhorst, dated June 10, 2022		Exhibit 10.1 to the Company’s Current Report on Form 8-K	June 14, 2022
10.26	Amendment to Facility Agreement by and between Track Group, Inc. and Conrent Invest S.A., acting on behalf of its compartment, “Safety 2”, dated April 26, 2023.		Exhibit 10.1 to the Company’s Current Report on Form 8-K	April 27, 2023
14.1	Code of Business Conduct & Ethics (incorporated by reference to our Annual Report on Form 10-K, filed).		Exhibit 14.1 to the Company’s Annual Report on Form 10-K	December 19, 2017
21	Subsidiaries of the Registrant (incorporated by reference to Amendment No. 1 to our Annual Report on Form 10-K, filed).		Exhibit 21 to the Company’s Annual Report on Form 10-K	January 28, 2019
31(i)	Certification of Chief Executive Officer under Section 302 of Sarbanes-Oxley Act of 2002 (filed herewith).	X
31(ii)	Certification of Chief Financial Officer under Section 302 of Sarbanes-Oxley Act of 2002 (filed herewith).	X
32	Certifications under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (filed herewith).	X
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	X
101.SCH	Inline XBRL Taxonomy Extension Schema Document	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	X
104	Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101)	X

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Track Group, Inc.
Date: December 20, 2023	By:	/s/ Derek Cassell
		Derek Cassell
		Chief Executive Officer (Principal Executive Officer)
Date: December 20, 2023	By:	/s/ Peter K. Poli
		Peter K. Poli Chief Financial Officer (Principal Accounting Officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. 

 

Signature		Title		Date
/s/ Karen Macleod		Director		December 20, 2023
Karen Macleod
/s/ Karim Sehnaoui		Director		December 20, 2023
Karim Sehnaoui

 

 

TRACK GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2023 AND 2022

 

 

The accompanying notes are an integral part of the financial statements.

 

 

TRACK GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2023 AND 2022

 

 

The accompanying notes are an integral part of the financial statements.

 

 

TRACK GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY/(DEFICIT)

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2023 AND 2022

 

 

 

 

The accompanying notes are an integral part of the financial statements. 

 

 

TRACK GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2023 AND 2022

 

 

The accompanying notes are an integral part of the financial statements. 

 

 

TRACK GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

(1)	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. As of September 30, 2023 and 2022, the Company had an accumulated deficit of $309,610,397 and $306,218,889, respectively. The Company incurred a net loss of 3,391,508 and $7,390,362 for the years ended September 30, 2023 and 2022, respectively. On April 27, 2023, the Company announced a three-year extension of its $42.9 million debt to July 1, 2027 (See Note 7). The Company also has six notes payable maturing between January 2, 2024 and February 17, 2025 related to the construction of two monitoring centers for a contract in Chile, with outstanding balances due for the six notes totaling $365,983, net of deferred financing fees, at September 30, 2023 (See Note 7). The Company’s ability to return to profitable operations is dependent upon generating a level of revenue adequate to support its cost structure, which it was close to achieving on an operating basis in the fiscal year ended September 30, 2022, excluding the approximate $1.7 million asset impairment and was close to achieving in the fiscal year ended September 30, 2023. Management has evaluated the significance of these conditions, as well as the recent change in the maturity date, and has determined that the Company can meet its operating obligations for a reasonable period. The Company expects to fund operations using cash on hand and through operational cash flows through the upcoming twelve months.

 

(2)	Summary of Significant Accounting Policies

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of Track Group, Inc. and its active 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 and certain assumptions related to the recoverability of intangible assets and Goodwill.

 

Business Combinations

 

Business combinations are accounted for under the provisions of ASC 805-10, Business Combinations (ASC 805-10), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed at the date of acquisition are recorded at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Acquisition-related expense is recognized separately from the business combinations and are expensed as incurred. If the business combination provides for contingent consideration, the contingent consideration is recorded at its probable fair value at the acquisition date. Any changes in fair value after the acquisition date are accounted for as measurement-period adjustments if they pertain to additional information about facts and circumstances that existed at the acquisition date and that the Company obtained during the measurement period. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as performance measures, are recognized in earnings.

 

F-8

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Table of Contents

 

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”) at the exchange rate prevailing at September 30, 2023. Their respective statements of operations have been translated into USD using the average exchange rates prevailing during the periods of each statement. The corresponding translation adjustments are part of accumulated other comprehensive income and are shown as part of stockholders’ equity.

 

Other Intangible Assets

 

Other intangible assets principally consist of patents, royalty purchase agreements, developed technology acquired, trade name, and capitalized software 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. See Note 13.

 

Fair Value of Financial Instruments

 

The carrying amounts reported in the accompanying consolidated financial statements for accounts receivable, other assets, 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 Revenue & 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, 2023 and 2022.

 

		2023				%				2022				%
Customer A		$	6,730,687				20	%		$	6,095,403				16	%
Customer B			3,804,951				11	%			4,871,073				13	%

 

No other customer represented more than 10% of the Company’s total revenue for the fiscal years ended September 30, 2023 or 2022.

 

Concentration of credit risk associated with the Company’s total and outstanding accounts receivable as of September 30, 2023 and 2022, respectively, are shown in the table below:

 

		2023				%				2022				%
Customer A		$	490,848				11	%		$	1,346,854				22	%
Customer B			303,777				7	%			714,399				11	%
Customer C			630,494				14	%			675,725				11	%
Customer D			465,320				10	%			310,723				5	%

 

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 $3,715,850 and $3,037,903 of cash deposits in excess of federally insured limits as of September 30, 2023 and 2022, respectively.

 

F-9

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Table of Contents

 

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. For the fiscal years ended September 30, 2023 and September 30 2022, the Company wrote-off accounts receivables of $127,527 and $201,469, respectively. The Company also maintains an allowance for credit memos for estimated credit memos to be issued against current sales. Estimates of allowance for credit memos are based upon the application of a historical issuance lag period to the average credit memos issued each month. For the fiscal years ended September 30, 2023 and September 30 2022, the reserve for credit memos was $23,065 and $0 respectively.

 

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 after the Company’s contractual obligation has been completed 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 first-in/first-out 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 parts used for minor repairs of ReliAlert™, and other tracking devices as well as completed circuit boards used to manufacture new devices and components used to manufacture circuit boards. Completed and shipped ReliAlert™ and other tracking devices are reflected in Monitoring Equipment. As of September 30, 2023 and 2022, inventory consisted of the following: 

 

		2023				2022
Monitoring equipment component boards inventory		$	1,289,966			$	1,053,245
Reserve for damaged or obsolete inventory			(3,772	)			-
Total inventory, net of reserves		$	1,286,194			$	1,053,245

 

The Company uses a third-party fulfillment service provider. As a result of this service, the Company’s employees do not actively assemble new products or repair a significant amount of 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 $3,772 and $0 during the years ended September 30, 2023 and 2022, respectively, for inventory that was obsolete, lost or damaged. Obsolete, lost and damaged items are expensed 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. Depreciation is determined using the straight-line method over the estimated useful lives of the assets, typically three to seven years. Leasehold improvements are depreciated 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.

 

F-10

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Table of Contents

 

Property and equipment consisted of the following as of September 30, 2023 and 2022, respectively:

 

		2023				2022
Equipment, software and tooling		$	1,427,522			$	1,399,288
Automobiles			4,460				4,187
Leasehold improvements			382,122				380,586
Furniture and fixtures			222,554				215,856
Total property and equipment before accumulated depreciation			2,036,658				1,999,917
Accumulated depreciation			(1,920,850	)			(1,829,588	)
Property and equipment, net of accumulated depreciation		$	115,808			$	170,329

 

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, 2023 and September 30, 2022, the Company disposed of $8,669 and $794,555 fixed assets, respectively. Internally developed software costs related to the Company’s monitoring platform are recorded as intangible assets on the Consolidated Balance Sheet.

 

Depreciation expense recognized for property and equipment for the fiscal years ended September 30, 2023 and 2022 was $95,099 and $144,054, respectively. Depreciation expense for property and equipment is recognized in operating expense in the Consolidated Statements of Operations.

 

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 three years for customer tablets and three to five years for monitoring devices. Monitoring equipment as of September 30, 2023 and 2022 is as follows:

 

		2023				2022
Monitoring equipment		$	11,535,787			$	9,574,740
Less: accumulated depreciation			(6,348,695	)			(5,950,639	)
Monitoring equipment, net of accumulated depreciation		$	5,187,092			$	3,624,101

 

Depreciation expense for the fiscal years ended September 30, 2023 and 2022 was $1,539,234 and $1,380,558, respectively. This expense was classified as a cost of revenue in the Consolidated Statements of Operations.

 

During the fiscal years ended September 30, 2023 and 2022, the Company recorded charges of $305,300 and $280,783, respectively, for devices that were lost, stolen or damaged. Lost, stolen and damaged items are expensed in Monitoring, product and other related services in the Consolidated Statements of Operations.

 

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

 

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 leased 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. 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.

 

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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 with 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. The Company recognizes revenue from other services as the customer receives services and the Company has the right to payment. When purchasing products (such as ReliAlert™ devices) from the Company, customers may, but are not required to, enter into monitoring service contracts with us. The Company recognizes revenue on monitoring services for customers that have previously purchased devices at the end of each month that monitoring services have been provided.

 

Multiple Element Arrangements

 

The majority of our revenue transactions do not have multiple elements. However, on occasion, the Company may enter into revenue transactions that have multiple elements. These may include different combinations of products or services that are included in a single billable rate. These products or services are delivered over time as the customer utilizes our services. In cases where obligations in a contract are distinct and thus require separation into multiple performance obligations, revenue recognition guidance requires that contract consideration be allocated to each distinct performance obligation based on its relative standalone selling price. The value allocated to each performance obligation is then recognized as revenue when the revenue recognition criteria for each distinct promise or bundle of promises has been met. There were no multiple element arrangements for the years ended September 30, 2023 and 2022.

 

Other Matters

 

The Company considers an arrangement with payment terms longer than the Company’s normal terms not to be fixed or determinable. 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.

 

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

 

The Company expenses research and development costs as incurred.

 

During the fiscal year ended September 30, 2023 and September 30, 2022, the Company incurred research and development expense of $2,735,060 and $2,432,448, respectively.

 

Advertising Costs

 

The Company expenses advertising costs as incurred. Advertising expense for the fiscal years ended September 30, 2023 and 2022 was $13,707 and $14,037, 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. Outstanding restricted stock units are amortized over the vesting period. We recorded $159,522 and $207,547 of expense related to these awards for fiscal years ended September 30, 2023 and 2022, respectively.

 

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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, 2023 and September 30, 2022, 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”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period.

 

Diluted net income (loss) per common share (“Diluted EPS”) is computed by dividing net income (loss) attributable to common stockholders by the sum of the weighted-average number of common shares outstanding and the weighted-average dilutive common share equivalents outstanding. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect. 

 

Common share equivalents consist of shares issuable upon the exercise of options and warrants to purchase shares of the Company’s Common Stock, par value $0.0001 per share (“Common Stock”). As of September 30, 2023, none of the outstanding common share equivalents were included in the computation of diluted net income per common share as their effect would be anti-dilutive. The Common Stock equivalents outstanding as of September 30, 2023 and 2022 (excluding 25,352 options that expired unexercised on October 14, 2022) consisted of the following:

 

		2023				2022
Issuable Common Stock options and warrants			4,688				160,881
Total Common Stock equivalents			4,688				160,881

 

At September 30, 2023 and 2022, all stock options and warrants had exercise prices that were above the market price of $0.49 per share and $0.51, respectively and have not been included in the diluted earnings per share calculations.

 

Recent Accounting Pronouncements

 

Recently Adopted Accounting Standards

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies, which are adopted by the Company as of the specified effective date. The Company considers the applicability and impact of all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's Consolidated Financial Statements.

 

Recently Issued Accounting Standards

 

In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, “Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with the carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 became effective for accelerated filing companies for annual periods or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and all other entities should adopt the amendments in ASU 2017-04 for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2022. The amendment should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company will adopt ASU 2017-04 in the fiscal year 2024. The Company has determined this adoption will not have a significant impact on its consolidated financial position, results of operations, or cash flows.

 

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In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 adds a current expected credit loss (“CECL”) impairment model to GAAP that is based on expected losses rather than incurred losses. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. ASU 2016-13 became effective for fiscal years beginning after December 15, 2019, excluding smaller reporting entities, which will be effective for fiscal years beginning after December 15, 2022. The Company will adopt ASU 2016-13 in fiscal year 2024. The Company does not expect the application of the CECL impairment model to have a significant impact on our allowance for uncollectible amounts for accounts receivable. 

 

(3)	Revenue Recognition

 

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. Monitoring revenue is recognized ratably over time, as the customer simultaneously receives and consumes the benefit of these services as they are performed. Payment due or received from the customers prior to rendering the associated services are recorded as deferred revenue.

 

The balance of accounts receivable at September 30, 2023 of $4,536,916 includes an unbilled balance of $490,848. The balance of accounts receivable at September 30, 2022 of $6,236,555 includes an unbilled balance of $777,514, and the balance of accounts receivable at October 1, 2021 of $7,163,615 includes an unbilled balance of $420,697. The balance of the deferred revenue at September 30, 2023, September 30, 2022 and October 1, 2021 was $431, $3,299, and $22,500 respectively, and were included in accrued liabilities on the Consolidated Balance Sheets. The Company recognized $12,928 and $120,958 of deferred revenue in the fiscal years ended September 30, 2023 and September 30, 2022, respectively. 

 

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 from the sale of devices and parts is recognized upon their transfer of control to the customer, which is generally upon delivery. Delivery is considered complete at either the time of shipment or arrival at destination, based on the agreed upon terms within the contract. Payment terms are generally 30 days from the invoice date.

 

Multiple Element Arrangements. The majority of our revenue transactions do not have multiple elements. However, on occasion, the Company may enter 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. There were no multiple element arrangements for the years ended September 30, 2023 and 2022.

 

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. 

 

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The following tables present the Company’s revenue disaggregated by geography, based on management’s assessment of available data:

 

		Year Ended September 30, 2023								Year Ended September 30, 2022
		Total Revenue				% of Total Revenue				Total Revenue				% of Total Revenue
United States		$	24,295,601				71	%		$	26,427,402				72	%
Latin America			9,370,160				27	%			9,389,482				25	%
Other			810,104				2	%			1,151,615				3	%
Total		$	34,475,865				100	%		$	36,968,499				100	%

 

The above table includes total revenue for the Company, of which monitoring and other related services is the majority (approximately 97% for fiscal years ended September 30, 2023 and 2022) 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.

(4)	Other Assets

 

As of September 30, 2023 and September 30, 2022, respectively, the balance of other assets was $2,442,154 and $3,509,655, respectively. Other assets at September 30, 2023 are comprised largely of cash used as collateral for Performance Bonds as well as contractually required monitoring center and other equipment, right of use assets, lease deposits and other long-term assets. The Company anticipates these performance bonds will be reimbursed to the Company upon completion of its contracts with the customer. See Note 12.

 

The Company was contractually obligated to construct and equip two monitoring centers for an international customer, as well as supply equipment for the customer’s satellite locations, which have been owned by the customer since construction was completed. The monitoring center equipment is amortized using the straight-line method over the contract period between 32 and 40 months. Monitoring center equipment as of September 30, 2023 and 2022, was as follows:

 

		September 30, 2023				September 30, 2022
Monitoring center equipment		$	1,619,278			$	1,520,115
Less: accumulated amortization			(1,088,825	)			(524,178	)
Monitoring center equipment, net of accumulated amortization		$	530,453			$	995,937

 

The Santiago and Puerto Montt monitoring centers amortization is recorded in Monitoring, products and other related service costs on the Condensed Consolidated Statements of Operations. Amortization of costs related to the Santiago and Puerto Montt monitoring centers for the twelve-months ended September 30, 2023 and 2022 were $572,135 and $494,001, respectively. The Company recorded revenue from the customer based on a contractually agreed upon unit per day amount during the contract period. See Note 7 for details of the borrowings related to the monitoring centers construction and equipment.

(5)	Accrued Liabilities

 

Accrued liabilities consisted of the following as of September 30, 2023 and 2022:

 

		September 30, 2023				September 30, 2022
Accrued payroll, taxes and employee benefits		$	1,116,036			$	1,412,055
Deferred revenue			431				3,299
Accrued taxes - foreign and domestic			260,697				371,293
Accrued other expense			108,476				123,752
Accrued legal and other professional costs			80,210				57,905
Accrued costs of revenue			410,726				352,060
Right of use liability			143,846				177,431
Deferred financing fees			-				88,685
Accrued interest			451,417				455,963
Total accrued liabilities		$	2,571,839			$	3,042,443

 

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(6)	Related Parties

 

ETS Limited is currently the beneficial owner of 4,706,579 shares of the Company's Common Stock (the “Track Group Shares”) held by ADS Securities LLC (“ADS”) under an agreement dated September 28, 2017, pursuant to which ADS transferred all the Track Group Shares to ETS Limited in exchange for all the outstanding shares of ETS Limited. A Director of ETS Limited was elected to the Company's current Board of Directors (the “Board”) on February 7, 2018 and is still serving on the Board in his current capacity as a senior executive at ADS.

