-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B3hrHjyQMkdUXWDDecSywO3agpuQ8iOx5DEaYh1pM5Q0SZXJfUDHkMkbJDMhqK/j ZUWpEMn3HMdAm6xuSNFnJQ== 0001042645-97-000023.txt : 19971113 0001042645-97-000023.hdr.sgml : 19971113 ACCESSION NUMBER: 0001042645-97-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALARMGUARD HOLDINGS INC CENTRAL INDEX KEY: 0000319250 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS RETAIL [5900] IRS NUMBER: 330318116 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08138 FILM NUMBER: 97715522 BUSINESS ADDRESS: STREET 1: 125 FRONTAGE ROAD STREET 2: STE 1880 CITY: ORANGE STATE: CT ZIP: 06477 BUSINESS PHONE: 6192311818 MAIL ADDRESS: STREET 1: 125 FRONTAGE ROAD STREET 2: STE 1880 CITY: ORANGE STATE: CT ZIP: 06477 FORMER COMPANY: FORMER CONFORMED NAME: TRITON GROUP LTD DATE OF NAME CHANGE: 19950328 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________ FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarter ended September 30, 1997 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 1-8138 Alarmguard Holdings, Inc. Incorporated In Delaware IRS Identification No: 33-0318116 Principal Executive Offices: Telephone (203) 795-9000 125 Frontage Road Orange, Connecticut 06477 Indicate by check mark whether the Registrant (1) has filed all reports by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12.13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes X No The number of shares of Alarmguard Holdings, Inc.'s common stock, $.0001 par value, outstanding as of November 11, 1997 was 5,591,847. ALARMGUARD HOLDINGS, INC. INDEX Part I. Financial Information Item 1. Financial Statements (Unaudited) Page Number Condensed Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996 3 Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 1997 and 1996 4 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 1997 and 1996 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 17 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ALARMGUARD HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ($ IN THOUSANDS) September December 30, 1997 31, 1996 ASSETS (unaudited) Current assets: Cash and cash equivalents $463 $230 Restricted cash 1,931 --- Accounts receivable, net 7,001 3,791 Inventories 2,497 1,698 Other current assets 933 582 ------ ----- Total current assets 12,825 6,301 Property and equipment, net 2,158 2,478 Customer installation costs, net 9,330 7,531 Customer contracts and intangibles, net 45,307 21,430 Other investments 3,597 --- Other assets 947 1,391 ------ ------ Total assets $74,164 $39,131 ====== ====== LIABILITIES AND STOCKHOLDERS' DEFICIENCY Current liabilities: Accounts payable $3,020 $1,469 Accrued expenses 6,430 1,390 Current portion of long term debt 1,711 4,865 Deferred revenue 6,479 4,621 Due to sellers 4,275 254 Other current liabilities 651 754 ------ ------ Total current liabilities 22,566 13,353 Term loan, less current portion 46,900 26,467 Subordinated debt 4,348 4,951 Notes payable, less current portion 890 2,563 Other liabilities 704 422 Redeemable preferred stock --- 16,273 Stockholders' deficiency Common stock, $0.0001 par value, 25,000,000 shares 1 --- authorized, 5,599,932 shares issued and outstanding Common stock, $1.00 par value, 256,000 shares authorized, 236,671 shares --- 237 (including 33,748 of non- voting shares) issued and outstanding Additional paid in capital 33,947 35 Accumulated deficit (35,192) (25,135) Notes receivable from officers --- (35) ------- ------- Total stockholders' deficiency (1,244) (24,898) ------- ------- Total liabilities and stockholders' deficiency $74,164 $39,131 ====== ====== See accompanying notes to the unaudited condensed consolidated financial statements. ALARMGUARD HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA) FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, 1997 1996 1997 1996 Revenue $9,627 $6,357 $24,611 $17,683 Cost of revenue 4,204 2,657 10,445 7,136 ----- ----- ------ ------ Gross profit 5,423 3,700 14,166 10,547 Selling, general and administrative expense 3,997 3,008 11,196 8,917 Amortization and depreciation expense 3,309 2,115 8,776 5,851 ----- ----- ------ ------ Total operating expenses 7,306 5,123 19,972 14,768 ----- ----- ------ ------ Operating loss (1,883) (1,423) (5,806) (4,221) Other income (expense): Interest expense (1,334) (787) (3,329) (2,142) Other, net 103 (2) 91 (13) ----- ----- ----- ----- Loss before extraordinary item (3,114) (2,212) (9,044) (6,376) Extraordinary loss from the early extinguishment of debt --- --- (813) --- ------ ------ ------ ----- Net loss $(3,114) $(2,212) $(9,857) $(6,376) Pro forma loss per common share before extraordinary item $(0.58) $(0.44) $(1.73) $(1.27) Pro forma loss per common share for extraordinary item --- --- $(0.15) --- ------ ----- ------ ------ Pro forma net loss per common share $(0.58) $(0.44) $(1.88) $(1.27) ====== ====== ====== ====== Weighted average number of common shares used in computing pro forma loss per common share 5,366 5,024 5,253 5,024 ====== ====== ====== ====== See accompanying notes to unaudited condensed consolidated financial statements. ALARMGUARD HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ($ IN THOUSANDS) FOR THE NINE MONTHS ENDED SEPTEMBER 30 1997 1996 Operating activities: Net loss ($9,857) ($6,376) Adjustment to reconcile net loss to net cash used in operating activities: Amortization and depreciation 8,776 5,851 Extraordinary loss 813 --- Customer installation costs (3,157) (4,408) Changes in operating assets & liabilities, net of effects of acquisitions (1,524) (512) ------ ------ Net cash used in operating activities (4,949) (5,445) Investing activities: Acquisitions of businesses, net of cash (4,645) (1,218) acquired Increase in restricted cash (1,931) --- Purchases of property and equipment (192) (337) Net cash used in investing activities (6,768) (1,555) ------ ------ Financing activities: Proceeds from term loan 46,900 5,900 Proceeds from issuance of subordinated debt 4,300 1,981 Proceeds from issuance of common stock --- 21 Payments of term loan (31,836) (1,373) Payments of subordinated debt (4,951) --- Financing fees paid (1,040) --- Payments of other notes payable and capital (1,423) (500) leases ------- ------- Net cash provided by financing activities 11,950 6,029 ------- ------- Increase (decrease) in cash and cash 233 (971) equivalents Cash and cash equivalents at beginning of 230 1,561 period Cash and cash equivalents at end of period $463 $590 ======= ======= Cash paid for interest $3,448 $2,152 ======= ======= See accompanying notes to unaudited condensed consolidated financial statements. ALARMGUARD HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. The condensed consolidated balance sheet as of December 31, 1996 has been derived from the audited consolidated balance sheet as of that date. The unaudited interim financial information of Alarmguard Holdings, Inc. ("Alarmguard" or the "Company") should be read in conjunction with the audited consolidated financial statements of Security Systems Holdings, Inc.