##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
      (Mark One)þ

Annual Report pursuant to Section 13 or 15(d) of the
    Securities Exchange Act of 1934For the fiscal year ended
    December 31, 2007o

Transition Report pursuant to Section 13 or 15(d) of the
    Securities Exchange Act of 1934   Commission File Number:
    000-51456
      180 CONNECT INC.
 (Exact Name of Registrant as
    Specified in its Charter)
  Delaware

20-2650200(State of
    Incorporation)

(IRS Employer Identification
    Number)  6501 E. Belleview Avenue
 Englewood, Colorado 80111
 (Address of principal executive
    offices)
  Registrants Telephone
    Number:
 (303) 395-6000
  Securities registered pursuant
    to Section 12(g) of the Act:
  Common Stock, par value $0.0001
    per share
  Units, each consisting of one
    share of Common Stock and two Warrants
  Warrants, exercisable for Common
    Stock at an exercise price of $5.00 per share
      o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated filer
    o

Accelerated filer
    o

Non-accelerated filer
    o

Smaller reporting company
    þ(Do not check if a smaller
    reporting company)   Rule 12b-2 o þ




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##### 





180 CONNECT
    INC.FORM 10-K
    FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007
    INDEX
   
 PagePART IItem 1.

Business


1Item 1A.

Risk Factors


5Item 1B.

Unresolved Staff Comments


9Item 2.

Properties


9Item 3.

Legal Proceedings


9Item 4.

Submission of Matters to a Vote of Security
    Holders


10PART IIItem 5.

Market for Registrants Common Equity,
    Related Shareholder Matters and Issuer Purchases of Equity
    Securities


11Item 6.

Selected Financial Data


12Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


13Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


36Item 8.

Financial Statements and Supplementary Data


37Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


77Item 9A(T).

Controls and Procedures


77PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


78Item 11.

Executive Compensation


78Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Shareholder Matters


78Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


78Item 14.

Principal Accountant Fees and Services


78PART IVItem 15.

Exhibits and Financial Statement Schedules


79SignaturesEX-10.28 Amended and Restated Common Stock Purchase WarrantEX-10.29 Amended and Restated Common Stock Purchase WarrantEX-10.30 Amended and Restated Warrant CertificateEX-10.36 Home Services Provider AgreementEX-10.37 Home Services Provider AgreementEX-10.44 Executive Employment AgreementEX-10.48 Warrant to Purchase Common StockEX-10.49 Amended and Restated Equity Plan for Non-Employee DirectorsEX-10.50 Unit Purchase Option Clarification AgreementEX-10.51 Warrant Clarification AgreementEX-21.1 SubsidiariesEX-23.1 Consent of Ernst & Young LLPEX-23.2 Consent of Ernst & Young LLPEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEO & CFO




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##### Table of Contents



PART I  Item 1.
    Business  Corporate
    Overview
  (AVP) Arrangement (180 Connect (Canada))
    Industry
    Trends
    
    Growing Demand for High-Definition Television and Voice,
    Video and Data Services.
    DIRECTV®
    Inc. (DIRECTV) satellite television
    subscriptions and installations have grown substantially over
    the last five years as the industry has gained acceptance in
    part through offering high definition television and digital
    video recorder capabilities, as well as attractive programming
    such as NFL Sunday Ticket, NASCAR HotPass, and other exclusive
    sports offerings. Cable companies continue to upgrade their
    systems to provide for enhanced broadband services, including
    voice over internet protocol, commonly called VOIP, as well as
    improved video offerings, including high definition television,
    video on demand and digital video recording. All of these
    improved offerings drive increased need for at-home fulfillment
    services, services which account for the vast majority of our
    revenues.
    Increasing Need for Network Infrastructure Design,
    Installation and Management.Municipalities, large housing
    developments and complex organizations, such as airports, are
    increasingly using advanced technology to expand operational
    capabilities, reduce costs, attract business development and
    drive additional revenue, among many other benefits. The
    technology is complex, and they often turn to third-parties,
    such as our Network Services division, to design the networks,
    oversee installation and manage the network post-construction.
    Increasing Sophistication of New Home Technology and
    Wiring. New home buyers are demanding and paying for
    increasingly complex wiring to support next-generation home
    entertainment, environmental and security controls. The Company
    has a small but growing division that works with builders and
    individuals to install new home and multi-dwelling unit
    structured wiring.  The 180 Connect
    Solution
     1




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and/or
    
    Quality Service.  We provide quality service
    through our comprehensive training and supervision of our
    technicians and through routine inspections by both us and our
    customers of completed work. These routine inspections ensure
    that completed work meets all applicable technical and
    customer-specified standards. Our quality service is evidenced
    by our high customer satisfaction ratings.
    Low Cost Provider.  In order to effectively
    compete with local technical support service providers, we
    concentrate on maintaining a well-managed cost structure. We
    achieve this by focusing extensively on a variable cost model.
    As part of our initiatives, we have transferred administrative
    functions such as payroll, human resources administration and
    accounting from local and regional offices to a centralized
    location. In this manner, we have been able to provide the
    benefits of a local technical support services provider with the
    economics of a national technical support services provider.
    National Footprint.  We provide technical
    support services to the satellite and cable, home building
    industries and municipalities operating across the United States
    and parts of Canada by utilizing a single operating standard to
    ensure all of our customers are provided with the same level of
    service, regardless of their location. We believe that as
    consolidation among our cable and satellite customers continues,
    our ability to provide reliable quality service on a national,
    regional and local basis to those consolidated entities will be
    a significant competitive advantage. Currently, we provide
    installation, connection and technical support services in more
    than 85 locations across the United States and parts of Canada.  Our
    Business
        Satellite
    Services
   2




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##### Table of Contents



180-days
  Cable
    Services
  (Time Warner) (Cablevision) (WoW) (Rogers
    Communications)
  Network
    Services
    Home
    Services
    Outlook
    
    the opportunity to increase market share by obtaining contracts
    in new geographic territories;
    the opportunity to leverage our branch networks to provide home
    installation of various technologies;
    the increasing demand by subscribers for advanced broadband
    services such as high-speed data, digital video and internet
    protocol telephony, satellite and cable services;
    the ability to increase market share by providing quality
    service at a competitive price; and
    the increasing demand for network management consulting,
    planning, engineering and construction-related services to
    communications systems owners, operators and equipment suppliers
    worldwide. 3




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Seasonality
    Safety and
    Insurance/Risk Management
    Competition
      Availability of
    Filings
  Exchange
    Act) SEC) Form 10-K. Form 10-K
 4




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1-800-SEC-0330.
  Item 1A.  Risk
    Factors
  Risks Related to
    Our Business and Industry
  We have a
    history of operating losses and may not be able to achieve
    profitability.
    We rely on one
    key customer for a substantial percentage of our
    revenue.
      If we are
    unable to retain trained personnel, we may be unable to provide
    adequate service.
   5




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Higher fuel
    prices would increase our cost of doing business, and we may not
    be able to pass along the added costs to
    customers.
    We depend on
    key employees for management and operations.
    We are subject
    to litigation and other disputes which may lead to
    litigation.
  Form 10-K
  Our actual
    losses may exceed our insurance expense estimates.
    We are subject
    to competition and may not be able to maintain our position
    within the industry.
   6




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Our revenue
    and liquidity are subject to seasonal
    fluctuations.
    (FASB) No. 95-22, (EITF 95-22).
  Consolidation
    of broadband carriers could result in a reduction of our
    customer base.
    We have not
    and do not expect to pay cash dividends which may cause the
    price of our common stock to decline.
    Failure to
    successfully manage organic growth or growth through
    acquisitions could negatively impact our business.
    
    Substantial financial resources may be required to support
    acquisitions, which could have otherwise been utilized in the
    development of other aspects of our business;
    Acquisitions may result in liabilities and contingencies, which
    could affect our operations; and 7




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
    We may incur significant expenses, or experience other financial
    or operational problems if we are unable to successfully
    integrate common systems and procedures with our current
    operational, financial and management systems.    Risks Related to
    Our Common Stock
  The price of
    our common stock is volatile and may be less than what you
    originally paid for your shares of common stock.
    
    Actual or anticipated fluctuations in quarterly and annual
    results;
    Mergers, consolidations and strategic alliances in the
    communication and broadcast services industry;
    Market conditions in the equipment installation industry;
    Our earnings estimates and those of our publicly held
    competitors; and
    The general state of the stock markets.    The exercise
    of our outstanding convertible securities will result in a
    dilution of our current shareholders voting power and an
    increase in the number of shares eligible for future resale in
    the public market which may negatively impact the market price
    of our shares.
    
    Publicly-traded warrants to purchase up to 18,000,000 common
    shares with an exercise price of $5.00 per share;
    An option to purchase up to 450,000 units (each unit
    consisting of one common share and two warrants) at a price of
    $7.50 per unit, held by Wedbush Morgan Securities Inc. (part of
    which was transferred to Maxim Group LLC);
    Warrants to purchase up to 942,060 shares held by previous
    lenders to the Company at an exercise price of $4.331 per share;
    A warrant to purchase up to 250,000 shares held by Laurus
    Master Fund, Ltd. (Laurus) at an
    exercise price of $3.00 per share;
    A warrant held by Laurus to purchase up to 150,000 shares
    of our common stock at an exercise price of $3.00 per share;
    A warrant held by Creative Vistas Inc. to purchase
    450,000 shares of our common stock at an exercise price of
    $0.01 per share;
    A warrant to purchase up to 266,393 shares held by Magnetar
    Capital Master Fund Ltd.
    (Magnetar) at an exercise price of
    $0.01 per share and
    2,294,650 stock options and other awards pursuant to our
    2007-Long Term Incentive Plan (LTIP)
    and prior stock option plans. 8




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Our common
    stock is traded on the OTC Bulletin Board, which may make
    it more difficult for shareholders to dispose of or to obtain
    accurate quotations as to the value of our common
    stock.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings  (Ironwood) (Mountain)
   9




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We intend to vigorously contest each of these
    claims.
    Item 4.
    Submission
    of Matters to a Vote of Security Holders   10




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Part II  Item 5.
    Market
    for the Registrants Common Equity, Related Shareholders
    Matters and Issuer Purchases of Equity Securities  Market Information.
    Fiscal 2007