 

(7)	Debt Obligations

 

Debt obligations, net of debt issuance costs, as of September 30, 2023 and 2022 consisted of the following:

 

		September 30, 2023				September 30, 2022
The unsecured loan (the “Amended Facility Agreement”) from Conrent Invest S.A. (“Conrent”) whereby, as of March 1, 2021, the Company had borrowed $42,864,000, bearing interest at a rate of 4% per annum, payable in arrears annually beginning July 1, 2021, with all principal and accrued and unpaid interest due on July 1, 2024. On April 26, 2023, the Company and Conrent entered into an amendment to the facility agreement, which extended the maturity date from July 1, 2024 to July 1, 2027. Interest payments are scheduled to be made on June 30 and December 31 each year. Unamortized issuance costs at September 30, 2023 are $120,401. As of September 30, 2023, $42,864,000 of principal and $438,165 of interest was owed to Conrent. The Company paid Conrent interest of $1,738,373 for the year ended September 30, 2023.		$	42,743,599			$	42,653,649
The unsecured Note Payable Agreement with HP Financial Services Chile Limitada bearing interest at a rate of 6.56% per annum, with a maturity date of February 6, 2024.			11,435				35,335
The unsecured Note Payable Agreement with Banco Santander, net of unamortized issuance costs $4,837, bearing interest at a rate of 5.04% per annum, with a maturity date of May 11, 2024.			77,670				177,463
The unsecured Note Payable Agreement with Banco Estado, net of unamortized issuance costs of $1,976, bearing interest at a rate of 3.50% per annum, with a maturity date of January 2, 2024.			36,773				135,521
The unsecured Note Payable Agreement with HP Financial Services Chile Limitada bearing interest at a rate of 6.61% per annum, with a maturity date of March 4, 2024.			29,118				79,375
The unsecured Note Payable Agreement with Banco de Chile, net of unamortized issuance costs of $57, bearing interest at a rate of 2.54% per annum, with a maturity date of March 4, 2024.			18,440				51,278
The unsecured Note Payable Agreement with Banco de Chile, net of unamortized issuance costs of $10,807, bearing interest at a rate of 3.12% per annum, with a maturity date of February 17, 2025.			192,547				303,303
Total debt obligations			43,109,582				43,435,924
Less: current portion			(308,417	)			(456,681	)
Long-term debt, less current portion		$	42,801,165			$	42,979,243

 

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On December 21, 2020, Conrent and the Company signed an amendment to the Amended Facility Agreement which extended the maturity date of the Amended Facility Agreement to July 1, 2024 (“Amended Facility”), capitalized the accrued and unpaid interest increasing the outstanding principal amount and reduced the interest rate of the Amended Facility from 8% to 4%. On April 26, 2023, the Company and Conrent entered into another amendment to the facility agreement (the “Amendment”) originally executed by and between the parties on December 30, 2013 and amended multiple times (the “Amended Facility Agreement”). The latest Amendment: (i) extended the maturity date from July 1, 2024, to July 1, 2027; (ii) amended the applicable interest rate resulting in an escalating interest rate as follows: 4% through June 30, 2024, 5% through June 30, 2025, 5.5% through June 30, 2026, and 6% through the maturity date and (iii) removed section 7.3 “Change of Control” of the Amended Facility Agreement. In return, the Company agreed to pay certain fees to Conrent. As of September 30, 2023, $42,864,000 of principal and $438,165 of interest was owed to Conrent.

 

On January 6, 2021, the Company borrowed 70,443,375 Chilean Pesos (“CLP”) ($101,186USD) from HP Financial Services Chile Limitada (the “HP Note 1”). To facilitate the HP Note 1, the Company entered into a Note Payable Agreement with HP Financial Services Chile Limitada as the lender. The HP Note 1 was used to purchase PABX (private automatic branch exchange phone equipment) for the construction of the Gendarmeria de Chile monitoring centers in Santiago and Puerto Montt, Chile (the “Santiago Monitoring Center” and “Puerto Montt Monitoring Center”, respectively). The HP Note 1 bears an interest rate of 6.56% per annum, payable monthly with principal beginning February 2021, and a maturity date of February 6, 2024.

 

On January 12, 2021, the Company borrowed 347,198,500CLP ($482,965USD), net of 2,801,500CLP fees ($3,897USD), from Banco Santander (the “Banco Santander Note”). To facilitate the Banco Santander Note, the Company entered into a Note Payable Agreement with Banco Santander as the lender. The Banco Santander Note was used for the construction of the Santiago Monitoring Center and remodeling a temporary monitoring center. The Banco Santander Note bears interest at a rate of 5.04% per annum, payable monthly with principal beginning February 2021, and a maturity of May 11, 2024. The Company also paid 19,607,843CLP ($27,275USD) in broker fees which are amortized over the life of the loan.

 

On February 2, 2021, the Company borrowed 247,999,300CLP ($338,954USD), net of 2,000,700CLP fees ($2,734USD), from Banco Estado (the “Banco Estado Note”). To facilitate the Banco Estado Note, the Company entered into a Note Payable Agreement with Banco Estado as the lender. The Banco Estado Note was used for the construction of the Santiago Monitoring Center and computer equipment for Gendarmeria branch offices. The Banco Estado Note bears interest at a rate of 3.50% per annum, initially having a 6-month grace period with the first payment including the 6 months of interest plus 1 month of principal on August 2, 2021, then monthly interest with principal, and a maturity date of January 2, 2024. The Company also paid 14,124,294CLP ($19,304USD) in broker fees which are amortized over the life of the loan.

 

On February 4, 2021, the Company borrowed 149,794,432CLP ($205,330USD) from HP Financial Services Chile Limitada (the “HP Note 2”). To facilitate the HP Note 2, the Company entered into a Note Payable Agreement with HP Financial Services Chile Limitada as the lender. The HP Note 2 was used to purchase computer equipment for the Santiago Monitoring Center. The HP Note 2 bears interest at a rate of 6.61% per annum, payable monthly with principal beginning March 2021, and a maturity of March 4, 2024.

 

On February 5, 2021, the Company borrowed 99,808,328CLP ($136,564USD), net of 210,485CLP fees ($286USD), from Banco de Chile (the “Banco de Chile Note 1”). To facilitate the Banco de Chile Note, the Company entered into a Note Payable Agreement with Banco de Chile as the lender. The Banco de Chile Note was used to purchase HVAC equipment for the Santiago Monitoring Center. The Banco de Chile Note bears interest at a rate of 2.54% per annum, payable monthly with principal beginning March 2021, and a maturity date of March 4, 2024.

 

On February 15, 2021, the Company borrowed 500,000,000CLP ($678,214USD) from Banco de Chile (the “Banco de Chile Note 2”). To facilitate the Banco de Chile Note 2, the Company entered into a Note Payable Agreement with Banco de Chile as the lender. The Banco de Chile Note 2 was used as working capital and to complete the construction of the Puerto Montt Monitoring Center. The Banco de Chile Note 2 bears interest at a rate of 3.12% per annum, payable monthly with principal beginning March 2021, and a maturity of February 17, 2025. The Company also paid 28,248,588CLP ($38,317USD) in broker fees which are amortized over the life of the loan.

 

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The following table summarizes our future maturities of debt obligations, net of the amortization of debt discounts as of September 30, 2023:

 

Twelve months ended September 30:		Total
2024		$	322,915
2025			60,745
2026			-
2027			42,864,000
Total			43,247,660
Issuance costs			(138,078	)
Debt obligations, net of unamortized issuance costs		$	43,109,582

 

(8)	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”), of which 1,200,000 shares have been designated as Series A Convertible Preferred Stock (“Series A Preferred”). The Company’s Board of Directors has the authority to amend its Certificate of Incorporation, without further stockholder approval, to designate and determine, in whole or in part, the preferences, limitations and relative rights of the preferred stock before any issuance of the Preferred Stock and to create additional series of Preferred Stock.

 

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”) with the Delaware Division of Corporations, designating 1,200,000 shares of the Company’s preferred stock as Series A Preferred. Shares of Series A Preferred rank senior to the Company’s Common Stock, and all other classes and series of equity securities of the Company that by their terms do not rank senior to the Series A Preferred.

 

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 shares of Common Stock into which the Series A Preferred is convertible shall, upon issuance, have all of the same voting rights as other issued and outstanding shares of our Common Stock.

 

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, 2023, there were no shares of Series A Preferred issued and outstanding.

(9)	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.

 

There were no issuances of Common Stock in fiscal year 2023.

 

On December 28, 2021, a member of the Board of Directors received 7,283 shares of Common Stock by exercising 7,283 options.

 

On December 30, 2021, a member of the Board of Directors received 9,191 shares of Common Stock by exercising 9,191 options.

 

On April 14, 2022, a member of the Board of Directors received an after-tax total of 37,306 shares of Common Stock by exercising 64,665 and 8,868 warrants, through a net exercise provision of the Common Stock Purchase Warrant Agreement and the payment of taxes.

 

On April 13, 2022, a member of management received an award of 185,000 shares of Common Stock based on a Restricted Stock Agreement.

 

On April 13, 2022, another employee received an award of 100,000 shares of Common Stock based on a Restricted Stock Agreement. 

 

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(10)	Stock Options and Warrants

 

Stock Incentive Plan

 

At the annual meeting of stockholders on April 13, 2022, our stockholders approved the 2022 Omnibus Equity Incentive Plan (the “2022 Plan”), previously approved by the Company’s Board. The 2022 Plan provides for the grant of incentive options and nonqualified 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 provide services to the Company in lieu of cash. A total of 500,000 shares are authorized for issuance pursuant to awards granted under the 2022 Plan.

 

The 2022 Plan supersedes and replaces the Company’s 2012 Equity Compensation Plan (the “2012 Plan”). As of June 30, 2020, the Board suspended further awards under the 2012 Plan. Any awards outstanding under the 2012 Plan will remain subject to the 2012 Plan. All shares of Common Stock remaining authorized and available for issuance under the 2012 Plan and any shares subject to outstanding awards under the 2012 Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares will automatically become available for issuance under our 2022 Plan.

 

There were no issuances of restricted shares in fiscal year 2023.

 

On April 13, 2022, the Company issued 285,000 restricted shares, at a grant date value of $1.30, to members of its executive team from the 2022 Plan with a total value of $370,500. The restricted shares are amortized over the vesting period. One-third of the restricted shares vested on the grant date and one-third of the restricted shares vested on October 13, 2022 and October 13, 2023, respectively.

 

The Company recorded expense of $159,522 and $207,547 during the fiscal years ended September 30, 2023 and 2022, respectively. As of September 30, 2023 there were 215,000 shares of Common Stock available for issuance under the 2022 Plan.

 

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, 2023 and 2022, the Company granted no options and warrants to purchase shares of Common Stock under the 2022 Plan or under the 2012 Plan. The Company recorded no expense for the fiscal years ended September 30, 2023 and 2022, 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, 2023 and no future issuances are expected.

 

As of September 30, 2023, 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, 2023 and 2022 is presented below:

 

		Shares Under Option				Weighted Average Exercise Price				Weighted Average Remaining Contractual Life (years)				Aggregate Intrinsic Value
Outstanding as of September 30, 2021			457,075			$	1.74				1.04			$	779,977
Granted			-				-				-				-
Expired			(196,097	)			(2.41	)			-				-
Exercised			(100,097	)			(1.23	)			-				-
Outstanding as of September 30, 2022			160,881			$	1.24				0.60			$	-
Granted			-				-				-				-
Expired			(156,193	)			(1.24	)			-				-
Exercised			-				-				-				-
Outstanding as of September 30, 2023			4,688			$	1.24				0.25			$	-
Exercisable as of September 30, 2023			4,688			$	1.24				0.25			$	-

 

F-19

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Table of Contents

 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $0.49 of the Company’s common stock on September 30, 2023.

(11)	Income Taxes

 

The Company recognizes deferred income tax assets or liabilities for the expected future tax consequences of events that have been recognized in the financial statements or income tax returns. Deferred income tax assets or liabilities are determined based upon the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to apply when the differences are expected to be settled or realized. Deferred income tax assets are reviewed periodically for recoverability and valuation allowances are provided as necessary. Interest and penalties related to income tax liabilities, when incurred, are classified in interest expense and income tax provision, respectively. Deferred tax liabilities are recorded in Accrued liabilities on the Consolidated Balance Sheets.

 

For the fiscal years ended September 30, 2023 and 2022, the Company incurred no net losses for income tax purposes. 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, 2023, the Company had net carryforwards available to offset future taxable income of approximately $163,702,643, $4,590,967 of which expires during the year ended September 30, 2023. 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, 2023, or on net deferred tax asset as of September 30, 2022. In the past, ownership changes of the Company resulted in a Sec. 382 limitation on the future realizability of U.S. state NOLs. Since the Company maintains a full valuation allowance on all U.S. and state deferred tax assets, the impact of the Sec. 382 limitation did not result in an impact to the provision for income taxes for the year ended September 30, 2023, or on net deferred assets as of September 30, 2023.

 

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, 2023 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,
		2023				2022
Net loss carryforwards		$	33,396,062			$	34,261,003
Accruals and reserves			(44,816	)			723,617
Severance indemnity reserve			98,735				76,918
Contributions			3,911				2,478
Depreciation and amortization			(378,920	)			(219,722	)
Stock-based compensation			93,031				109,397
Interest Expense Carryforward			397,566				-
Valuation allowance			(33,661,255	)			(35,182,109	)
Total		$	(95,686	)		$	(228,418	)

 

F-20

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Table of Contents

 

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, 2023 and 2022 are as follows:

 

		Fiscal Years Ended
		September 30,
		2023				2022
Federal income tax benefit at statutory rate		$	(169,121	)		$	(78,091	)
State income tax benefit, net of federal income tax effect			(31,811	)			42,086
Effect of foreign income taxes			548,851				679,605
Return to Provision			(33,604	)			(4,473	)
Withholding Taxes			79,000				147,109
Deferred only adjustment			1,740,896				471,609
Gain on deductible expenses			14,493				487,442
Change in valuation allowance			(1,520,854	)			(861,799	)
Provision for income taxes		$	627,850			$	883,488

 

The Company’s open tax years for federal and state income tax returns are for the tax years ended September 30, 2018 through September 30, 2023. The Company was examined by the Internal Revenue Service for fiscal years ended September 30, 2018 and September 30, 2017. The examinations were closed as of November 29, 2021, with no additional tax assessment.

(12)	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 nearly 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). On March 24, 2017, SecureAlert Inc. (a predecessor entity to Track Group, Inc. or the Company) filed a complaint before the Federal Administrative Tribunal, asserting the failure by defendants to pay claimant amounts agreed to, and due under, the Pluri Annual Contract for the Rendering of Monitoring Services of Internees, through Electric Bracelets, in the Islas Marias Penitentiary Complex dated July 15, 2011. Although preliminary rulings have been unfavorable to the Company, the Company’s counsel continues to review its remaining claims which are upwards of $4.0 million. Based upon the fee arrangement the Company has with its counsel, we anticipate the future liabilities attributable to legal expense will be minimal.

 

Commonwealth of Puerto Rico, through its Trustees v. International Surveillance Services Corporation. On January 23, 2020, the Company was served with a summons for an Adversary Action pending against International Surveillance Services Corporation (“ISS”), a subsidiary of the Company, now known as Track Group – Puerto Rico Inc., in the United States District Court for the District of Puerto Rico seeking to recover allegedly fraudulent transfers and to disallow claims pursuant to United States Bankruptcy and Puerto Rican law. The allegations stem from payments made to ISS between 2014 and 2017, which the Company believes were properly made in accordance with a contract between ISS and the government of Puerto Rico, through the Oficina de Servicios con Antelacion a Juicio, originally signed in 2011. The Company is confident that all payments it received were earned and due under applicable law and produced documentation supporting its position in an informal document exchange with the Commonwealth on July 6, 2020. At this time, the case remains stayed by Court order. The Company remains confident in its position and no accrual for a potential loss has been made, after consultation with legal counsel.

 

Jeffrey Mohamed Abed v. Track Group, Inc., et al. On June 7, 2021, Jeffrey Mohamed Abed filed a complaint seeking unspecified damages in the Superior Court of the State of California, alleging strict products liability, negligence and breach of implied warranty premised upon injuries sustained by Abed who was involved in an automobile accident while wearing a GPS tracking device of the Company. The Company was served on October 15, 2021 and subsequently filed its Answer and Affirmative Defenses and issued discovery. On July 17, 2023, the action was consolidated with a related case brought by Plaintiff against other motorists involved in the automobile accident. The Company disputes Abed’s claims and will defend the case vigorously. The Company remains confident in its position and no accrual for a potential loss has been made, after consultation with legal counsel.

 

F-21

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Table of Contents

 

Track Group Chile SpA. v. Republic of Chile. On January 24, 2022, Track Group Chile SpA. initiated a judicial action in the Court of Justice of Chile to settle a contract dispute with the Republic of Chile. The Company asserts that it has complied with its contractual obligations and that any delays in so doing were not attributable to the Company. The Company remains confident in its position and no accrual for a potential loss has been made, after consultation with legal counsel.

 

Jesus Valle Gonzalez, et al. v. Track Group-Puerto Rico, et al. On May 9, 2022, Plaintiff Jesus Valle Gonzalez filed a complaint in the Court of First Instance, San Juan Superior Court, Commonwealth of Puerto Rico against the Company, and associated parties alleging the death of his mother on June 8, 2016 was a result of the gross negligence of all the defendants. This claim follows a similar claim made against the Company in June 2017 by different relatives of the deceased which was settled on September 5, 2018. Plaintiff in this matter asserts his claim now having reached the age of majority and is requesting damages of $1.5 million. On August 22, 2023, the Superior Court dismissed the Plaintiffs’ case for lack of jurisdiction.