("SSH") as of and for the year ended December 31, 1996 included in the Registration Statement of Triton Group Ltd. on Form S-4 (File # 333-23307) filed with the Securities and Exchange Commission on March 14, 1997. 2. MERGER On April 15, 1997, Triton Acquisition Corp. ("Merger Sub"), a wholly-owned subsidiary of Triton Group Ltd. ("Triton"), consummated a merger (the "Merger") with SSH pursuant to an Agreement and Plan of Merger dated December 23, 1996, as amended March 6, 1997 (the "Merger Agreement"), by and among Triton, Merger Sub and SSH. As a result of the Merger, Merger Sub ceased to exist and SSH has continued as the surviving corporation and a wholly-owned subsidiary of the Company. In addition, in connection with the Merger, Triton effected a one-for-ten reverse stock split (the "Reverse Stock Split"). Pursuant to the Merger Agreement and in consideration of the Merger, SSH's preferred and common stockholders received an aggregate of 2,877,321 new shares of common stock of Triton, representing approximately 57% of the common stock outstanding upon consummation of the Reverse Stock Split and the Merger. Additionally, post-merger, the Company was renamed Alarmguard Holdings, Inc., the common shares of which are listed for trading on the American Stock Exchange under the symbol "AGD". As a result of the Merger, Alarmguard's fiscal year end was changed to December 31 and the Board of Directors of the Company was reconstituted to include five representatives from SSH's Board of Directors and two representatives from Triton's Board of Directors. The Merger was accounted for as a "reverse acquisition" such that Triton was designated the accounting acquiree and SSH the accounting acquiror. As such, the net assets of Triton (principally cash of approximately $15.0 million plus other investments) were recorded at fair value and the pre- Merger financial statements of SSH became the historical financial statements of Alarmguard (formerly Triton). Accordingly, in the condensed consolidated balance sheet as of September 30, 1997, SSH's pre-Merger stockholders' deficiency and loss per common share have been retroactively restated for the equivalent number of shares received by the stockholders of SSH in the Merger, with differences between the par values of Triton's common stock and SSH's common stock recorded as an adjustment to paid-in-capital of Alarmguard. The pro forma net loss per common share and the pro forma loss per common share before extraordinary items for the three and nine month periods ended September 30, 1997 and 1996 give effect to the conversion of all SSH preferred stock (including accrued dividends) and common stock into Triton common stock as noted above. Accordingly, the pro forma net loss per common share is calculated from the net loss before the dividend requirement on the SSH preferred stock ($200,000 and $513,000 for the nine months ended September 30, 1997 and 1996, respectively, and $172,000 for the three months ended September 30, 1996). Such conversion excludes shares issuable upon exercise of outstanding stock options due to their anti-dilutive effect. The pro forma loss per common share for the three and nine month periods ended September 30, 1997 also give effect to common shares issued in connection with the Company's two acquisitions consummated during the first nine months of 1997 from the respective dates of acquisitions (see Note 3). All share and per share information herein has been retroactively restated to reflect the Reverse Stock Split. 3. ACQUISITIONS On May 1, 1997, Alarmguard purchased all of the issued and outstanding shares of capital stock of Protective Alarms, Inc. ("Protective Alarms"), for an initial purchase price of $17.1 million. Up to $4.3 million in additional consideration will be paid to the sellers of Protective Alarms upon (i) the installation of certain national account contracts pending on the closing date; and (ii) certain other obligations being met during the year following the closing of the acquisition, of which $0.4 million has been paid through September 30, 1997. Approximately $1.9 million of the amount potentially due to sellers is secured by a cash collateralized letter of credit represented as restricted cash at September 30, 1997. The acquisition was accounted for under the purchase method of accounting and, accordingly, the purchase price has been preliminarily allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Protective Alarms was a security alarm system company doing business primarily in Connecticut and Westchester County, New York, that provided security equipment and monitoring services to homeowners and businesses. In addition, Protective Alarms engaged in national account sales under the name "Pro National", primarily in the Northeastern United States. In addition, during the nine months ended September 30, 1997, Alarmguard acquired certain operating assets of three companies in the security alarm installation and monitoring business for an aggregate of $1,985,000 in cash and up to 568,000 shares of Alarmguard common stock valued for the purposes of the acquisitions at $3,812,000. The acquisitions added approximately $191,000 of Monthly Recurring Revenue ("MRR") and 2,900 customers. The acquisitions were accounted for under the purchase method of accounting and, accordingly, the purchase price has been preliminarily allocated to the assets acquired and liabilities assumed based on their estimated fair values at the respective dates of acquisition. In connection with the acquisitions, Alarmguard received customer contracts of $6,044,000, and other assets of $1,137,000 and assumed current liabilities of $1,384,000, which was included in the purchase price of the acquisitions. During the nine months ended September 30, 1996, Alarmguard acquired certain operating assets of three companies in the security alarm installation and monitoring business for an aggregate of $1,218,000 in cash and $1,235,000 in notes payable to the sellers. The acquisitions added approximately $80,000 of MRR and 3,800 customers. The acquisitions were accounted for under the purchase method of accounting and, accordingly, the purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair values at the respective dates of acquisition. In connection with the