Net income for the quarter ended December 31, 2004 decreased to $US3,895 or $US0.00 per share, from net earnings of $US169,043, or $US0.01 per share, in the comparable quarter ended December 31, 2003. “Extreme continues to expand on its leadership position in active-infrared optics technology. Our strategic customer base continues to grow, and our product line is becoming more comprehensive and advanced, addressing current and future needs of an intelligent-security world. “We have continued with our strategy to increase our investment in R&D to enhance our position as the world’s leading active infrared technology company,” stated Jack Gin, President and CEO of Extreme CCTV. Gross margin increased to 50% in the quarter from 48% last year. The full impact of Extreme’s price increases, initiated during the third quarter ended June 30, 2004, has taken effect. Furthermore, strategic cost reduction initiatives on some of the Company’s product lines and increased sales of the higher margin REG(R) product lines have positively impacted gross margins. Comparative figures for the quarter ended December 31, 2003 have been restated to take into effect the retroactive treatment of stock based compensation expense, as recommended by the Canadian Institute of Chartered Accountants. Sales and marketing, and general and administrative expenses have been affected by the restatement, as well as retained earnings and contributed surplus. Unit sales across most of Extreme’s product categories increased during the quarter. The REG(R) product group, a high value line, showed strong growth in the quarter with unit sales up significantly. Revenue for the UK geographic segment for the quarter was $US 2.6 million, as compared to $US2.3 million last year, as a result of success in the European markets and, in particular, the expansion of the REG(R) camera product group for license plate reading. Overall unit sales in the United States were consistent year over year, and sales in Canada increased. “We are encouraged with the sale of the first units of our Reg-ALERT(TM) software product and further expansion of the product line,” said Mr. Gin. “We are experiencing strong interest in the Reg-ALERT(TM) License Plate Capture system, particularly in the United States market.”