 

Michael Matthews v. Track Group, Inc., et al. On December 13, 2022, Plaintiff Michael Matthews filed a complaint in the Circuit Court of Cook County, Illinois, amended on July 23, 2023, against the Company and other defendants alleging wrongful arrest and incarceration and a deprivation of his rights following his purportedly erroneous violation of home monitoring program requirements. The Company disputes the allegations of the complaint, has retained counsel, and intends to vigorously defend the case. Based on the preliminary stage of the proceedings and after consultation with legal counsel, no accrual for a potential loss has been made.

 

Leases

 

Leases as Lessor

 

Monitoring Equipment and Other Related Services

 

The Company leases monitoring equipment and provides monitoring services to its customers with contract terms varying from month-to-month to several years and each daily contract price varies. Devices supplied to customers are not serial number unique and a single device may be used by multiple customers over its useful life. If a leased device is returned for repair, it will likely be replaced with a different device from a different customer or possibly a new device.

 

The Company’s tracking devices are considered operating leases under ASC 842 as transfer of control of the asset does not occur at the end of the lease, a single device is not specific to a customer and devices may be used by multiple customers throughout their life cycle. Due to the movement of devices from customer to customer, relatively few long-term contracts, the measurement of the equipment life and the present value of the equipment’s fair values would not be a measurement to qualify the devices as sales-type leases.

 

Operating lease and monitoring revenue associated with the Company’s monitoring equipment as of September 30, 2023 and 2022, respectively, are shown in the table below:

 

		2023				2022
Monitoring equipment operating revenue		$	28,106,916			$	29,867,266

 

The Company cannot accurately estimate 5-years of future minimum lease receipts for its devices leased to customers because none of its customers make any contractual commitment regarding the number of active devices utilized in any given year and those quantities of active devices vary significantly for every customer each and every day. 

 

F-22

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Table of Contents

 

Leases as Lessee

 

The following table shows right of use assets and lease liabilities for real estate and equipment, with the associated financial statement line items as of September 30, 2023 and 2022.

 

		September 30, 2023								September 30, 2022
		Operating lease asset				Operating lease liability				Operating lease asset				Operating lease liability
Other assets		$	403,205			$	-			$	575,716			$	-
Accrued liabilities			-				143,846				-				177,431
Long-term liabilities			-				259,359				-				398,285

 

The following table summarizes the supplemental cash flow information for the year ended September 30, 2023 and 2022:

 

		September 30, 2023				September 30, 2022
Cash paid for noncancelable operating leases included in operating cash flows		$	284,897			$	272,921
Right of use assets obtained in exchange for operating lease liabilities:		$	5,459			$	626,047

 

The future minimum lease payments under noncancelable operating leases with terms greater than one year as of September 30, 2023 are:

 

		Operating Leases
From October 2023 to September 2024		$	157,632
From October 2023 to September 2025			92,492
From October 2024 to September 2026			94,273
From October 2025 to September 2027			87,585
From October 2026 to September 2028			773
Thereafter			-
Undiscounted Cash Flow			432,755
Less: imputed interest			(29,550	)
Total		$	403,205

 

Reconciliation to lease liabilities:
Lease liabilities - current		$	143,846
Lease liabilities - long-term			259,359
Total Lease Liabilities		$	403,205

 

The weighted-average remaining lease term and discount rate related to the Company’s lease liabilities as of September 30, 2023 were 3.44 years and 4%, 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, 2023, the Company has one performance bond in connection with a foreign customer totaling $1,654,134 (“Performance Bond”) of which $1,157,867 is held in an interest-bearing account on behalf of the bank and is recorded in Other Assets on the Consolidated Balance Sheets. The amount held on this Performance Bond will be released after the expiration of the Performance Bond, all contract extensions have been exhausted, and the consent of the customer, but in no event before July 2024 and more likely in 2025.

 

The amounts held on two performance bonds were released in the second quarter of 2023 and the Company received $1,041,797, including interest.

 

The Company pays interest on the full amount of the Performance Bond to the financial institution providing the guarantee at 2.8% interest per annum for the Performance Bond expiring in July 2024. The Company recorded interest expenses of $54,676 and $56,343 for the years ended September 30, 2023 and September 30, 2022, respectively.

 

F-23

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Table of Contents

 

 

(13)	Intangible Assets

 

The following table summarizes the activity of intangible assets for the years ended September 30, 2023 and 2022, respectively:

 

		September 30, 2023												September 30, 2022
		Gross				Accumulated Amortization				Net				Gross				Accumulated Amortization				Net
Patent & royalty agreements		$	21,120,565			$	(14,358,431	)		$	6,762,134			$	21,120,565			$	(13,027,465	)		$	8,093,100
Developed technology			10,328,125				(2,933,499	)			7,394,626				9,206,006				(1,649,563	)			7,556,443
Trade name			139,450				(138,916	)			534				139,115				(127,241	)			11,874
Total intangible assets		$	31,588,140			$	(17,430,846	)		$	14,157,294			$	30,465,686			$	(14,804,269	)		$	15,661,417

 

The intangible assets summarized above were purchased or developed on various dates from July 2011 through September 30, 2023. The assets have useful lives ranging from three to twenty years. Amortization expense for the years ended September 30, 2023 and 2022 was $2,616,629 and $3,277,088, respectively. Amortization expense included in cost of revenue in the Consolidated Statements of Operations for the years ended September 30, 2023 and 2022 was $1,724,256 and $1,857,413, respectively. Amortization expense included in operating expense in the Consolidated Statements of Operations for the years ended September 30, 2023 and 2022 was $892,373 and $1,419,675, respectively. The Company wrote-off fully amortized intangible assets at September 30, 2023 and September 30, 2022 of $0 and $1,860,000, respectively. In the fourth quarter of fiscal year 2022, based on future sales trends, operating margins and capital expenditures, the Company made a decision to discontinue the Shadow and InTouch products. This resulted in a developed technology impairment charge of $0 and $1,728,961 for the years ended September 30, 2023 and 2022, respectively, and is recorded in general and administrative expense on the Consolidated Statements of Operations.

 

The following table summarizes the future maturities of amortization of intangible assets as of September 30, 2023:

 

Fiscal Year		Amortization				STOP Royalty
2024			2,240,653				187,500
2025			2,418,908				-
2026			2,418,908				-
2027			2,418,908				-
Thereafter			4,472,417				-
Total		$	13,969,794			$	187,500

 

Goodwill – In accordance with accounting principles generally accepted in the United States of America, we do not amortize goodwill. These principles require the Company to periodically perform tests for goodwill impairment, at least annually, or sooner if evidence of possible impairment arises. We evaluated the goodwill for impairment as of September 30, 2023. Based on the evaluation made, the Company concluded that no impairment of goodwill was necessary.

 

Goodwill, as of September 30, consisted of the following:

 

		September 30,
		2023				2022
Balance - beginning of year		$	8,061,002			$	8,519,998
Effect of foreign currency translation on goodwill			(209,536	)			(458,996	)
Balance - end of year		$	7,851,466			$	8,061,002

 

(14)	Subsequent Events

 

In accordance with the Subsequent Events Topic of the FASB ASC 855, we have evaluated subsequent events, through the filing date and noted that no additional subsequent events have occurred that are reasonably likely to impact the financial statements.

 

 

EXHIBIT 31(i)

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

 

I, Derek Cassell, Chief Executive Officer and Principal Executive Officer of Track Group, Inc. (the “Company”), certify that:

 

1.	I have reviewed this annual report on Form 10-K of Track Group, Inc.;

 

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent three months (the registrant's fourth three months in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date: December 20, 2023

/s/ Derek Cassell Derek Cassell Chief Executive Officer and Principal Executive Officer

 

 

EXHIBIT 31(ii)

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

 

I, Peter K. Poli, Chief Financial Officer, Principal Financial and Accounting Officer, of Track Group, Inc. (the “Company”), certify that:

 

1.	I have reviewed this annual report on Form 10-K of Track Group, Inc.;

 

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date: December 20, 2023

/s/ Peter K. Poli Peter K. Poli Chief Financial Officer, Principal Financial and Accounting Officer

 

 

 

EXHIBIT 32

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

In connection with the Quarterly Report of Track Group, Inc. on Form 10-K for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Derek Cassell, Chief Executive Officer (Principal Executive Officer), and Peter K. Poli, Chief Financial Officer (Principal Financial Officer), of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)           The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

By:	/s/ Derek Cassell
	Derek Cassell
	Chief Executive Officer (Principal Executive Officer)
By:	/s/ Peter K. Poli
	Peter K. Poli, Chief Financial Officer (Principal Accounting Officer)

 

Dated: December 20, 2023

 

 

This certification accompanies each Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

v3.23.4

Document And Entity Information - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2023	Dec. 01, 2023	Mar. 31, 2023
Document Information [Line Items]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	000-23153
Entity Registrant Name	TRACK GROUP, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	87-0543981
Entity Address, Address Line One	200 E. 5th Avenue Suite 100
Entity Address, City or Town	Naperville
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60563
City Area Code	877
Local Phone Number	260-2010
Title of 12(g) Security	Common Stock, Par Value $0.0001
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	false
Document Financial Statement Error Correction [Flag]	false
Entity Shell Company	false
Entity Public Float			$ 1.8
Entity Common Stock, Shares Outstanding (in shares)		11,863,758
Auditor Firm ID	286
Auditor Name	Eide Bailly LLP
Auditor Location	Denver, Colorado
Entity Central Index Key	0001045942
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	FY
Amendment Flag	false

v3.23.4

Consolidated Balance Sheets - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Current assets:
Cash	$ 4,057,195	$ 5,311,104
Accounts receivable, net of allowances of $178,095 and $102,570, respectively	4,536,916	6,236,555
Prepaid expense and deposits	610,440	769,006
Inventory, net of reserves of $3,772 and $0, respectively	1,286,194	1,053,245
Other current assets	0	284,426
Total current assets	10,490,745	13,654,336
Intangible assets, net of accumulated amortization of $17,430,846 and $14,804,269, respectively	14,157,294	15,661,417
Goodwill	7,851,466	8,061,002
Other assets	2,442,154	3,509,655
Total assets	40,244,559	44,680,840
Current liabilities:
Accounts payable	2,796,712	2,858,915
Accrued liabilities	2,571,839	3,042,443
Current portion of long-term debt	308,417	456,681
Total current liabilities	5,676,968	6,358,039
Long-term debt, net of current portion	42,801,165	42,979,243
Long-term liabilities	259,359	398,285
Total liabilities	48,737,492	49,735,567
Commitments and Contingencies
Stockholders’ equity (deficit):
Common stock, $0.0001 par value: 30,000,000 shares authorized; 11,863,758 and 11,863,758 shares outstanding, respectively	1,186	1,186
Paid in capital	302,597,115	302,437,593
Accumulated deficit	(309,610,397)	(306,218,889)
Accumulated other comprehensive loss	(1,480,837)	(1,274,617)
Total equity (deficit)	(8,492,933)	(5,054,727)
Total liabilities and stockholders’ equity (deficit)	40,244,559	44,680,840
Series A Convertible Preferred Stock [Member]
Stockholders’ equity (deficit):
Series A Convertible Preferred stock, $0.0001 par value: 1,200,000 shares authorized; 0 shares outstanding	0	0
Property, Plant, and Equipment, Excluding Monitoring Equipment [Member]
Current assets:
Property and equipment, net of accumulated depreciation of $1,920,850 and $1,829,588, respectively	115,808	170,329
Monitoring Equipment [Member]
Current assets:
Property and equipment, net of accumulated depreciation of $1,920,850 and $1,829,588, respectively	$ 5,187,092	$ 3,624,101

v3.23.4

Consolidated Balance Sheets (Parentheticals) - USD ($)	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2021
Accounts Receivable, Allowance for Credit Loss, Current	$ 178,095	$ 102,570
Reserve for inventory	3,772	0
Intangible assets, accumulated amortization	17,430,846	$ 14,804,269
Common Stock, Par or Stated Value Per Share (in dollars per share)		$ 0.0001	$ 0.0001
Common Stock, Shares Authorized (in shares)		30,000,000	30,000,000
Common stock - shares outstanding (in shares)		11,863,758	11,863,758
Preferred Stock, Par or Stated Value Per Share (in dollars per share)			$ 0.0001
Series A Convertible Preferred Stock - shares authorized (in shares)			20,000,000
Series A Convertible Preferred Stock [Member]
Preferred Stock, Par or Stated Value Per Share (in dollars per share)		$ 0.0001	$ 0.0001
Series A Convertible Preferred Stock - shares authorized (in shares)		1,200,000	1,200,000
Preferred Stock, Shares Outstanding (in shares)		0	0
Property, Plant, and Equipment, Excluding Monitoring Equipment [Member]
Property, Plant, and Equipment, Owned, Accumulated Depreciation	1,920,850	$ 1,829,588
Monitoring Equipment [Member]
Property, Plant, and Equipment, Owned, Accumulated Depreciation	$ 6,348,695	$ 5,950,639

v3.23.4

Consolidated Statements of Operations and Comprehensive Income/(Loss) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Revenue:
Revenues	$ 34,475,865	$ 36,968,499
Cost of revenue:
Monitoring, products and other related services	15,915,300	16,377,573
Depreciation and amortization	3,263,490	3,237,970
Total cost of revenue	19,178,790	19,615,543
Gross profit	15,297,075	17,352,956
Operating expense:
General & administrative	10,275,695	12,462,931
Selling & marketing	2,842,661	2,993,749
Research & development	2,735,060	2,432,448
Depreciation & amortization	987,472	1,563,729
Total operating expense	16,840,888	19,452,857
Operating income (loss)	(1,543,813)	(2,099,901)
Other income (expense):
Interest income	272,775	162,975
Interest expense	(1,960,488)	(1,991,302)
Currency exchange rate gain (loss)	467,868	(1,619,018)
Other income/(expense), net	0	(959,628)
Total other income (expense)	(1,219,845)	(4,406,973)
Net income (loss) before income taxes	(2,763,658)	(6,506,874)
Income tax expense	627,850	883,488
Net income (loss) attributable to common stockholders	(3,391,508)	(7,390,362)
Foreign currency translation adjustments	(206,220)	(220,268)
Comprehensive income (loss)	$ (3,597,728)	$ (7,610,630)
Net income (loss) per share – basic:
Net income (loss) per common share, basic (in dollars per share)	$ (0.3)	$ (0.64)
Weighted average common shares outstanding, basic (in shares)	11,863,758	11,634,449
Net income (loss) per share – diluted:
Net income (loss) per common share (in dollars per share)	$ (0.3)	$ (0.64)
Weighted average common shares outstanding (in shares)	11,863,758	11,634,449
Monitoring and Other Related Services [Member]
Revenue:
Revenues	$ 33,503,687	$ 35,768,090
Product Sales and Other [Member]
Revenue:
Revenues	$ 972,178	$ 1,200,409

v3.23.4

Consolidated Statements of Stockholders' Equity/(Deficit) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Sep. 30, 2021	11,524,978
Balance at Sep. 30, 2021	$ 1,152	$ 302,250,954	$ (298,828,527)	$ (1,054,349)	$ 2,369,230
Stock-based compensation		207,547			207,547
Foreign currency translation adjustments	(220,268)				(220,268)
Net loss	$ (7,390,362)				(7,390,362)
Stock Issued During Period, Shares, Issued for Services (in shares)	285,000
Stock Issued During Period, Value, Issued for Services	$ 29	(29)	0
Issuance of Common Stock for options/warrants exercised (in shares)	53,780
Issuance of Common Stock for options/warrants exercised	$ 5	(5)	0
Cash received for options/warrants exercised	10,570
Tax withheld on issuance of Common Stock for options/warrants exercised	$ (31,444)
Balance (in shares) at Sep. 30, 2022	11,863,758
Balance at Sep. 30, 2022	$ 1,186	302,437,593	(306,218,889)	(1,274,617)	(5,054,727)
Stock-based compensation		159,522			159,522
Foreign currency translation adjustments				(206,220)	(206,220)
Net loss			(3,391,508)		(3,391,508)
Balance (in shares) at Sep. 30, 2023	11,863,758
Balance at Sep. 30, 2023	$ 1,186	$ 302,597,115	$ (309,610,397)	$ (1,480,837)	$ (8,492,933)

v3.23.4

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net loss	$ (3,391,508)	$ (7,390,362)
Adjustments to reconcile net loss to net cash provided by operating activities:
Bad debt expense/(recovery)	4,250,962	4,801,699
(Recovery of)/Bad debt expense	166,737	(16,814)
Sales allowance	(23,065)	0
Stock-based compensation	159,522	207,547
Loss on monitoring equipment included in cost of sales	305,300	280,783
Amortization of debt issuance costs	152,663	137,540
Amortization of monitoring center assets included in cost of revenue	572,135	494,001
Impairment of intangible assets and loss from disposal of fixed assets	0	1,729,658
Income on forgiveness of expense/debt	0	(633,471)
Foreign currency exchange (gain)/loss	(467,868)	1,619,018
Change in assets and liabilities:
Accounts receivable, net	1,509,837	693,752
Inventories	(234,262)	(748,035)
Prepaid expense, deposits and other assets	1,376,822	284,048
Accounts payable and accrued expense	(546,605)	(656,403)
Net cash provided by operating activities	3,876,800	802,961
Cash flow from investing activities:
Purchase of property and equipment	(40,083)	(117,177)
Capitalized software	(1,020,604)	(865,263)
Purchase of monitoring equipment and parts	(3,503,515)	(2,077,840)
Net cash used in investing activities	(4,564,202)	(3,060,280)
Cash flow from financing activities:
Payment of deferred financing fees	(44,151)	0
Principal payments on long-term debt	(467,323)	(494,626)
Employee tax withholdings related to net share settlement of equity-based awards	0	(31,444)
Proceeds from exercise of employee stock options	0	10,570
Net cash provided by (used in) financing activities	(511,474)	(515,500)
Effect of exchange rate changes on cash	(55,033)	(337,239)
Net increase (decrease) in cash	(1,253,909)	(3,110,058)
Cash, beginning of year	5,311,104	8,421,162
Cash, end of year	4,057,195	5,311,104
Cash paid for interest	1,894,972	1,870,204
Cash paid for taxes	$ 670,231	$ 212,268

v3.23.4

Note 1 - Organization and Nature of Operations	12 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Nature of Operations [Text Block]	(1) 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. As of September 30, 2023 and 2022, the Company had an accumulated deficit of $309,610,397 and $306,218,889, respectively. The Company incurred a net loss of 3,391,508 and $7,390,362 for the years ended September 30, 2023 and 2022, respectively. On April 27, 2023, the Company announced a three-year extension of its $42.9 million debt to July 1, 2027 (See Note 7). The Company also has six notes payable maturing between January 2, 2024 and February 17, 2025 related to the construction of two monitoring centers for a contract in Chile, with outstanding balances due for the six notes totaling $365,983, net of deferred financing fees, at September 30, 2023 (See Note 7). The Company’s ability to return to profitable operations is dependent upon generating a level of revenue adequate to support its cost structure, which it was close to achieving on an operating basis in the fiscal year ended September 30, 2022, excluding the approximate $1.7 million asset impairment and was close to achieving in the fiscal year ended September 30, 2023. Management has evaluated the significance of these conditions, as well as the recent change in the maturity date, and has determined that the Company can meet its operating obligations for a reasonable period. The Company expects to fund operations using cash on hand and through operational cash flows through the upcoming twelve months.