acquisitions, Alarmguard received customer contracts of $1,881,000, and other assets of $1,215,000 and assumed current and long term liabilities of $643,000, which was included in the purchase price of the acquisitions. The results of operations of the acquired companies have been included in the condensed consolidated statements of operations from the respective dates of acquisition. The following unaudited pro forma information shows the results of the Company's operations as though the acquisitions consummated during the first nine months of 1996 had been made as of January 1, 1996 and as though the acquisitions consummated during the first nine months of 1997 had been made as of January 1, 1996 and January 1, 1997: (in thousands, except per share data) Nine months ended September 30, 1997 1996 Pro forma revenue $28,346 $26,070 =========== ======== Pro forma loss before extraordinary item $(9,273) $(6,833) =========== ======== Pro forma net loss $(10,086) $(6,833) =========== ======== Pro forma loss per common share before extraordinary item $(1.66) $(1.22) =========== ======== Pro forma net loss per common share $(1.80) $(1.22) =========== ======== Shares used in computing pro forma loss per common share 5,592 5,592 =========== ======== The pro forma results are not necessarily indicative of the actual results of operations that would have been obtained had the acquisitions taken place at the beginning of the respective periods or the results that may occur in the future and do not give effect to cost savings which may occur as a result of the consolidation of the acquired companies. The pro forma loss per common share gives effect to the conversion of all preferred and common stock into Triton Common Stock (see Note 2) and the common stock issued in two acquisitions consummated during the first nine months of 1997. 4. INVENTORIES Inventories consist principally of alarm components and supplies which are carried at the lower of cost or market value. 5. CUSTOMER INSTALLATION COSTS During the nine months ended September 30, 1997 and 1996, Alarmguard incurred approximately $3,157,000 and $4,408,000, respectively, in customer installation costs primarily attributable to the operations of its direct marketing program. Alarmguard added approximately 5,400 and 7,900 customers, respectively, through its direct marketing program during these periods. 6. CUSTOMER CONTRACTS AND INTANGIBLES Customer contracts and intangibles (at cost) consist of the following: (in thousands) September 30, December 31, 1997 1996 Acquired customer $54,020 $27,520 contracts Covenants not to compete 12,824 7,271 Goodwill 2,493 2,493 -------- -------- 69,337 37,284 Less accumulated amortization (24,030) (15,854) -------- -------- $45,307 $21,430 ======== ======== 7. OTHER INVESTMENTS Other investments at September 30, 1997 are comprised of certain assets held by Triton at the time of the Merger, which are in the process of being liquidated. (In thousands) Ridgewood Hotels, Inc. Series A $2,009 Preferred Stock Mission West Properties Common Stock 1,352 Other 236 ------- $3,597 ======= Alarmguard owns 450,000 shares of Series A Preferred Stock of Ridgewood Hotels, Inc. ("Ridgewood") with a face value of $3.6 million. Alarmguard currently receives a 10% quarterly dividend of $90,000 on this investment and the preferred stock is redeemable at any time by Ridgewood at its face value plus accrued dividends. The preferred stock is convertible by Alarmguard at any time into 1,350,000 Ridgewood common shares, which would represent approximately 47% of the Ridgewood common shares then outstanding, or 40% fully diluted. Alarmguard accounts for the Ridgewood investment using the cost method of accounting. Alarmguard owns 676,050 common shares of Mission West Properties ("Mission West"), a real estate company listed on the American Stock Exchange under the symbol "MSW". On August 5, 1997, Mission West shareholders approved the sale of 6 million shares of newly issued common stock, at $0.15 per share, to a group of private investors, which transaction closed on September 2, 1997. Additionally, the Mission West Board of Directors declared a $3.30 per share cash distribution which was paid on October 21, 1997. Alarmguard's share of the distribution amounted to approximately $2.2 million. The difference between the carrying amount and the distribution amount will be adjusted upon finalization of the accounting for the Merger. Prior to the cash distribution, Alarmguard accounted for the Mission West investment using the equity method of accounting. Subsequent to the distribution, this was discontinued. 8. LONG TERM DEBT Concurrent with the Merger, Alarmguard refinanced its credit agreement existing at April 15, 1997 with a new credit agreement. The new agreement provides for a two year, $60 million, non-amortizing, revolving loan agreement which converts to a five year term loan on April 30, 1999. On September 30, 1997, outstanding borrowings under the revolving credit facility were $46.9 million. During the nine month period ending September 30, 1997, the Company recognized an extraordinary loss of $0.8 million resulting from the write-off of unamortized financing costs from the former credit agreement and subordinated debt. On August 22, 1997 the Company entered into an Amendment to its existing revolving credit facility which allowed the Company to increase its borrowing availability by $2.1 million in anticipation of the Mission West dividend of $2.2 million. The Amendment terminated upon receipt of the cash dividend from Mission West on October 21, 1997. On October 31, 1997 the Company entered into a three year interest rate swap agreement at 8.84%. The Company fixed $40 million out of $46.9 million outstanding under the Company's revolving credit facility. In connection with the Merger, Alarmguard refinanced its subordinated debt with $4.6 million of newly issued subordinated debt bearing interest at 15%. In addition, Alarmguard issued warrants to purchase 215,939 shares of Alarmguard Common Stock at an exercise price of $11.11 per share which has been accounted for as a discount to the new subordinated debt and is being amortized over the two year life of the underlying debt instrument. 9. STOCK OPTIONS On April 17, 1997, the Board of Directors issued 352,000 stock options to the senior management of Alarmguard which vest over a four year period from the date of grant, 339,000 of which were outstanding as of September 30, 1997. Additionally, three non-employee Directors were granted 10,000 options on similar terms. The exercise price for all options granted was $7.50 per share which was the quoted market value of the common stock at the date of grant. 