TORONTO, ONTARIO--(Marketwired - Oct. 12, 2016) - AlarmForce Industries Inc. (TSX:AF) (AlarmForce or the Company) today provides an update on its review of its revenue recognition practices for the periods starting fiscal Q4 2013 for revenue generated from customer contracts after a customer had requested cancellation of services as described in the Company's August 24, 2016 news release.
The Company reports that its review is ongoing and that it continues to work diligently to complete its review of customer accounts, determine whether any restatement of historical financial statements is necessary and file its financial statements for the third quarter of fiscal 2016 as soon as possible. Based on current progress, the Company anticipates that it will have completed its review of a sufficient number of customer contracts and accounts within the coming weeks to allow the Company to provide additional information on the likelihood that a restatement of historical financial statements will be required.
The Company has received the results of its audit under the Employer Health Tax Act in Ontario as previously announced on August 24, 2016. The Ontario Ministry of Finance has proposed to assess the Company for taxes and penalties in the amount of $0.5 million from 2011 to September 2016 largely on the basis that the Company's independent contractors should be classified as employees for the purposes of the Employer Health Tax Act. The Company is considering its options with respect to this proposed assessment.
The Company applied for and received a management cease trade order (the "MCTO") from the Ontario Securities Commission ("OSC") in connection with the late filing of its Q3-interim financial statements and MD&A. The MCTO restricts the Chief Executive Officer and the Chief Financial Officer of the Company from trading in and all acquisitions of the securities of the Company, whether direct or indirect, until two full business days after all filings the Company is required to make under applicable securities law are received by the OSC or further order of the OSC.
This status update is provided pursuant to the alternative information guidelines in National Policy 12-203 - Management Cease Trade Orders (NP 12-203), which require the Company to provide bi-weekly updates on its affairs until such time as the Company is current with its filing obligations under Canadian securities laws. In accordance with those requirements, the Company advises that: (i) there has not been any material changes to the information contained in our August 24, 2016, September 14, 2016 and September 28, 2016 news releases; (ii) there has not been any failure by the Company to fulfill its publicly disclosed intentions with respect to satisfying the provisions of the alternative information guidelines of NP 12-203; (iii) there are no subsequent specified defaults (actual or anticipated) within the meaning of NP 12-203; and (iv) there is no other material information concerning the Company and its affairs that has not been generally disclosed as of the date of this press release.
AlarmForce provides security alarm monitoring, personal emergency response monitoring, video surveillance and related services to residential and commercial subscribers throughout Canada and the United States. More information about AlarmForce's products and services can be found at alarmforce.com.
Forward Looking Statements
Certain statements contained in this document constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements are often identified by words such as "may", "will", "should", "could", "anticipate", "believe", "expect", "intend", "plan", "potential", "continue" and similar expressions. Forward-looking statements contained or referred to in this press release includes, but may not be limited to: the Company's intention to complete its review of customer accounts, determine whether any restatement of historical financial statements is necessary and file its financial statements for the third quarter of fiscal 2016 as soon as possible, the Company's expectation that it will have competed its review of a sufficient number of customer contracts and accounts within the coming weeks to allow the Company to provide additional information on the likelihood that a restatement of historical financial statements will be required, and the proposed assessment by the Ontario Ministry of Finance under the Employer Health Tax Act.
The forward-looking statements in this press release reflects the current expectations, assumptions and/or beliefs of AlarmForce about future events based on information currently available to AlarmForce. In connection with the forward-looking statements contained in this press release, AlarmForce has made assumptions about, among other things: no significant events occur outside of AlarmForce's normal course of business; that the Company ought not to have continued charging monitoring fees in some jurisdictions for the period following certain residential customers' subscription cancellations; the quantum of refunds to be made to customers; that the cancelled subscription revenue should not have been recognized; the scope and work necessary to assess any required restatement and for the reporting of its quarterly financial results.
Although AlarmForce believes that the expectations reflected in the forward-looking statements contained in this press release, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this press release, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve risks, uncertainties and other factors that could cause actual events, results, liabilities and financial results in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things: the possibility that the final results of the review identify additional issues or different impacts not identified in the preliminary results of the review; that the quantum of refunds to be made to customers is significantly different than preliminarily determined; that the consumer law, tax and any other possible consequences relating to the Company's past and current treatment of cancellations is significantly different than preliminarily determined, and the possibility that the continued review of customer contracts and accounts take longer than anticipated, any of which may adversely impact the timing of completing the review, and the possibility that the taxes and penalties payable by the Company are significantly different than proposed by the Ontario Ministry of Finance. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The forward-looking statements contained in this press release speak only as of the date of this press release. Except as may be required by applicable securities laws, AlarmForce disclaims any intent or obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise.