Financial Information

AUDITORS’ REPORT

To the Shareholders of AlarmForce INDUSTRIES INC.:

We have audited the balance sheet of AlarmForce INDUSTRIES INC. as at October 31, 2004 and the statements of retained earnings, income and cash flows for the year then ended. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing standards. Thos standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at October 31, 2004 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

The financial statements as at October 31, 2003 and for the year then ended, prior to restatement for complying with new Canadian Accounting Standards as described in Note 3(b), were audited by the other auditors who expressed an opinion without reservation on those statements in the auditors’ report dated January 20, 2004. We have examined the adjustments that were applied to restate the 2003 financial statements and in our opinion, such adjustments are appropriate and have been properly applied.