Financial Information

12. DISCLOSURE CONTROLS AND PROCEDURES

As defined in Multilateral Instrument 52-109, disclosure controls and procedures mean controls and other procedures designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), on a timely basis and in accordance with securities legislation.

As of the fiscal year ended October 31, 2007, the CEO and the CFO reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures as it applies to the preparation of the Management discussion and analysis, the Consolidated financial statements and financial reporting. Based upon that review and evaluation, they have concluded that those disclosure controls and procedures are effective at a reasonable assurance level and meet the requirements thereof.

13. FUTURE ACCOUNTING PRONOUNCEMENTS FOR 2008

(i) Financial Instruments – Disclosure and Presentation: In December 2006, the CICA issued Handbook Section 3862, “Financial Instruments Disclosures,” and Section 3863, “Financial Instruments, presentation.” These standards provide additional guidance on disclosing risks related to recognized and unrecognized financial instruments and how those risks are managed. These standards are effective for 2008. The Company is currently evaluating the impact of adopting these standards on the consolidated financial statements.

(ii) Capital disclosures: CICA issued Handbook Section 1535, Capital Disclosures, which provides standards for disclosures regarding a home security system company’s capital and how it is managed. Enhanced disclosure with respect to the objectives, policies and processes for managing capital and quantitative disclosures about what a burglar alarm company regards as capital is required. These recommendations are effective for fiscal years beginning on or after October 1, 2007 and, therefore, the Company will be required to implement these standards on November 1, 2007. The Company is currently evaluating the impact of this standard on the consolidated financial statements.

(iii) Inventory: In June 2007, the CICA issued Handbook Section 3031, “Inventories,” which requires inventory to be measured at lower of cost and net realizable value. The standard also provides guidance on the costs that can be capitalized by home alarm monitoring company. In addition, previous inventory writedowns must be reversed if the economic circumstances have changed to support an increased inventory value. The standard is effective for our annual and interim periods beginning on or after January 1, 2008 and, therefore, the burglar alarm Company will be required to implement these standards on February 1, 2008. The Company is currently evaluating the impact of this standard on the consolidated financial statements.

14. TRENDS, RISKS AND UNCERTAINTIES

In addition to general economic factors the Company’s security monitoring business is subject to a number of risk factors including consumer behaviors, two way voice alarm technological changes, and competition as further described below. The Company has certain business alarm monitoring risks linked to collection of receivables and subscriber attrition risk, which management believes is manageable.

Competition: The home alarm security industry is highly competitive and fragmented. The Company may encounter competition from other alarm system distributors and/or installers having established marketing and distribution networks and/or greater financial resources. As well, new home monitoring developments may create new competition. Other than competitive advantages that the Company may enjoy as a result of market penetration and brand recognition, there will not be any significant barriers to the entry into this market by competitors.