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 |
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Testimonials
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We were having trouble with our door alarm and it was going off without reason. In one way it was annoying as Alarmforce kept calling us, but it was good to know they were protecting our home. Alarmforce corrected the problem and the problem stopped. I have accidentally set of the alarm myself, but the Alarm Force personnel were extremely patient with me and I am glad that they were there. Thanks Alarm Force, your staff is amazing and I have already recommended you to other people including my sister-in-law who lives alone and feels very secure now knowing she has the two-way voice in case of emergency.
-Brenda M.- Edmonton, AB -
Neil was very helpful, friendly and professional.
-Ana, ON -
We have had your service for more than 15 years and are more than pleased. Your service technicians in the Barrie area have been great.
-G & M, ON -
Fantastic in all ways. I tell everyone about you.
-Deb, BC -
The Central Station reps are the best ever - 110%. They saved my house. The fireplace door somehow came loose and open and an ember was smouldering on some newspapers. Had I not had this system my house would have had some damage so it’s reassuring to know you are there watching my back
-Denise, AB -
No difficulties for the past four years, thank you. I enjoy the 2-way communication and also enjoy the calls prior to dispatching of emergency services. Avoids extra cost due to false alarms.
-Ken, ON -
Very impressed with your company. Have referred several people.
-Dusty, OH -
Wonderful, informed, courteous staff - a credit to your company.
-Jago, ON