v3.23.4

Note 2 - Summary of Significant Accounting Policies	12 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Significant Accounting Policies [Text Block]	(2) Summary of Significant Accounting Policies   Principles of Consolidation   The consolidated financial statements include the accounts of Track Group, Inc. and its active 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 and certain assumptions related to the recoverability of intangible assets and Goodwill.   Business Combinations   Business combinations are accounted for under the provisions of ASC 805-10, Business Combinations (ASC 805-10), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed at the date of acquisition are recorded at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Acquisition-related expense is recognized separately from the business combinations and are expensed as incurred. If the business combination provides for contingent consideration, the contingent consideration is recorded at its probable fair value at the acquisition date. Any changes in fair value after the acquisition date are accounted for as measurement-period adjustments if they pertain to additional information about facts and circumstances that existed at the acquisition date and that the Company obtained during the measurement period. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as performance measures, are recognized in earnings.     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”) at the exchange rate prevailing at September 30, 2023. Their respective statements of operations have been translated into USD using the average exchange rates prevailing during the periods of each statement. The corresponding translation adjustments are part of accumulated other comprehensive income and are shown as part of stockholders’ equity.   Other Intangible Assets   Other intangible assets principally consist of patents, royalty purchase agreements, developed technology acquired, trade name, and capitalized software 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. See Note 13.   Fair Value of Financial Instruments   The carrying amounts reported in the accompanying consolidated financial statements for accounts receivable, other assets, 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 Revenue & 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, 2023 and 2022.       2023     %     2022     %   Customer A   $ 6,730,687       20 %   $ 6,095,403       16 % Customer B     3,804,951       11 %     4,871,073       13 %   No other customer represented more than 10% of the Company’s total revenue for the fiscal years ended September 30, 2023 or 2022.   Concentration of credit risk associated with the Company’s total and outstanding accounts receivable as of September 30, 2023 and 2022, respectively, are shown in the table below:       2023     %     2022     %   Customer A   $ 490,848       11 %   $ 1,346,854       22 % Customer B     303,777       7 %     714,399       11 % Customer C     630,494       14 %     675,725       11 % Customer D     465,320       10 %     310,723       5 %   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 $3,715,850 and $3,037,903 of cash deposits in excess of federally insured limits as of September 30, 2023 and 2022, 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. For the fiscal years ended September 30, 2023 and September 30 2022, the Company wrote-off accounts receivables of $127,527 and $201,469, respectively. The Company also maintains an allowance for credit memos for estimated credit memos to be issued against current sales. Estimates of allowance for credit memos are based upon the application of a historical issuance lag period to the average credit memos issued each month. For the fiscal years ended September 30, 2023 and September 30 2022, the reserve for credit memos was $23,065 and $0 respectively.   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 after the Company’s contractual obligation has been completed 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 first-in/first-out 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 parts used for minor repairs of ReliAlert™, and other tracking devices as well as completed circuit boards used to manufacture new devices and components used to manufacture circuit boards. Completed and shipped ReliAlert™ and other tracking devices are reflected in Monitoring Equipment. As of September 30, 2023 and 2022, inventory consisted of the following:        2023     2022   Monitoring equipment component boards inventory   $ 1,289,966     $ 1,053,245   Reserve for damaged or obsolete inventory     (3,772 )     -   Total inventory, net of reserves   $ 1,286,194     $ 1,053,245     The Company uses a third-party fulfillment service provider. As a result of this service, the Company’s employees do not actively assemble new products or repair a significant amount of 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 $3,772 and $0 during the years ended September 30, 2023 and 2022, respectively, for inventory that was obsolete, lost or damaged. Obsolete, lost and damaged items are expensed 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. Depreciation is determined using the straight-line method over the estimated useful lives of the assets, typically three to seven years. Leasehold improvements are depreciated 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, 2023 and 2022, respectively:       2023     2022   Equipment, software and tooling   $ 1,427,522     $ 1,399,288   Automobiles     4,460       4,187   Leasehold improvements     382,122       380,586   Furniture and fixtures     222,554       215,856   Total property and equipment before accumulated depreciation     2,036,658       1,999,917   Accumulated depreciation     (1,920,850 )     (1,829,588 ) Property and equipment, net of accumulated depreciation   $ 115,808     $ 170,329     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, 2023 and September 30, 2022, the Company disposed of $8,669 and $794,555 fixed assets, respectively. Internally developed software costs related to the Company’s monitoring platform are recorded as intangible assets on the Consolidated Balance Sheet.   Depreciation expense recognized for property and equipment for the fiscal years ended September 30, 2023 and 2022 was $95,099 and $144,054, respectively. Depreciation expense for property and equipment is recognized in operating expense in the Consolidated Statements of Operations.   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 three years for customer tablets and three to five years for monitoring devices. Monitoring equipment as of September 30, 2023 and 2022 is as follows:       2023     2022   Monitoring equipment   $ 11,535,787     $ 9,574,740   Less: accumulated depreciation     (6,348,695 )     (5,950,639 ) Monitoring equipment, net of accumulated depreciation   $ 5,187,092     $ 3,624,101     Depreciation expense for the fiscal years ended September 30, 2023 and 2022 was $1,539,234 and $1,380,558, respectively. This expense was classified as a cost of revenue in the Consolidated Statements of Operations.   During the fiscal years ended September 30, 2023 and 2022, the Company recorded charges of $305,300 and $280,783, respectively, for devices that were lost, stolen or damaged. Lost, stolen and damaged items are expensed in Monitoring, product and other related services in the Consolidated Statements of Operations.   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   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 leased 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. 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 with 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. The Company recognizes revenue from other services as the customer receives services and the Company has the right to payment. When purchasing products (such as ReliAlert™ devices) from the Company, customers may, but are not required to, enter into monitoring service contracts with us. The Company recognizes revenue on monitoring services for customers that have previously purchased devices at the end of each month that monitoring services have been provided.   Multiple Element Arrangements   The majority of our revenue transactions do not have multiple elements. However, on occasion, the Company may enter into revenue transactions that have multiple elements. These may include different combinations of products or services that are included in a single billable rate. These products or services are delivered over time as the customer utilizes our services. In cases where obligations in a contract are distinct and thus require separation into multiple performance obligations, revenue recognition guidance requires that contract consideration be allocated to each distinct performance obligation based on its relative standalone selling price. The value allocated to each performance obligation is then recognized as revenue when the revenue recognition criteria for each distinct promise or bundle of promises has been met. There were no multiple element arrangements for the years ended September 30, 2023 and 2022.   Other Matters   The Company considers an arrangement with payment terms longer than the Company’s normal terms not to be fixed or determinable. 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.   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   The Company expenses research and development costs as incurred.   During the fiscal year ended September 30, 2023 and September 30, 2022, the Company incurred research and development expense of $2,735,060 and $2,432,448, respectively.   Advertising Costs   The Company expenses advertising costs as incurred. Advertising expense for the fiscal years ended September 30, 2023 and 2022 was $13,707 and $14,037, 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. Outstanding restricted stock units are amortized over the vesting period. We recorded $159,522 and $207,547 of expense related to these awards for fiscal years ended September 30, 2023 and 2022, respectively.     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, 2023 and September 30, 2022, 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”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period.   Diluted net income (loss) per common share (“Diluted EPS”) is computed by dividing net income (loss) attributable to common stockholders by the sum of the weighted-average number of common shares outstanding and the weighted-average dilutive common share equivalents outstanding. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect.    Common share equivalents consist of shares issuable upon the exercise of options and warrants to purchase shares of the Company’s Common Stock, par value $0.0001 per share (“Common Stock”). As of September 30, 2023, none of the outstanding common share equivalents were included in the computation of diluted net income per common share as their effect would be anti-dilutive. The Common Stock equivalents outstanding as of September 30, 2023 and 2022 (excluding 25,352 options that expired unexercised on October 14, 2022) consisted of the following:       2023     2022   Issuable Common Stock options and warrants     4,688       160,881   Total Common Stock equivalents     4,688       160,881     At September 30, 2023 and 2022, all stock options and warrants had exercise prices that were above the market price of $0.49 per share and $0.51, respectively and have not been included in the diluted earnings per share calculations.   Recent Accounting Pronouncements   Recently Adopted Accounting Standards   From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies, which are adopted by the Company as of the specified effective date. The Company considers the applicability and impact of all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's Consolidated Financial Statements.   Recently Issued Accounting Standards   In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, “Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with the carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 became effective for accelerated filing companies for annual periods or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and all other entities should adopt the amendments in ASU 2017-04 for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2022. The amendment should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company will adopt ASU 2017-04 in the fiscal year 2024. The Company has determined this adoption will not have a significant impact on its consolidated financial position, results of operations, or cash flows.     In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 adds a current expected credit loss (“CECL”) impairment model to GAAP that is based on expected losses rather than incurred losses. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. ASU 2016-13 became effective for fiscal years beginning after December 15, 2019, excluding smaller reporting entities, which will be effective for fiscal years beginning after December 15, 2022. The Company will adopt ASU 2016-13 in fiscal year 2024. The Company does not expect the application of the CECL impairment model to have a significant impact on our allowance for uncollectible amounts for accounts receivable.

v3.23.4

Note 3 - Revenue Recognition	12 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Revenue from Contract with Customer [Text Block]	(3) Revenue Recognition   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. Monitoring revenue is recognized ratably over time, as the customer simultaneously receives and consumes the benefit of these services as they are performed. Payment due or received from the customers prior to rendering the associated services are recorded as deferred revenue.   The balance of accounts receivable at September 30, 2023 of $4,536,916 includes an unbilled balance of $490,848. The balance of accounts receivable at September 30, 2022 of $6,236,555 includes an unbilled balance of $777,514, and the balance of accounts receivable at October 1, 2021 of $7,163,615 includes an unbilled balance of $420,697. The balance of the deferred revenue at September 30, 2023, September 30, 2022 and October 1, 2021 was $431, $3,299, and $22,500 respectively, and were included in accrued liabilities on the Consolidated Balance Sheets. The Company recognized $12,928 and $120,958 of deferred revenue in the fiscal years ended September 30, 2023 and September 30, 2022, respectively.    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 from the sale of devices and parts is recognized upon their transfer of control to the customer, which is generally upon delivery. Delivery is considered complete at either the time of shipment or arrival at destination, based on the agreed upon terms within the contract. Payment terms are generally 30 days from the invoice date.   Multiple Element Arrangements. The majority of our revenue transactions do not have multiple elements. However, on occasion, the Company may enter 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. There were no multiple element arrangements for the years ended September 30, 2023 and 2022.   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.      The following tables present the Company’s revenue disaggregated by geography, based on management’s assessment of available data:       Year Ended September 30, 2023     Year Ended September 30, 2022       Total Revenue     % of Total Revenue     Total Revenue     % of Total Revenue                                     United States   $ 24,295,601       71 %   $ 26,427,402       72 % Latin America     9,370,160       27 %     9,389,482       25 % Other     810,104       2 %     1,151,615       3 % Total   $ 34,475,865       100 %   $ 36,968,499       100 %   The above table includes total revenue for the Company, of which monitoring and other related services is the majority (approximately 97% for fiscal years ended September 30, 2023 and 2022) 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.

v3.23.4

Note 4 - Other Assets	12 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Investments and Other Noncurrent Assets [Text Block]	(4) Other Assets   As of September 30, 2023 and September 30, 2022, respectively, the balance of other assets was $2,442,154 and $3,509,655, respectively. Other assets at September 30, 2023 are comprised largely of cash used as collateral for Performance Bonds as well as contractually required monitoring center and other equipment, right of use assets, lease deposits and other long-term assets. The Company anticipates these performance bonds will be reimbursed to the Company upon completion of its contracts with the customer. See Note 12.   The Company was contractually obligated to construct and equip two monitoring centers for an international customer, as well as supply equipment for the customer’s satellite locations, which have been owned by the customer since construction was completed. The monitoring center equipment is amortized using the straight-line method over the contract period between 32 and 40 months. Monitoring center equipment as of September 30, 2023 and 2022, was as follows:       September 30, 2023     September 30, 2022   Monitoring center equipment   $ 1,619,278     $ 1,520,115   Less: accumulated amortization     (1,088,825 )     (524,178 ) Monitoring center equipment, net of accumulated amortization   $ 530,453     $ 995,937     The Santiago and Puerto Montt monitoring centers amortization is recorded in Monitoring, products and other related service costs on the Condensed Consolidated Statements of Operations. Amortization of costs related to the Santiago and Puerto Montt monitoring centers for the twelve-months ended September 30, 2023 and 2022 were $572,135 and $494,001, respectively. The Company recorded revenue from the customer based on a contractually agreed upon unit per day amount during the contract period. See Note 7 for details of the borrowings related to the monitoring centers construction and equipment.

v3.23.4

Note 5 - Accrued Liabilities	12 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Accounts Payable and Accrued Liabilities Disclosure [Text Block]	(5)    Accrued Liabilities   Accrued liabilities consisted of the following as of September 30, 2023 and 2022:       September 30, 2023     September 30, 2022   Accrued payroll, taxes and employee benefits   $ 1,116,036     $ 1,412,055   Deferred revenue     431       3,299   Accrued taxes - foreign and domestic     260,697       371,293   Accrued other expense     108,476       123,752   Accrued legal and other professional costs     80,210       57,905   Accrued costs of revenue     410,726       352,060   Right of use liability     143,846       177,431   Deferred financing fees     -       88,685   Accrued interest     451,417       455,963   Total accrued liabilities   $ 2,571,839     $ 3,042,443

v3.23.4

Note 6 - Related Parties	12 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Related Party Transactions Disclosure [Text Block]	(6)    Related Parties   ETS Limited is currently the beneficial owner of 4,706,579 shares of the Company's Common Stock (the “Track Group Shares”) held by ADS Securities LLC (“ADS”) under an agreement dated September 28, 2017, pursuant to which ADS transferred all the Track Group Shares to ETS Limited in exchange for all the outstanding shares of ETS Limited. A Director of ETS Limited was elected to the Company's current Board of Directors (the “Board”) on February 7, 2018 and is still serving on the Board in his current capacity as a senior executive at ADS.

