JEMTEC Inc.

JEMTEC Inc. was formed in 1981 and has grown to become a leading provider of compliance monitoring solutions for the Canadian justice and public safety market. The company offers services and technologies that allow the courts, police, correctional services and other entities to verify that convicted individuals are complying with legally imposed restrictions such as bail, house arrest, home curfew and movement limitations.

Products and Services

JEMTEC’s solutions range from leased monitoring systems and equipment operated by government agencies to publicprivate partnerships in which the company manages business and operational risks in return for service fees. JEMTEC’s services and systems are typically paid for under government contracts awarded through competitive bidding.

Some of the specific types of products and technologies provided by JEMTEC include offender reporting kiosks with associated databases, active and passive global positioning system (GPS) tracking, radio frequency electronic monitoring systems, voice verification technology and remote alcohol in-home monitoring.

An example of a GPS product used by JEMTEC are electronic ankle bracelets that have been supplied to the Ontario government as part of a multi-million dollar contract. The bracelets employ GPS technology that allows correction officials to track the movements of prisoners serving at-home jail sentences. For those inmates allowed to leave their houses at certain times to go to school or attend counseling, the bracelets transmit a signal to an inhome receiver, which sends the data through phone lines to a main computer that is monitored by correction authorities. The GPS bracelets can also be programmed to set off an alarm and notify police if inmates enter prohibited areas such as schools or playgrounds.

The company is presently the exclusive Canadian distributor of Pro-Tech Monitoring Inc.’s and BI Inc.’s offender monitoring and tracking devices. The sales and leasing of these products accounted for substantially all of JEMTEC’s revenues during 2005 and 2004. The company remains economically dependent on Pro-Tech and BI Inc. for the continued supply of monitoring equipment, replacement parts, and maintenance services which JEMTEC offers for resale or rental.

Management’s approach in offering different levels of technology allows corrections, courts and police to select from a variety of options to ensure that the correct level of offender control can be used at the lowest overall cost. During the first half of fiscal 2005, the company began offering private electronic monitoring services for selected pre-trial bail cases directly to selected individuals. This service, which is the first of its kind in Canada, allows clients to pay for their own electronic monitoring in order to win bail release while awaiting trial. This private bail project has enabled the company to take advantage of more diversified revenue sources.

Presently, in most Canadian jurisdictions, the justice systems are clogged with cases awaiting trial or awaiting sentencing. In addition, most correctional institutions are already crowded and in need of repair. Furthermore, governments in Canada have significant budget pressures and keeping inmates in jail can cost taxpayers up to $155 per day. Housing one hundred people in jail can cost $6 million annually.

With its customized solutions and advanced technologies, JEMTEC helps governments to effectively manage the criminal population without compromising public safety.

Financial Performance

For the year ended July 31, 2005, JEMTEC reported record revenues of $2.6 million, an increase of 60% over the $1.6 million reported for the fiscal year ended July 31, 2004. The company’s net earnings for fiscal 2005 were $715,000 or $0.33 per share as compared to earnings of $414,000 or $0.20 per share in 2004. Management has stated that the significant turnaround is primarily attributable to the company having moved out of the development phase into the main phase of its key projects.

JEMTEC received approximately 93% of its fiscal 2005 revenues from a single customer, namely, the government of Ontario. This contract expires in January 2008. JEMTEC is planning to diversify its economic dependence on its two primary suppliers and one principal customer by locating other complementary products and by establishing additional service contracts.

The company’s results for the first quarter ended October 31, 2005, are anticipated to be publicly released during the second week of December 2005.