- 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
ALTERNATIVE ACCEPTABLE ACCOUNTING POLICY
Canadian GAAP permits the following alternative methods of accounting for the company’s direct-response marketing expenditures. These expenditures are capitalized and amortized in expense over the four year term of the related subscriber agreement, in order to match the expense against the recurring revenue from the subscriber accounts created.
The alternative method is to expense these expenditures in the year incurred. The company has elected to capitalize the expenditures because it believes that this appropriately represents the costs of creating the related subscriber accounts, and presents the better accounting treatment given the nature of the company’s business model and the industry in which it operates.
The company follows the recommendations of CICA Handbook Section 3063, “Impairment of Long-Lived Assets”. The company reviews for impairment the value of long-lived assets including revenue equipment and intangible assets on a regular basis, at least annually. The value is reviewed more frequently if events or changes in circumstances indicate that the carrying value exceeds fair value, as determined by the undiscounted future cash flows expected from the related subscriber accounts after normal attrition. If the sum of the undiscounted future cash flow expected from the subscriber agreements and eventual disposition of assets is less than the carrying amount, the group of assets is considered to be impaired, and an impairment loss is recorded, measured as the amount by which the carrying amount of the group of assets exceeds its estimated fair market value.
OUTLOOK
The company expects continued growth in revenues as it expands its subscriber monitored account base using its mass marketing model and brand recognition, focusing on giving the customer the best value possible through its infrastructure of manufacturing capabilities, customer-focused team culture and financial capital base. The company is committed to differentiating its position in the industry and controlling all aspects of subscriber service delivery. The central station will continue to maintain the most advanced two-way voice home security capabilities in the areas that the company operates in.
The residential alarm industry is continuing to do well, and based on industry estimates, the compound annual growth rate for total revenues in North America over the past five years is approximately 8.4%. It is expected that industry fragmentation will continue in the North American alarm industry, with the estimated market share of the top three companies in terms of recurring monthly revenue having decreased from 45% to 41% since 2002. In the meantime the estimated market share of the rest of the top 100 companies has remained virtually unchanged in that period. The net internal growth estimated for the industry was between 3% and 6 % per annum in the eight year period including 2004. The market penetration rate is estimated to be less than 20%.
Management believes that the company is well positioned to grow the subscriber account base in the foreseeable future, given that the fundamental drivers for the residential alarm industry are considered sound. These are represented by fine-tuning of the low-cost approach, false alarm minimization and up market features, which are expected to be strong drivers and will continue to differentiate the company’s technology and innovative approach.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
hough the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, they are not guarantees of future performance and management cannot assure that actual results will be consistent with these forward-looking statements. Investors should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and we assume no obligation to update or revise them to reflect new information, or the occurrence of future events or other circumstances.
Additional information on the Company can be found in the Company’s Annual Information Form (“AIF”) and other information filed with Canadian regulators on SEDAR at www.sedar.com.