EX-99.2 3 exhibit99-2.htm EXHIBIT 99.2 exhibit99-2.htm
Exhibit 99.2

















GPS Global Tracking & Surveillance System Ltd.
(A Development Stage Company)

Unaudited Condensed Interim Consolidated Financial Statements
As of March 31, 2014


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 



GPS Global Tracking & Surveillance System Ltd. (A Development Stage Company) INDEX





 

 

    Page
UNAUDITED  CONDENSED INTERIM CONSOLIATED FINANCIAL STATEMENTS  
   
Condensed Interim Consolidated Balance Sheets
1
Condensed Interim Consolidated Statements of Comprehensive Loss
2
Condensed Interim Consolidated Statements of Cash Flows
3
   
NOTES TO CONDENSED INTERIM CONSOLIATED FINANCIAL STATEMENTS   4-6







 
 
 
 
GPS Global Tracking & Surveillance System Ltd. (A Development Stage Company)
Condensed Interim Consolidated Balance Sheets


   
March 31,
    
September 30,
  
   
2014 (Unaudited)
    
2013
  
   
(in thousands)
  
ASSETS
            
CURRENT ASSETS:
            
Cash and cash equivalents
   $ 195     $ -  
Inventory
     12       12  
Other current assets
     22       16  
Total Current Assets
     229       28  
                 
NON-CURRENT ASSETS:
                
Property and equipment,  Net
     47       58  
Monitoring equipment
     48       63  
Severance pay funds
     21       11  
       Total Non- Current Assets
     116       132  
                 
Total Assets
   $ 345     $ 160  
                 
LIABILITIES & SHAREHOLDER'S DEFICIT:
                
CURRENT LIABILITIES:
                
Banks' lines of credit and loan
   $ *     $ 143  
Accrued payroll and other compensation related accruals
     62       72  
Accounts payable and accrued expenses
     70       170  
Accounts payable and accrued expenses of GPS Albania
     66       66  
Due to Shareholder and his wholly owned entities
     2,180       2,062  
Total Current Liabilities
     2,378       2,513  
                 
Accrued severance pay
     83       47  
Due to SecureAlert, Inc.
     753       -  
Total Liabilities
   $ 3,214     $ 2,560  
                 
SHAREHOLDER'S DEFICIT
                
Ordinary shares of NIS 1 ($ 0.3) par value
     *       *  
Accumulated other comprehensive loss during the development stage
     (145 )     (151 )
Accumulated losses during the development stage
     (2,660 )     (2,185 )
Total Shareholder's Deficit
     (2,869 )      (2,400 ) 
Total Liabilities and Shareholder's Deficit
   $ 345     $ 160  

* Less than 1 thousand
 
The accompanying notes are an integral part of the condensed interim consolidated financial statements.

 
-1-
 
GPS Global Tracking & Surveillance System Ltd. (A Development Stage Company)
Unaudited Condensed Interim Consolidated Statements of Comprehensive Loss


 
   
 
          
Period from July 31, 2008 through
March 31, 2014
  
   
Six Month Ended
    
      March 31, 2014       March 31, 2013      
   
(in thousands)
      
                       
Revenues
   $ -     $ 206     $ 544  
Cost of revenues
     -       115       344  
    Gross profit
     -       91       200  
Research and development expenses
     215       218       1,344  
Sales and marketing expenses
     61       70       415  
General and administrative expenses
     190       177       1,125  
    Operating loss
     466       374       2,684  
Interest expenses
     8       7       39  
Net loss
     474       381       2,723  
Other comprehensive (income) loss - currency translation adjustments
     (5 )      109       145  
                         
Comprehensive loss
    $ 469      $ 490      $ 2,868  
 
 
The accompanying notes are an integral part of the condensed interim consolidated financial statements.