v3.23.4

Note 7 - Debt Obligations	12 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Debt Disclosure [Text Block]	(7) Debt Obligations   Debt obligations, net of debt issuance costs, as of September 30, 2023 and 2022 consisted of the following:       September 30, 2023     September 30, 2022                     The unsecured loan (the “Amended Facility Agreement”) from Conrent Invest S.A. (“Conrent”) whereby, as of March 1, 2021, the Company had borrowed $42,864,000, bearing interest at a rate of 4% per annum, payable in arrears annually beginning July 1, 2021, with all principal and accrued and unpaid interest due on July 1, 2024. On April 26, 2023, the Company and Conrent entered into an amendment to the facility agreement, which extended the maturity date from July 1, 2024 to July 1, 2027. Interest payments are scheduled to be made on June 30 and December 31 each year. Unamortized issuance costs at September 30, 2023 are $120,401. As of September 30, 2023, $42,864,000 of principal and $438,165 of interest was owed to Conrent. The Company paid Conrent interest of $1,738,373 for the year ended September 30, 2023.   $ 42,743,599     $ 42,653,649                     The unsecured Note Payable Agreement with HP Financial Services Chile Limitada bearing interest at a rate of 6.56% per annum, with a maturity date of February 6, 2024.     11,435       35,335                     The unsecured Note Payable Agreement with Banco Santander, net of unamortized issuance costs $4,837, bearing interest at a rate of 5.04% per annum, with a maturity date of May 11, 2024.     77,670       177,463                     The unsecured Note Payable Agreement with Banco Estado, net of unamortized issuance costs of $1,976, bearing interest at a rate of 3.50% per annum, with a maturity date of January 2, 2024.     36,773       135,521                     The unsecured Note Payable Agreement with HP Financial Services Chile Limitada bearing interest at a rate of 6.61% per annum, with a maturity date of March 4, 2024.     29,118       79,375                     The unsecured Note Payable Agreement with Banco de Chile, net of unamortized issuance costs of $57, bearing interest at a rate of 2.54% per annum, with a maturity date of March 4, 2024.     18,440       51,278                     The unsecured Note Payable Agreement with Banco de Chile, net of unamortized issuance costs of $10,807, bearing interest at a rate of 3.12% per annum, with a maturity date of February 17, 2025.     192,547       303,303                     Total debt obligations     43,109,582       43,435,924   Less: current portion     (308,417 )     (456,681 ) Long-term debt, less current portion   $ 42,801,165     $ 42,979,243       On December 21, 2020, Conrent and the Company signed an amendment to the Amended Facility Agreement which extended the maturity date of the Amended Facility Agreement to July 1, 2024 (“Amended Facility”), capitalized the accrued and unpaid interest increasing the outstanding principal amount and reduced the interest rate of the Amended Facility from 8% to 4%. On April 26, 2023, the Company and Conrent entered into another amendment to the facility agreement (the “Amendment”) originally executed by and between the parties on December 30, 2013 and amended multiple times (the “Amended Facility Agreement”). The latest Amendment: (i) extended the maturity date from July 1, 2024, to July 1, 2027; (ii) amended the applicable interest rate resulting in an escalating interest rate as follows: 4% through June 30, 2024, 5% through June 30, 2025, 5.5% through June 30, 2026, and 6% through the maturity date and (iii) removed section 7.3 “Change of Control” of the Amended Facility Agreement. In return, the Company agreed to pay certain fees to Conrent. As of September 30, 2023, $42,864,000 of principal and $438,165 of interest was owed to Conrent.   On January 6, 2021, the Company borrowed 70,443,375 Chilean Pesos (“CLP”) ($101,186USD) from HP Financial Services Chile Limitada (the “HP Note 1”). To facilitate the HP Note 1, the Company entered into a Note Payable Agreement with HP Financial Services Chile Limitada as the lender. The HP Note 1 was used to purchase PABX (private automatic branch exchange phone equipment) for the construction of the Gendarmeria de Chile monitoring centers in Santiago and Puerto Montt, Chile (the “Santiago Monitoring Center” and “Puerto Montt Monitoring Center”, respectively). The HP Note 1 bears an interest rate of 6.56% per annum, payable monthly with principal beginning February 2021, and a maturity date of February 6, 2024.   On January 12, 2021, the Company borrowed 347,198,500CLP ($482,965USD), net of 2,801,500CLP fees ($3,897USD), from Banco Santander (the “Banco Santander Note”). To facilitate the Banco Santander Note, the Company entered into a Note Payable Agreement with Banco Santander as the lender. The Banco Santander Note was used for the construction of the Santiago Monitoring Center and remodeling a temporary monitoring center. The Banco Santander Note bears interest at a rate of 5.04% per annum, payable monthly with principal beginning February 2021, and a maturity of May 11, 2024. The Company also paid 19,607,843CLP ($27,275USD) in broker fees which are amortized over the life of the loan.   On February 2, 2021, the Company borrowed 247,999,300CLP ($338,954USD), net of 2,000,700CLP fees ($2,734USD), from Banco Estado (the “Banco Estado Note”). To facilitate the Banco Estado Note, the Company entered into a Note Payable Agreement with Banco Estado as the lender. The Banco Estado Note was used for the construction of the Santiago Monitoring Center and computer equipment for Gendarmeria branch offices. The Banco Estado Note bears interest at a rate of 3.50% per annum, initially having a 6-month grace period with the first payment including the 6 months of interest plus 1 month of principal on August 2, 2021, then monthly interest with principal, and a maturity date of January 2, 2024. The Company also paid 14,124,294CLP ($19,304USD) in broker fees which are amortized over the life of the loan.   On February 4, 2021, the Company borrowed 149,794,432CLP ($205,330USD) from HP Financial Services Chile Limitada (the “HP Note 2”). To facilitate the HP Note 2, the Company entered into a Note Payable Agreement with HP Financial Services Chile Limitada as the lender. The HP Note 2 was used to purchase computer equipment for the Santiago Monitoring Center. The HP Note 2 bears interest at a rate of 6.61% per annum, payable monthly with principal beginning March 2021, and a maturity of March 4, 2024.   On February 5, 2021, the Company borrowed 99,808,328CLP ($136,564USD), net of 210,485CLP fees ($286USD), from Banco de Chile (the “Banco de Chile Note 1”). To facilitate the Banco de Chile Note, the Company entered into a Note Payable Agreement with Banco de Chile as the lender. The Banco de Chile Note was used to purchase HVAC equipment for the Santiago Monitoring Center. The Banco de Chile Note bears interest at a rate of 2.54% per annum, payable monthly with principal beginning March 2021, and a maturity date of March 4, 2024.   On February 15, 2021, the Company borrowed 500,000,000CLP ($678,214USD) from Banco de Chile (the “Banco de Chile Note 2”). To facilitate the Banco de Chile Note 2, the Company entered into a Note Payable Agreement with Banco de Chile as the lender. The Banco de Chile Note 2 was used as working capital and to complete the construction of the Puerto Montt Monitoring Center. The Banco de Chile Note 2 bears interest at a rate of 3.12% per annum, payable monthly with principal beginning March 2021, and a maturity of February 17, 2025. The Company also paid 28,248,588CLP ($38,317USD) in broker fees which are amortized over the life of the loan.     The following table summarizes our future maturities of debt obligations, net of the amortization of debt discounts as of September 30, 2023:   Twelve months ended September 30:   Total   2024   $ 322,915   2025     60,745   2026     -   2027     42,864,000   Total     43,247,660   Issuance costs     (138,078 ) Debt obligations, net of unamortized issuance costs   $ 43,109,582

v3.23.4

Note 8 - Preferred Stock	12 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Preferred Stock [Text Block]	(8) 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”), of which 1,200,000 shares have been designated as Series A Convertible Preferred Stock (“Series A Preferred”). The Company’s Board of Directors has the authority to amend its Certificate of Incorporation, without further stockholder approval, to designate and determine, in whole or in part, the preferences, limitations and relative rights of the preferred stock before any issuance of the Preferred Stock and to create additional series of Preferred Stock.   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”) with the Delaware Division of Corporations, designating 1,200,000 shares of the Company’s preferred stock as Series A Preferred. Shares of Series A Preferred rank senior to the Company’s Common Stock, and all other classes and series of equity securities of the Company that by their terms do not rank senior to the Series A Preferred.   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 shares of Common Stock into which the Series A Preferred is convertible shall, upon issuance, have all of the same voting rights as other issued and outstanding shares of our Common Stock.   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, 2023, there were no shares of Series A Preferred issued and outstanding.

v3.23.4

Note 9 - Common Stock	12 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Common Stock [Text Block]	(9) 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.   There were no issuances of Common Stock in fiscal year 2023.   On December 28, 2021, a member of the Board of Directors received 7,283 shares of Common Stock by exercising 7,283 options.   On December 30, 2021, a member of the Board of Directors received 9,191 shares of Common Stock by exercising 9,191 options.   On April 14, 2022, a member of the Board of Directors received an after-tax total of 37,306 shares of Common Stock by exercising 64,665 and 8,868 warrants, through a net exercise provision of the Common Stock Purchase Warrant Agreement and the payment of taxes.   On April 13, 2022, a member of management received an award of 185,000 shares of Common Stock based on a Restricted Stock Agreement.   On April 13, 2022, another employee received an award of 100,000 shares of Common Stock based on a Restricted Stock Agreement.

v3.23.4

Note 10 - Stock Options and Warrants	12 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Share-Based Payment Arrangement [Text Block]	(10) Stock Options and Warrants   Stock Incentive Plan   At the annual meeting of stockholders on April 13, 2022, our stockholders approved the 2022 Omnibus Equity Incentive Plan (the “2022 Plan”), previously approved by the Company’s Board. The 2022 Plan provides for the grant of incentive options and nonqualified 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 provide services to the Company in lieu of cash. A total of 500,000 shares are authorized for issuance pursuant to awards granted under the 2022 Plan.   The 2022 Plan supersedes and replaces the Company’s 2012 Equity Compensation Plan (the “2012 Plan”). As of June 30, 2020, the Board suspended further awards under the 2012 Plan. Any awards outstanding under the 2012 Plan will remain subject to the 2012 Plan. All shares of Common Stock remaining authorized and available for issuance under the 2012 Plan and any shares subject to outstanding awards under the 2012 Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares will automatically become available for issuance under our 2022 Plan.   There were no issuances of restricted shares in fiscal year 2023.   On April 13, 2022, the Company issued 285,000 restricted shares, at a grant date value of $1.30, to members of its executive team from the 2022 Plan with a total value of $370,500. The restricted shares are amortized over the vesting period. One-third of the restricted shares vested on the grant date and one-third of the restricted shares vested on October 13, 2022 and October 13, 2023, respectively.   The Company recorded expense of $159,522 and $207,547 during the fiscal years ended September 30, 2023 and 2022, respectively. As of September 30, 2023 there were 215,000 shares of Common Stock available for issuance under the 2022 Plan.   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, 2023 and 2022, the Company granted no options and warrants to purchase shares of Common Stock under the 2022 Plan or under the 2012 Plan. The Company recorded no expense for the fiscal years ended September 30, 2023 and 2022, 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, 2023 and no future issuances are expected.   As of September 30, 2023, 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, 2023 and 2022 is presented below:       Shares Under Option     Weighted Average Exercise Price     Weighted Average Remaining Contractual Life (years)     Aggregate Intrinsic Value   Outstanding as of September 30, 2021     457,075     $ 1.74       1.04     $ 779,977   Granted     -       -       -       -   Expired     (196,097 )     (2.41 )     -       -   Exercised     (100,097 )     (1.23 )     -       -   Outstanding as of September 30, 2022     160,881     $ 1.24       0.60     $ -   Granted     -       -       -       -   Expired     (156,193 )     (1.24 )     -       -   Exercised     -       -       -       -   Outstanding as of September 30, 2023     4,688     $ 1.24       0.25     $ -   Exercisable as of September 30, 2023     4,688     $ 1.24       0.25     $ -       The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $0.49 of the Company’s common stock on September 30, 2023.

v3.23.4

Note 11 - Income Taxes	12 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Income Tax Disclosure [Text Block]	(11) Income Taxes   The Company recognizes deferred income tax assets or liabilities for the expected future tax consequences of events that have been recognized in the financial statements or income tax returns. Deferred income tax assets or liabilities are determined based upon the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to apply when the differences are expected to be settled or realized. Deferred income tax assets are reviewed periodically for recoverability and valuation allowances are provided as necessary. Interest and penalties related to income tax liabilities, when incurred, are classified in interest expense and income tax provision, respectively. Deferred tax liabilities are recorded in Accrued liabilities on the Consolidated Balance Sheets.   For the fiscal years ended September 30, 2023 and 2022, the Company incurred no net losses for income tax purposes. 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, 2023, the Company had net carryforwards available to offset future taxable income of approximately $163,702,643, $4,590,967 of which expires during the year ended September 30, 2023. 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, 2023, or on net deferred tax asset as of September 30, 2022. In the past, ownership changes of the Company resulted in a Sec. 382 limitation on the future realizability of U.S. state NOLs. Since the Company maintains a full valuation allowance on all U.S. and state deferred tax assets, the impact of the Sec. 382 limitation did not result in an impact to the provision for income taxes for the year ended September 30, 2023, or on net deferred assets as of September 30, 2023.   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, 2023 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,       2023     2022   Net loss carryforwards   $ 33,396,062     $ 34,261,003   Accruals and reserves     (44,816 )     723,617   Severance indemnity reserve     98,735       76,918   Contributions     3,911       2,478   Depreciation and amortization     (378,920 )     (219,722 ) Stock-based compensation     93,031       109,397   Interest Expense Carryforward     397,566       -   Valuation allowance     (33,661,255 )     (35,182,109 ) Total   $ (95,686 )   $ (228,418 )     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, 2023 and 2022 are as follows:       Fiscal Years Ended       September 30,       2023     2022   Federal income tax benefit at statutory rate   $ (169,121 )   $ (78,091 ) State income tax benefit, net of federal income tax effect     (31,811 )     42,086   Effect of foreign income taxes     548,851       679,605   Return to Provision     (33,604 )     (4,473 ) Withholding Taxes     79,000       147,109   Deferred only adjustment     1,740,896       471,609   Gain on deductible expenses     14,493       487,442   Change in valuation allowance     (1,520,854 )     (861,799 ) Provision for income taxes   $ 627,850     $ 883,488     The Company’s open tax years for federal and state income tax returns are for the tax years ended September 30, 2018 through September 30, 2023. The Company was examined by the Internal Revenue Service for fiscal years ended September 30, 2018 and September 30, 2017. The examinations were closed as of November 29, 2021, with no additional tax assessment.

v3.23.4

Note 12 - Commitments and Contingencies	12 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Commitments and Contingencies Disclosure [Text Block]	(12) 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 nearly 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). On March 24, 2017, SecureAlert Inc. (a predecessor entity to Track Group, Inc. or the Company) filed a complaint before the Federal Administrative Tribunal, asserting the failure by defendants to pay claimant amounts agreed to, and due under, the Pluri Annual Contract for the Rendering of Monitoring Services of Internees, through Electric Bracelets, in the Islas Marias Penitentiary Complex dated July 15, 2011. Although preliminary rulings have been unfavorable to the Company, the Company’s counsel continues to review its remaining claims which are upwards of $4.0 million. Based upon the fee arrangement the Company has with its counsel, we anticipate the future liabilities attributable to legal expense will be minimal.   Commonwealth of Puerto Rico, through its Trustees v. International Surveillance Services Corporation. On January 23, 2020, the Company was served with a summons for an Adversary Action pending against International Surveillance Services Corporation (“ISS”), a subsidiary of the Company, now known as Track Group – Puerto Rico Inc., in the United States District Court for the District of Puerto Rico seeking to recover allegedly fraudulent transfers and to disallow claims pursuant to United States Bankruptcy and Puerto Rican law. The allegations stem from payments made to ISS between 2014 and 2017, which the Company believes were properly made in accordance with a contract between ISS and the government of Puerto Rico, through the Oficina de Servicios con Antelacion a Juicio, originally signed in 2011. The Company is confident that all payments it received were earned and due under applicable law and produced documentation supporting its position in an informal document exchange with the Commonwealth on July 6, 2020. At this time, the case remains stayed by Court order. The Company remains confident in its position and no accrual for a potential loss has been made, after consultation with legal counsel.   Jeffrey Mohamed Abed v. Track Group, Inc., et al. On June 7, 2021, Jeffrey Mohamed Abed filed a complaint seeking unspecified damages in the Superior Court of the State of California, alleging strict products liability, negligence and breach of implied warranty premised upon injuries sustained by Abed who was involved in an automobile accident while wearing a GPS tracking device of the Company. The Company was served on October 15, 2021 and subsequently filed its Answer and Affirmative Defenses and issued discovery. On July 17, 2023, the action was consolidated with a related case brought by Plaintiff against other motorists involved in the automobile accident. The Company disputes Abed’s claims and will defend the case vigorously. The Company remains confident in its position and no accrual for a potential loss has been made, after consultation with legal counsel.     Track Group Chile SpA. v. Republic of Chile. On January 24, 2022, Track Group Chile SpA. initiated a judicial action in the Court of Justice of Chile to settle a contract dispute with the Republic of Chile. The Company asserts that it has complied with its contractual obligations and that any delays in so doing were not attributable to the Company. The Company remains confident in its position and no accrual for a potential loss has been made, after consultation with legal counsel.   Jesus Valle Gonzalez, et al. v. Track Group-Puerto Rico, et al. On May 9, 2022, Plaintiff Jesus Valle Gonzalez filed a complaint in the Court of First Instance, San Juan Superior Court, Commonwealth of Puerto Rico against the Company, and associated parties alleging the death of his mother on June 8, 2016 was a result of the gross negligence of all the defendants. This claim follows a similar claim made against the Company in June 2017 by different relatives of the deceased which was settled on September 5, 2018. Plaintiff in this matter asserts his claim now having reached the age of majority and is requesting damages of $1.5 million. On August 22, 2023, the Superior Court dismissed the Plaintiffs’ case for lack of jurisdiction.   Michael Matthews v. Track Group, Inc., et al. On December 13, 2022, Plaintiff Michael Matthews filed a complaint in the Circuit Court of Cook County, Illinois, amended on July 23, 2023, against the Company and other defendants alleging wrongful arrest and incarceration and a deprivation of his rights following his purportedly erroneous violation of home monitoring program requirements. The Company disputes the allegations of the complaint, has retained counsel, and intends to vigorously defend the case. Based on the preliminary stage of the proceedings and after consultation with legal counsel, no accrual for a potential loss has been made.   Leases   Leases as Lessor   Monitoring Equipment and Other Related Services   The Company leases monitoring equipment and provides monitoring services to its customers with contract terms varying from month-to-month to several years and each daily contract price varies. Devices supplied to customers are not serial number unique and a single device may be used by multiple customers over its useful life. If a leased device is returned for repair, it will likely be replaced with a different device from a different customer or possibly a new device.   The Company’s tracking devices are considered operating leases under ASC 842 as transfer of control of the asset does not occur at the end of the lease, a single device is not specific to a customer and devices may be used by multiple customers throughout their life cycle. Due to the movement of devices from customer to customer, relatively few long-term contracts, the measurement of the equipment life and the present value of the equipment’s fair values would not be a measurement to qualify the devices as sales-type leases.   Operating lease and monitoring revenue associated with the Company’s monitoring equipment as of September 30, 2023 and 2022, respectively, are shown in the table below:       2023     2022   Monitoring equipment operating revenue   $ 28,106,916     $ 29,867,266     The Company cannot accurately estimate 5-years of future minimum lease receipts for its devices leased to customers because none of its customers make any contractual commitment regarding the number of active devices utilized in any given year and those quantities of active devices vary significantly for every customer each and every day.      Leases as Lessee   The following table shows right of use assets and lease liabilities for real estate and equipment, with the associated financial statement line items as of September 30, 2023 and 2022.       September 30, 2023     September 30, 2022       Operating lease asset     Operating lease liability     Operating lease asset     Operating lease liability                                     Other assets   $ 403,205     $ -     $ 575,716     $ -   Accrued liabilities     -       143,846       -       177,431   Long-term liabilities     -       259,359       -       398,285     The following table summarizes the supplemental cash flow information for the year ended September 30, 2023 and 2022:       September 30, 2023     September 30, 2022   Cash paid for noncancelable operating leases included in operating cash flows   $ 284,897     $ 272,921   Right of use assets obtained in exchange for operating lease liabilities:   $ 5,459     $ 626,047     The future minimum lease payments under noncancelable operating leases with terms greater than one year as of September 30, 2023 are:       Operating Leases   From October 2023 to September 2024   $ 157,632   From October 2023 to September 2025     92,492   From October 2024 to September 2026     94,273   From October 2025 to September 2027     87,585   From October 2026 to September 2028     773   Thereafter     -   Undiscounted Cash Flow     432,755   Less: imputed interest     (29,550 ) Total   $ 403,205     Reconciliation to lease liabilities:         Lease liabilities - current   $ 143,846   Lease liabilities - long-term     259,359   Total Lease Liabilities   $ 403,205     The weighted-average remaining lease term and discount rate related to the Company’s lease liabilities as of September 30, 2023 were 3.44 years and 4%, 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, 2023, the Company has one performance bond in connection with a foreign customer totaling $1,654,134 (“Performance Bond”) of which $1,157,867 is held in an interest-bearing account on behalf of the bank and is recorded in Other Assets on the Consolidated Balance Sheets. The amount held on this Performance Bond will be released after the expiration of the Performance Bond, all contract extensions have been exhausted, and the consent of the customer, but in no event before July 2024 and more likely in 2025.   The amounts held on two performance bonds were released in the second quarter of 2023 and the Company received $1,041,797, including interest.   The Company pays interest on the full amount of the Performance Bond to the financial institution providing the guarantee at 2.8% interest per annum for the Performance Bond expiring in July 2024. The Company recorded interest expenses of $54,676 and $56,343 for the years ended September 30, 2023 and September 30, 2022, respectively.

