Financial Information

The following table sets out selected financial information for the company for the eight most recently completed quarters up to October 31, 2005, prepared in accordance with Canadian GAAP and expressed in Canadian currency:

In the fourth quarter, total revenues amounted to approximately $ 4.7 Million up by 12% from the 2004 corresponding quarter. Gross profit as a percentage of total revenue increased to 79 % from 76%. The increases in revenue and gross margin are consistent and primarily due to the increasing volume of net subscribers resulting in greater economies of scale.

Net Income in the fourth quarter amounted to approximately $196,000. This increase also reflects the consistent growth in the subscriber account base.

As at October 31, 2005 the company has cash and cash equivalents of $4,087,074, and unused credit facilities of approximately $3,000,000 available for future operating and capital requirements.

As at October 31, 2005, the company’s assets totalled $20,389,283 of which the majority represented revenue generating capital assets including tangible and intangible assets. The outstanding debt at October 31, 2005 consisted of revolving bank loans of $945,721 under credit facilities that are available to be used by the company to finance the growth in the subscriber base, which in turn will contribute to additional recurring revenues and cash flows.

The cash flows from operations and financing activities, and cash flows used in financing and investing activities for the years 2001-2005 are summarized below.

The company expects to continue to invest significantly in growth of the subscriber base, through direct-response marketing programs, which have been highly effective in Canada historically, and in the installation of new security systems in subscriber homes. Security systems are installed under three-year contracts, which are subsequently renewable annually. The company manufactures the equipment that it installs and the manufacturing process involves purchasing various key components from foreign and domestic manufacturers, and utilizing local subcontractors in certain parts of the manufacturing process. The Company’s manufacturing operations are housed in Toronto where the alarm system is manufactured. In addition to the standard system, the company also manufactures AlarmPlus telephone line-cut technology that is available exclusively to subscribers of AlarmForce, which is the only Canadian alarm company that manufactures and installs AlarmPlus.