Financial Information

President's Message

“In 2007, we achieved an all-time record increase in revenues, the highest in the company’s nineteen year history.”

To Our Shareholders:

In 2007, we achieved an all-time record increase in revenues, the highest in the company’s nineteen year history. We have solidified the foundation for our security system for home subscriber base expansion program for the next five years, which promises to be the most exciting period yet, as our future continues to unfold. The two most salient trends reflected in our report this year are consistently strong growth in revenues, and an expanded marketing expenditure budget. The emphasis on investing in our marketing programs reflects our confidence in their effectiveness in achieving our objectives, as well as our track record in generating new subscriber growth from ongoing investment in marketing programs.

In 2007, the AlarmForce home alarm monitoring subscriber base increased to 79,200 monitored accounts, which represents the largest net increase in our account size ever recorded. Revenues in 2007 surpassed the $25 million mark, reflecting a record annual increase of $4,171,000 from the preceding year, or a 20% increase from 2006. Our subscriber growth and revenues are key performance benchmarks given that companies in the security industry are typically valued as a multiple of recurring revenue. In terms of new in home security subscribers, we added 18,000 accounts in 2007, which was 20% higher than 2006. As a result of the growth, our recurring monthly revenues and cash flows increased commensurately.

This was a year during which we stabilized the company’s operations in the new markets that we had entered in the last few years, and focused the company’s organizational capacity. As a result we are leveraging our team’s combined knowledge and accumulated experience of 19 years in innovating and introducing new products in an affordable manner to the consumer, and have created a powerful brand synonymous with advanced two-way wireless technology and customer satisfaction.

Looking ahead, the convergence of several trends and industry factors are creating attractive opportunities for us to propel the company to new heights. We have achieved a significant position in the major centres in Canada and in the three US States in which our brand has now gained a critical mass, providing traction to sustain growth from existing subscribers as well as referrals. We expect to grow in 2008 with a much lower operational drag than that in prior years, which had reflected the startup phase for new markets in the US. In addition, social and demographic trends as well as technology-driven innovation in product development promise to provide opportunities for incremental revenues in the existing markets. We are very optimistic about potential new sources of incremental revenue in the future as a result of these opportunities and the efforts of our team.