AlarmForce Posts $ 7.9 Million In Operating Cash Flow In 2004.

TORONTO -- AlarmForce Industries Inc. (TSX:AF) - Joel Matlin, President and CEO is pleased to announce annual results for the year ended October 31, 2004.

2004         2003(a)            Change
---------------------------------------------------------------------
                      (Year ended)   (Year ended)   (Year over Year)

Revenue                14,450,129     11,986,086                +21%
EBITDA(b)               6,595,255      5,203,087                +27%
Cash flows from
 operating activities   7,906,761      5,251,930                +51%
Cash flow per share          0.75           0.58                +29%
Diluted cash flow
 per share                   0.72           0.54                +33%
Income before taxes     2,517,754      1,940,371                +30%
Net income              1,275,986      1,301,509                 -2%
Net income/share            0.120          0.144                -17%
Diluted Net income
 per share                  0.116          0.134                -13%
EBITDA/share                 0.62           0.58                 +7%
Diluted EBITDA
 per share                   0.60           0.54                +11%

(a) Restated to reflect the change in accounting policy in 2004
(b) Earnings before interest, taxes depreciation and amortization as
    reconciled to GAAP earnings in management's discussion and
    analysis of annual results

Referring to the financial results for 2004, Mr. Matlin said that: "AlarmForce recorded the best ever growth with cash flows of almost $8 million and revenues of $14.5 million. The account base today stands over 50,000 accounts which is a milestone in our history of year-over-year growth. We continue to grow organically as a result of our ever-expanding brand recognition, and our total operating cash flows were up 51% in 2004."

"We closed two private placements on a bought deal basis, issuing 2,000,000 new common shares in 2004 which resulted in a dilution factor. Despite the increase in outstanding and issued shares, diluted cash flow per share was up 33% in 2004. The net proceeds are to be deployed for US expansion."

"A new accounting method adopted retroactively, was reflected in the reported figures for 2004 and 2003 and had the effect of decreasing the reported amounts of certain revenue and income figures. Under the new accounting standard, sales of add-on equipment installed in the customer's home are recognized in revenue over the four year contract term of the subscriber monitoring contract. Previously this revenue, which represents about 7% of total revenues, was recognized when received on installation."

"We are seeing a surge in organic account creation, which is driving the company's margins and profit up. Gross margin as a percentage of revenue rose from 74% to 79%, proving that significant economies of scale are being realized through growth. Income from operations represented by EBITDA, and income before taxes increased by 27% and 30% respectively. Net income decreased by 2% due to the tax effect of certain non deductible amortization expenses. Diluted net income per share decreased by 13% due to the effect of increases in the number of shares outstanding. The tremendous growth opportunities that lie ahead are backed by a solid balance sheet and an outstanding team to implement our business plan."

"Our new office in Charlotte, NC, which opened after the end of the year, represents the first phase of our US expansion and I am pleased to advise that the State of North Carolina has recently granted AlarmForce an alarm business operating license. We look forward to reporting on the progress in future quarters. Our goal is to leverage the AlarmForce infrastructure and central station, and to increase economies of scale even further over the next five years."

On the company's future outlook, Mr. Matlin said: "In closing, the record level of growth in monitored subscriber accounts, operating efficiency and gross margins, made 2004 an unqualified success for AlarmForce. In 2005, we will continue to see impressive results and are confident that our financial capitalization, credit facility and cash flows are sufficient to finance capital and operating requirements into the foreseeable future."

AlarmForce Industries Inc. is Canada's largest manufacturer and installer of two-way voice home alarm systems and line-cut protection with offices across Canada and over 50,000 subscribers.

AlarmForce Industries Inc. (TSX:AF)