- 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
3. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of 2004 and prior years have been restated to reflect the change in accounting policy and an accounting error identified therein.
A. On August 1, 2005, the Company announced a retroactive change to its accounting policy for capitalizing direct-response marketing costs. These costs are now treated as period costs and expensed in the period incurred. Previously, they were deferred and amortized over the term of the subscriber agreement. The change in accounting policy has been adopted retroactively with restatement of prior periods. The results of this change are shown in column “A” of the table.
B. The Company acquired certain subsidiaries that owned franchise rights and, based upon the interpretation of section 3465.37 of the CICA handbook, no provision for future income taxes was previously reflected in the financial statements. Upon review in 2005, the Company determined that a retroactive correction of an accounting error should be made to reflect the future income taxes. As per the same section of the CICA handbook, these franchise rights acquired were grossed up for the future tax liability associated with them, and amortized over the respective useful lives to properly match the future taxes in the appropriate years. The results of the correction are shown in column “B”.
The effect of these changes on the 2004 financial statement balances is as follows:
| Previously reported | Increase (decrease) | Restated | ||
| A | B | |||
| Balance Sheet | ||||
| Deferred Revenue | 5,915,040 | (5,778,219) | - | 136,821 |
| Intangible Assets | 3,175,803 | - | 1,598,267 | 4,774,070 |
| Future Income Taxes | (1,950,000) | 2,121,500 | (1,598,267) | (1,426,767) |
| Retained Earnings | 4,528,147 | (3,656,719) | - | 871,428 |
| Income Statement | ||||
| Amortization | ||||
| Deferred Charges | 2,135,928 | (2,125,524) | - | 10,404 |
| Intangibles | 319,556 | - | 170,856 | 490,412 |
| Selling Expenses | 1,297,205 | 3,668,187 | - | 4,965,302 |
| Future Income Taxes | 843,820 | (570,277) | (170,856) | 102,687 |
| Net Income | 1,275,986 | (972,386) | - | 303,600 |
| Earnings per share | ||||
| Basic | 0.12 | (0.09) | 0.03 | |
| Diluted | 0.11 | (0.08) | 0.03 | |
4. DEFERRED CHARGES
| 2005 | 2004 | |
| (Note 3) | ||
| Deferred stock compensation | 42,112 | 96,859 |
| Deferred development costs (net of accumulated amortization of $65,545: 2004- $55,953) | 30,370 | 39,962 |
| 72,482 | 136,821 |
5. PROPERTIES, PLANT AND EQUIPMENT
| 2005 | 2004 | |||
| Cost | Accumulated Amortization |
Cost | Accumulated Amortization |
|
| $ | $ | $ | $ | |
| Computer equipment | 548,457 | 419,443 | 525,227 | 369,129 |
| Computer software | 280,831 | 144,541 | 226,583 | 97,756 |
| Furniture and fixtures | 275,786 | 171,123 | 264,210 | 146,404 |
| Leasehold improvements | 261,391 | 209,224 | 255,330 | 187,482 |
| Moulding equipment | 57,386 | 39,173 | 57,386 | 27,695 |
| Revenue equipment | 15,050,402 | 5,237,241 | 16,038,753 | 6,716,914 |
| 16,474,253 | 6,220,745 | 17,367,489 | 7,545,380 | |
| Net Book Value | $10,253,508 | $9,822,109 | ||