Fiscal 2006Units

High


Low


High


LowFirst Quarter

$
6.45


$
5.85


$
6.90


$
6.04Second Quarter

$
7.15


$
6.37


$
6.86


$
6.30Third Quarter

$
6.80


$
3.45


$
6.30


$
6.09Fourth Quarter

$
3.45


$
1.40


$
6.20


$
5.95   Fiscal 2007


Fiscal 2006Common Stock

High


Low


High


LowFirst Quarter

$
4.00


$
2.17


$
4.92


$
2.78Second Quarter

$
4.83


$
3.25


$
4.25


$
2.33Third Quarter

$
4.67


$
2.70


$
3.65


$
1.25Fourth Quarter

$
2.68


$
1.26


$
2.95


$
1.25   Fiscal 2007


Fiscal 2006Warrants

High


Low


High


LowFirst Quarter

$
0.39


$
0.15


$
0.71


$
0.37Second Quarter

$
0.67


$
0.315


$
0.65


$
0.36Third Quarter

$
0.62


$
0.23


$
0.39


$
0.33Fourth Quarter

$
0.40


$
0.08


$
0.36


$
0.19   Holders.
  Dividends.
  Unregistered Securities Sold.
   11




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Item 6.
    Selected
    Financial Data    Year EndedDecember 31,


December 31,


December 31,


December 25,


December 27,2007


2006


2005


2004


2003(restated)(In thousands, except per share data)Revenues

$
379,768


$
331,175


$
278,641


$
210,275


$
82,316Expenses(1)


360,483



317,672



278,477



207,535



78,701Loss from continuing operations


(22,903
)


(8,826
)


(5,228
)


(3,731
)


(8,675
)Net loss

$
(24,942
)

$
(14,589
)

$
(8,517
)

$
(7,451
)

$
(12,812
)Loss per share from continuing operationsBasic and diluted

$
(1.20
)

$
(0.60
)

$
(0.36
)

$
(0.29
)

$
(0.82
)Net loss per shareBasic and diluted

$
(1.30
)

$
(1.00
)

$
(0.59
)

$
(0.57
)

$
(1.21
)Total assets

$
158,284


$
165,444


$
173,471


$
161,871


$
87,317Long term liabilities, excluding deferred tax
    liabilities(2)


17,246



33,754



22,977



43,730



48,333Shareholders equity


22,211



9,402



20,353



34,416



5.163Cash dividends declared per common share

$
0.00


$
0.00


$
0.00


$
0.00


$
0.00     (1)
    
    Includes: direct expenses, general and administrative expenses,
    foreign exchange (gain) loss, and restructuring costs.(2)
    
    2006 amount has been restated as a result of the
    reclassification of $20.5 million of long-term debt
    reclassified to current portion of long-term debt. 12




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Overview
  (MD&A)
  Form 10-K.
  (GAAP)
    Introduction
    Trends and
    Uncertainties in our Business
  DIRECTV
    Labor
    Class Action Proceedings
    Rising Fuel
    Costs
   13




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2007 Significant
    Operating Events
  Consummation
    of the Plan of Arrangement
  On August 24, 2007, the Arrangement was
    consummated.
  Exercise and
    Redemption of Convertible Debentures
      Reduction of
    Letter of Credit
  (LOC)
    Seasonality
    Revenue distribution by quarter

Quarter 1


Quarter 2


Quarter 3


Quarter 4


TotalYear 2007


24.1
%


22.9
%


26.8
%


26.2
%


100
%Year 2006


22.1
%


22.6
%


26.8
%


28.5
%


100
%Year 2005


22.8
%


22.2
%


26.8
%


28.2
%


100
%  14




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Significant
    Accounting Policies
  Critical
    Accounting Estimates
    Reserves
    Other
    Intangible Assets
       15




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Goodwill
         16




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##### Table of Contents



Leases
      1.
    The lease transfers ownership of the property to the lessee by
    the end of the lease term. This criterion is met in situations
    in which the lease agreement provides for the transfer of title
    at or shortly after the end of the lease term in exchange for
    the payment of a nominal fee, for example, the minimum required
    by statutory regulation to transfer title.2.
    The lease contains a bargain purchase option. A bargain purchase
    option is one that allows the lessee, at his option, to purchase
    the leased property for a price that, at the inception of the
    lease, appears to virtually assure transfer of the property to
    the lessee at the date the option becomes exercisable.3.
    The lease term is equal to 75% or more of the estimated economic
    life of the leased property. However, if the beginning of the
    lease term falls within the last 25% of the total estimated
    economic life of the leased property, including earlier years of
    use, this criterion shall not be used for purposes of
    classifying the lease.4.
    The present value of the minimum lease payments, exclusive of
    executory costs, at inception of the lease is at least
    90 percent of the fair value of the leased property to the
    lessor less any related investment tax credit retained by the
    lessor. Executory costs are the normal costs of operating and
    maintaining an asset. They include insurance, property taxes,
    and maintenance and repair services. This criterion is also
    subject to the 25% constraint noted in (3) above. The
    present value of the minimum lease payments should be calculated
    using the incremental borrowing rate, unless the rate implicit
    in the lease can be determined and such rate is less than the
    incremental borrowing rate.    Income
    Taxes
   17




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Insurance
    Premium Deposits
  U.S.-based
    Commitments
    and Contingencies
   18




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Relationship
    with DIRECTV
    (DCM)
    Financial
    Review
  project-by-project
        Selected
    Financial Highlights  Year and Quarter Ended
    December 31, 2007
    Full Year
    Highlights
  
    Revenue grew to $379.8 million, an increase of
    $48.6 million, or 14.7%, compared to revenue of
    $331.2 million in 2006.
    EBITDA from continuing
    operations(1)
    was $19.3 million, an increase of $5.8 million or 43%
    compared to $13.5 million in 2006.
    Total cash provided by operating activities was
    $1.5 million, a decrease of $4.8 million from the cash
    provided by operating activities of $6.3 million in 2006. 19




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
    Loss from continuing operations was $22.9 million, an
    increase of $14.1 million compared to a loss from
    continuing operations of $8.8 million in 2006.
    Net loss was $24.9 million, an increase of
    $10.3 million compared to a net loss of $14.6 million
    in 2006.
    Net loss per share for the twelve months ended December 31,
    2007 and December 31, 2006, respectively, is as follows:  
    Loss from continuing operations was $1.20 per share basic and
    diluted compared to a loss from continuing operations of $0.60
    per share basic and diluted in 2006.
    Net loss was $1.30 per share basic and diluted compared to net
    loss of $1.00 per share basic and diluted in 2006.    (1)
    
    EBITDA from continuing operations excludes depreciation,
    amortization of customer contracts, interest and loan fees,
    (gain) loss on change in fair value of derivative liabilities,
    gain on the extinguishment of debt, (gain) loss on sale of
    investments and assets, other expense and income tax expense
    (benefit). EBITDA from continuing operations is a non-GAAP
    measure and does not have a standardized meaning prescribed by
    GAAP. Therefore, EBITDA from continuing operations is not likely
    to be comparable to similar measures presented by other issuers.
    See Non-GAAP Measures. Management believes that
    this term provides a better assessment of cash flow from our
    operations by eliminating the charges for depreciation and
    amortization, which are non-cash expense items, (gain) loss on
    sale of investments and assets, (gain) loss on fair market value
    of derivative liabilities, gain on the extinguishment of debt,
    and other expense which is not considered to be in the normal
    course of operating activity. The comparative GAAP measure is
    loss from continuing operations. A reconciliation of EBITDA from
    continuing operations to loss from continuing operations is
    contained in this MD&A under EBITDA from continuing
    operations. 20




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Results of
    Operations
  Comparison of
    Years Ended December 31, 2007 and 2006
  December 31,


December 31,2007


2006


% ChangeRevenue

$
379,767,879


$
331,175,241



14.7
%Direct expenses


341,108,774



297,073,863



14.8
%Direct contribution
    margin(1)


38,659,105



34,101,378



13.4
%General and
    administrative(2)


19,223,846



19,675,497



(2.3
)%Foreign exchange (gain) loss


(124,329
)


30,361



(509.5
)%Restructuring costs


275,000



892,688



(69.2
)%Depreciation


12,061,858



13,398,987



(10.0
)%Amortization of customer contracts


3,681,499



3,712,673



(0.8
)%Other (income) expense:Interest and loan fees


16,272,393



10,043,504



62.0
%Gain on extinguishment of debt






(1,233,001
)


(Gain) loss on sale of investments and assets


715,151



(726,086
)


(198.5
)%(Gain) loss on change in fair value of derivative liabilities


5,020,945



(1,363,936
)


(468.1
)%Other expense


3,579,459







Loss from continuing operations before income tax expense
    (benefit)


(22,046,717
)


(10,329,309
)


113.4
%Income tax expense (benefit)


856,576



(1,503,271
)


(157.0
)%Loss from continuing operations


(22,903,293
)


(8,826,038
)


159.5
%Loss from discontinued operations


(2,039,073
)


(5,762,800
)


(64.6
)%Net loss for the period

$
(24,942,366
)

$
(14,588,838
)


71.0
%Net loss per share from continuing operationsBasic

$
(1.20
)

$
(0.60
)Diluted

$
(1.20
)

$
(0.60
)Net loss per shareBasic

$
(1.30
)

$
(1.00
)Diluted

$
(1.30
)

$
(1.00
)     (1)
    
    DCM consists of revenue less direct expenses and excludes
    general and administrative expense, foreign exchange (gain)
    loss, restructuring costs, depreciation, amortization of
    customer contracts, interest and loan fees, (gain) loss on sale
    of investments and assets, other expense, gain (loss) on change
    in fair value of derivative liabilities, gain on extinguishment
    of debt, and income tax expense (benefit). DCM is a non-GAAP
    measure. The comparative GAAP measure is loss from continuing
    operations. For a reconciliation of DCM to loss from continuing
    operations, see Direct Contribution Margin.(2)
    
    General and administrative includes stock-based compensation of
    $860,035 and $91,214, for the years ended December 31,
    2007, and December 31, 2006, respectively.  Revenue
   21




