Financial Information

FINANCING ACTIVITIES

The company is authorized to issue an unlimited number of common shares. The changes in the issued common shares of the company during 2005 and 2004 were as follows:

DISCUSSION OF FOURTH QUARTER 2005

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.

LIQUIDITY AND CAPITAL RESOURCES

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.

	Number of Shares	Value $
Balance, October 31, 2004	11,574,888	11,708,770
Issued during the year:
For cash pursuant to option plan	101,600	86,360
Balance, October 31, 2005	11,676,488	11,795,130

The company is committed to issuing 612,300 common shares under options that were outstanding at the end of the 2005 fiscal year (743,900 at the end of the 2004 fiscal year). Exercise prices under the options and the remaining life of options are summarized below.

Expiry Date	Number as October 31, 2004	Remaining contractual life (Years)	Exercise Price $
February 5, 2006	412,300	.25	0.85
July 17, 2009	200,000	3.75	3.78
	612,300

DIVIDEND POLICY

The company does not currently have a policy of declaring or paying dividends on its common shares and intends to retain future earnings for use in its business and does not anticipate paying dividends in the foreseeable future. Any determination to pay any future dividends will remain at the discretion of the board of directors of the company and will be made based on the financial condition and other factors deemed relevant by the board of the directors. The Company has not paid any dividends since its incorporation. The existing cash reserves, cash from operations and credit facilities are believed to be adequate to finance growth as well as operating requirements in the foreseeable future. Debt and equity components for the years 2003-2005 are summarized below.

LONG-TERM DEBT

Total liabilities	Number as October 31, 2004	Remaining contractual life (Years)	Exercise Price $
Less non refundable deferred revenue included in liabilities (GAAP)	412,300	.25	0.85
Less cash and short-term deposits	200,000	3.75	3.78
Net debt	612,300
Equity (capital stock and retained earnings)
Ratio of Net debt to Equity