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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2005
OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ________

Commission File No. 000-50343
 
IASG Logo

INTEGRATED ALARM SERVICES GROUP, INC.
(Exact name of Registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)


(I.R.S. Employer Identification No.)
42-1578199

One Capital Center
99 Pine Street, 3rd Floor
Albany, New York 12207
(Address of principal executive offices) (zip code)

(518) 426-1515
(Registrant's telephone number, including area code)


(Former name or former address, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes __ No X  

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No __ 

As of June 14, 2005 there were 24,681,462 shares of the registrant's common stock outstanding.



 

 
Page
     
Part I
Financial Information
3
 
 
 
 
     
Part II
Other Information
22
 

2

Integrated Alarm Services Group, Inc. and Subsidiaries

Consolidated Balance Sheets
 

   
 As of
  
   
 December 31,
  
March 31,
  
   
 2004
  
2005
  
        
(unaudited)
  
Assets
              
Current assets:
              
Cash and cash equivalents 
  
$
31,554,609
  
$
26,853,950
  
Current portion of notes receivable 
    
5,186,965
   
19,510,397
 
Accounts receivable, net 
    
6,289,787
   
6,737,464
 
Inventories 
    
1,233,785
   
1,078,899
 
Prepaid expenses 
    
1,127,581
   
1,536,522
 
Due from related parties 
    
70,655
   
136,448
 
 Total current assets
    
45,463,382
   
55,853,680
 
Property and equipment, net
    
7,926,324
   
7,774,069
 
Notes receivable, net
    
22,211,283
   
5,068,331
 
Dealer relationships, net
    
34,529,962
   
33,381,747
 
Customer contracts, net
    
85,169,085
   
93,280,544
 
Deferred installation costs, net
    
5,946,059
   
7,069,169
 
Goodwill
    
91,434,524
   
91,194,427
 
Debt issuance costs, net
    
5,322,089
   
5,334,144
 
Other identifiable intangibles, net
    
3,054,247
   
2,909,259
 
Restricted cash
   
757,104
   
1,399,714
 
Other assets
    
270,122
   
236,663
 
 Total assets
  
$
302,084,181
  
$
303,501,747
  
               
Liabilities and Stockholders' Equity
              
Current liabilities:
              
Current portion of long-term debt 
  
$
5,225,000
  
$
4,970,000
  
Current portion of capital lease obligations 
    
459,987
   
374,645
 
Accounts payable 
    
3,720,197
   
1,933,887
 
Accrued expenses 
    
9,185,263
   
13,904,706
 
Current portion of deferred revenue 
    
9,756,134
   
10,311,003
 
Other liabilities 
    
160,809
   
106,509
 
 Total current liabilities
    
28,507,390
   
31,600,750
 
               
Long-term debt, net of current portion 
    
125,000,000
   
125,000,000
 
Capital lease obligations, net of current portion 
    
575,502
   
506,937
 
Deferred revenue, net of current portion 
    
4,034,675
   
4,636,130
 
Deferred income taxes 
    
1,112,778
   
1,222,158
 
Other liabilities 
    
-
   
45,190
 
Due to related parties 
    
4,009
   
8,065
 
 Total liabilities
    
159,234,354
   
163,019,230
 
               
Commitments and Contingencies  
              
               
Stockholders' equity:
              
 
              
Preferred stock, $0.001 par value; authorized 3,000,000 shares and none issued and outstanding
    
-
   
-
 
 
Common stock, $0.001 par value; authorized 100,000,000 shares; issued and outstanding 24,681,462 at December 31, 2004 and March 31, 2005
    
24,682
   
24,682
 
Paid-in capital 
    
206,566,067
   
206,785,008
 
Accumulated deficit 
    
(63,740,922
)
  
(66,327,173
)
Total stockholders' equity
    
142,849,827
   
140,482,517
 
Total liabilities and stockholders' equity
  
$
302,084,181
  
$
303,501,747
  

 
The accompanying notes are an integral part of the consolidated financial statements.

3

Integrated Alarm Services Group, Inc. and Subsidiaries

Consolidated Statements of Operations

For the Three Months Ended March 31, 2004 and 2005
(unaudited)
 
   
For the Three Months Ended March 31,
 
   
2004
  
2005
  
Revenue:
              
Monitoring fees 
  
$
5,787,406
  
$
7,822,068
  
Revenue from customer accounts 
    
11,178,804
   
14,281,782
 
Related party monitoring fees 
    
25,480
   
32,736
 
Service, installation and other revenue 
    
1,216,060
   
2,321,349
 
Total revenue
    
18,207,750
   
24,457,935
 
             
Cost of revenue (excluding depreciation and amortization) 
    
7,067,994
   
10,285,449
 
     
11,139,756
   
14,172,486
 
Operating expenses:
              
Selling and marketing 
    
1,115,962
   
1,159,358
 
Depreciation and amortization 
    
5,012,521
   
6,113,608
 
Loss (gain) on sale of assets 
    
402
   
187
 
General and administrative 
    
5,058,998
   
6,140,157
 
Total operating expenses
    
11,187,883
   
13,413,310
 
               
Income (loss) from operations
    
(48,127
)
  
759,176
 
Other income (expense):
              
Other income, net 
    
(3,080
)
  
-
 
Amortization of debt issuance costs 
    
(259,850
)
  
(274,200
)
Interest expense 
    
(1,705,172
)
  
(4,185,515
)
Interest income 
    
324,671
   
1,254,669
 
Income (loss) before income taxes
    
(1,691,558
)
  
(2,445,870