Financial Information

(e) Property, Plant and Equipment

Property, plant and equipment are recorded at cost. When assets are replaced or disposed of, the cost and accumulated depreciation are removed from the accounts and the gains or losses are recognized in the period realized. Repairs and maintenance costs are expensed as incurred. Amortization is provided over the useful lives using the following methods and annual rates:

Computer equipment		30%, declining balance basis
Computer software		30%, declining balance basis
Furniture and fixtures		20%, declining balance basis
Building 20 years		straight-line basis
Rental equipment 10 yearst		straight-line basis
Moulding equipment 5 years		straight-line basis

(f) Long-lived Assets

Long-lived assets, including property plant and equipment, intangible assets and deferred charges with finite useful lives are amortized over their useful lives. The Company reviews its long-lived assets for impairment on a regular basis or more frequently if events or changes in circumstances indicate that the carrying value exceeds its fair value, as determined by the undiscounted future cash flows expected from the related subscriber accounts. If the sum of the undiscounted future cash flow expected and eventual disposition of assets is less than the carrying amount, it is considered to be impaired. An impairment loss is measured as the amount by which the carrying amount of the group of assets exceeds it fair value. For the year ended October 31, 2006 and 2005, the Company recorded no impairment loss.

(g) Intangible Assets

Intangible assets consisting of franchise rights are recorded at the cost at which the Company acquired the rights. Amortization is provided on a straight line basis over their estimated useful lives between 5 and 14 years representing the remaining term of the respective franchise agreement.

(h) Income Taxes

Current income tax expense reflects the estimated income taxes payable for the current year. The Company follows the asset and liability method of accounting for income taxes. Under this method future income taxes are recognized to reflect the temporary differences between the carrying amounts of the assets and liabilities for accounting purposes and the amounts used for tax purposes on an after-tax basis.

The Company calculates future income taxes using the rates enacted by tax law. The effect of a change in tax rates on future income tax assets and liabilities is included in earnings in the period when the change was enacted. A valuation allowance is provided to the extent that it is more likely than not that the future income tax assets will not be realized.

(i) Deferred Charges

Costs incurred in developing the centralized monitoring station and deferred stock compensation costs are capitalized as deferred charges. Amortization is recorded annually as follows:

(i) Deferred development costs are written off on a straight-line basis over 10 years, which represents management’s best estimate of the useful life of the centralized monitoring station.

(ii) Deferred stock compensation cost is written off over the vesting period of four years.