10. COMMITMENTS AND CONTINGENCIES The Company experiences routine litigation in the normal course of its business. Management does not believe that any pending or threatened litigation will have a material adverse effect on the financial condition or results of operations of the Company. 11. RECENT FASB PRONOUNCEMENTS In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted as of December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements, primary earnings per share will be replaced with basic earnings per share. In computing basic earnings per share, the dilutive effect of common stock equivalents will be excluded. The impact of Statement No. 128 on the computation of the Company's primary earnings per share (to be replaced with basic earnings per share) and fully diluted earnings per share is not expected to be material. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain matters in this section constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results of Alarmguard Holdings, Inc. (the "Company" or "Alarmguard") to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors are discussed under the caption "Risk Factors" in a Registration Statement on Form S-4 (File No. 333-23307) filed with the Securities and Exchange Commission on March 14, 1997 ("Form S-4"). GENERAL OVERVIEW For an overview of the Company's accounting policies, see the Company's audited consolidated financial statements as of and for the year ended December 31, 1996 which are included in the Form S-4 mentioned above. Alarmguard sells and installs burglar and fire alarm systems and provides security monitoring services and security system repair and maintenance services to homeowners and businesses, principally in the Northeast and Mid-Atlantic regions of the United States. Alarmguard provides its security alarm systems and services primarily under its trademark "Alarmguard". As of September 30, 1997 Alarmguard had approximately $2.1 million of monthly recurring revenue, approximately 60% of which was residential and 40% of which was commercial. On April 15, 1997 Triton Group Ltd. completed a merger (the "Merger") with Security Systems Holdings, Inc. pursuant to an Agreement and Plan of Merger dated December 23, 1996, as amended March 6, 1997. Additionally, post-merger, the Company was renamed Alarmguard Holdings, Inc., the common shares of which are listed for trading on the American Stock Exchange under the symbol "AGD"(see note 2 to the unaudited condensed consolidated financial statements). Alarmguard's objective is to provide residential and commercial security services to an increasing number of subscribers. Alarmguard's growth strategy is to enhance its position in the security alarm monitoring industry in the Northeastern and Mid-Atlantic United States by increasing the number and density of subscribers for whom it provides services. Alarmguard is pursuing this strategy through a balanced growth plan involving: (1) incorporating acquisitions of portfolios of subscriber accounts in existing and contiguous markets; (2) internal growth through direct marketing to obtain new subscribers (the "Direct Marketing Program"); (3) growth of Alarmguard's core business through referrals and traditional local marketing; and (4) new multi-locational commercial subscribers from its National Accounts Program. Alarmguard believes that increasing the number and density of its subscribers will help it to achieve economies of scale and enhance results of operations. During the nine months ended September 30, 1997, Alarmguard acquired four companies in the security alarm installation and monitoring business for an aggregate of $19.1 million in cash and up to 568,000 shares of Alarmguard common stock valued for purposes of the acquisitions at $3,812,000. The acquisitions added approximately $600,000 of monthly recurring revenue and 13,000 customers. KEY OPERATING MEASURES The Company employs three internal measurements used to assess the performance of operations: Adjusted EBITDA, Monthly Recurring Revenue ("MRR")and Gross MRR Attrition. Adjusted EBITDA. Adjusted EBITDA is derived by adding Direct Marketing Program ("DMP") expenses incurred, net of DMP revenues earned, to EBITDA ("Earnings Before Interest, Taxes, Depreciation and Amortization"). This calculation provides a basis for comparison of Alarmguard's results to those of other security alarm companies that grow primarily through the acquisition of subscriber accounts rather than investing in internal growth programs. An amount similar to adjusted EBITDA is used by lenders in extending credit to Alarmguard. Adjusted EBITDA does not represent cash flows from operations as defined by generally accepted accounting principals and should not be construed as an alternative to net income. Adjusted EBITDA was $4.6 million for the nine months ended September 30, 1997 compared to $2.9 million for the nine months ended September 30, 1996, a 61% increase. Adjusted EBITDA was $1.9 million and $1.1 million for the three months ended September 30, 1997 and 1996, respectively. FOR THE THREE FOR THE NINE MONTHS MONTHS ENDED ENDED SEPTEMBER SEPTEMBER 30, 30, ($000s) 1997 1996 1997 1996 EBITDA $1,426 $692 $2,970 $1,630 Less DMP (294) (941) (963) (2,462) revenue Plus DMP 810 1,333 2,632 3,710 expense ------ ------ ------ ------ Adjusted $1,942 $1,084 $4,639 $2,878 EBITDA ====== ====== ====== ====== Monthly Recurring Revenue. MRR represents revenue that a company in the security alarm industry is entitled to receive under contracts (monitoring, leasing, and maintenance) in effect at the end of such period. MRR is a term commonly used in the security alarm industry as a measure of the size of a company. It does not measure profitability or performance, and does not include any allowance for future subscriber attrition or uncollectible accounts receivable. Gross MRR Attrition. Gross MRR attrition has an adverse effect on the Company's financial position and results of operations, since it affects the Company's recurring revenues. Gross MRR attrition, generally expressed on an annualized basis, can be measured in terms of decreased MRR resulting from canceled subscriber accounts. Gross MRR attrition is defined by the Company for a particular period as a quotient, the numerator of which is equal to gross MRR lost as the result of canceled subscriber accounts during such period and the denominator of which is the average month-end MRR during such 12 month period. The following table sets forth the Company's MRR additions, cancellations, and gross MRR attrition for the periods indicated: Nine Months Ended Twelve Months September 30, 1997 Ended December 31, 