- We protect over 150,000 people across North America
- Over 20 years experience in the industry
- One of the few alarm companies to manufacture our own technology
- You deal directly with AlarmForce at all times
- Lowest prices and best value in the business
Financial Information
Stock Option plan:
The company has established an incentive stock option plan for directors, officers, employees, and consultants of the company. Options may be granted for a period not exceeding five years vesting 25% on the date of grant and 25% per year thereafter at an option price not less than the market price of the shares at the time the option is granted. The maximum number of common shares which may be set aside for issue under the plan is 1,750,000, provided that, from time to time, such number may be increased subject to approval of the shareholders of the Company. The maximum number of common shares which may be reserved for issuance to any one person under the plan is 5% of the common shares outstanding at the time of the grant, less the number of shares reserved for issuance to such person.
The changes in the outstanding stock options of the company during 2004 and 2003 are as follows:
| 2004 | 2003 | |||
| Option | Weighted Average Exercise Price |
Option | Weighted Average Exercise Price |
|
| $ | $ | |||
| Balance, beginning of year | 1,008,000 | 0.88 | 1,175,500 | 0.85 |
| Granted | 200,000 | 3.78 | 40,000 | 1.67 |
| Exercised | (406,600) | .86 | 975,052 | 0.85 |
| Cancelled | (57,500) | 1.34 | (40,000) | 0.85 |
| Balance, end of year (i) | 743,900 | 1.64 | 1,008,000 | 0.88 |
| Less options not vested (ii) | (150,000) | (265,000) | ||
| Exercisable, end of year | 593,900 | 743,000 |
The remaining contractual life and exercise price of options outstanding and options exercisable as at October 31, 2004 are as follows:
| Number of Options | Remaining | Exercise | Number of Options |
| Outstanding | contractual life (Years) |
Price |
Exercisable |
| 70,000 | .9 | 0.85 | 70,000 |
| 473,900 | 1.25 | 0.85 | 473,900 |
| 200,000 | 4.75 | 3.78 | 50,000 |
| 743,900 | 593,900 |
Vesting of options:
(i) Outstanding options are subject to vesting provisions under which 25% of the total options granted vest immediately at the date of the grant, and a further 25% after each of the first second and third anniversaries.
(ii) All options fully vested in 2004 except for 150,000 options which will fully vest in 2007. Subsequent to year end 31,800 options were exercised as described in note 17.
During the 2004 fiscal year, the Company recognized compensation expense of $105,281 for the stock option awards granted during the year in the financial statements. The fair value of options granted was estimated at the date of grant using the Black-Scholes valuation model with the following assumptions: (i) risk-free interest rate of 3.07% (ii) expected option life of 3.5 years, (iii) expected volatility of 35%, and (iv) expected dividend yield of 0%. During the year options were granted at a price of $3.78 per option. If options granted during the year had been accounted for using the fair value method at the grant date, the company’s net income and income per share would not be materially different.
10. INTEREST
| 2004 | 2003 | |
| Price |
Exercisable | |
| Interest on long-term debt | 143,444 | 198,777 |
| Other | 3,296 | 12,688 |
| 146,740 | 211,465 |
11. INCOME TAXES
| 2004 | 2003 | |
| $ |
$ | |
| Current | 397,948 | 111,862 |
| Future | 843,820 | 527,000 |
| 1,241,768 | 638,862 |