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Direct
    Contribution Margin
     22




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Reconciliation
    of DCM to Loss from Continuing Operations
  December 31,


December 31,2007


2006Direct contribution
    margin(1)

$
38,659,105


$
34,101,378General and
    administrative(2)


19,223,846



19,675,497Foreign exchange (gain) loss


(124,329
)


30,361Restructuring costs


275,000



892,688Depreciation


12,061,858



13,398,987Amortization of customer contracts


3,681,499



3,712,673Other (income) expense:Interest and loan fees


16,272,393



10,043,504Gain on extinguishment of debt






(1,233,001
)(Gain) loss on sale of investments and assets


715,151



(726,086
)(Gain) loss on change in fair value of derivative liabilities


5,020,945



(1,363,936
)Other expense


3,579,459



Loss from continuing operations before income tax expense
    (benefit)


(22,046,717
)


(10,329,309
)Income tax expense (benefit)


856,576



(1,503,271
)Loss from continuing operations

$
(22,903,293
)

$
(8,826,038
)     (1)
    
    DCM consists of revenue less direct expenses and excludes
    general and administrative expense, foreign exchange (gain)
    loss, restructuring costs, (gain) loss on sale of investments
    and assets, depreciation, amortization of customer contracts,
    interest and loan fees, (gain) loss on change in fair value of
    derivative liabilities, gain on extinguishment of debt, other
    expense, and income tax expense (benefit). DCM is a non-GAAP
    measure. See Non-GAAP Measures. The comparative
    GAAP measure is loss from continuing operations.(2)
    
    General and administrative includes stock-based compensation of
    $860,035 and $91,214, for the years ended December 31,
    2007, and December 31, 2006, respectively.  General and
    Administrative Expenses, Restructuring Costs and Non-Cash
    Stock-Based Compensation
      EBITDA from
    Continuing Operations
   23




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##### Table of Contents



Reconciliation
    of EBITDA to Loss from Continuing Operations
  December 31,


December 31,2007


2006EBITDA from continuing
    operations(1)

$
19,284,588


$
13,502,832Depreciation


12,061,858



13,398,987Amortization of customer contracts


3,681,499



3,712,673Other (income) expense:Interest and loan fees


16,272,393



10,043,504Gain on extinguishment of debt






(1,233,001
)(Gain) loss on sale of investments and assets


715,151



(726,086
)(Gain) loss on change in fair value of derivative liabilities


5,020,945



(1,363,936
)Other expense


3,579,459



Loss from continuing operations before income tax expense
    (benefit)


(22,046,717
)


(10,329,309
)Income tax expense (benefit)


856,576



(1,503,271
)Loss from continuing operations

$
(22,903,293
)

$
(8,826,038
)     (1)
    
    See Non-GAAP Measures  Depreciation
    and Amortization of Customer Contracts
    Other Income
    and Expense and Interest and Loan Fees
     24




---



##### Table of Contents



Control F-1
      Income Tax
    Expense (Benefit)
    Loss from
    Continuing Operations
    Loss from
    Discontinued Operations
    Net
    Loss
   25




---



##### Table of Contents



Results of
    Operations
  Comparison of
    Years Ended December 31, 2006 and 2005
  December 31,


December 31,2006


2005


% ChangeRevenue

$
331,175,241


$
278,640,517



18.9
%Direct expenses


297,073,863



255,120,324



16.4
%Direct contribution
    margin(1)


34,101,378



23,520,193



45.0
%General and
    administrative(2)


19,675,497



21,702,824



(9.3
)%Foreign exchange (gain) loss


30,361



(18,692
)


(262.4
)%Restructuring costs


892,688



1,672,485



(46.7
)%Depreciation


13,398,987



6,147,874



118.0
%Amortization of customer contracts


3,712,673



4,093,985



(9.3
)%Other (income) expense:Interest and loan fees


10,043,504



3,440,690



191.9
%Gain on extinguishment of debt


(1,233,001
)






Gain on sale of investments and assets


(726,086
)


(6,897,291
)


(89.5
)%Impairment of goodwill and customer contracts






608,096



Gain on change in fair value of derivative liabilities


(1,363,936
)






Loss from continuing operations before income tax Benefit


(10,329,309
)


(7,229,778
)


42.9
%Income tax benefit


(1,503,271
)


(2,001,727
)


(24.9
)%Loss from continuing operations


(8,826,038
)


(5,228,051
)


68.8
%Loss from discontinued operations


(5,762,800
)


(3,288,604
)


75.2
%Net loss for the period

$
(14,588,838
)

$
(8,516,655
)


71.3
%Net loss per share from continuing operationsBasic

$
(0.60
)

$
(0.36
)Diluted

$
(0.60
)

$
(0.36
)Net loss per shareBasic

$
(1.00
)

$
(0.59
)Diluted

$
(1.00
)

$
(0.59
)     (1)
    
    DCM consists of revenue less direct expenses and excludes
    general and administrative expense, foreign exchange (gain)
    loss, restructuring costs, depreciation, amortization of
    customer contracts, interest and loan fees, gain on sale of
    investments and assets, gain on change in fair value of
    derivative liabilities, gain on extinguishment of debt,
    impairment of goodwill and customer contracts and income tax
    benefit. DCM is a non-GAAP measure. The comparative GAAP measure
    is loss from continuing operations. For a reconciliation of DCM
    to loss from continuing operations, see Direct
    Contribution Margin.(2)
    
    General and administrative includes stock-based compensation of
    $91,214 and $1,387,133 for the years ended December 31,
    2006, and December 31, 2005, respectively.  Revenue
   26




---



##### Table of Contents



Direct
    Contribution Margin
    start-up
   27




---



##### Table of Contents



Reconciliation
    of DCM to Loss from Continuing Operations
  December 31,


December 31,2006


2005Direct contribution
    margin(1)


34,101,378



23,520,193General and administrative


19,675,497



21,702,824Foreign exchange (gain) loss


30,361



(18,692
)Restructuring costs


892,688



1,672,485Depreciation


13,398,987



6,147,874Amortization of customer contracts


3,712,673



4,093,985Other (income) expense:Interest and loan fees


10,043,504



3,440,690Gain on extinguishment of debt


(1,233,001
)


Gain on sale of investments and assets


(726,086
)


(6,897,291
)Impairment of goodwill and customer contracts






608,096Gain on change in fair value of derivative liabilities


(1,363,936
)


Loss from continuing operations before income tax benefit


(10,329,309
)


(7,229,778
)Income tax benefit


(1,503,271
)


(2,001,727
)Loss from continuing operations


(8,826,038
)


(5,228,051
)     (1)
    
    DCM consists of revenue less direct expenses and excludes
    general and administrative expense, foreign exchange (gain)
    loss, restructuring costs, gain on sale of investments and
    assets, depreciation, amortization of customer contracts,
    interest and loan fees, gain on change in fair value of
    derivative liabilities, gain on extinguishment of debt,
    impairment of goodwill and customer contracts and income tax
    benefit. DCM is a non-GAAP measure. See
    Non-GAAP Measures. The comparative GAAP measure
    is loss from continuing operations.(2)
    
    General and administrative includes stock-based compensation of
    $91,214 and $1,387,133 for the years ended December 31,
    2006, and December 31, 2005, respectively.  General and
    Administrative Expenses, Restructuring Costs and Stock-Based
    Compensation
      EBITDA from
    Continuing Operations
   28




---



##### Table of Contents



Reconciliation
    of EBITDA to Loss from Continuing Operations
  December 31,


December 31,2006


2005EBITDA from continuing
    operations(1)

$
13,502,832


$
163,576Depreciation


13,398,987



6,147,874Amortization of customer contracts


3,712,673



4,093,985Other (income) expense:Interest and loan fees


10,043,504



3,440,690Gain on extinguishment of debt


(1,233,001
)


Gain on sale of investments and assets


(726,086
)


(6,897,291
)Impairment of goodwill and customer contracts






608,096Gain on fair value of derivative liabilities


(1,363,936
)


Loss from continuing operations before income tax benefit


(10,329,309
)


(7,229,778
)Income tax benefit


(1,503,271
)


(2,001,727
)Loss from continuing operations

$
(8,826,038
)

$
(5,228,051
)     (1)
    
    See Non-GAAP Measures  Depreciation,
    Amortization of Customer Contracts and Impairment of Goodwill
    and Customer Contracts
    Other Income
    and Expense
   29




---



##### Table of Contents



Income Tax
    Benefit
      Loss from
    Continuing Operations
    Loss from
    Discontinued Operations
    Net
    Loss
    Liquidity and
    Capital Resources
     30




---



##### Table of Contents



No. 95-22, (EITF 95-22).
    Agreements
    with Laurus
  (180 Connect (NV))
   31




---



##### Table of Contents



July
    Warrant) August Warrant) lock-up.
     32




---



##### Table of Contents



Private
    Placement
  360-day
    Vehicle
    Leasing Arrangements
    Cash Flow from
    Operating Activities
    30-45 days
 33




---



##### Table of Contents



Cash Flow from
    Investing Activities
        Cash Flow from
    Financing Activities
      (Mountain)
    30-45 day 20-day
 34




---



##### Table of Contents



Form 10-K.
  Contractual
    Obligations
    As of December 31, 2007Contractual Obligations Due by PeriodLess than








More thanTotal


1 Year


1-3 Years


3-5 Years


5 YearsCurrent portion of long-term
    debt(1)

$
27,769,301


$
27,769,301


$



$



$
Operating leases, real property


9,410,187



3,785,453



4,329,548



1,295,186



Operating leases, equipment and trucks


670,094



273,840



373,697



22,557



Capital leases, I/T Equipment


314,871



111,621



138,435



64,815



Capital leases 
    Vehicles(2)


30,846,650



12,716,285



16,634,237



1,496,128



Total

$
69,011,103


$
44,656,500


$
21,475,917


$
2,878,686


$
     (1)
    
    The current portion of long-term debt amounts in the schedule
    above does not include interest because it is at variable rates.
    The estimated interest expense for 2008,
    2009-2010,
    2011-2012
    and thereafter is $2,066,459, $989,763 and zero, respectively.
    We estimated interest expense based on current interest rates,
    current balances and scheduled repayments.(2)
    