v3.23.4

Note 13 - Intangible Assets	12 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Intangible Assets Disclosure [Text Block]	(13) Intangible Assets   The following table summarizes the activity of intangible assets for the years ended September 30, 2023 and 2022, respectively:       September 30, 2023     September 30, 2022       Gross     Accumulated Amortization     Net     Gross     Accumulated Amortization     Net                                                     Patent & royalty agreements   $ 21,120,565     $ (14,358,431 )   $ 6,762,134     $ 21,120,565     $ (13,027,465 )   $ 8,093,100   Developed technology     10,328,125       (2,933,499 )     7,394,626       9,206,006       (1,649,563 )     7,556,443   Trade name     139,450       (138,916 )     534       139,115       (127,241 )     11,874   Total intangible assets   $ 31,588,140     $ (17,430,846 )   $ 14,157,294     $ 30,465,686     $ (14,804,269 )   $ 15,661,417     The intangible assets summarized above were purchased or developed on various dates from July 2011 through September 30, 2023. The assets have useful lives ranging from three to twenty years. Amortization expense for the years ended September 30, 2023 and 2022 was $2,616,629 and $3,277,088, respectively. Amortization expense included in cost of revenue in the Consolidated Statements of Operations for the years ended September 30, 2023 and 2022 was $1,724,256 and $1,857,413, respectively. Amortization expense included in operating expense in the Consolidated Statements of Operations for the years ended September 30, 2023 and 2022 was $892,373 and $1,419,675, respectively. The Company wrote-off fully amortized intangible assets at September 30, 2023 and September 30, 2022 of $0 and $1,860,000, respectively. In the fourth quarter of fiscal year 2022, based on future sales trends, operating margins and capital expenditures, the Company made a decision to discontinue the Shadow and InTouch products. This resulted in a developed technology impairment charge of $0 and $1,728,961 for the years ended September 30, 2023 and 2022, respectively, and is recorded in general and administrative expense on the Consolidated Statements of Operations.   The following table summarizes the future maturities of amortization of intangible assets as of September 30, 2023:   Fiscal Year   Amortization     STOP Royalty   2024     2,240,653       187,500   2025     2,418,908       -   2026     2,418,908       -   2027     2,418,908       -   Thereafter     4,472,417       -   Total   $ 13,969,794     $ 187,500     Goodwill – In accordance with accounting principles generally accepted in the United States of America, we do not amortize goodwill. These principles require the Company to periodically perform tests for goodwill impairment, at least annually, or sooner if evidence of possible impairment arises. We evaluated the goodwill for impairment as of September 30, 2023. Based on the evaluation made, the Company concluded that no impairment of goodwill was necessary.   Goodwill, as of September 30, consisted of the following:       September 30,       2023     2022   Balance - beginning of year   $ 8,061,002     $ 8,519,998   Effect of foreign currency translation on goodwill     (209,536 )     (458,996 ) Balance - end of year   $ 7,851,466     $ 8,061,002

v3.23.4

Note 14 - Subsequent Events	12 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Subsequent Events [Text Block]	(14) Subsequent Events   In accordance with the Subsequent Events Topic of the FASB ASC 855, we have evaluated subsequent events, through the filing date and noted that no additional subsequent events have occurred that are reasonably likely to impact the financial statements.

v3.23.4

Significant Accounting Policies (Policies)	12 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
Consolidation, Policy [Policy Text Block]	Principles of Consolidation   The consolidated financial statements include the accounts of Track Group, Inc. and its active 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, Policy [Policy Text Block]	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 and certain assumptions related to the recoverability of intangible assets and Goodwill.
Business Combinations Policy [Policy Text Block]	Business Combinations   Business combinations are accounted for under the provisions of ASC 805-10, Business Combinations (ASC 805-10), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed at the date of acquisition are recorded at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Acquisition-related expense is recognized separately from the business combinations and are expensed as incurred. If the business combination provides for contingent consideration, the contingent consideration is recorded at its probable fair value at the acquisition date. Any changes in fair value after the acquisition date are accounted for as measurement-period adjustments if they pertain to additional information about facts and circumstances that existed at the acquisition date and that the Company obtained during the measurement period. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as performance measures, are recognized in earnings.     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 Transactions and Translations Policy [Policy Text Block]	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”) at the exchange rate prevailing at September 30, 2023. Their respective statements of operations have been translated into USD using the average exchange rates prevailing during the periods of each statement. The corresponding translation adjustments are part of accumulated other comprehensive income and are shown as part of stockholders’ equity.
Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]	Other Intangible Assets   Other intangible assets principally consist of patents, royalty purchase agreements, developed technology acquired, trade name, and capitalized software 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. See Note 13.
Fair Value Measurement, Policy [Policy Text Block]	Fair Value of Financial Instruments   The carrying amounts reported in the accompanying consolidated financial statements for accounts receivable, other assets, 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 Risk, Credit Risk, Policy [Policy Text Block]	Concentration of Revenue & 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, 2023 and 2022.       2023     %     2022     %   Customer A   $ 6,730,687       20 %   $ 6,095,403       16 % Customer B     3,804,951       11 %     4,871,073       13 %   No other customer represented more than 10% of the Company’s total revenue for the fiscal years ended September 30, 2023 or 2022.   Concentration of credit risk associated with the Company’s total and outstanding accounts receivable as of September 30, 2023 and 2022, respectively, are shown in the table below:       2023     %     2022     %   Customer A   $ 490,848       11 %   $ 1,346,854       22 % Customer B     303,777       7 %     714,399       11 % Customer C     630,494       14 %     675,725       11 % Customer D     465,320       10 %     310,723       5 %
Cash and Cash Equivalents, Policy [Policy Text Block]	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 $3,715,850 and $3,037,903 of cash deposits in excess of federally insured limits as of September 30, 2023 and 2022, respectively.
Receivable [Policy Text Block]	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. For the fiscal years ended September 30, 2023 and September 30 2022, the Company wrote-off accounts receivables of $127,527 and $201,469, respectively. The Company also maintains an allowance for credit memos for estimated credit memos to be issued against current sales. Estimates of allowance for credit memos are based upon the application of a historical issuance lag period to the average credit memos issued each month. For the fiscal years ended September 30, 2023 and September 30 2022, the reserve for credit memos was $23,065 and $0 respectively.
Prepaid Expense and Other, Policy [Policy Text Block]	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 after the Company’s contractual obligation has been completed and prepaid expenses to be allocated over the commitment.
Inventory, Policy [Policy Text Block]	Inventory   Inventory is valued at the lower of the cost or net realizable value. Cost is determined using the first-in/first-out 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 parts used for minor repairs of ReliAlert™, and other tracking devices as well as completed circuit boards used to manufacture new devices and components used to manufacture circuit boards. Completed and shipped ReliAlert™ and other tracking devices are reflected in Monitoring Equipment. As of September 30, 2023 and 2022, inventory consisted of the following:        2023     2022   Monitoring equipment component boards inventory   $ 1,289,966     $ 1,053,245   Reserve for damaged or obsolete inventory     (3,772 )     -   Total inventory, net of reserves   $ 1,286,194     $ 1,053,245     The Company uses a third-party fulfillment service provider. As a result of this service, the Company’s employees do not actively assemble new products or repair a significant amount of 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 $3,772 and $0 during the years ended September 30, 2023 and 2022, respectively, for inventory that was obsolete, lost or damaged. Obsolete, lost and damaged items are expensed in Monitoring, products & other related services in the Consolidated Statement of Operations.
Property, Plant and Equipment, Policy [Policy Text Block]	Property and Equipment   Property and equipment are stated at cost, less accumulated depreciation. Depreciation is determined using the straight-line method over the estimated useful lives of the assets, typically three to seven years. Leasehold improvements are depreciated 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, 2023 and 2022, respectively:       2023     2022   Equipment, software and tooling   $ 1,427,522     $ 1,399,288   Automobiles     4,460       4,187   Leasehold improvements     382,122       380,586   Furniture and fixtures     222,554       215,856   Total property and equipment before accumulated depreciation     2,036,658       1,999,917   Accumulated depreciation     (1,920,850 )     (1,829,588 ) Property and equipment, net of accumulated depreciation   $ 115,808     $ 170,329     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, 2023 and September 30, 2022, the Company disposed of $8,669 and $794,555 fixed assets, respectively. Internally developed software costs related to the Company’s monitoring platform are recorded as intangible assets on the Consolidated Balance Sheet.   Depreciation expense recognized for property and equipment for the fiscal years ended September 30, 2023 and 2022 was $95,099 and $144,054, respectively. Depreciation expense for property and equipment is recognized in operating expense in the Consolidated Statements of Operations.
Loans and Leases Receivable, Lease Financing, Policy [Policy Text Block]	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 three years for customer tablets and three to five years for monitoring devices. Monitoring equipment as of September 30, 2023 and 2022 is as follows:       2023     2022   Monitoring equipment   $ 11,535,787     $ 9,574,740   Less: accumulated depreciation     (6,348,695 )     (5,950,639 ) Monitoring equipment, net of accumulated depreciation   $ 5,187,092     $ 3,624,101     Depreciation expense for the fiscal years ended September 30, 2023 and 2022 was $1,539,234 and $1,380,558, respectively. This expense was classified as a cost of revenue in the Consolidated Statements of Operations.   During the fiscal years ended September 30, 2023 and 2022, the Company recorded charges of $305,300 and $280,783, respectively, for devices that were lost, stolen or damaged. Lost, stolen and damaged items are expensed in Monitoring, product and other related services in the Consolidated Statements of Operations.
Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]	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 from Contract with Customer [Policy Text Block]	Revenue Recognition   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 leased 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. 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 with 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. The Company recognizes revenue from other services as the customer receives services and the Company has the right to payment. When purchasing products (such as ReliAlert™ devices) from the Company, customers may, but are not required to, enter into monitoring service contracts with us. The Company recognizes revenue on monitoring services for customers that have previously purchased devices at the end of each month that monitoring services have been provided.   Multiple Element Arrangements   The majority of our revenue transactions do not have multiple elements. However, on occasion, the Company may enter into revenue transactions that have multiple elements. These may include different combinations of products or services that are included in a single billable rate. These products or services are delivered over time as the customer utilizes our services. In cases where obligations in a contract are distinct and thus require separation into multiple performance obligations, revenue recognition guidance requires that contract consideration be allocated to each distinct performance obligation based on its relative standalone selling price. The value allocated to each performance obligation is then recognized as revenue when the revenue recognition criteria for each distinct promise or bundle of promises has been met. There were no multiple element arrangements for the years ended September 30, 2023 and 2022.   Other Matters   The Company considers an arrangement with payment terms longer than the Company’s normal terms not to be fixed or determinable. 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.   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 Expense, Policy [Policy Text Block]	Research and Development Costs   The Company expenses research and development costs as incurred.   During the fiscal year ended September 30, 2023 and September 30, 2022, the Company incurred research and development expense of $2,735,060 and $2,432,448, respectively.
Advertising Cost [Policy Text Block]	Advertising Costs   The Company expenses advertising costs as incurred. Advertising expense for the fiscal years ended September 30, 2023 and 2022 was $13,707 and $14,037, respectively.
Compensation Related Costs, Policy [Policy Text Block]	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. Outstanding restricted stock units are amortized over the vesting period. We recorded $159,522 and $207,547 of expense related to these awards for fiscal years ended September 30, 2023 and 2022, respectively.
Income Tax, Policy [Policy Text Block]	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, 2023 and September 30, 2022, we did not record a liability for uncertain tax positions.
Earnings Per Share, Policy [Policy Text Block]	Net Income (Loss) Per Common Share   Basic net income (loss) per common share (“Basic EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period.   Diluted net income (loss) per common share (“Diluted EPS”) is computed by dividing net income (loss) attributable to common stockholders by the sum of the weighted-average number of common shares outstanding and the weighted-average dilutive common share equivalents outstanding. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect.    Common share equivalents consist of shares issuable upon the exercise of options and warrants to purchase shares of the Company’s Common Stock, par value $0.0001 per share (“Common Stock”). As of September 30, 2023, none of the outstanding common share equivalents were included in the computation of diluted net income per common share as their effect would be anti-dilutive. The Common Stock equivalents outstanding as of September 30, 2023 and 2022 (excluding 25,352 options that expired unexercised on October 14, 2022) consisted of the following:       2023     2022   Issuable Common Stock options and warrants     4,688       160,881   Total Common Stock equivalents     4,688       160,881     At September 30, 2023 and 2022, all stock options and warrants had exercise prices that were above the market price of $0.49 per share and $0.51, respectively and have not been included in the diluted earnings per share calculations.
New Accounting Pronouncements, Policy [Policy Text Block]	Recent Accounting Pronouncements   Recently Adopted Accounting Standards   From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies, which are adopted by the Company as of the specified effective date. The Company considers the applicability and impact of all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's Consolidated Financial Statements.   Recently Issued Accounting Standards   In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, “Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with the carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 became effective for accelerated filing companies for annual periods or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and all other entities should adopt the amendments in ASU 2017-04 for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2022. The amendment should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company will adopt ASU 2017-04 in the fiscal year 2024. The Company has determined this adoption will not have a significant impact on its consolidated financial position, results of operations, or cash flows.     In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 adds a current expected credit loss (“CECL”) impairment model to GAAP that is based on expected losses rather than incurred losses. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. ASU 2016-13 became effective for fiscal years beginning after December 15, 2019, excluding smaller reporting entities, which will be effective for fiscal years beginning after December 15, 2022. The Company will adopt ASU 2016-13 in fiscal year 2024. The Company does not expect the application of the CECL impairment model to have a significant impact on our allowance for uncollectible amounts for accounts receivable.

