Financial Information
3. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTSThe 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 alarm 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 | ||
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Testimonials
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We set the alarm off a couple of times by mistake but haven't had to use it otherwise. I am alone now and it's a good feeling to have the alarm system.
-Helen, AB -
Thanks to AlarmForce, I feel safer in my home. My children and I live in a not so nice area of Edmonton and have had 1 attempted break-in so with alarm force I know that the alarm system helps to protect my family. On 2 occasions the alarm has been activated by mistake and AlarmForce always made sure everyone was ok and even sent security to our house to check on us. Thanks AlarmForce.
-Teresa B. - Edmonton, AB -
Dear Joel: I have listened to your comments about your service on the radio for a while. As a retired Volunteer Fire Rescue Captain, I realize the importance of a quick response. I am currently looking after my bosses house while he is on vacation. I entered the premises, and hit the wrong button to disarm. Immediately, your dispatcher was talking to me. He called on the land line, and helped me out. I'm extremely impressed with your service, and your personnel. So much so, I want to install Alarm Force in my house. Keep up the good work Joel. I'll rest easier knowing you're on our side
-John, AB -
We were pleased that the service was so prompt. Good job well done.
-David, OH -
As a child I remember being afraid of the dark. Even as an adult a scary movie or a bump in the night would set off that fear. I can avoid watching scary movies but i can not prevent a break in to my home...or can I? I have never felt so safe with an alarm system like AlarmForce. Not only do I arm my home during the day while at work, my home is armed while I am home alone and during the times where things go bump in the night. I sleep easy knowing that my home is armed. I would recommend Alarmforce to anyone the same way that got me on board with protecting my home. I have had alarm systems in past homes but nothing compares to having a live person monitoring your home when the alarm is triggered with a real threat or false alarm. I can honestly say I sleep better at night. Knowing that any intruder would see that my house is armed and know what they are up against is comfort in its own. I have no action packed glorified story...just a better nights sleep and a well secured protected home with AlarmForce. Thanks for everything.
-Laura T - Calgary, AB -
Dan(the installer) was very communicative and helpful. He really explained everything well.
-Henrietta, OH -
Fantastic in all ways. I tell everyone about you.
-Deb, BC -
The installer (BJ) was very knowledgeable and courteous. I appreciate that very much.
-Randy, OH