    Capital lease obligations include interest in the table above.  Off-Balance Sheet
    Obligations
    Forward-Looking
    Statements
  Form 10-K
 35




---



##### Table of Contents



Non-GAAP Measures
      Item 7A.  Quantitative
    And Qualitative Disclosures About Market Risk
   36




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Form 10-K.
 37




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
              38




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
            /s/ Ernst & Young LLPToronto, Canada,

Chartered AccountantsApril 20, 2007

Licensed Public Accountants(except for note 12 as to which the date is March 27,
    2008).  39




---



##### Table of Contents



Consolidated
    Financial Statements
   180 Connect
    Inc.
    Consolidated Balance Sheets
  December 31,


December 31,2007


2006(Restated Note 12)AssetsCurrent AssetsCash and cash equivalents

$
366,449


$
2,904,098Accounts receivable (less allowance for doubtful accounts of
    $3,750,200 and $2,506,637, respectively)


48,378,339



48,934,952Inventory


20,180,167



15,816,148Restricted cash


10,169,108



14,503,000Prepaid expenses and other assets


9,378,519



7,910,255TOTAL CURRENT ASSETS


88,472,582



90,068,453Property, plant and equipment


34,906,750



34,882,890Goodwill


11,034,723



11,034,723Customer contracts, net


21,391,257



25,072,756Other assets


2,478,839



4,384,750TOTAL ASSETS

$
158,284,151


$
165,443,572Liabilities and Shareholders EquityCurrent liabilitiesAccounts payable and accrued liabilities

$
79,115,651


$
78,686,245Current portion of long-term debt


27,769,301



26,502,096Fair value of derivative financial instruments


122,168



4,065,729Current portion of capital lease obligations


11,628,142



13,033,104TOTAL CURRENT LIABILITIES


118,635,262



122,287,174Income tax liability


191,580



Long-term debt






12,264,621Convertible debt






6,276,584Capital lease obligations


17,246,267



15,213,112TOTAL LIABILITIES


136,073,109



156,041,491Commitments and contingencies (Notes 12, 15, and 24)Shareholders EquityCommon stock $.0001 par value; authorized 100,000,000, at
    December 31, 2007 and December 31, 2006 issued and
    outstanding shares 25,520,152 and 14,685,976, respectively


2,552



1,469Paid-in capital


130,096,083



91,871,813Treasury stock, 500,000 shares and zero at
    December 31, 2007 and December 31, 2006, respectively


(224,019
)


Accumulated deficit


(107,898,597
)


(82,956,231
)Accumulated other comprehensive income


235,023



485,030TOTAL SHAREHOLDERS EQUITY


22,211,042



9,402,081TOTAL LIABILITIES AND SHAREHOLDERS EQUITY

$
158,284,151


$
165,443,572    40




---



##### Table of Contents



180 Connect
    Inc.
  Consolidated
    Statements of Operations
  Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2007


2006


2005Revenue

$
379,767,879


$
331,175,241


$
278,640,517ExpensesDirect expenses


341,108,774



297,073,863



255,120,324General and
    administrative(1)


19,223,846



19,675,497



21,702,824Foreign exchange loss (gain)


(124,329
)


30,361



(18,692
)Restructuring costs


275,000



892,688



1,672,485Depreciation


12,061,858



13,398,987



6,147,874Amortization of customer contracts


3,681,499



3,712,673



4,093,985Other (income) expenseInterest and loan fees


16,272,393



10,043,504



3,440,690Gain on extinguishment of debt






(1,233,001
)


(Gain) loss on sale of investments and assets


715,151



(726,086
)


(6,897,291
)Impairment of goodwill and customer contracts










608,096(Gain) loss on change in fair value of derivative liabilities


5,020,945



(1,363,936
)


Other expense


3,579,459







Loss from continuing operations before income tax expense
    (benefit)


(22,046,717
)


(10,329,309
)


(7,229,778
)Income tax expense (benefit)


856,576



(1,503,271
)


(2,001,727
)Loss from continuing operations


(22,903,293
)


(8,826,038
)


(5,228,051
)Loss from discontinued operations, net of income taxes of zero


(2,039,073
)


(5,762,800
)


(3,288,604
)Net loss for the period

$
(24,942,366
)

$
(14,588,838
)

$
(8,516,655
)Net loss per share from continuing operations:Basic

$
(1.20
)

$
(0.60
)

$
(0.36
)Diluted

$
(1.20
)

$
(0.60
)

$
(0.36
)Net loss per share:Basic

$
(1.30
)

$
(1.00
)

$
(0.59
)Diluted

$
(1.30
)

$
(1.00
)

$
(0.59
)Weighted average number of shares outstanding  basic


19,155,718



14,641,010



14,368,864Weighted average number of shares outstanding  diluted


19,155,718



14,641,010



14,368,864     (1)
    
    General and administrative includes stock-based compensation of
    $860,035, $91,214 and $1,387,133 for the years ended
    December 31, 2007, December 31, 2006, and
    December 31, 2005, respectively.   41




---



##### Table of Contents



180 Connect
    Inc.
  Consolidated
    Statements of Shareholders Equity
  AccumulatedCommon














OtherStock














Compre-Out-














hensivestanding


Common


Paid in


Treasury


Accumulated


IncomeShares


Stock


Capital


Stock


Deficit


(loss)


TotalBalances at December 25, 2004


14,296,622


$
1,430


$
86,878,322


$



$
(59,452,519
)

$
6,988,770


$
34,416,003Issuance on exercise of stock options for cash


408,847



41



728,291















728,332Share repurchase


(175,320
)


(18
)


(759,810
)






(398,219
)






(1,158,047
)Stock-based compensation










1,387,133















1,387,133Sale of investment






















(6,503,740
)


(6,503,740
)Net loss


















(8,516,655
)






(8,516,655
)Balances at December 31, 2005


14,530,149



1,453



88,233,936







(68,367,393
)


485,030



20,353,026Issuance on exercise of stock options for cash


155,827



16



259,696















259,712Issuance of warrants on long-term debt










3,286,967















3,286,967Stock-based compensation










91,214















91,214Net loss


















(14,588,838
)






(14,588,838
)Balances at December 31, 2006


14,685,976



1,469



91,871,813







(82,956,231
)


485,030



9,402,081Issuance on exercise of stock options for cash


46,467



4



77,507















77,511Issuance on exercise of warrants for cash


1,200,000



120



17,140















17,260Issuance on exercise of convertible debt


510,000



51



2,293,179















2,293,230Net proceeds from reverse merger


9,577,709



958



37,932,207















37,933,165Issuance costs attributed to reverse merger










(6,976,440
)














(6,976,440
)Stock-based compensation










860,035















860,035Issuance of warrants on long-term debt










2,803,296















2,803,296Issuance of warrants in support of Arrangement










800,000















800,000Acquisition of net assets of AVP










(7,099,514
)














(7,099,514
)Reclassification of the Public Warrants










7,516,810















7,516,810Purchase of 500,000 shares of treasury stock


(500,000
)


(50
)


50



(224,019
)










(224,019
)Foreign currency translation adjustment






















(250,007
)


(250,007
)Net loss


















(24,942,366
)






(24,942,366
)Balances at December 31, 2007


25,520,152


$
2,552


$
130,096,083


$
(224,019
)

$
(107,898,597
)

$
235,023


$
22,211,042   180 Connect
    Inc.
 Consolidated
    Statements of Comprehensive Loss
  Year Ended


Year Ended


Year EndedDecember 31, 2007


December 31, 2006


December 31, 2005Net loss

$
(24,942,366
)

$
(14,588,838
)

$
(8,516,655
)Other comprehensive income:Foreign currency translation


(250,007
)






Sale of investment










(6,503,740
)Comprehensive loss

$
(25,192,373
)

$
(14,588,838
)

$
(15,020,395
)    42




---



##### Table of Contents



180 Connect
    Inc.
  Consolidated
    Statements of Cash Flows
  Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2007


2006


2005Cash provided by (used in) the following activities:OperatingLoss from continuing operations

$
(22,903,293
)

$
(8,826,038
)

$
(5,228,051
)Add (deduct) items not affecting cash:Depreciation, amortization and impairment


15,743,357



17,111,660



10,849,955Non-cash interest expense


8,117,147



3,210,141



459,852Stock-based compensation


860,035



91,214



1,387,133Deferred income taxes






(1,561,031
)


(1,491,941
)Settlement of derivative liability


(2,766,573
)






Gain on extinguishment of debt






(1,233,001
)


(Gain) loss on change in fair value of derivative liabilities


5,020,945



(1,363,936
)


(Gain) loss on sale of investments and assets


715,151



(726,086
)


(6,897,291
)Other


(177,050
)


(291
)


3,816Changes in non-cash working capital balances related to
    operations:Accounts receivable


556,613



227,513



(6,464,271
)Inventory


(4,364,019
)


4,486,519



(2,412,713
)Other current assets


(1,222,516
)


338,030



(688,922
)Insurance premium deposits


(16,195
)


(6,209,037
)


1,126,896Other assets


(377,949
)


(37,035
)


(18,928
)Settlement of class action lawsuit










(7,973,623
)Settlement of certain wage practices










(1,217,639
)Restricted cash


4,333,892



247,366



(8,696,719
)Accounts payable and accrued liabilities


(9,660
)


2,375,179



14,320,065Operating cash flows from discontinued operations


(1,966,397
)


(1,842,778
)


(2,597,616
)Total cash provided by (used in) operating activities


1,543,488



6,288,389



(15,539,997
)InvestingPurchase of property, plant and equipment


(3,373,257
)


(2,742,727
)


(5,656,286
)Net proceeds from disposition of investments






1,327,693



10,968,388Proceeds from sale of property, plant and equipment










665,000Short-term investments










16,178,848Business acquisition










(429,603
)Total cash used in investing activities


(3,373,257
)


(1,415,034
)


21,726,347FinancingRepayment of capital lease obligations


(12,105,040
)


(15,010,698
)


(4,960,341
)Repayment of debt


(12,333,337
)


(7,350,000
)


(6,908,003
)Proceeds from share issuance


94,771



259,712



723,608Net proceeds from reverse merger


37,933,165







Issuance costs on reverse merger


(6,976,440
)






Redemption of convertible debt


(10,393,577
)






Increase (decrease) in borrowings under the Revolver credit
    facility


(101,160
)


(377,494
)


Issuance costs on long-term debt






(3,546,150
)


Net proceeds from refinancing of vehicles


3,470,714



2,127,542



Proceeds from issuance of convertible debt






10,686,101



Proceeds from refinancing of long-term debt






42,140,497



Extinguishment of long-term debt






(32,863,525
)


Repurchase of common stock


(224,019
)






Repurchase of shares










(1,158,047
)Settlement with selling shareholders of Mountain Center
    Inc.










