Included in the assets sold are alarm contracts in Colorado, Idaho and Utah with recurring monthly revenue (RMR) of $212,200 and other assets of approximately $224,000. The purchase price for the alarm contract assets was $7.1 million representing a RMR purchase multiple of 34.7 (pre deferred revenue). Consideration paid was in the form of cash and a promissory note in the amount of $6.5 million bearing interest at a rate of 12 percent and due December 31, 2006. All monitoring and billing will continue with IASG until the note is paid. The other assets sold included inventory, vehicles and deposits.
Commenting on the transaction, Charles May IASG CEO said "The transaction is positive for IASG shareholders, our customers and employees. The accounts are in service areas which do not fit in our desired profile. The sale of these accounts will provide a positive gain to IASG in 2006 not including the gain on sale which will be deferred until certain criteria are met. As a part of restructuring our retail division we are analyzing all of the accounts we have on a region by region basis to determine our costs to service, cancellation rates and whether they fit with our profile for profitable low attrition customers. We anticipate more sales of accounts which do not meet our profile as well as additional purchases of accounts that are representative of our desired profile."