Dear FriendsAs you are aware Firstline filed for Chapter 11 Bankruptcy protection on January25, 2008. In this letter, Firstline cannot adequately explain all of the complex andtechnical details which led to its filing, but a condensed version is warranted.Disputes arose during the 2007 selling season between ADT and Firstline about theirdealer agreement and whether ADT (which had the exclusive right to buy at least 75% of

Firstline’s accounts

(through February 14

2008) had authorized Firstline to sellcustomer accounts which used cellular service through Alarm.com. Firstline believed thatconsent had been given. ADT did not. ADT took the position that Firstline breached itsdealer agreement with ADT. This misunderstanding was critical in that ADT (which wasa good and reliable funding source) refused to purchase

Firstline’s accounts—

which

complicated Firstline’s ability to generate cash flow.

Making the sale of accounts to others more difficult, ADT asserted (under theprovisions of th

e dealer agreement) a security interest on virtually all of Firstline’s

accounts. Because of the asserted security interest, Firstline was unable to sell accounts

(and, therefore, generate cash flow) without ADT’s consent. ADT initially consented to

the sale of accounts, but refused to consent to sales (except on condition of payment of amounts due to ADT) that had been arranged in late 2007 and early 2008. In addition,ADT sued Firstline in early 2008 for millions of dollars for breach of the dealeragreement.To make matters worse, Firstline sold customer accounts to SAI (over 25,000) in the

beginning of the summer of 2007 (with ADT’s consent), but SAI was unable to

adequately provide service to the customers or to adequately track billing on the accountsthat were sold. As a result, millions of dollars in value were lost against holdbacks andchargebacks because of paying accounts that were lost due to poor service.Until late January 2008, it was hoped (and expected) that accounts could be sold(with A

DT’s consent) and that cash flow issues could be lessened if not fully resolved.

But by this time other large creditors including GE and Alarm.com became veryconcerned about whether Firstline was going to pay them millions of dollars in debtincurred to purchase the alarm system components that had been placed in homes duringthe selling season.

The emergence of GE and Alarm.com further complicated Firstline’s ability to

sell accounts as these creditors, understandably, wanted to be the first paid out of theproceeds from any sale of accounts.GE filed a receivership complaint (which Alarm.com joined) in state court inJanuary 2008. Firstline believed that putting its business in the hands of a third-partyreceiver would ultimately lessen the value of the accounts and be detrimental to creditors.Negotiations among Firstline, ADT, GE, and Alarm.com to sell accounts to Monitronicsand avoid receivership took place until just hours before the receivership hearing was

scheduled (which was January 25, 2008 at 1:30 p.m.). Substantial concessions were madeby several of the creditor parties to allow cash to flow, but the negotiations did notultimately bear fruit. Firstline filed bankruptcy just a few minutes before the receivershiphearing was to take place.Firstline is now focused on preserving and realizing the best value of all of itsassets (customer accounts, inventory, equipment etc.) for the benefit of creditors

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including many of you for unpaid commissions. Firstline is additionally consideringappropriate legal action, including against ADT and SAI to the extent claims may existagainst them that would generate funds to pay debt. Our plans for reorganizing thecompany and continuing in the industry are still in the formative stages but will becommunicated to you from time to time.I know that you have many questions. Below is an attempt to answer a few thatare recurring.1.

How do I get paid what I am owed?

You should have received a notice of bankruptcy and proof of claim form in the mail. You should fill out the formand follow the instructions for mailing to the bankruptcy court. You must besure that it is filed by the deadline stated on the notice. You should note thatthere are special provisions in the form for the assertion of wage or

commission claims earned within 180 days before Firstline’s bankruptcy

filing. If you have questions about the form and how to fill it out, you shouldconsult your own legal counsel. People who have filed claims or otherwisehave allowed claims in the bankruptcy will be paid according to the prioritiesset forth in the bankruptcy code and according to the terms of a chapter 11plan. It is difficult to say when the plan will be proposed and when paymentwill be made. Firstline will put forth its best efforts to speed the process, but itwill likely be many months before payment (which will likely be less than100% for non-priority unsecured claims) will be paid.2.

How do I determine what Firstline owes me?

Firstline is attempting tocalculate the amount it believes is owed to its sales contractors and will beposting its determinations on the company website as soon as practicable

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probably within 3 to 5 business days. You are not, of course, bound by whatFirstline says, and you may assert with the court whatever claim that youbelieve can be legally supported. Similarly, Firstline further reserves the rightto change its calculations based upon updated or corrected information.However, it is hoped that the amounts will assist you in determining yourclaim and eliminate the need for litigation on either side.3.

Who do I contact regarding questions about my 1099 for 2007?

Jennifer Miller @ 801-478-2490 ext. 2740 if you have not received your 1099 or if your1099 is incorrect. For faster response send Jennifer an email jmiller@4firsltine.com . Some 1099 have been returned to our office due to incorrect address. If you have movedplease send your correct mailing address in the email to Jennifer and she can resend the