(2,950,000
)Issuance costs paid on convertible debt






(1,388,985
)


Total cash provided by (used in) financing activities


(634,923
)


(5,323,000
)


(15,252,783
)Effect of exchange rates on cash and cash equivalents


(72,957
)


291



39,753Net increase (decrease) in cash and cash equivalents during the
    period


(2,537,649
)


(449,354
)


(9,026,680
)Cash and cash equivalents, beginning of period


2,904,098



3,353,452



12,380,132Cash and cash equivalents, end of period

$
366,449


$
2,904,098


$
3,353,452Supplemental cash flow information:Interest paid

$
8,779,371


$
6,091,487


$
2,485,035Income taxes paid

$
257,120


$
429,279


$
1,265,756    Supplemental disclosure of non-cash investing and financing
    transactions:
   43




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial Statements
  1.
    BASIS OF
    PRESENTATION    Nature of the
    Business
        Seasonality
   44




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2.
    SIGNIFICANT
    ACCOUNTING POLICIES  Principles of
    Consolidation
    Revenue
    Recognition
  ® (DIRECTV) No. 99-19:, 
      Allowance for
    Doubtful Accounts
    Cash and Cash
    Equivalents
    Inventory
  first-in,
 45




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Property,
    Plant and Equipment
    Vehicles

5 years, effective January 1, 2007; 4 years prior
    theretoTools

2 yearsEquipment

5 yearsComputer equipment and software

3 yearsOffice furniture and equipment

5 -7 yearsLeasehold improvements

Shorter of economic life or term of the lease   98-1:
  Deferred
    Financing Costs
    Insurance
    Premium Deposits
       46




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Goodwill
        Intangible
    Assets
    Impairment or
    Disposal of Long-Lived Assets
    Income
    Taxes
    Use of
    Estimates
   47




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Foreign
    Currency Translation
    Net Loss per
    Share
    Leases
    Stock-Based
    Compensation
    Fair Value of
    Derivative Financial Instruments
  (SFAS 133)
 48




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    EITF 00-19, (EITF 00-19)
  Change in
    Accounting Estimate
    3.
    IMPACT OF
    RECENTLY ISSUED ACCOUNTING STANDARDS  (SFAS 155)
  
    Permits fair value remeasurement for any hybrid financial
    instrument that contains an embedded derivative that otherwise
    would require bifurcation.
    Clarifies which interest-only strips and principal-only strips
    are not subject to the requirements of Statement 133.
    Establishes a requirement to evaluate interests in securitized
    financial assets to identify interests that are freestanding
    derivatives or that are hybrid financial instruments that
    contain an embedded derivative requiring bifurcation.
    Clarifies that concentrations of credit risk in the form of
    subordination are not embedded derivatives.
    Amends SFAS 140 Accounting for Transfers and
    Servicing of Financial Assets and Extinguishments of
    Liabilities to eliminate the prohibition on a qualifying
    special-purpose entity from holding a derivative financial
    instrument that pertains to a beneficial interest other than
    another derivative financial instrument.    (SFAS 157) FAS 157-2, Partial Deferral of the Effective Date of Statement 157
  (FIN 48)
 49




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    (SFAS 159)
  (FASB) SFAS No. 141(R),
  SFAS No. 160,
  SFAS No. 161
 50




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    4.
    FINANCIAL
    INSTRUMENTS        5.
    RESTRICTED
    CASH    (LOC)
    6.
    INVENTORY    December 31,


December 31,2007


2006Direct broadcast satellite equipment

$
15,704,295


$
12,633,189Materials and components


4,475,872



3,182,959$
20,180,167


$
15,816,148  51




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    7.
    PREPAID EXPENSES
    AND OTHER ASSETS    December 31,


December 31,2007


2006Insurance premium deposits

$
6,871,402


$
6,855,207Prepaid expenses


1,578,959



841,288Miscellaneous receivables


928,158



213,760$
9,378,519


$
7,910,255   8.
    PROPERTY, PLANT
    AND EQUIPMENT    December 31,


December 31,2007


2006CostVehicles

$
48,839,563


$
49,307,080Tools and equipment


4,788,606



4,629,918Computer equipment and software


4,932,910



4,115,997Office furniture and equipment


1,237,693



1,537,515Leasehold improvements


757,698



602,592$
60,556,470


$
60,193,102   December 31,


December 31,2007


2006Accumulated DepreciationVehicles

$
(18,569,648
)

$
(18,533,260
)Tools and equipment


(2,873,335
)


(2,754,619
)Computer equipment and software


(3,311,344
)


(2,738,050
)Office furniture and equipment


(499,926
)


(960,480
)Leasehold improvements


(395,467
)


(323,803
)$
(25,649,720
)

$
(25,310,212
)Net book value

$
34,906,750


$
34,882,890    52




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  9.
    GOODWILL AND
    CUSTOMER CONTRACTS    December 31,


December 31,2007


2006Goodwill

$
11,034,723


$
11,034,723   December 31,


December 31,2007


2006Customer Contracts:

$
36,498,372


$
36,498,372Accumulated amortization


(15,107,115
)


(11,425,616
)Net

$
21,391,257


$
25,072,756       2008


3,681,5032009


3,681,5032010


3,681,5032011


3,681,503Thereafter


6,665,245Total

$
21,391,257      53




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  10.
    OTHER
    ASSETS    December 31,


December 31,2007


2006Deferred financing costs (net of accumulated amortization of
    $3,518,681 and $1,590,620, respectively)

$
1,635,101


$
3,661,599Security deposits


701,677



666,002Other assets


142,061



57,149$
2,478,839


$
4,384,750   11.
    ACCOUNTS PAYABLE
    AND ACCRUED LIABILITIES    December 31,


December 31,2007


2006Equipment purchase liability

$
54,104,176


$
44,497,745Accrued insurance


5,088,317



9,556,789Trade accounts payable


6,392,663



8,461,228Accrued payroll and employee benefits


5,060,507



7,238,919Accrued costs for legal settlements (Note 25)


1,484,152



1,671,000Taxes payable


1,232,045



584,659Restructuring reserve (Note 19)


46,875



6,825Other accrued expenses


5,706,916



6,669,080$
79,115,651


$
78,686,245      54




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  12.
    LONG-TERM DEBT
    AND COMMON STOCK PURCHASE WARRANTS    December 31,


December 31,2007


2006(Restated)Revolving credit facility and over advance facility of up to
    $37,000,000 bearing interest at prime plus 3% to 5%, subject to
    a minimum interest rate of 10% to 11% with interest payable
    monthly. The revolving credit facility is subject to the
    Companys eligible trade receivables and inventory as per
    the debt agreement and collateralized by the Companys real
    and personal property. For the period of August 1, 2006 to
    July 31, 2007, The Company was able to draw in excess of
    the eligible trade receivables and inventory an over advance of
    up to $9,000,000 but not to exceed an aggregate amount of
    $37,000,000. At December 31, 2007, the interest rate of the
    revolving credit facility was 10.75% with an effective interest
    rate of 14.3%. At December 31, 2006, the interest rate for
    the revolving credit facility was 11.25% and the interest rate
    for the over advance facility was 13.25%, with an effective
    interest rate of 12.21%. Repayment is due on or before
    July 31, 2009. The credit facility may be borrowed, repaid,
    and reborrowed in accordance with the terms of the Security and
    Purchase Agreement. As of December 31, 2007 and
    December 31, 2006, the Revolving credit facility has
    $1,228,583 and $2,004,529 of unamortized discount attributed to
    warrants issued to the Companys lender

$
20,433,263


$
19,758,475Term note, bearing interest at prime plus 5%, subject to a
    minimum interest rate of 12% and interest is payable monthly. At
    December 31, 2007, the interest rate was 12.75% with an
    effective interest rate of 20.4%. At December 31, 2006, the
    interest rate was 13.25% with an effective interest rate of
    17.5%. Repayments of the term note commenced on February 1,
    2007 for $666,667 per month, with the final payment due on
    July 31, 2009. As of December 31, 2007 and
    December 31, 2006, the Term Note has $330,625 and $991,758
    of unamortized discount attributed to warrants issued to the
    Companys lender


7,336,038



19,008,242Total debt


27,769,301



38,766,717Less: current portion


(27,769,301
)


(26,502,096
)Total long-term debt

$



$
12,264,621    55




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (the
    Revolver).
      Issue EITF
    No. 00-19 (EITF
    No. 00-19) (APB Opinion 14)
        July
    Warrant
 56




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  August Warrant).
        FASB No. 95-22, (EITF 95-22) Form 8-K
  Previously Reported


As restatedDecember 31, 2006


December 31, 2006Current portion of long-term debt

$
5,967,674


$
26,502,096Long-term debt


32,799,043



12,264,621   EITF 95-22
 57




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    13.
    CONVERTIBLE
    DEBENTURES        14.
    WARRANTS AND
    DERIVATIVE FINANCIAL INSTRUMENTS  PIPE Warrants) EITF 00-19
    Public
    Warrants) No. 00-19,
  paid-in-capital Amendment Date)
 58




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
         59




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    EmbeddedDerivatives ofPIPE


Public


Convertible


StockWarrants


Warrants


Debt


Repurchase


TotalFair value at March 22, 2006

$
1,076,693


$



$
4,352,972


$



$
5,429,665Changes in fair value


(41,486
)






(1,322,450
)






(1,363,936
)Fair value at December 31, 2006

$
1,035,207


$



$
3,030,522


$



$
4,065,729Fair value, August 24, 2007

$



$
6,936,225


$



$



$
6,936,225Changes in fair value


(913,039
)