1996 MRR ($000s) Beginning of period $1,392 $1,129 DMP Additions 150 264 Acquisition additions 606 80 Other additions (1) 88 73 Canceled MRR (158) (154) ---------- --------- End of period $2,078 $1,392 ========== ========= Gross MRR attrition (2) 11.6% 11.9% (1) MRR primarily generated through traditional non-investment sales programs and the National Accounts Program. (2) Calculated on a trailing twelve-month basis. RESULTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1996 REVENUE Revenue for the nine months ended September 30, 1997 increased $6.9 million, or 39% from the comparable period in 1996. This increase was primarily the result of a 40% increase of recurring revenue to $15.4 million and a 35% increase in installation revenue to $2.0 million. A significant portion of the revenue growth was related to acquisition activity in 1997. GROSS PROFIT Gross profit increased to $14.2 million, 58% of total revenue, for the third quarter of 1997 compared to $10.5 million, 60% of total revenue, in the third quarter of 1996. The decrease of gross profit as a percentage of total revenue was primarily the result of several larger installations which had lower gross profit margins than the Company's traditional business. SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expense for the first nine months of 1997 increased approximately $2.3 million over the comparable period in 1996. The increase was primarily the result of staffing requirements at both the operating and corporate level required to facilitate the Company's growth plan and additional expenses of operating as a public company, costs which were not incurred during the first nine months of 1996. As a percent of total revenue, selling, general and administrative expense for the first nine months of 1997 decreased to 45% from 50% in the comparable 1996 period, reflecting economies of scale resulting from incremental revenue growth. AMORTIZATION AND DEPRECIATION Amortization and depreciation for the first nine months of 1997 increased by approximately $2.9 million compared to the same period in 1996. This increase was primarily the result of a higher level of assets from increased acquisition activity and increased customer installation costs. OPERATING LOSS The operating loss for the first nine months of 1997 increased to approximately $5.8 million from $4.2 million in the comparable 1996 period. As a percent of total revenue, the operating loss was 24% for the first nine months of 1997 and 1996. INTEREST EXPENSE Interest expense, net of interest income, for the nine months ended September 30, 1997 increased $1.2 million over the comparable period in 1996. This increase was the result of an increased outstanding balance under the Company's revolving credit facility in the first nine months of 1997 compared to the first nine months of 1996, a higher interest rate on the refinanced subordinated debt during the same period, and amortization (over two years) of the fair value of common stock warrants issued in conjunction with the subordinated debt. THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1996 REVENUE Revenue for the three months ended September 30, 1997 increased $3.3 million, or 51%, from the comparable period in 1996. This increase was primarily the result of a 58% increase of recurring revenue to $6.1 million and a 39% increase in installation revenue to $2.9 million. A significant portion of the revenue growth was related to acquisition activity in 1997. GROSS PROFIT Gross profit increased to $5.4 million, 56% of total revenue, for the third quarter of 1997 compared to $3.7 million, 58% of total revenue, in the third quarter of 1996. The decrease of gross profit as a percentage of total revenue was primarily the result of several larger installations which had lower gross profit margins than the Company's traditional business. SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expense for the third quarter of 1997 increased approximately $1.0 million over the comparable period in 1996. The increase was primarily the result of staffing requirements at both the operating and corporate level required to facilitate the Company's growth plan and additional expenses of operating as a public company, costs which were not incurred during the third quarter of 1996. As a percent of total revenue, selling, general and administrative expense for the third quarter of 1997 decreased to 42% from 47% in the comparable 1996 period, reflecting economies of scale resulting from incremental revenue growth. AMORTIZATION AND DEPRECIATION Amortization and depreciation for the third quarter of 1997 increased by approximately $1.2 million compared to the same period in 1996. This increase was primarily the result of increased acquisition activity and increased customer installation costs. OPERATING LOSS The operating loss for the third quarter of 1997 increased to approximately $1.9 million from $1.4 million in the comparable 1996 period. As a percent of total revenue, the operating loss decreased to 20% for the third quarter of 1997 compared to 22% for the same period in 1996. This improvement reflects economies of scale resulting from incremental revenues. INTEREST EXPENSE Interest expense, net of interest income, for the three months ended September 30, 1997 increased approximately $0.5 million over the comparable period in 1996. This increase is the result of an increased outstanding balance under the Company's revolving credit facility in the third quarter of 1997 compared to the third quarter of 1996, a higher interest rate on the refinanced subordinated debt during the same period, and amortization (over two years) of the fair value of common stock warrants issued in conjunction with the subordinated debt. LIQUIDITY AND CAPITAL RESOURCES Capital Resources. Since May 1992, the Company has financed its operations and growth from a combination of borrowings under revolving credit facilities, issuance of subordinated debentures, sales of its capital stock, the recently completed Merger, and internally generated cash flows. The Company's principal uses of cash are the costs associated with the marketing and installation of DMP systems, acquisitions of subscriber account portfolios, and interest payments on borrowings under the revolving credit facility. A substantial portion of the Company's future cash flow will be used to fund the DMP and to service borrowings under the revolving credit facility and other company debt. There can be no assurance that the Company will continue to have the ability to meet its borrowing requirements to fund its DMP and acquisition strategies, among other things. The Company entered into a