Monitoring Equipment

9 Months Ended

Jun. 30, 2014

Notes to Financial Statements

(13) Monitoring Equipment

Monitoring equipment as of June 30, 2014 and September 30, 2013, was as follows:

	June 30,			September 30,
	2014			2013
Monitoring equipment	$	3,273,830		$	2,420,042
Less: accumulated depreciation		(1,117,105	)		(1,183,346	)
Monitoring equipment,  net of accumulated depreciation	$	2,156,725		$	1,236,696

The Company began leasing monitoring equipment to agencies for offender tracking in April 2006 under operating lease arrangements.  The monitoring equipment is amortized using the straight-line method over an estimated useful life of three years.

Depreciation expense related to monitoring equipment for the three months ended June 30, 2014 and 2013 was $151,121 and $342,676. Depreciation expense for the nine months ended June 30, 2014 and 2013 was $619,351 and $1,010,757, respectively.  Additionally, as of June 30, 2014, the Company reserved $225,000 for future monitoring equipment impairment. These expenses have been recognized in cost of revenues.

Assets to be disposed of are reported at the lower of the carrying amount or fair value, less the estimated costs to sell the assets.  During the three and nine months ended June 30, 2014 and 2013, the Company recorded in cost of revenues disposal of lease monitoring equipment and parts of $184,965 and $89,093, respectively.