 
-2-
 
 
GPS Global Tracking & Surveillance System Ltd. (A Development Stage Company)
Unaudited Condensed Interim Consolidated Statements of Cash Flow


 
    Six Months Ended   Period from July 31, 2008 through March 31, 2014  
     March 31, 2014     March 31, 2013    
     (in thousands)  
CASH FLOWS FROM OPERATING ACTIVITIES:
                  
Net loss
   $ (474 )       $ (381 )        $ (2,723 )   
                         
Adjustments to reconcile net loss to net cash used in operating activities:
                        
Depreciation
     25       30       159  
Capital loss from vehicle sale
     -       -       5  
Changes in operating assets and liabilities:
                        
Decrease (Increase) in other current assets
     (6 )     27       (18 )
Decrease (Increase) in inventory
     -       91       (11 )
Increase (Decrease) in Accrued payroll and other compensation related accruals
     (40 )     38       122  
Increase (Decrease) in Accounts payable and accrued expenses
     (76 )     (144 )     29  
Increase in Accounts payable and accrued expenses of GPS Albania
     -       32       66  
Increase (Decrease)  in due to Shareholders
     30       29       195  
Increase in accrued severance pay, net
     26       (4 )     58  
Total Adjustments
     (41 )     99       605  
Net Cash Used In Operating Activities
   $ (515 )      $ (282 )      $ (2,118 )     
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                        
Purchase of monitoring equipment and property and equipment
   $ -      $ (80 )       $ (314 )      
Proceeds from sale of vehicle
     -       -       62  
Net Cash Used In Investing Activities
   $ -     $ (80 )     $ (252 )     
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                        
Bank's line of credit and loan, net
   $ (141 )      $ (52 )     $ *  
Proceeds from SecureAlert, Inc.
     750       -       705  
Proceeds net of repayments Due to Shareholder and his wholly owned entities
     101       415       1,849  
Net Cash Provided By Financing Activities
   $ 710     $ 363     $ 2,554  
                         
Net Change In Cash
     195       -       184  
CASH AT BEGINNING OF THE PERIOD
     -       -       -  
EFFECT OF EXCHANGE RATE FLUCTUATION ON CASH
     *       -       12  
CASH AT END OF THE FISCAL PERIOD
   $ 196     $ -     $ 196  
                         

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
                  
Cash paid:
                  
Interest and bank charges
   $ 8     $ 7     $ 39  
 
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
 
 

 
 
-3-
 
 
GPS Global Tracking & Surveillance System Ltd. (A Development Stage Company)
Notes to Unaudited Condensed Interim Consolidated Financial Statements


NOTE 1 - General

 
a.
GPS Global Tracking & Surveillance System Ltd. (the "Company") was incorporated in Israel on July 31, 2008. The Company develops products for locating, tracking, tracing, monitoring and surveillance solutions of offenders, vehicles, facilities and human resources and specializes in developing innovative products using advanced technologies and tailored turn-key solutions for its customers worldwide. The Company has been engaged primarily in research and development of its products and has had limited operations to date, as such, its ability to continue to operate is dependent on the completion of the development of its products, the ability to market and sell its products and additional financing until profitability is achieved, therefore it is considered as a development stage company. The Company was wholly owned by its founder, an Israeli resident who is also its Chairman and Chief Executive Officer (the "Shareholder").

 
b.
On March 12, 2014, SecureAlert, Inc. ("SA"), a Utah (United States of America) corporation (SA operates also internationally in the business of tracking and surveillance systems and monitoring services) which its common stock is currently quoted on the OTC Markets (OTCQB) signed an agreement with the Company and its Shareholder, to purchase the outstanding stock of the Company and certain amounts due to him and its wholly owned entities by the Company (“Agreement”). Pursuant to the Agreement, on March 17, 2014, SA acquired aggregated amounts of $188,596 due to the Shareholder's wholly owned entities. On April 1, 2014, the acquisition by SA was completed and the outstanding shares of the Company were purchased from the Shareholder as well as aggregated amounts of NIS6,901,293 ($1.976 million) due to him by the Company. Additionally pursuant to the Agreement, SA committed to provide the Company up to $3 million to fund its operations of which NIS2 million ($576 thousand) was funded in on March 17, 2014 and additional $100 thousand up to June 12, 2014. Further, SA committed not to call for a repayment of all the outstanding debts mentioned above for at least 12 months from June 12, 2014. On April 1, 2014, SA and the Company entered into an employment agreement with the Shareholder for a period of at least two years.