new revolving credit facility on April 15, 1997 providing for a two year, $60 million, non- amortizing revolving loan agreement which converts to a five year term loan. On August 22, 1997 the Company entered into an Amendment to its revolving credit facility which allowed the Company to increase its borrowing availability by $2.1 million in anticipation of the Mission West dividend discussed below. The Amendment terminated upon receipt of the cash dividend from Mission West on October 21, 1997. As of September 30, 1997, the Company had $46.9 million outstanding under the revolving credit facility with approximately $2.0 million of availability. The Company's ability to borrow against the unused portion of the revolving credit facility is limited by certain financial covenants, among other things. On October 31, 1997 The Company entered into a three year interest rate swap agreement at 8.84%. The Company fixed $40 million out of $46.9 million outstanding under the Company's revolving credit facility. In connection with the Merger, Alarmguard refinanced its subordinated debt with $4.6 million of newly issued subordinated debt bearing interest at 15%. In addition, Alarmguard issued warrants to purchase 215,939 shares of Alarmguard Common Stock at an exercise price of $11.11 per share which has been accounted for as a discount to the new subordinated debt and is being amortized over the two year life of the underlying debt instrument. Additionally, the Company has a total of $6.3 million due to sellers of previous acquisitions, a portion of which is secured by various SSH notes and a letter of credit. A portion of the amounts due to sellers requires the Company to make periodic principal and interest payments. The Company received a cash distribution of approximately $2.2 million on October 21, 1997 from its minority investment in 676,050 shares of common stock in Mission West Properties. (See Note 7 to condensed consolidated financial statements.) The Company intends to continue to use cash flows from operations, together with borrowings under the revolving credit facility, to finance the addition of subscriber accounts and capital expenditures. The planned $0.8 million expansion of the Company's central station was started in early November, 1997, and is expected to be completed by January, 1998. Additionally, the Company, depending on future needs and the cost and availability of various financing alternatives, may from time to time seek additional debt or equity financing in the public or private markets in order to support growth of subscriber accounts through acquisitions and the DMP. In August 1997, the Company engaged an investment bank to raise additional capital for the Company. There can be no assurance that the Company will be able to obtain such capital on acceptable terms or at all. If cash flows from operations and monetization of other investments combined with borrowings under the revolving credit facility and other borrowings are insufficient to fund the Company's growth strategies, management would curtail the DMP and implement a cost reduction strategy to the extent necessary to satisfy its obligations. Liquidity. During the first nine months of 1997 and 1996, the Company's net cash used in operating activities was approximately $4.9 million and $5.4 million, respectively. The decrease was primarily the result of reduced DMP installation costs, partially offset by working capital changes. During the first nine months of 1997 and 1996, the Company's net cash used in investing activities was approximately $6.8 million and $1.6 million, respectively. This increase was primarily the result of larger acquisitions in the first nine months of 1997 compared with 1996 which were partially offset by cash received in the Merger. During the first nine months of 1997 and 1996, the Company's net cash provided by financing activities was approximately $12.0 million and $6.0 million, respectively, the increase of which was primarily the result of increased borrowings under the revolving credit facility. During the first nine months of 1997 and 1996, the Company had net losses of approximately $9.9 million and approximately $6.4 million, respectively. During the three months ended September 30, 1997 and 1996, the Company had net losses of approximately $3.1 million and approximately $2.2 million, respectively. As the Company continues to internally generate new subscriber accounts through its DMP and to purchase subscriber accounts, or if the Company's indebtedness increases or if interest rates increase, the Company expects to continue to incur net losses for the foreseeable future. The Company has had, and expects to continue to have, a working capital deficit. At September 30, 1997, the Company had a working capital deficit of approximately $9.7 million. There are two principal categories of current liabilities that cause the Company to have a working capital deficit: (i) "deferred revenue", which represents billings by the Company in advance of services performed; and (ii) amounts due to sellers, which represent the aggregate of a portion of the purchase price of subscriber accounts which, if the actual attrition rate exceeds the guaranteed rate at the end of such 6 - 12 month holdback period, is applied to adjust the effective purchase price downward. Recent FASB Pronouncements. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted as of December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements, primary earnings per share will be replaced with basic earnings per share. In computing basic earnings per share, the dilutive effect of common stock equivalents will be excluded. The impact of Statement No. 128 on the computation of the Company's primary earnings per share (to be replaced with basic earnings per share) and fully diluted earnings per share is not expected to be material. The Company is in the process of reviewing "Year 2000" issues. Based on its review to date, it does not anticipate incurring any significant costs associated with this issue. PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a)Exhibits The following exhibits are filed with this quarterly report on form 10-Q Exhibits Number Exhibit 3.1 Amended and Restated Certificate of Incorporation, incorporated herein by reference to File No. 333-23307, Registration Statement on Form S-4 filed, March 14, 1997. 10.1 Second Amended and Restated Term Loan and Acquisition Credit Agreement, incorporated herein by reference to File No. 1-8138, Interim Report on Form 10-Q, filed August 14, 1997. 10.2 Note Payable Agreement, incorporated herein by reference to File No. 1-8138, Interim Report on Form 10-Q, filed August 14, 1997. 