580,585



2,586,826



2,766,573



5,020,945Settlement of derivative liability














(2,766,573
)


(2,766,573
)Settled on conversion of debentures










(1,113,646
)






(1,113,646
)Settled on redemption of debentures










(4,503,702
)






(4,503,702
)Reclassification to
    paid-in-capital






(7,516,810
)










(7,516,810
)Fair value, December 31, 2007

$
122,168


$



$



$



$
122,168   15.
    LEASE
    COMMITMENTS  (a)
    Operating
    Leases      2008

$
4,059,2932009


2,732,3332010


1,970,9122011


1,039,8432012


277,900$
10,080,281     and/or
 60




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (b)
    Capital
    Leases    2008

$
12,827,9062009


10,888,6372010


5,884,0352011


1,284,5322012


276,411Future minimum lease payments


31,161,521Less: amount representing interest


2,287,112Present value of minimum lease payments


28,874,409Less: current portion


11,628,142$
17,246,267       2007

$
14,214,1262008


11,332,8052009


4,393,7302010


121,597Future minimum lease payments


30,062,258Less: amount representing interest


1,816,042Present value of minimum lease payments


28,246,216Less: current portion


13,033,104$
15,213,112     16.
    STOCK-BASED
    COMPENSATION AND CHANGES IN SHAREHOLDERS EQUITY  (LTIP)
 61




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
            3 Year


4 Year


Share3 Year


4 Year


Restricted


Restricted


AppreciationStock Options


Stock Options


Stock Units


Stock Units


RightsNumber granted


499,750



664,500



445,250



370,500



167,999Stock price on day of grant

$
3.25


$
3.25


$
3.25


$
3.25


$
4.01Exercise price

$
3.25


$
3.25










$
2.50Expected life in years


4.5



4.75



3



3.25



3.75Vesting period in years


3



4



3



4



4Interest free rate


4.25
%


4.25
%


4.25
%


4.25
%


4.44
%Volatility


61.0
%


61.0
%


61.0
%


61.0
%


60.5
%Forfeiture rate


18.0
%


18.0
%


18.0
%


18.0
%


18.0
%Dividend


Zero



Zero



Zero



Zero



Zero   (FIN 44)
 62




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Year Ended December 31, 2007


Year Ended December 31, 2006


Year Ended December 31, 2005Weighted





Weighted





WeightedNumber of


Average


Number of


Average


Number of


AverageOptions


Exercise Price


Options


Exercise Price


Options


Exercise PriceOutstanding, beginning of period


349,946


$
2.92



856,000


$
2.18



1,292,609


$
1.98Granted


2,147,999


$
1.96















Exercised


(46,467
)

$
1.67



(155,828
)

$
1.67



(408,847
)

$
1.78Cancelled


(74,828
)

$
1.67



(350,226
)

$
1.67



(27,762
)

$
1.67Outstanding, end of period


2,376,650


$
2.10



349,946


$
2.92



856,000


$
2.18Options exercisable, end of period


268,651


$
3.29



349,946


$
2.92



856,000


$
2.18     Options Outstanding and ExercisableWeighted AverageRemainingNumber


Contractual Life


Weighted AverageSecurity

Of Shares


(Years)


Exercise PriceRestricted stock units under LTIP


801,750



3.67



Stock options granted during Cable Play Acquisition


268,651



2.86


$
3.29Share appreciation rights


167,999



3.92


$
2.50Stock options granted under LTIP


1,138,250



6.67


$
3.25      63




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        17.
    RELATED-PARTY
    TRANSACTIONS    18.
    RESTRUCTURING
    COSTS    Reserve


Restructuring





ReserveDecember 31,


Costs Incurred in


Paid During


December 31,2006


2007


2007


2007Rent

$



$
275,000


$
228,125


$
46,875Moving expenses


500







500



Other


6,325







6,325



Total restructuring

$
6,825


$
275,000


$
234,950


$
46,875       Reserve


Restructuring





ReserveDecember 31,


Costs Incurred in


Paid During


December 31,2005


2006


2006


2006Severance

$
549,987


$
560,173


$
1,110,160


$
Moving expenses






185,261



184,761



500Rent expense


27,450







27,450



Other






147,254



140,929



6,325Total restructuring

$
577,437


$
892,688


$
1,463,300


$
6,825    64




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Reserve


Restructuring





ReserveDecember 31,


Costs Incurred in


Paid During


December 31,2004


2005


2005


2005Severance

$



$
1,439,339


$
889,352


$
549,987Moving expenses






136,341



136,341



Rent expense






32,805



5,355



27,450Other






64,000



64,000



Total restructuring

$



$
1,672,485


$
1,095,048


$
577,437     19.
    INCOME
    TAXES    Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2007


2006


2005Tax benefit on loss from continuing operations at the U.S.
    statutory rate of 35% for 2007, Canadian statutory rate for of
    32.5% for 2006 and 33.75% for 2005

$
(7,716,351
)

$
(3,348,630
)

$
(2,484,253
)State tax expense/(benefit)


298,493







Nondeductible items


121,996



518,086



523,246Foreign rate differences


(1,148,240
)


(1,080,076
)


(688,308
)Nontaxable portion of gain from sale of investment or loss from
    discontinued operations


(2,039,073
)


(216,877
)


(1,100,588
)Deferred tax asset valuation allowance


11,441,917



2,624,226



1,748,176FIN 48 liability


191,580







Other


(293,746
)






Total Income tax expense/ (benefit)

$
856,576


$
(1,503,271
)

$
(2,001,727
)Allocation of income tax expense /(benefit):Current income tax expense/ (benefit)

$
664,997


$
57,760


$
(509,786
)Deferred income tax expense/ (benefit)


191,579



(1,561,031
)


(1,491,941
)Income tax expense/ (benefit)

$
856,576


$
(1,503,271
)

$
(2,001,727
)      65




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      December 31,


December 31,2007


2006Deferred tax assetsLoss carryforwards

$
23,779,903


$
19,616,110Goodwill and customer contracts


10,762,763



6,703,610Nondeductible reserves


3,776,315



6,737,751Tax cost of venture investments in excess of carrying value






94,517Undeducted share issuance costs


942,907



754,832Derivative Financial Instruments






2,226,939Other


35,097



Subtotal

$
39,296,985


$
36,133,760Valuation allowance


(36,557,348
)


(25,115,431
)Deferred tax assets

$
2,739,637


$
11,018,328Deferred tax liabilitiesIntangibles

$



$
6,819,573Capital assets


2,217,343



2,558,358Original issue discount interest


522,294



Convertible Debenture






1,640,397Deferred tax liabilities

$
2,739,637


$
11,018,328          66




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Balance as at January 1, 2007

$
Increase related to current year tax positions


387,212Decrease due to change in tax position


(195,632
)Gross balance as at December 31, 2007

$
191,580         2007


2006


2005Domestic

$
(22,781,005
)

$
(8,641,077
)

$
(12,891,701
)Foreign


734,288



(1,688,232
)


5,661,923Total

$
(22,046,717
)

$
(10,329,309
)

$
(7,229,778
)   non-U.S. operations
 67




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  20.
    LOSS PER
    SHARE    Year Ended


Year Ended


Year EndedDecember 31, 2007


December 31, 2006


December 31, 2005Numerator:Loss from continuing operations

$
(22,903,293
)

$
(8,826,038
)

$
(5,228,051
)Loss from discontinued operations


(2,039,073
)


(5,762,800
)


(3,288,604
)Net loss for the period

$
(24,942,366
)

$
(14,588,838
)

$
(8,516,655
)Denominator:Denominator for basic income (loss) per share 
    weighted average number of shares


19,155,718



14,641,010



14,368,864Denominator for diluted income (loss) per share 
    adjusted weighted average shares and assumed conversion


19,155,718



14,641,010



14,368,864Income (loss) per share data:Basic and diluted from continuing operations

$
(1.20
)

$
(0.60
)

$
(0.36
)Basic and diluted from discontinued operations

$
(0.10
)

$
(0.40
)

$
(0.23
)Basic, net

$
(1.30
)

$
(1.00
)

$
(0.59
)      68




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Number of SharesTotal outstanding shares as of December 31, 2007


25,520,152Potentially Dilutive SecuritiesPIPE Warrants


942,060Laurus Warrants


850,000Magnetar Warrants


266,393Employee stock options


1,406,901Employee restricted stock units


801,750Share appreciation rights


167,999Public Warrants and Unit Options


19,350,000Maximum Potential Diluted Shares Outstanding


49,305,255   21.
    (GAIN) LOSS ON
    SALE OF INVESTMENTS AND ASSETS    Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2007


2006


2005Gain from investments

$



$
(1,320,193
)

$
(6,522,324
)(Gain) loss on disposal of assets


253,410



297,960



(374,967
)Refinancing of vehicles under capital lease


461,741



296,147



$
715,151


$
(726,086
)

$
(6,897,291
)       (Control
    F-1)
  (Guest-Tek)
 69




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  22.
    OTHER
    EXPENSE    23.
    DISCONTINUED
    OPERATIONS      Consolidated
    statements of operations from discontinued operations is as
    follows:
  Year Ended


Year Ended


Year EndedDecember 31, 2007


December 31, 2006


December 31, 2005Revenue from discontinued operations

$
1,622,817


$
5,509,336


$
4,123,005Impairment of goodwill and customer Contracts

$



$
490,403


$
305,575Loss from discontinued operations, net of income taxes of zero

$
(2,039,073
)

$
(5,762,800
)

$
(3,288,604
)Diluted loss per share from discontinued operations

$
(0.10
)

$
(0.40
)

$
(0.23
)     24.
    CONTINGENCIES   70




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
            25.
    COMPARATIVE
    CONSOLIDATED FINANCIAL STATEMENTS    26.
    SEGMENT
    INFORMATION   71




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Geographic
    information
  December 31,