 
c.
The Company had Shareholder's deficit and negative working capital amounted to $2.869 and $2.149 million, respectively, as of March 31, 2014. The Company incurred net losses and comprehensive income for the six month ended March 31, 2014 amounted to $474 and $469 thousand, respectively. The Company also incurred accumulated losses and accumulated comprehensive loss for the period from July 31, 2008 (inception) and through March 31, 2014 amounted to $2.66 and $2.185 million, respectively. In addition, the Company incurred negative cash flows from operations of $515 thousand and $2.118 million for the six month ended March 31, 2014 and for the period from July 31, 2008 (inception) through March 31, 2014, respectively. In order to fund its marketing and research and development activities, the Company will rely on financing expected to be received from SA as mentioned above which undertook to support the Company for at least the next 12 months from the approval date of these condensed interim consolidated financial statements. Therefore, the Company’s condensed interim consolidated financial statements have been presented on a basis that contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and assumes that the Company will continue as a going concern.


 
-4-
 
 
GPS Global Tracking & Surveillance System Ltd. (A Development Stage Company)
Notes to Unaudited Condensed Interim Consolidated Financial Statements



NOTE 1 – General (Cont.)
 
 
d.
In connection with the preparation of the condensed interim consolidated financial statements and in accordance with authoritative guidance for subsequent events, the Company evaluated subsequent events after the balance sheet date of March 31, 2014, through June 13, 2014, the date on which the condensed interim consolidated financial statements were issued.

NOTE 2 - Summary of Significant Accounting Policies

a.  
Basis of Presentation
The unaudited interim condensed consolidated financial information should be read in conjunction with the annual consolidated  financial statements of  GPS Global  and related notes because certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. In the opinion of management, the accompanying condensed interim consolidated financial information contains all adjustments, consisting only of normal recurring adjustments necessary to present fairly the Company’s financial position as of March 31, 2014, and results of its operations for the six months ended March 31, 2014 and 2013. The results of operations for the six months ended March 31, 2014 may not be indicative of the results for the fiscal year ending September 30, 2014. The accompanying condensed interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
 
b.  
Foreign Currency
 
The functional currency of the Company is the New Israeli Shekel ("NIS"). The functional currency of GPS Albania is Lek. The consolidated financial statements have been prepared based on a translation into the U.S. Dollar ("$" or "Dollar") under the principles prescribed in ASC Topic 830 "Foreign Currency Matters". Assets and liabilities are translated at year-end exchange rates, while revenues and expenses are translated at the reporting periods' average exchange rates, as applicable. As of March 31, 2014 and 2013 the Dollar/NIS exchange rates were NIS3.492 and NIS3.64, respectively. As of March 31, 2014 and 2013 the Dollar/Lek exchange rates were Lek100.2 and Lek107.1.
 
The Dollar/NIS average exchange rates for the six month ended March 31, 2014 and 2013 and for the period from July 31, 2008 (inception) through March 31, 2014 were NIS3.504, NIS3.773 and NIS3.725, respectively.The Dollar/ Lek average exchange rates for the six month ended March 31, 2014 and 2013 and for the period from July 31, 2008 (inception) through March 31, 2014 were Lek101.05, Lek104.886 and 100.885, respectively. Differences resulting from such translation are presented as "Other comprehensive loss" in the consolidated statements of comprehensive loss and "Accumulated other comprehensive income (loss) during the development stage" in the consolidated statements of changes in Shareholder's equity.
 
All amounts are presented in U.S. Dollars rounded to the nearest thousand, unless otherwise indicated.
 
 
-5-
 
NOTE 3 - Related Parties

The following are balances and transactions with the Shareholder and his wholly owned entities:

   
March 31
    
September 30
  
   
2014
    
2013
  
   
(in thousands)
  
   
Unaudited
    
Audited
  
LineBit Systems Ltd.
   $ 16     $ 161  
Eytanim Building and Infrastructure Ltd.
     -       5  
Accrued payroll
     53       44  
Loans
     1,976       1,711  
Accumulated payments made by the Shareholder to various vendors on behalf of the Company
     135       141  
    $ 2,180     $ 2,062  


   
Six months ended
 March 31, 2014
    
Period from July 31, 2008 through
 March 31, 2014
  
   
(in thousands)
  
             
Research and development expenses
   $ 3     $ 68  
General and administrative expenses
     3       68  
    $ 6     $ 136  

 
 
 
 
 
 
-6-