Financial Information
(a) Income tax expense varies from the amount that would be computed by applying the combine federal and provincial statutory income taxes rate as a result of the following:
| 2004 | 2003 | |
| Income taxes based on combined federal and provincial | $ | $ |
| statutory income tax rate of 36.12% in 2004 and 36.6% in 2003 | 909,413 | 710,176 |
| Increase (decrease) in income taxes resulting from: | ||
| Non-deductible expenses | 169,749 | 282,927 |
| Reduction in tax rates applicable to prior year’s | ||
| temporary difference | (25,019) | |
| Other temporary differences | 187,625 | (354,241) |
| Effective income tax provision | 1,241,768 | 638,862 |
(b) The significant components of the company future income tax liability consist of timing differences in the deferred charges which are expensed over the four year term of the customer rental agreement to which they relate, but are deducted for income tax purposes when incurred. Deferred revenue is recognized in income over a four-year term but taxable when received.
A summary of significant components of future tax liabilities calculated in accordance with Canadian accounting principles at October 31, 2004 and 2003 are as follows:
| Number of Options | 2004 | 2003 |
| $ | $ | |
| Non-current future tax liabilities | ||
| Deferred direct response advertising costs | (2,135,920) | 0.85 |
| Depreciable property, plant and equipment | (432,900) | (244,900) |
| Intangible assets | (10,900) | (17,700) |
| Non current future tax assets | ||
| Deferred revenue | 488,900 | 358,200 |
| Share issue costs | 140,820 | - |
| Scientific research and development tax pools | - | 226,900 |
| 629,720 | 585,100 | |
| Total Future tax liability | (1,950,000) | (1,247,000) |
12. CONTINGENT LIABILITY
The company is a defendant in a legal action with respect to a claim for fees subsequent to termination of an agreement. Based on the evidence available, it is management’s opinion that the claim is entirely without merit. No provision has been reflected in the financial statements relating to this action.
13. COMMITMENTThe company is committed to operating leases for premises, vehicles, and office equipment expiring at various dates up to June 30, 2008. Future minimum lease payments are as follows:
| Premises | Vehicle |
Equipment | Total | |
| $ | $ | $ | $ | |
| 2005 | 140,686 | 34,592 | 18,989 | 194,267 |
| 2006 | 120,243 | 34,592 | 17,446 | 172,282 |
| 2007 | 52,591 | 17,019 | 16,930 | 86,540 |
| 2008 | 35,061 | 468 | 6,565 | 42,094 |
| 348,581 | 86,671 | 59,930 | 495,182 |
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Testimonials
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I am extremely pleased with your service. When I did not notify you that I would be on holiday, you called my son to inform him that I had not turned my alarm off after day 2 and that he should check on me. As a senior, I really appreciate what I refer to as service beyond the call of duty. Thank you.
-Lanadale, ON -
Very professional and nice technician.
-Andy, ON -
I've been happy with your company since the first day I called about buying your service. I tell everyone.
-Audrey, GA -
Very happy with service, installation and operation of equipment . We now feel more secure in our home.
-Victor, ON -
Set off by mistake. Response was very quick and expertly carried out.
-Robert, OH -
By, the way the alarm system is great - I feel much safer now especially when my husband is on the graveyard shift. The fellow that installed it for us too was very professional and helpful.
-Debbie, BC -
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 -
It is very assuring to know there will be a live voice on the intercom if something goes wrong. Thank you for your service.
-Darcy, ON