December 31,2007


2006Property plant and equipment, goodwill and customer
    contracts, netCanada

$
1,441,250


$
1,468,494United States


65,891,480



69,521,875Total

$
67,332,730


$
70,990,369   Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2007


2006


2005RevenueCanada

$
14,703,141


$
9,161,281


$
6,737,941United States


365,064,738



322,013,960



271,902,576Total

$
379,767,879


$
331,175,241


$
278,640,517       27.
    SELECTED
    CONSOLIDATED QUARTERLY FINANCIAL INFORMATION
    (UNAUDITED)   72




---



##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    For the Year
    2007
  QTR 1


QTR 2


QTR 3


QTR 4


2007Revenue

$
91,569,789


$
86,811,664


$
101,819,731


$
99,566,695


$
379,767,879Direct expenses


82,942,171



78,420,072



89,111,547



90,634,984



341,108,774Direct contribution
    margin(1)


8,627,618



8,391,592



12,708,184



8,931,711



38,659,105General and
    administrative(2)


5,037,953



4,709,882



4,281,328



5,194,683



19,223,846Foreign exchange loss (gain)


11,138



(51,820
)


(72,760
)


(10,887
)


(124,329
)Restructuring costs


275,000















275,000Depreciation


2,716,533



2,758,895



3,048,805



3,537,625



12,061,858Amortization of customer contracts


920,376



920,370



920,376



920,377



3,681,499Interest and loan fees


2,976,134



3,234,758



7,800,981



2,260,520



16,272,393(Gain) loss on sale of investments and assets


71,778



427,442



(7,336
)


223,267



715,151(Gain) loss on change in fair value of derivative liabilities


2,786,391



1,903,270



887,062



(555,778
)


5,020,945Other (income) expense










4,379,459



(800,000
)


3,579,459Loss from continuing operations before income tax


(6,167,685
)


(5,511,205
)


(8,529,731
)


(1,838,096
)


(22,046,717
)Income tax expense


74,000



178,444



130,583



473,549



856,576Loss from continuing operations


(6,241,685
)


(5,689,649
)


(8,660,314
)


(2,311,645
)


(22,903,293
)Gain (loss) from discontinued operations


252,618



37,706



(15,648
)


(2,313,749
)


(2,039,073
)Net loss for the period

$
(5,989,067
)

$
(5,651,943
)

$
(8,675,962
)

$
(4,625,394
)

$
(24,942,366
)Net loss per share from continuing
    operations:(3)Basic and diluted

$
(0.42
)

$
(0.35
)

$
(0.43
)

$
(0.09
)

$
(1.20
)Net loss per
    share:(3)Basic and diluted

$
(0.41
)

$
(0.35
)

$
(0.43
)

$
(0.18
)

$
(1.30
)     (1)
    
    DCM consists of revenue less direct expenses and excludes
    general and administrative expense, foreign exchange (gain)
    loss, restructuring costs, stock-based compensation, (gain) loss
    on sale of investments and assets, depreciation, amortization of
    customer contracts, interest and loan fees, (gain) loss on
    change in fair market value of derivative liabilities, other
    expense, and income tax expense. DCM is a non-GAAP measure. See
    Non-GAAP Measures. The comparative GAAP measure
    is loss from continuing operations. See Non
    GAAP Measures.(2)
    
    General and administrative includes stock-based compensation of
    $0, $0, $227,019, $633,016 for the three months ended
    March 31, 2007, June 30, 2007, September 30, 2007
    and December 31, 2007, respectively, and $860,035 for the
    year ended December 31, 2007.(3)
    
    Net loss per share is computed independently for each of the
    quarters presented and the summation of quarterly amounts does
    not necessarily equal the total net loss per share reported for
    the year. 73




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##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   For the Year
    2006
  QTR 1


QTR 2


QTR 3


QTR 4


2006Revenue

$
73,290,601


$
74,822,784


$
88,831,021


$
94,230,835


$
331,175,241Direct expenses


68,602,789



67,581,220



77,769,243



83,120,611



297,073,863Direct contribution
    margin(1)


4,687,812



7,241,564



11,061,778



11,110,224



34,101,378General and
    administrative(2)


4,262,715



5,049,115



4,712,862



5,650,805



19,675,497Foreign exchange loss (gain)


13,805



(10,303
)


(469
)


27,328



30,361Restructuring costs


392,879











499,809



892,688Depreciation


3,186,359



3,355,460



3,397,032



3,460,136



13,398,987Amortization of customer contracts


920,376



939,077



929,727



923,493



3,712,673Interest and loan fees


1,775,580



2,251,375



2,898,538



3,118,011



10,043,504Gain on extinguishment of debt










(1,233,001
)






(1,233,001
)(Gain) loss on sale of investments and assets


(1,336,454
)


86,291



135,696



388,381



(726,086
)(Gain) loss on change in fair value of derivative liabilities


(886,393
)


2,051,968



(4,599,330
)


2,069,819



(1,363,936
)Gain (loss) from continuing operations before income tax


(3,641,055
)


(6,481,419
)


4,820,723



(5,027,558
)


(10,329,309
)Income tax expense (benefit)


72,800



(34,000
)


(96,965
)


(1,445,106
)


(1,503,271
)Gain (loss) from continuing operations


(3,713,855
)


(6,447,419
)


4,917,688



(3,582,452
)


(8,826,038
)Loss from discontinued operations


(610,825
)


(735,725
)


(439,551
)


(3,976,699
)


(5,762,800
)Net loss for the period

$
(4,324,680
)

$
(7,183,144
)

$
4,478,137


$
(7,559,151
)

$
(14,588,838
)Net income (loss) per share from continuing
    operations:(3)Basic

$
(0.26
)

$
(0.44
)

$
0.33


$
(0.24
)

$
(0.60
)Diluted

$
(0.26
)

$
(0.44
)

$
0.32


$
(0.24
)

$
(0.60
)Net income (loss) per
    share:(3)Basic

$
(0.30
)

$
(0.49
)

$
0.30


$
(0.51
)

$
(1.00
)Diluted

$
(0.30
)

$
(0.49
)

$
0.29


$
(0.51
)

$
(1.00
)     (1)
    
    DCM consists of revenue less direct expenses and excludes
    general and administrative expense, foreign exchange (gain)
    loss, restructuring costs, non-cash stock-based compensation,
    (gain) loss on sale of investments and assets, depreciation,
    amortization of customer contracts, interest and loan fees,
    (gain) loss on fair market value of derivatives, gain on
    extinguishment of debt, and income tax expense (benefit). DCM is
    a non-GAAP measure. See Non-GAAP Measures. The
    comparative GAAP measure is loss from continuing operations.(2)
    
    General and administrative includes stock-based compensation of
    $91,214, $0, $0, $0 for the three months ended March 31,
    2006, June 30, 2006, September 30, 2006 and
    December 31, 2006, respectively, and $91,214 for the year
    ended December 31, 2006.(3)
    
    Net income (loss) per share is computed independently for each
    of the quarters presented and the summation of quarterly amounts
    does not necessarily equal the total net loss per share reported
    for the year.   74




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##### Table of Contents



180 Connect
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          28.
    SUBSEQUENT
    EVENTS       75




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##### Table of Contents



SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS
  Years ended
    December 31, 2007, 2006 and 2005
  Column A

Column B


Column C


Column D


Column EAdditionsBalance at


charged tobeginning


costs and





Balance atof year


expenses


Deductions


end of yearAllowance for Doubtful Accounts2005

$
1,883,746


$
3,649,981


$
(4,366,417
)(a)

$
1,167,3102006


1,167,310



5,029,188



(3,689,861
)(a)


2,506,6372007


2,506,637



5,671,702



(4,428,139
)(a)


3,750,200Valuation Allowance for Deferred Tax Assets:2005

$
17,887,000


$
4,206,355


$



$
22,093,3552006


22,093,355



3,022,076







25,115,4312007


25,115,431



11,441,917







36,557,348     (a)
    
    Deductions represent receivables that were charged off to the
    allowance during the year. 76




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##### Table of Contents



Item 9.
    Changes
    In and Disagreements With Accountants and Accounting and
    Financial Disclosures  Regulation S-K.
  Item 9A(T).
    Controls
    and Procedures  Disclosure
    Controls and Procedures
    Managements
    Report on Internal Control over Financial
    Reporting
  Rule 13a-15(f)
    Internal Control-Integrated Framework, No. 95-22, (EITF 95-22).
    Remediation
    Plan Related to 2007
    10-K
    Material Weakness
   77




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##### Table of Contents



Change in
    Internal Control over Financial Reporting
   Part III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K
  Item 11.
    Executive
    Compensation  Regulation S-K Form 10-K
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Shareholder Matters  Form 10-K
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence  Form 10-K
  Item 14.
    Principal
    Accountant Fees and Services  Form 10-K
 78




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##### Table of Contents



Part IV  Item 15.
    Exhibits
    and Financial Statement Schedules    1.
    Financial Statements.  The following
    consolidated financial statements of 180 Connect Inc. and
    subsidiaries are included in Item 8:  Consolidated Balance Sheets as of December 31, 2007 and 2006Consolidated Statements of Operations for the Years Ended
    December 31, 2007, 2006 and 2005Consolidated Statements of Shareholders Equity and
    Comprehensive Loss for the Years Ended December 31, 2007,
    2006 and 2005Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2007, 2006 and 2005Notes to Consolidated Financial StatementsReports of Independent Registered Public Accounting Firms  2.
    Financial Statement Schedules.  The following
    consolidated financial statement schedule of 180 Connect Inc. is
    included in Item 8: Schedule II  Valuation and
    Qualifying Accounts3.
    Exhibits.  The Exhibits on the accompanying
    Index to Exhibits are filed as part of, or incorporated by
    reference into, this Annual Report on
    Form 10-K. 79




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##### Table of Contents



SIGNATURES      By:
    /s/  Peter
    Giacalone     Date: March 31,
    2008
    Signature