v3.23.4

Note 2 - Summary of Significant Accounting Policies (Tables)	12 Months Ended
	Sep. 30, 2023
Notes Tables
Schedules of Concentration of Risk, by Risk Factor [Table Text Block]	2023     %     2022     %   Customer A   $ 6,730,687       20 %   $ 6,095,403       16 % Customer B     3,804,951       11 %     4,871,073       13 %     2023     %     2022     %   Customer A   $ 490,848       11 %   $ 1,346,854       22 % Customer B     303,777       7 %     714,399       11 % Customer C     630,494       14 %     675,725       11 % Customer D     465,320       10 %     310,723       5 %
Schedule of Inventory, Current [Table Text Block]	2023     2022   Monitoring equipment component boards inventory   $ 1,289,966     $ 1,053,245   Reserve for damaged or obsolete inventory     (3,772 )     -   Total inventory, net of reserves   $ 1,286,194     $ 1,053,245
Property, Plant and Equipment [Table Text Block]	2023     2022   Equipment, software and tooling   $ 1,427,522     $ 1,399,288   Automobiles     4,460       4,187   Leasehold improvements     382,122       380,586   Furniture and fixtures     222,554       215,856   Total property and equipment before accumulated depreciation     2,036,658       1,999,917   Accumulated depreciation     (1,920,850 )     (1,829,588 ) Property and equipment, net of accumulated depreciation   $ 115,808     $ 170,329
Schedule of Monitoring Property and Equipment [Table Text Block]	2023     2022   Monitoring equipment   $ 11,535,787     $ 9,574,740   Less: accumulated depreciation     (6,348,695 )     (5,950,639 ) Monitoring equipment, net of accumulated depreciation   $ 5,187,092     $ 3,624,101
Common Stock Equivalents [Table Text Block]	2023     2022   Issuable Common Stock options and warrants     4,688       160,881   Total Common Stock equivalents     4,688       160,881

v3.23.4

Note 3 - Revenue Recognition (Tables)	12 Months Ended
	Sep. 30, 2023
Notes Tables
Disaggregated Revenue by Geography [Table Text Block]	Year Ended September 30, 2023     Year Ended September 30, 2022       Total Revenue     % of Total Revenue     Total Revenue     % of Total Revenue                                     United States   $ 24,295,601       71 %   $ 26,427,402       72 % Latin America     9,370,160       27 %     9,389,482       25 % Other     810,104       2 %     1,151,615       3 % Total   $ 34,475,865       100 %   $ 36,968,499       100 %

v3.23.4

Note 4 - Other Assets (Tables)	12 Months Ended
	Sep. 30, 2023
Notes Tables
Schedule of Other Assets [Table Text Block]	September 30, 2023     September 30, 2022   Monitoring center equipment   $ 1,619,278     $ 1,520,115   Less: accumulated amortization     (1,088,825 )     (524,178 ) Monitoring center equipment, net of accumulated amortization   $ 530,453     $ 995,937

v3.23.4

Note 5 - Accrued Liabilities (Tables)	12 Months Ended
	Sep. 30, 2023
Notes Tables
Schedule of Accrued Liabilities [Table Text Block]	September 30, 2023     September 30, 2022   Accrued payroll, taxes and employee benefits   $ 1,116,036     $ 1,412,055   Deferred revenue     431       3,299   Accrued taxes - foreign and domestic     260,697       371,293   Accrued other expense     108,476       123,752   Accrued legal and other professional costs     80,210       57,905   Accrued costs of revenue     410,726       352,060   Right of use liability     143,846       177,431   Deferred financing fees     -       88,685   Accrued interest     451,417       455,963   Total accrued liabilities   $ 2,571,839     $ 3,042,443

v3.23.4

Note 7 - Debt Obligations (Tables)	12 Months Ended
	Sep. 30, 2023
Notes Tables
Schedule of Debt [Table Text Block]	September 30, 2023     September 30, 2022                     The unsecured loan (the “Amended Facility Agreement”) from Conrent Invest S.A. (“Conrent”) whereby, as of March 1, 2021, the Company had borrowed $42,864,000, bearing interest at a rate of 4% per annum, payable in arrears annually beginning July 1, 2021, with all principal and accrued and unpaid interest due on July 1, 2024. On April 26, 2023, the Company and Conrent entered into an amendment to the facility agreement, which extended the maturity date from July 1, 2024 to July 1, 2027. Interest payments are scheduled to be made on June 30 and December 31 each year. Unamortized issuance costs at September 30, 2023 are $120,401. As of September 30, 2023, $42,864,000 of principal and $438,165 of interest was owed to Conrent. The Company paid Conrent interest of $1,738,373 for the year ended September 30, 2023.   $ 42,743,599     $ 42,653,649                     The unsecured Note Payable Agreement with HP Financial Services Chile Limitada bearing interest at a rate of 6.56% per annum, with a maturity date of February 6, 2024.     11,435       35,335                     The unsecured Note Payable Agreement with Banco Santander, net of unamortized issuance costs $4,837, bearing interest at a rate of 5.04% per annum, with a maturity date of May 11, 2024.     77,670       177,463                     The unsecured Note Payable Agreement with Banco Estado, net of unamortized issuance costs of $1,976, bearing interest at a rate of 3.50% per annum, with a maturity date of January 2, 2024.     36,773       135,521                     The unsecured Note Payable Agreement with HP Financial Services Chile Limitada bearing interest at a rate of 6.61% per annum, with a maturity date of March 4, 2024.     29,118       79,375                     The unsecured Note Payable Agreement with Banco de Chile, net of unamortized issuance costs of $57, bearing interest at a rate of 2.54% per annum, with a maturity date of March 4, 2024.     18,440       51,278                     The unsecured Note Payable Agreement with Banco de Chile, net of unamortized issuance costs of $10,807, bearing interest at a rate of 3.12% per annum, with a maturity date of February 17, 2025.     192,547       303,303                     Total debt obligations     43,109,582       43,435,924   Less: current portion     (308,417 )     (456,681 ) Long-term debt, less current portion   $ 42,801,165     $ 42,979,243
Schedule of Maturities of Long-Term Debt [Table Text Block]	Twelve months ended September 30:   Total   2024   $ 322,915   2025     60,745   2026     -   2027     42,864,000   Total     43,247,660   Issuance costs     (138,078 ) Debt obligations, net of unamortized issuance costs   $ 43,109,582

v3.23.4

Note 10 - Stock Options and Warrants (Tables)	12 Months Ended
	Sep. 30, 2023
Notes Tables
Schedule of Stock Options Roll Forward [Table Text Block]	Shares Under Option     Weighted Average Exercise Price     Weighted Average Remaining Contractual Life (years)     Aggregate Intrinsic Value   Outstanding as of September 30, 2021     457,075     $ 1.74       1.04     $ 779,977   Granted     -       -       -       -   Expired     (196,097 )     (2.41 )     -       -   Exercised     (100,097 )     (1.23 )     -       -   Outstanding as of September 30, 2022     160,881     $ 1.24       0.60     $ -   Granted     -       -       -       -   Expired     (156,193 )     (1.24 )     -       -   Exercised     -       -       -       -   Outstanding as of September 30, 2023     4,688     $ 1.24       0.25     $ -   Exercisable as of September 30, 2023     4,688     $ 1.24       0.25     $ -

v3.23.4

Note 11 - Income Taxes (Tables)	12 Months Ended
	Sep. 30, 2023
Notes Tables
Schedule of Deferred Tax Assets and Liabilities [Table Text Block]	Fiscal Years Ended       September 30,       2023     2022   Net loss carryforwards   $ 33,396,062     $ 34,261,003   Accruals and reserves     (44,816 )     723,617   Severance indemnity reserve     98,735       76,918   Contributions     3,911       2,478   Depreciation and amortization     (378,920 )     (219,722 ) Stock-based compensation     93,031       109,397   Interest Expense Carryforward     397,566       -   Valuation allowance     (33,661,255 )     (35,182,109 ) Total   $ (95,686 )   $ (228,418 )
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]	Fiscal Years Ended       September 30,       2023     2022   Federal income tax benefit at statutory rate   $ (169,121 )   $ (78,091 ) State income tax benefit, net of federal income tax effect     (31,811 )     42,086   Effect of foreign income taxes     548,851       679,605   Return to Provision     (33,604 )     (4,473 ) Withholding Taxes     79,000       147,109   Deferred only adjustment     1,740,896       471,609   Gain on deductible expenses     14,493       487,442   Change in valuation allowance     (1,520,854 )     (861,799 ) Provision for income taxes   $ 627,850     $ 883,488

v3.23.4

Note 12 - Commitments and Contingencies (Tables)	12 Months Ended
	Sep. 30, 2023
Notes Tables
Operating Lease, Lease Income [Table Text Block]	2023     2022   Monitoring equipment operating revenue   $ 28,106,916     $ 29,867,266
Lessee, Operating Lease, Balance Sheet Information [Table Text Block]	September 30, 2023     September 30, 2022       Operating lease asset     Operating lease liability     Operating lease asset     Operating lease liability                                     Other assets   $ 403,205     $ -     $ 575,716     $ -   Accrued liabilities     -       143,846       -       177,431   Long-term liabilities     -       259,359       -       398,285
Lease, Cost [Table Text Block]	September 30, 2023     September 30, 2022   Cash paid for noncancelable operating leases included in operating cash flows   $ 284,897     $ 272,921   Right of use assets obtained in exchange for operating lease liabilities:   $ 5,459     $ 626,047
Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block]	Operating Leases   From October 2023 to September 2024   $ 157,632   From October 2023 to September 2025     92,492   From October 2024 to September 2026     94,273   From October 2025 to September 2027     87,585   From October 2026 to September 2028     773   Thereafter     -   Undiscounted Cash Flow     432,755   Less: imputed interest     (29,550 ) Total   $ 403,205   Reconciliation to lease liabilities:         Lease liabilities - current   $ 143,846   Lease liabilities - long-term     259,359   Total Lease Liabilities   $ 403,205

v3.23.4

Note 13 - Intangible Assets (Tables)	12 Months Ended
	Sep. 30, 2023
Notes Tables
Schedule of Finite-Lived Intangible Assets [Table Text Block]	September 30, 2023     September 30, 2022       Gross     Accumulated Amortization     Net     Gross     Accumulated Amortization     Net                                                     Patent & royalty agreements   $ 21,120,565     $ (14,358,431 )   $ 6,762,134     $ 21,120,565     $ (13,027,465 )   $ 8,093,100   Developed technology     10,328,125       (2,933,499 )     7,394,626       9,206,006       (1,649,563 )     7,556,443   Trade name     139,450       (138,916 )     534       139,115       (127,241 )     11,874   Total intangible assets   $ 31,588,140     $ (17,430,846 )   $ 14,157,294     $ 30,465,686     $ (14,804,269 )   $ 15,661,417
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]	Fiscal Year   Amortization     STOP Royalty   2024     2,240,653       187,500   2025     2,418,908       -   2026     2,418,908       -   2027     2,418,908       -   Thereafter     4,472,417       -   Total   $ 13,969,794     $ 187,500
Schedule of Goodwill [Table Text Block]	September 30,       2023     2022   Balance - beginning of year   $ 8,061,002     $ 8,519,998   Effect of foreign currency translation on goodwill     (209,536 )     (458,996 ) Balance - end of year   $ 7,851,466     $ 8,061,002

v3.23.4

Note 1 - Organization and Nature of Operations (Details Textual) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Apr. 27, 2023
Retained Earnings (Accumulated Deficit), Total	$ (309,610,397)	$ (306,218,889)
Net Income (Loss) Attributable to Parent, Total	(3,391,508)	(7,390,362)
Long-Term Debt	43,109,582	43,435,924
Asset Impairment Charges, Total	0	$ 1,729,658
Debt Maturing in July 2024 [Member]
Long-Term Debt			$ 42,900,000
Notes Payable Related to Construction of Monitoring Centers [Member]
Long-Term Debt	$ 365,983

v3.23.4

Note 2 - Summary of Significant Accounting Policies (Details Textual)	12 Months Ended
	Sep. 30, 2023 USD ($) $ / shares shares	Sep. 30, 2022 USD ($) $ / shares	Sep. 30, 2021 USD ($) $ / shares
Cash, Uninsured Amount		$ 3,715,850	$ 3,037,903
Accounts Receivable, Allowance for Credit Loss, Writeoff	$ 127,527		201,469
Allowance for Credit Memos	23,065	0
Inventory Write-down	3,772		0
Property, Plant and Equipment, Disposals	8,669		794,555
Depreciation, Nonproduction	95,099		144,054
Depreciation, Lessor Asset under Operating Lease	1,539,234	1,380,558
Disposal of Lease Monitoring Equipment	305,300	280,783
Research and Development Expense	2,735,060	2,432,448
Advertising Expense	$ 13,707	$ 14,037
Unrecognized Tax Benefits			$ 0
Common Stock, Par or Stated Value Per Share | $ / shares		$ 0.0001	$ 0.0001
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | shares	0
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures and Expirations in Period, Total (in shares) | shares	25,352
Share Price (in dollars per share) | $ / shares (in dollars per share) | $ / shares	$ 0.51	$ 0.49
Restricted Stock [Member]
Share-Based Payment Arrangement, Expense	$ 159,522	$ 207,547
Customer Concentration Risk [Member] | Revenue from Contract with Customer Benchmark [Member]
Number of Major Customers	2		2
Minimum [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	3 years
Property, Plant and Equipment, Useful Life (Year) (Year)	3 years
Equipment Leased Under Contractual Service Agreements, Useful Life (Year)	1 year
Maximum [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	20 years
Property, Plant and Equipment, Useful Life (Year) (Year)		7 years
Equipment Leased Under Contractual Service Agreements, Useful Life (Year)	3 years

v3.23.4

Note 2 - Summary of Significant Accounting Policies - Customer Concentration Risk (Details) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Revenues	$ 34,475,865	$ 36,968,499
Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member] | Customer A [Member]
Revenues	$ 6,730,687	$ 6,095,403
Customer concentration risk percentage	20.00%	16.00%
Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member] | Customer B [Member]
Revenues	$ 3,804,951	$ 4,871,073
Customer concentration risk percentage	11.00%	13.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer A [Member]
Customer accounts receivable amount	$ 490,848	$ 1,346,854
Customer concentration risk percentage	11.00%	22.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer B [Member]
Customer accounts receivable amount	$ 303,777	$ 714,399
Customer concentration risk percentage	7.00%	11.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer C [Member]
Customer accounts receivable amount	$ 630,494	$ 675,725
Customer concentration risk percentage	14.00%	11.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer D [Member]
Customer accounts receivable amount	$ 465,320	$ 310,723
Customer concentration risk percentage	10.00%	5.00%

v3.23.4

Note 2 - Summary of Significant Accounting Policies - Summary of Inventory (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Monitoring equipment component boards inventory	$ 1,289,966	$ 1,053,245
Reserve for damaged or obsolete inventory	(3,772)	0
Total inventory, net of reserves	$ 1,286,194	$ 1,053,245

v3.23.4

Note 2 - Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Equipment, software and tooling	$ 1,427,522	$ 1,399,288
Automobiles	4,460	4,187
Leasehold improvements	382,122	380,586
Furniture and fixtures	222,554	215,856
Total property and equipment before accumulated depreciation	2,036,658	1,999,917
Accumulated depreciation	(1,920,850)	(1,829,588)
Property, Plant, and Equipment, Excluding Monitoring Equipment [Member]
Property and equipment, net of accumulated depreciation	$ 115,808	$ 170,329

v3.23.4

Note 2 - Summary of Significant Accounting Policies - Summary of Monitoring Equipment (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Monitoring equipment	$ 11,535,787	$ 9,574,740
Less: accumulated depreciation	(6,348,695)	(5,950,639)
Monitoring equipment, net of accumulated depreciation	$ 5,187,092	$ 3,624,101

v3.23.4

Note 2 - Summary of Significant Accounting Policies - Common Stock Equivalents Excluded from EPS Calculation (Details) - shares	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2020
Issuable Common Stock options and warrants (in shares)	4,688	160,881	457,075
Total Common Stock equivalents (in shares)	4,688	160,881
Stock Options and Warrants [Member]
Issuable Common Stock options and warrants (in shares)	4,688	160,881

v3.23.4

Note 3 - Revenue Recognition (Details Textual) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2020
Accounts and Financing Receivable, after Allowance for Credit Loss, Total		$ 6,236,555	$ 4,536,916	$ 7,163,615
Unbilled Receivables, Current		777,514	490,848	420,697
Contract with Customer, Liability, Total		3,299	$ 431	$ 22,500
Contract with Customer, Liability, Deferred Revenue Recognized	$ 12,928	$ 120,958
Monitoring and Other Related Services [Member]
Revenue From Contract With Customer, Percent	97.00%	97.00%

v3.23.4

Note 3 - Revenue Recognition - Revenue Disaggregated by Geography (Details) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Customer revenue amount	$ 34,475,865	$ 36,968,499
Revenue Benchmark [Member] | Geographic Concentration Risk [Member]
Customer concentration risk percentage	100.00%	100.00%
UNITED STATES
Customer revenue amount	$ 24,295,601	$ 26,427,402
UNITED STATES | Revenue Benchmark [Member] | Geographic Concentration Risk [Member]
Customer concentration risk percentage	71.00%	72.00%
Latin America [Member]
Customer revenue amount	$ 9,370,160	$ 9,389,482
Latin America [Member] | Revenue Benchmark [Member] | Geographic Concentration Risk [Member]
Customer concentration risk percentage	27.00%	25.00%
Other than United States and Latin America [Member]
Customer revenue amount	$ 810,104	$ 1,151,615
Other than United States and Latin America [Member] | Revenue Benchmark [Member] | Geographic Concentration Risk [Member]
Customer concentration risk percentage	2.00%	3.00%

v3.23.4

Note 4 - Other Assets (Details Textual) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Other Assets, Total	$ 2,442,154	$ 3,509,655
Capitalized Contract Cost, Santiago Monitoring Center [Member]
Capitalized Contract Cost, Amortization	$ 572,135	$ 494,001

v3.23.4

Note 4 - Other Assets - Monitoring Center Equipment (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Monitoring center equipment	$ 2,036,658	$ 1,999,917
Less: accumulated amortization	1,920,850	1,829,588
Monitoring Center Equipment [Member]
Monitoring center equipment	1,619,278	1,520,115
Less: accumulated amortization	1,088,825	524,178
Property and equipment, net of accumulated depreciation of $1,920,850 and $1,829,588, respectively	$ 530,453	$ 995,937