10.3 Protective Alarms, Inc. Stock Purchase and Sale Agreement, as amended, incorporated herein by reference to File No. 1-8138, Interim Report on Form 8-K, filed May 1, 1997. 10.4 1997 Long Term Stock Incentive Plan, incorporated herein by reference to File No. 333-23307, Registration Statement on Form S- 4, Filed March 14, 1997. 10.5 First Amendment to Second Amended and Restated Term Loan and Acquisition Credit Agreement. 27.1 Financial data schedule (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATE: NOVEMBER 13, 1997 /S/ DAVID HEIDECORN EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER DATE: NOVEMBER 13, 1997 /S/ DAVID HEIDECORN EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER EX-10.5 2 FIRST AMENDMENT TO SECOND AMENDED AND RESTATED TERM LOAN AND ACQUISITION CREDIT AGREEMENT This FIRST AMENDMENT TO SECOND AMENDED AND RESTATED TERM LOAN AND ACQUISITION CREDIT AGREEMENT (the "First Amendment") is made as of the 22nd day of August, 1997 by and among ALARMGUARD, INC., a Delaware corporation, with its chief executive office located at 125 Frontage Road, Orange, Connecticut 06477 ("Borrower"), the Guarantors which are or may become parties to this First Amendment, the banks, financial institutions and other lenders which are or may become parties to this First Amendment (individually, a "Lender" and collectively, the "Lenders"), BANK OF BOSTON CONNECTICUT, a Connecticut savings bank, with its head office located at 100 Pearl Street, Hartford, Connecticut 06103 as Administrative Agent for the Lenders (in such capacity, the "Administrative Agent"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation, with an office located at 201 High Ridge Road, Stamford, Connecticut 06927-5100 as the Documentation Agent for the Lenders (in such capacity, the "Documentation Agent"). W I T N E S S E T H: Borrower, the Lenders, the Administrative Agent and the Documentation Agent entered into a certain Second Amended and Restated Term Loan and Acquisition Credit Agreement as of the 15th day of April, 1997 (as amended and in effect from time to time, the "Credit Agreement") whereby the Lenders agreed to make loans and advances and otherwise extend credit to the Borrower. Borrower, the Lenders, the Administrative Agent and the Documentation Agent have agreed to amend the Credit Agreement in certain respects. Section 14.11. of the Credit Agreement provides that no modification or amendment of the Credit Agreement shall be effective unless the same shall be in writing and signed by the parties thereto. NOW, THEREFORE, in consideration of one dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower, the Lenders, the Administrative Agent and the Documentation Agent hereby agree as follows: 1 Defined Terms. Defined terms not defined herein shall have the meanings ascribed to them in the Credit Agreement. 2. Amendment to Credit Agreement. (a) Section 1.26. of the Credit Agreement, entitled "Borrowing Base," is hereby amended and restated in its entirety as follows: Section 1.26. "Borrowing Base" means, (a) as of any date as of which the amount thereof shall be determined during the period commencing as of August 22, 1997 and continuing through the earlier of (i) the Dividend Payment Date (as hereinafter defined) or (ii) December 31, 1997, an amount which is equal to RMR as of such date multiplied by 23.5 and, (b) as of any other date as of which the amount thereof shall be determined, an amount which is equal to RMR as of such date multiplied by 22.5. For purposes of this Section 1.26., the term "Dividend Payment Date" shall mean the date on which Alarmguard Holdings receives the proceeds of a certain dividend declared by Mission West Properties and scheduled to be paid in October, 1997. (b) Section 3.2.4. of the Credit Agreement is hereby amended and restated in its entirety as follows: Section 3.2.4. A pledge of all of Alarmguard Holding's right, title and interest in and to all shares of Capital Stock of SSH and Mission West Properties pursuant to the Alarmguard Holdings Pledge Agreement; provided, however, that as long as no Default or Event of Default shall have occurred or be continuing, the pledge of the shares of Capital Stock of Mission West Properties shall be released by the Administrative Agent as of the earlier of the Dividend Payment Date (as defined in Section 1.26.) or December 31, 1997. 3. Confirmation of Agreements. Borrower, the Lenders, the Administrative Agent and the Documentation Agent hereby agree that, except as provided in this First Amendment, the Credit Agreement, the Notes and the Other Documents, and the grant of the liens, security interests and other encumbrances thereunder, and its agreements, covenants, obligations, representations and warranties thereunder and therein are hereby expressly ratified, confirmed and restated as of the date hereof. 4. Effect of Amendment. Borrower, the Lenders, the Administrative Agent and the Documentation Agent hereby agree and acknowledge that except as provided in this First Amendment, the Credit Agreement remains in full force and effect and has not been modified or amended in any respect, it being the intention of Borrower, the Lenders, the Administrative Agent and the Documentation Agent that this First Amendment and the Credit Agreement be read, construed and interpreted as one and the same instrument. IN WITNESS WHEREOF, Borrower, the Lenders, the Administrative Agent and the Documentation Agent have executed this First Amendment as of the date first above written. THE BORROWER: ALARMGUARD, INC. By: /s/David Heidecorn Name: David Heidecorn Title: THE GUARANTORS: SECURITY SYSTEMS HOLDINGS, INC. By: /s/ David Heidecorn Name: David Heidecorn Title: ALARMGUARD HOLDINGS, INC. (formerly known as Triton Holdings, Ltd.) By: /s/ David Heidecorn Name: David Heidecorn Title: THE LENDERS: BANK OF BOSTON CONNECTICUT By: Name: Title: GENERAL ELECTRIC CAPITAL CORPORATION By: Name: Title: CONFIRMATION OF AND AMENDMENT TO GUARANTEE AND PLEDGE AGREEMENT This CONFIRMATION OF AND AMENDMENT TO GUARANTEE AND PLEDGE AGREEMENT (the "Agreement") is made as of this 22nd day of August, 1997 by ALARMGUARD HOLDINGS, INC. (formerly Triton Group, Ltd.), a Delaware corporation, with its chief executive office located at 125 Frontage Road, Orange, Connecticut 06477 (the "Guarantor") in favor of BANK OF BOSTON CONNECTICUT, a Connecticut savings bank, with its head office located at 100 Pearl Street, Hartford, Connecticut 06103 as Administrative Agent (in such capacity, the "Administrative Agent") for the banks, financial institutions and other lenders (the "Lenders") which are or become parties to the Credit Agreement (as