3. COMPANY OVERVIEW
AlarmForce Industries Inc. (the “Company” or “AlarmForce”) is a public company whose shares are listed on the Toronto Stock Exchange. The Company provides security monitoring and related services to residential and commercial subscribers throughout Canada and selected centers across the United States. The Company is a leading provider of two-way voice alarm systems in Canada and was incorporated under the laws of Canada on November 16, 1988.
The Company also manufactures a wireless two-way voice controller (the “AlarmVoice System”) that facilitates live two-way voice communication between the subscriber and the Company’s communications center thereby offering immediate response and/or assistance in event of emergencies. The Company is vertically integrated by manufacturing, installing, maintaining and monitoring its subscriber systems. The Company attributes its success to being able to control all aspects of the delivery process to the customer and by focusing and adhering to stringent quality control requirements. The Company has been able to organically grow its subscribers by an average of 15% over the last 3 years.
In 2009, the Company experienced steady and sustainable growth by adding 11,400 net new subscribers for a total ending subscriber account base of 102,400. The Company’s Canadian operations experienced net growth of 6,800 new subscribers, bringing the total Canadian subscribers to 89,000 and the US operations experienced a net growth of 4,600 new subscribers, bringing the total US subscribers to 13,400.
Revenue is primarily generated from monitoring services pursuant to the terms of subscriber contracts and in 2009, monitoring services revenue accounted for 89% of the total revenue. In 2009, total revenues increased to $34,133,361 or a 14% increase from 2008.
The Company continued to improve its cash position in 2009 to $8,315,792 from $5,408,362 in 2008 by maintaining appropriate management over marketing expenditures and equipment production costs. In 2009, the Company was able to fund all capital requirements and all operational growth with internally generated cash flows.
The Company continues to promote its newest service offering under the brand name AlarmCare. AlarmCare is a 24 hour Personal Emergency Response System (“PERS”) that is specifically tailored to the segment of the market consisting of the elderly and those wishing to live independently, requiring medical assistance. The Company continues to aggressively advertise the AlarmCare system in Canada and selected centers in the United States using the same model that has made the security suite of products so successful. As at October 31, 2009, the Company had approximately 2,400 AlarmCare subscribers.
In 2009, the Company commenced development of a new security product that will enable monitoring of the home via remote video access. Designed for the residential mass market, the wireless system will allow live-video streaming over the customer’s broadband connection to a smart phone, allowing the user to view and interact with the home from anywhere in the world. The Company has engaged a software developer to assist in the development of the video application. The Company has completed the initial risk assessment, proof of concept and design phase and is currently in the process of designing the back-end infrastructure to support the video system controller. The Company expects to commence field trials in June 2010 with an expected market release date in September 2010. The Company expects development expenditures to be approximately $750,000.
On January 20, 2010, the Company announced that it planned to further expand its United States operations by establishing regional representation to install and service alarm systems in the city of Minneapolis-Saint Paul as part of the first phase of entering the State of Minnesota. As previously done in North Carolina, Ohio and Georgia, the Company plans to aggressively advertise its security suite of products to the mass market via television, radio and other media. While initial costs will translate into a drag on cash flows in order to build branding, the additional marketing expenditures and capital equipment will be financed from working capital.
The Company expects to continue growing organically by marketing and distributing its unique technology and create awareness through advertising programs across Canada and the United States. The Company has not acquired any monitoring accounts or blocks of accounts from dealers, but has increased its subscriber account base solely through internal account creation. Under its existing programs, the Company believes that it has one of the lowest subscriber acquisition costs in the industry when compared to comparable competitors’ cost to acquire accounts, individually or en bloc.
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I had recently purchased a house and I was looking into putting an alarm system in. I searched and researched different companies and then I came across Alarm Force. I e-mailed them and asked them about their company and the sales representative blew me away. I said to myself I would have to have them come out and see for myself and talk face to face with someone so I set up an appointment. When Alarm Force installer came out he explain everything to me he went through the motions of hooking up the Alarm system, he explain my monthly rate he informed me to let my insurance company now I have an Alarm system he answered all my question with perfection. I really was feeling good about this company. I have not had any break ins or anything but to know that I'm secured by this company makes we feel good and safe at night my children enjoy it just as well when they are home and want to have the front door open with the screen door lock knowing that no one is coming in on us. I would like to thank your Company for the excellent service that you provide and I have recommended your Company to several of my friends and co-workers and family members in Minneapolis as well as out of Minneapolis keep up the good work and thanks again.
-Lisa - Minneapolis, MN
Alarm Force has helped to prolong my life. Last year all but 2 houses in our neighborhood had a break in, and ours was one of the 2. I worried myself sick that we would be next. I was debating between Alarm Force and another popular system. The other house that hadn't been broken into, decided on the other company. I decided on Alarm Force. Two weeks after install the other house got broken into, and someone from their company showed up 4 hours later. Too late. I have had a couple of false alarms, and someone from Alarm Force showed up in 15 minutes. Now, I can truly feel secure. Thanks Alarm Force.
-Carol - Whitby, ON
Install tech was very personable, professional and knowledgeable. If he's any representation of AlarmForce I look forward to working with your team.
We were referred to Alarm Force by another user of your services. We have been impressed with the whole process of registration, implementation, customer service and administration; we will definitely refer friends and family. BRAVO!
-Shirley - Calgary, AB
I had a break in on March 29 and the two way voice scared off the intruder. I was an hour away from home when I was notified of the break in. When I arrived at my house the police were on site. The front door had been smashed in but nothing had been taken even though there was an expensive camera lying on a table quite near the door.
We have been with AlarmForce for approximately three years. Their service has been great and technical support exemplary. In particular the water and heat sensor have saved us a lot of expense when our hot water heater leaked. We would definitely recommend Alarm Force to others.
-Lorraine - Jarvis Bay, AB
I have used AlarmForce in two homes over the past 6 years. Installations and account transfer between my homes was made easy by the professionalism of the Alarm Force Reps. When I leave my house and set the alarm all my concerns about intruders are lade to rest. I know, during my absence, my house is as well protected as I can make it. When I am alone in that house at night, I set the alarm and I can sleep well because I know I will be alerted if there are any intruders during the night.
-Carol - Georgetown, ON
Purchase and installation was a snap! The installer showed up on time, was very professional. He did a nice clean installation and cleaned up after himself and left no garbage behind. He explained the system thoroughly before he left. The low monthly fee is also a huge plus. I would definitely recommend Alarmforce to anyone!
-Eric - Oshawa, ON