Financial Information

1. INTRODUCTION

The following Management’s Discussion and Analysis of operating results and financial position is supplementary to, and should be read in conjunction with, the audited consolidated financial statements for the fiscal year ended October 31, 2009. Management’s Discussion and Analysis (MD&A) is intended to help readers understand the dynamics of our business and the key factors underlying our financial results. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in Canada and all amounts, unless otherwise indicated, are expressed in Canadian dollars. The consolidated financial statements and Management’s Discussion and Analysis were reviewed and approved by the Company’s Audit Committee and the Board of Directors.

2. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information contained herein including (without limitation) financial and business prospects and financial outlooks, may constitute forward-looking information which reflects management’s current expectations regarding, among other things, future events, conditions, plans and intentions, growth, results of operations, financial plans, the ability to meet future investment requirements, performance and business prospects and opportunities, future technological developments, future revenue generation, creation of new customer accounts, increased efficiency of our operations, our ability to take advantage of current market conditions, population trends, predictions of future actions, plans or strategies, the effectiveness of advertising programs, investment in the growth of the subscriber base, and the installation of new security systems.

Words such as “may”, “will”, “should”, “could”, “anticipate”, “believe”, “expect”, “intend”, “plan”,“potential”, “continue” and similar expressions have been used to identify such forward-looking information. In connection with such forward-looking information, certain assumptions have been made about our business, the economy and other factors. By its nature, such information is subject to certain risks and uncertainties, known and unknown, including, without limitation:

• technological change;
• development of new products;
• proper performance of alarm equipment;
• the reliability of our payroll processing services;
• the protection and privacy of personal information which we hold;
• the risks associated with credit;
• the exchange rate of the U.S. currency fluctuations;
• changes in accounting policies and estimates;
• changes in consumer preferences, customer demand for our alarm products and services and our ability to maintain customer relationships
• disruption to manufacturing and distribution activities due to labour disruptions, bad weather, natural disasters and other unforeseen adverse events;
• the recruitment and hiring of competent personnel
• our inability to maintain or renew existing product sourcing arrangements; and
• the discontinuation by our suppliers of certain technologies or the exiting by one of our suppliers from the electronic securities systems market.

The above (and other) factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied in such forward-looking information. See also “Risks and Uncertainties” below. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying our projections or forward-looking information prove incorrect, our actual results may vary materially from those described in this Management’s Discussion and Analysis as intended, planned, anticipated, believed, estimated or expected. We do not intend and do not assume any obligation to update such forward-looking information whether as a result of new information, plans, events or otherwise, unless required by law.