hereinafter defined). W I T N E S S E T H: Pursuant to that certain Second Amended and Restated Term Loan and Acquisition Credit Agreement dated as of April 15, 1997 (as amended and in effect from time to time, the "Credit Agreement"), by and among Alarmguard, Inc., a Delaware corporation, with its chief executive office located at 125 Frontage Road, Orange, Connecticut 06477 (the "Borrower"), Guarantor, Guarantor's wholly-owned subsidiary, Security Systems Holdings, Inc., the Lenders, the Administrative Agent and General Electric Capital Corporation as the documentation agent for the Lenders (in such capacity, the "Documentation Agent"), the Lenders have severally agreed to make loans, advances and other extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein, to be evidenced by the Notes issued by the Borrower thereunder. In connection with the execution and delivery of the Credit Agreement, and as a condition precedent to the obligation of the Lenders to make their respective loans, advances and other extensions of credit to the Borrower under the Credit Agreement, Guarantor executed and delivered a certain Guarantee Agreement dated as of April 15, 1997 to the Administrative Agent for the ratable benefit of the Lenders (the "Guarantee"). In addition, in order to secure its obligations under the Guarantee, Guarantor executed and delivered a certain Pledge Agreement dated as of April 15, 1997 in favor of the Administrative Agent for the ratable benefit of the Lenders (the "Pledge Agreement"). Borrower, Guarantor, Security Systems Holdings, Inc., the Lenders, the Administrative Agent and the Documentation Agent have agreed to amend the Credit Agreement in certain respects pursuant to a certain First Amendment to Second Amended and Restated Term Loan and Acquisition Credit Agreement of even date herewith (the "First Amendment"). A condition precedent to the obligations of the Lenders under the First Amendment is the execution and delivery of this Agreement by Guarantor for the purpose of confirming and amending the Guarantee and the Pledge Agreement to reflect the terms and conditions of the First Amendment. NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent, the Documentation Agent and the Lenders to enter into the First Amendment and to induce the Lenders to continue to make their respective loans to the Borrower under the Credit Agreement, the Guarantor hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders as follows: 1. Guarantee. Guarantor hereby agrees, notwithstanding the amendment of the Credit Agreement pursuant to the First Amendment, that the Guarantee and its agreements, covenants, obligations, representations and warranties thereunder and therein, are hereby expressly ratified, confirmed, restated and, to the extent necessary, amended as of the date hereof so that the term "Credit Agreement," as used in the Guarantee, shall mean the Credit Agreement, as amended by the First Amendment and as such may be amended, extended, restated or renewed from time to time in the future. 2. Pledge Agreement. Guarantor hereby agrees, notwithstanding the amendment of the Credit Agreement pursuant to the First Amendment, that the Pledge Agreement and its agreements, covenants, obligations, representations and warranties thereunder and therein, and the grant of the pledges, liens and other encumbrances thereby, are hereby expressly ratified, confirmed, restated and, to the extent necessary, amended as of the date hereof so that the term "Credit Agreement," as used in the Pledge Agreement, shall mean the Credit Agreement, as amended by the First Amendment and as such may be amended, extended, restated or renewed from time to time. In addition, the Pledge Agreement is hereby amended as follows: (a) Schedule 1 to the Pledge Agreement is hereby deleted in its entirety and Schedule 1 to this Agreement is hereby substituted in lieu thereof as of the date hereof. (b) Section 6 of the Pledge Agreement is hereby deleted in its entirety and the following is hereby substituted in lieu thereof: 6. Cash Dividends: Voting Rights. Unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to the Pledgor of the Administrative Agent's intent to exercise its corresponding rights pursuant to paragraph 7 below, the Pledgor shall be permitted, except as hereinafter provided, to receive all cash dividends paid in the normal course of business of the Issuer and consistent with past practice, to the extent permitted in the Credit Agreement, in respect of the Pledged Stock and to exercise all voting and corporate rights with respect to the Pledged Stock, provided, however, that no vote shall be cast or corporate right exercised or other action taken which would impair the Collateral or which would be inconsistent with or result in any violation of any provision of the Credit Agreement, the Notes, the Other Documents or this Pledge Agreement. Notwithstanding the foregoing, the Pledgor shall direct Mission West Properties to pay any cash dividend to be paid to the Pledgor to the Administrative Agent in accordance with instructions provided by the Administrative Agent. (c) The following is hereby added as a new sentence in Section 18 of the Pledge Agreement. Notwithstanding the foregoing, all notices to Mission West Properties shall be given as follows: Mission West Properties 6815 Flanders Drive Suite 250 San Diego, California 92121-3914 Attn: Michael M. Earley, President 3. Governing Law. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Connecticut. 4. Counterparts. This Agreement may be executed in any number of counterparts and by different parties on different counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. 5. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. IN WITNESS WHEREOF, Guarantor has executed this Agreement as of the date first above written. ALARMGUARD HOLDINGS, INC. By: /s/ David Heidecorn Name David Heidecorn Title: The foregoing is hereby consented to and acknowledged as of this 22nd day of August, 1997. BANK OF BOSTON CONNECTICUT (as Administrative Agent) By: /s/ Mark St. Pierre Name: Mark St. Pierre Title: Assistant Vice President SCHEDULE 1 to Pledge Agreement DESCRIPTION OF PLEDGED STOCK 100 shares of Common Stock, $.0l par value issued by Security Systems Holdings, Inc., a Delaware corporation 676,000 shares of Common Stock, no par value issued by Mission West Properties, a California corporation EX-27 3
5 1,000 9-MOS DEC-31-1997 SEP-30-1997 2,394 0 7,480 479 2,497 12,825 22,108 10,620 74,164 22,566 0 0 0 1 (1,245) 74,164 2,823 24,611 2,823 10,445 19,300 581 3,329 (9,044) 0 (9,044) 0 (813) 0 (9,857) (1.88) (1.88)
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