v3.23.4

Note 5 - Accrued Liabilities - Summary of Accrued Liabilities (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Accrued payroll, taxes and employee benefits	$ 1,116,036	$ 1,412,055
Deferred revenue	431	3,299
Accrued taxes - foreign and domestic	260,697	371,293
Accrued other expense	108,476	123,752
Accrued legal and other professional costs	80,210	57,905
Accrued costs of revenue	410,726	352,060
Deferred financing fees	0	88,685
Accrued interest	451,417	455,963
Total accrued liabilities	2,571,839	3,042,443
Right-of-use Liability [Member]
Right of use liability	$ 143,846	$ 177,431

v3.23.4

Note 6 - Related Parties (Details Textual)	Sep. 28, 2017 shares
Stock Issued During Period, Shares, Acquisitions (in shares)	4,706,579

v3.23.4

Note 7 - Debt Obligations (Details Textual)													12 Months Ended
	Feb. 15, 2021 USD ($)	Feb. 15, 2021 CLP ($)	Feb. 05, 2021 USD ($)	Feb. 05, 2021 CLP ($)	Feb. 04, 2021 USD ($)	Feb. 04, 2021 CLP ($)	Feb. 02, 2021 USD ($)	Feb. 02, 2021 CLP ($)	Jan. 12, 2021 USD ($)	Jan. 12, 2021 CLP ($)	Jan. 06, 2021 USD ($)	Jan. 06, 2021 CLP ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022	Feb. 15, 2021 CLP ($)	Feb. 02, 2021 CLP ($)	Jan. 12, 2021 CLP ($)	Dec. 21, 2020	Dec. 20, 2020
Principal Amount													$ 42,864,000
Repayments of Long-Term Debt	$ 678,214		$ 136,564		$ 205,330		$ 338,954		$ 482,965		$ 101,186
Other Expenses, Total			$ 286				2,734		3,897
Broker Fees Others	$ 38,317						$ 19,304		$ 27,275
Chilean Pesos [Member]
Repayments of Long-Term Debt		$ 500,000,000		$ 99,808,328		$ 149,794,432		$ 247,999,300		$ 347,198,500		$ 70,443,375
Other Expenses, Total				$ 210,485				$ 2,000,700		$ 2,801,500
Broker Fees Others															$ 28,248,588	$ 14,124,294	$ 19,607,843
Agreement with Conrent [Member]
Debt Instrument, Interest Rate, Stated Percentage													4.00%					4.00%	8.00%
Debt Instrument, Increase, Accrued Interest													$ 438,165
Note Payable With HP Financial Services Maturing on Feb 6, 2024 [Member]
Debt Instrument, Interest Rate, Stated Percentage													6.56%	6.56%
Debt Instrument, Interest Rate, Effective Percentage											6.56%	6.56%
Note Payable With Banco Santander [Member]
Debt Instrument, Interest Rate, Stated Percentage													5.04%	5.04%
Debt Instrument, Interest Rate, Effective Percentage									5.04%								5.04%
Note Payable With Banco Estado [Member]
Debt Instrument, Interest Rate, Stated Percentage													3.50%	3.50%
Debt Instrument, Interest Rate, Effective Percentage							3.50%									3.50%
Note Payable with HP Financial Services Maturing on March 4, 2024 [Member]
Debt Instrument, Interest Rate, Stated Percentage													6.61%	6.61%
Debt Instrument, Interest Rate, Effective Percentage					6.61%	6.61%
Note Payable with Banco De Chile Maturing on March 4, 2024 [Member]
Debt Instrument, Interest Rate, Stated Percentage													2.54%	2.54%
Debt Instrument, Interest Rate, Effective Percentage			2.54%	2.54%
Note Payable with Banco De Chile Maturing on Feb 17, 2025 [Member]
Debt Instrument, Interest Rate, Stated Percentage													3.12%	3.12%
Debt Instrument, Interest Rate, Effective Percentage	3.12%														3.12%

v3.23.4

Note 7 - Debt Obligations - Summary of Debt Obligations (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Total debt obligations	$ 43,109,582	$ 43,435,924
Less: current portion	(308,417)	(456,681)
Long-term debt, net of current portion	42,801,165	42,979,243
Agreement with Conrent [Member]
Total debt obligations	42,743,599	42,653,649
Note Payable With HP Financial Services Maturing on Feb 6, 2024 [Member]
Total debt obligations	11,435	35,335
Note Payable With Banco Santander [Member]
Total debt obligations	77,670	177,463
Note Payable With Banco Estado [Member]
Total debt obligations	36,773	135,521
Note Payable with HP Financial Services Maturing on March 4, 2024 [Member]
Total debt obligations	29,118	79,375
Note Payable with Banco De Chile Maturing on March 4, 2024 [Member]
Total debt obligations	18,440	51,278
Note Payable with Banco De Chile Maturing on Feb 17, 2025 [Member]
Total debt obligations	$ 192,547	$ 303,303

v3.23.4

Note 7 - Debt Obligations - Summary of Debt Obligations (Details) (Parentheticals) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Dec. 21, 2020	Dec. 20, 2020
Debt Issuance Costs, Net	$ 138,078
Interest Paid, Excluding Capitalized Interest, Operating Activities	1,894,972	$ 1,870,204
Agreement with Conrent [Member]
Debt Instrument, Face Amount	$ 42,864,000
Debt Instrument, Interest Rate, Stated Percentage	4.00%		4.00%	8.00%
Debt Instrument, Face Amount	$ 42,864,000
Debt Instrument, Interest Rate, Stated Percentage	4.00%		4.00%	8.00%
Amended Agreement with Conrent [Member]
Debt Instrument, Face Amount	$ 42,864,000
Debt Issuance Costs, Net	120,401
Debt Instrument, Face Amount	42,864,000
Interest Paid, Including Capitalized Interest, Operating and Investing Activities	438,165
Interest Paid, Excluding Capitalized Interest, Operating Activities	$ 1,738,373
Note Payable With HP Financial Services Maturing on Feb 6, 2024 [Member]
Debt Instrument, Interest Rate, Stated Percentage	6.56%	6.56%
Debt Instrument, Interest Rate, Stated Percentage	6.56%	6.56%
Note Payable With Banco Santander [Member]
Debt Instrument, Interest Rate, Stated Percentage	5.04%	5.04%
Debt Issuance Costs, Net	$ 4,837	$ 4,837
Debt Instrument, Interest Rate, Stated Percentage	5.04%	5.04%
Note Payable With Banco Estado [Member]
Debt Instrument, Interest Rate, Stated Percentage	3.50%	3.50%
Debt Issuance Costs, Net	$ 1,976	$ 1,976
Debt Instrument, Interest Rate, Stated Percentage	3.50%	3.50%
Note Payable with HP Financial Services Maturing on March 4, 2024 [Member]
Debt Instrument, Interest Rate, Stated Percentage	6.61%	6.61%
Debt Instrument, Interest Rate, Stated Percentage	6.61%	6.61%
Note Payable with Banco De Chile Maturing on March 4, 2024 [Member]
Debt Instrument, Interest Rate, Stated Percentage	2.54%	2.54%
Debt Issuance Costs, Net	$ 57	$ 57
Debt Instrument, Interest Rate, Stated Percentage	2.54%	2.54%
Note Payable with Banco De Chile Maturing on Feb 17, 2025 [Member]
Debt Instrument, Interest Rate, Stated Percentage	3.12%	3.12%
Debt Issuance Costs, Net	$ 10,807	$ 10,807
Debt Instrument, Interest Rate, Stated Percentage	3.12%	3.12%

v3.23.4

Note 7 - Debt Obligations - Future Maturities of Debt Obligations (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
2024	$ 322,915
2025	60,745
2026	0
Long-Term Debt, Maturity, Year Four	42,864,000
Total	43,247,660
Issuance costs	(138,078)
Total debt obligations	$ 43,109,582	$ 43,435,924

v3.23.4

Note 8 - Preferred Stock (Details Textual)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022 $ / shares shares	Sep. 30, 2021 $ / shares shares	Oct. 12, 2017 shares
Preferred Stock, Shares Authorized | shares			20,000,000
Preferred Stock, Par or Stated Value Per Share			$ 0.0001
Series A Convertible Preferred Stock [Member]
Preferred Stock, Shares Authorized | shares		1,200,000	1,200,000	1,200,000
Preferred Stock, Par or Stated Value Per Share		$ 0.0001	$ 0.0001
Preferred Stock, Liquidation Preference Per Share		$ 35
Preferred Stock, Convertible, Conversion Ratio		10
Preferred Stock, Convertible, Convertibility, Period After Date of Issuance (Day)	540 days

v3.23.4

Note 9 - Common Stock (Details Textual) - $ / shares					12 Months Ended
	Apr. 14, 2022	Apr. 13, 2022	Dec. 30, 2021	Dec. 28, 2021	Dec. 28, 2022	Sep. 30, 2022	Sep. 30, 2021
Common Stock, Shares Authorized						30,000,000	30,000,000
Common Stock, Par or Stated Value Per Share						$ 0.0001	$ 0.0001
Restricted Stock [Member]
Stock Issued During Period, Shares, Issued for Services		285,000
Director [Member]
Issuance of Common Stock for Options Warrants Exercised, Shares (in shares)	37,306		9,191		7,283
Class of Warrant or Right, Exercised During Period (in shares)			9,191	7,283
Director [Member] | Warrants 1 [Member]
Class of Warrant or Right, Exercised During Period (in shares)	64,665
Director [Member] | Warrants 2 [Member]
Class of Warrant or Right, Exercised During Period (in shares)	8,868
Management [Member] | Restricted Stock [Member]
Stock Issued During Period, Shares, Issued for Services		185,000
Management 2 [Member] | Restricted Stock [Member]
Stock Issued During Period, Shares, Issued for Services		100,000

v3.23.4

Note 10 - Stock Options and Warrants (Details Textual) - USD ($)		12 Months Ended
	Apr. 13, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross		215,000
Share Price (in dollars per share) | $ / shares (in dollars per share)		$ 0.51	$ 0.49
Restricted Stock [Member]
Stock Issued During Period, Shares, Issued for Services	285,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value (in dollars per share)	$ 1.3
Share-Based Payment Arrangement, Expense		$ 159,522	$ 207,547
Restricted Stock Units (RSUs) [Member]
Stock Issued During Period, Value, Issued for Services	$ 370,500
Stock Options and Warrants [Member]
Share Price (in dollars per share) | $ / shares (in dollars per share)			$ 0.49
Stock Options and Warrants [Member] | Director [Member]
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount			$ 0
The 2022 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized			500,000
The 2022 Plan [Member] | Restricted Stock [Member]
Share-Based Payment Arrangement, Expense		$ 159,522		$ 207,547
The 2012 Plan [Member]
Class of Warrant or Right, Issued During Period (in shares)		0

v3.23.4

Note 10 - Stock Options and Warrants - Summary of Stock Options and Warrants Activity (Details) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2021
Outstanding (in shares)	160,881		457,075
Outstanding, weighted average exercise price (in dollars per share)	$ 1.24		$ 1.74
Outstanding, weighted average remaining contractual life (Year)	3 months	7 months 6 days	1 year 14 days
Outstanding, aggregate intrinsic value	$ 0	$ 0	$ 779,977
Expired (in shares)		(156,193)	(196,097)
ExpiredExpired, weighted average exercise price (in dollars per share)		$ (1.24)	$ (2.41)
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period (in shares)		0	(100,097)
Exercised (in dollars per share)		$ 0	$ (1.23)
Outstanding (in shares)	4,688	160,881
Outstanding, weighted average exercise price (in dollars per share)	$ 1.24	$ 1.24
Exercisable (in shares)	4,688
Exercisable, weighted average exercise price (in dollars per share)	$ 1.24
Exercisable, weighted average remaining contractual life (Year)	3 months
Exercisable, aggregate intrinsic value	$ 0

v3.23.4

Note 11 - Income Taxes (Details Textual) - USD ($)	Sep. 30, 2022	Sep. 30, 2021
Deferred Tax Assets, Capital Loss Carryforwards	$ 163,702,643	$ 4,590,967

v3.23.4

Note 11 - Income Taxes - Deferred Income Tax Assets (Liabilities) (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Net loss carryforwards	$ 33,396,062	$ 34,261,003
Accruals and reserves	(44,816)	723,617
Severance indemnity reserve	98,735	76,918
Contributions	3,911	2,478
Depreciation and amortization	(378,920)	(219,722)
Stock-based compensation	93,031	109,397
Interest Expense Carryforward	397,566	0
Valuation allowance	(33,661,255)	(35,182,109)
Net liability	$ (95,686)	$ (228,418)

v3.23.4

Note 11 - Income Taxes - Income Tax Reconciliation (Details) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Federal income tax benefit at statutory rate	$ (169,121)	$ (78,091)
State income tax benefit, net of federal income tax effect	(31,811)	42,086
Effect of foreign income taxes	548,851	679,605
Return to Provision	(33,604)	(4,473)
Withholding Taxes	79,000	147,109
Deferred only adjustment	1,740,896	471,609
Gain/(Loss) on deductible expenses	14,493	487,442
Change in valuation allowance	(1,520,854)	(861,799)
Provision for income taxes	$ 627,850	$ 883,488

v3.23.4

Note 12 - Commitments and Contingencies (Details Textual)			12 Months Ended
	May 09, 2022 USD ($)	Mar. 24, 2017 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($)
Operating Lease, Weighted Average Remaining Lease Term (Year)			3 years 5 months 8 days
Operating Lease, Weighted Average Discount Rate, Percent			4.00%
Performance Bonds in Connection with a Foreign Customer					$ 1,654,134
Performance Bonds in Connection with a Foreign Customer, Amount Held in an Interest-bearing Account on Behalf of Customer					$ 1,157,867
Number of Performance Bonds. Released, in Connection with a Foreign Customer			2
Performance Bonds in Connection with a Foreign Customer, Including Interest			$ 1,041,797
Performance Bonds in Connection with a Foreign Customer, Bonds Expiring in Next Fiscal Year, Interest Rate				2.80%
Performance Bonds in Connection with a Foreign Customer, Interest Expense			$ 54,676	$ 56,343
SecureAlert, Inc. v. Federal Government of Mexico [Member]
Claim Amount		$ 4,000,000
Jesus Valle Gonzalez, et.al v. Track Group Puerto Rico [Member] | Pending Litigation [Member] | Minimum [Member]
Loss Contingency, Damages Sought, Value	$ 1,500,000

v3.23.4

Note 12 - Commitments and Contingencies - Operating Lease Revenue Associated With Monitoring Equipment (Details) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Monitoring equipment operating revenue	$ 28,106,916	$ 29,867,266

v3.23.4

Note 12 - Commitments and Contingencies - Right of Use Assets and Lease Liabilities (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Other Assets [Member]
Other assets	$ 403,205	$ 575,716
Accounts Payable and Accrued Liabilities [Member]
Accrued liabilities	143,846	177,431
Other Noncurrent Liabilities [Member]
Long-term liabilities	$ 259,359	$ 398,285

v3.23.4

Note 12 - Commitments and Contingencies - Cash Flow Information (Details) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash paid for noncancelable operating leases included in operating cash flows	$ 284,897	$ 272,921
Right of use assets obtained in exchange for operating lease liabilities:	$ 5,459	$ 626,047

v3.23.4

Note 12 - Commitments and Contingencies - Future Minimum Lease Payments (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
From October 2022 to September 2023	$ 157,632
From October 2023 to September 2024	92,492
From October 2024 to September 2025	94,273
From October 2025 to September 2026	87,585
Total	403,205
From October 2026 to September 2027	773
Undiscounted Cash Flow	432,755
Less: imputed interest	(29,550)
Under ASC 840 [Member]
Thereafter	0
Accounts Payable and Accrued Liabilities [Member]
Accrued liabilities	143,846	$ 177,431
Long-term Liabilities [Member]
Long-term liabilities	259,359
Lease Liabilities [Member]
Total	$ 403,205

v3.23.4

Note 13 - Intangible Assets (Details Textual) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Amortization of Intangible Assets	$ 2,616,629	$ 3,277,088
Write off of Amortized Intangible Assets	0	1,860,000
Impairment of Intangible Assets (Excluding Goodwill), Total	0	1,728,961
Cost of Sales [Member]
Amortization of Intangible Assets	1,724,256	1,857,413
Operating Expense [Member]
Amortization of Intangible Assets	$ 892,373	$ 1,419,675
Minimum [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	3 years
Maximum [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	20 years

v3.23.4

Note 13 - Intangible Assets - Intangible Asset Activity (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Gross	$ 31,588,140	$ 30,465,686
Accumulated amortization	17,430,846	14,804,269
Net	14,157,294	15,661,417
Patents [Member]
Gross	21,120,565	21,120,565
Accumulated amortization	14,358,431	13,027,465
Net	6,762,134	8,093,100
Developed Technology Rights [Member]
Gross	10,328,125	9,206,006
Accumulated amortization	2,933,499	1,649,563
Net	7,394,626	7,556,443
Trade Names [Member]
Gross	139,450	139,115
Accumulated amortization	138,916	127,241
Net	$ 534	$ 11,874

v3.23.4

Note 13 - Intangible Assets - Future Maturities of Amortization of Intangible Assets (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Total	$ 14,157,294	$ 15,661,417
Amortization [Member]
2024	2,240,653
2025	2,418,908
2026	2,418,908
2027	2,418,908
Thereafter	4,472,417
Total	13,969,794
STOP Royalty [Member]
2024	187,500
2025	0
2026	0
2027	0
Thereafter	0
Total	$ 187,500

v3.23.4

Note 13 - Intangible Assets - Goodwill (Details) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2021
Balance - beginning of year	$ 8,061,002	$ 8,519,998
Effect of foreign currency translation on goodwill	(209,536)	(458,996)
Balance - end of year	$ 7,851,466	$ 8,061,002

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