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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After I heard about the first break -in on my street I called AlarmForce and had the system installed the next day for the first couple of weeks I was sure that I made a mistake getting an alarm any alarm then the semi next to my house got robbed and the next week the one 2 houses down as well both did not have any alarms since that day I have no questioned my alarm force system for I know alarm force is the reason that my house was not broken in to and also is the reason that I can leave my wife and kids home knowing that they are safe.
-Adrian - Brampton, ON -
Very pleased with your services. Will recommend again.
-Vicky, OH -
I was at first not convinced that Alarm Force would work in my home. We have two small terriers that have been our guard dogs for 10 years and we were worried they would set off the alarm. Just after the system was installed I forgot to enter the PIN to disarm and heard a loud voice asking me to identify myself. I gave the password and even after that I received a phone call asking me if everything was OK. I feel very safe now and am convinced that Alarm Force is the best. My guard dogs work only part time now.
-Jack - Richmond Hill, ON -
Absolutely outstanding service and peace of mind.
-Marc, OH -
I have used other large alarm forces companies, but the expertise and the friendliness of the AlarmForce staff are excellent. Additionally, they use wireless technology in the era when other companies still need a land base line. When customers demand and embrace technology, AlarmForce has kept up-to-date on the latest technology and enable it in the palm of your hand for peace of mind when you are away from home.
-Thomas - Toronto, ON -
AlarmForce is the best choice to protect any home as it is an economical 24 hr monitored service. I never thankfully had to actually use the system for a incident but my family feels more secure knowing the system is there monitoring our home. I also would like to comment the staff as I had issues with low batteries the walked me through the maintenance of the system. Everyone I have dealt with was very friendly. I would and have recommended Alarm force to friends and co-workers. Thank You.
-Greg S. - Spruce Grove, AB -
Switching to ALARMFORCE wasn't only cost effective, it was easy! Starting with my first phone call to my first alarm; the response and service was terrific. I feel more secure with ALARMFORCE then I did with my previous monitoring service. Call me a customer for life!
-Andrew - St Catharines, ON -
My husband and I had a monitored security system with another company for approximately 18 years. Almost two years ago, an elderly lady was murdered in our neighborhood. My husband and I live in the country, and to add to that my husband leaves for work around 2.00 a.m. Monday to Friday which leaves me alone in the house overnight. Shortly after that murder took place, our alarm went off around 4.00 a.m. When I answered the call from the security company, I was told to "go downstairs and see if everything is ok". I told them that I was alone, that we live in the country, I am over 60 years old, and that there had just been a murder in the area, and the suspect was still at large. Unfortunately that made no difference, I was still told to investigate. I did go downstairs, and when I went to pick up the phone in the kitchen, my line was dead. Needless to say I panicked. A few minutes later my cell phone rang and it was the security company calling back. They told me that my line was dead because of the alarm system being set off. After some discussion that evening with my husband, we decided to call Alarm Force. When the representative came to set it up, we fully expected to spend at least $300.00 for equipment. We were delighted with the service and surprised that we did not have to spend a single cent. We are 100% happy with Alarm Force and would not hesitate to recommend your company. I can say with complete confidence that I have no fear staying alone in my home at night, knowing that Alarm Force is on my side.
-Susan - Brantford, ON