Title

Date/s/  Peter
    GiacalonePeter
    Giacalone

Chief Executive Officer and Director

March 31, 2008/s/  M.
    Brian McCarthyM.
    Brian McCarthy

Chairman of the Board of Directors

March 31, 2008/s/  David
    HallmenDavid
    Hallmen

Director

March 31,2008/s/  Byron
    OsingByron
    Osing

Director

March 31, 2008/s/  Jiri
    ModryJiri
    Modry

Director

March 31, 2008/s/  Howard
    S. BalterHoward
    S. Balter

Director

March 31, 2008/s/  Ilan
    SlaskyIlan
    Slasky

Director

March 31, 2008/s/  Lawrence
    AskowitzLawrence
    Askowitz

Director

March 31, 2008/s/  Thomas
    CaloThomas
    Calo

Director

March 31, 2008  80




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber2
.1

Arrangement Agreement, dated March 13, 2007, by and among
    180 Connect Exchangeco Inc. (formerly 6732097 Canada Inc.),
    Ad.Venture Partners, Inc. and 180 Connect Inc. (a Canadian
    corporation)(1)2
.2

Plan of Arrangement, dated March 13, 2007, by and among 180
    Connect Exchangeco Inc. (formerly 6732097 Canada Inc.),
    Ad.Venture Partners, Inc. and 180 Connect Inc. (a Canadian
    corporation)(1)2
.3

Amendment No. 1, dated as of July 2, 2007, to the
    Arrangement Agreement, dated March 13, 2007, by and among
    180 Connect Exchangeco Inc. (formerly 6732097 Canada Inc.),
    Ad.Venture Partners, Inc. and 180 Connect Inc. (a Canadian
    corporation)(3)2
.4

Amendment No. 2, dated as of August 6, 2007, to the
    Arrangement Agreement, dated March 13, 2007, by and among
    180 Connect Exchangeco Inc. (formerly 6732097 Canada Inc.),
    Ad.Venture Partners, Inc. and 180 Connect Inc. (a Canadian
    corporation)(3)2
.5

Voting and Exchange Trust Agreement, dated as of
    March 13, 2007, by and among 180 Connect Exchangeco Inc.
    (formerly 6732097 Canada Inc.), Ad.Venture Partners, Inc. and
    Valiant Trust Company(1)2
.6

Support Agreement, dated as of March 13, 2007, by and among
    Ad.Venture Partners, Inc., 1305699 Alberta ULC and 6732097
    Canada Inc.(1)3
.1

Amended and Restated Certificate of Incorporation of 180 Connect
    Inc.(2)3
.2

By-laws of 180 Connect Inc.(2)4
.1

Specimen Unit Certificate(2)4
.2

Specimen Common Stock Certificate(2)4
.3

Specimen Warrant Certificate(2)4
.4

Warrant Agreement by and among Continental Stock
    Transfer & Trust Company and Ad.Venture Partners,
    Inc.(2)4
.5

Form of Unit Purchase Option granted to Wedbush Morgan
    Securities Inc.(2)9
.1

Form of Voting Agreement entered into as of March 13, 2007
    by and between Ad.Venture Partners, Inc. and each of
    Messrs. Giacalone, Hallmen, McCarthy, Osing, Roszak and
    Simunovic(1)9
.2

Form of Parent Voting Agreement entered into as of
    March 13, 2007 by and between 180 Connect Inc. (a Canadian
    corporation) and each of Messrs. Balter, Slasky, Askowitz
    and Kalish(1)10
.1

Letter Agreement, dated as of April 12, 2005, by and
    between Howard S. Balter and Ad.Venture Partners, Inc.(2)10
.2

Letter Agreement, dated as of April 12, 2005, by and
    between Ilan M. Slasky and Ad.Venture Partners, Inc.(2)10
.3

Letter agreement between Wedbush Morgan Securities Inc. and
    Howard S. Balter(2)10
.4

Letter Agreement between Wedbush Morgan Securities Inc. and Ilan
    M. Slasky(2)10
.5

Warrant Purchase Agreement among Wedbush Morgan Securities, Inc.
    and each of Howard S. Balter and Ilan M. Slasky(2)10
.6

Form of Affiliate Agreement entered into as of March 13,
    2007 by each of Messrs. Giacalone, Hallmen, McCarthy,
    Osing, Roszak and Simunovic in favor and for the benefit of
    Ad.Venture Partners, Inc.(1)10
.7

Securities Purchase Agreement, dated March 21, 2006, by and
    among 180 Connect Inc. (a Canadian corporation) and Midsummer
    Investment Ltd., Radcliffe SPC, Ltd., and CAMOFI Master LDC(3)10
.8

Registration Rights Agreement, dated March 21, 2006, by and
    among 180 Connect Inc. (a Canadian corporation) and Midsummer
    Investment Ltd., Radcliffe SPC, Ltd., and CAMOFI Master LDC(3) 81




---



##### Table of Contents



ExhibitNumber10
.9

Replacement Common Stock Purchase Warrant, dated August 24,
    2007, issued to Midsummer Investment Ltd. to purchase
    528,948 shares of common stock of the Company(4)10
.10

Replacement Common Stock Purchase Warrant, dated August 24,
    2007, issued to Radcliffe SPC, Ltd. to purchase
    206,556 shares of common stock of the Company(4)10
.11

Replacement Common Stock Purchase Warrant, dated August 24,
    2007, issued to CAMOFI Master LDC to purchase
    206,556 shares of common stock of the Company(4)10
.12

Replacement 9.33% Convertible Debenture, dated
    August 24, 2007, issued to Midsummer Investment Ltd. by the
    Company in the amount of $3,975,248.48(4)10
.13

Replacement 9.33% Convertible Debenture, dated
    August 24, 2007, issued to Radcliffe SPC, Ltd. by the
    Company in the amount of $2,343,033.56(4)10
.14

Replacement 9.33% Convertible Debenture, dated
    August 24, 2007, issued to CAMOFI Master LDC by the Company
    in the amount of $2,343,033.56(4)10
.15

Amended and Restated Registration Rights Agreement, dated as of
    August 24, 2007, by and among 180 Connect, Inc. and each of
    the Insiders listed therein(4)10
.16

Security and Purchase Agreement, dated July 31, 2006, by
    and among Laurus Master Fund, Ltd., 180 Connect Inc. (a Nevada
    corporation), Mountain Center, Inc., JJ&V Communications,
    Inc., Tumbleweed HS Inc., Piedmont Telecommunications Inc., 180
    Digital Interiors, Inc., HD Complete, Inc., Ironwood
    Communications Inc. and Queens Cable Contractors, Inc.(3)10
.17

Secured Non-Convertible Revolving Note, dated July 31,
    2006, in the principal amount of $37,000,000, by and among 180
    Connect Inc. (a Nevada corporation), Mountain Center, Inc.,
    JJ&V Communications, Inc., Tumbleweed HS Inc., Piedmont
    Telecommunications Inc., 180 Digital Interiors, Inc., HD
    Complete, Inc., Ironwood Communications Inc. and Queens Cable
    Contractors, Inc.(3)10
.18

Secured Non-Convertible Revolving Term Note, dated July 31,
    2006, in the principal amount of $20,000,000, by and among 180
    Connect Inc. (a Nevada corporation), Mountain Center, Inc.,
    JJ&V Communications, Inc., Tumbleweed HS Inc., Piedmont
    Telecommunications Inc., 180 Digital Interiors, Inc., HD
    Complete, Inc., Ironwood Communications Inc. and Queens Cable
    Contractors, Inc.(3)10
.19

Overadvance Letter, dated July 31, 2006, by Laurus Master
    Fund, Ltd., agreed and accepted by 180 Connect Inc. (a Nevada
    corporation), Mountain Center, Inc., JJ&V Communications,
    Inc., Tumbleweed HS Inc., Piedmont Telecommunications Inc., 180
    Digital Interiors, Inc., HD Complete, Inc., Ironwood
    Communications Inc. and Queens Cable Contractors, Inc.(3)10
.20

Canadian Guaranty of 180 Connect Inc. (a Canadian corporation)
    dated July 31, 2006(3)10
.21

Guaranty of Wirecomm America, Inc. dated July 31, 2006(3)10
.22

Stock Pledge Agreement, dated July 31, 2006, by and among
    Laurus Master Fund, Ltd., 180 Connect Inc. (a Nevada
    corporation) and Wirecomm America, Inc.(3)10
.23

Share Pledge Agreement, dated July 31, 2006, by and among
    Laurus Master Fund, Ltd., 180 Connect Inc. (a Canadian
    corporation) and Wirecomm Systems Inc.(3)10
.24

Master Security Agreement, dated July 31, 2006, by and
    between Wirecomm Systems Inc. and Laurus Master Fund, Ltd.(3)10
.25

Canadian Master Security Agreement, dated July 31, 2006, by
    and among Wirecomm Systems Inc., 180 Connect Inc. (a Canadian
    corporation) and Laurus Master Fund, Ltd.(3)10
.26

Amended and Restated Secured Non-Convertible Revolving Note,
    dated July 2, 2007, to the Secured Non-Convertible
    Revolving Note, dated July 31, 2006, by and among Laurus
    Master Fund, Ltd., 180 Connect Inc. (a Nevada corporation),
    Mountain Center, Inc., JJ&V Communications, Inc.,
    Tumbleweed HS Inc., Piedmont Telecommunications Inc., 180
    Digital Interiors, Inc., HD Complete, Inc., Ironwood
    Communications Inc. and Queens Cable Contractors, Inc.(3)10
.27

Common Stock Purchase Warrant, dated July 31, 2006, issued
    to Laurus Master Fund, Ltd. to purchase 2,000,000 shares of
    180 Connect Inc.s (a Canadian corporation) common stock(3) 82




---



##### Table of Contents



ExhibitNumber10
.28

Amended and Restated Common Stock Purchase Warrant, dated
    July 2, 2007, issued to Creative Vistas Inc. to purchase up
    to 450,000 shares of the Companys common stock(*)10
.29

Amended and Restated Common Stock Purchase Warrant, dated
    July 2, 2007, issued to Laurus Master Fund, Ltd. to
    purchase up to 150,000 shares of the Companys common
    stock(*)10
.30

Amended and Restated Warrant Certificate, dated August 24,
    2007, issued to Laurus Master Fund, Ltd. to purchase up to
    250,000 shares of the Companys common stock(*)10
.31

Letter Agreement, dated July 2, 2007, by and among 180
    Connect Inc. (a Canadian corporation), Howard S. Balter and Ilan
    M. Slasky(3)10
.32

Reaffirmation and Ratification Agreement, dated July 2,
    2007, by and among 180 Connect Inc. (a Nevada corporation),
    Mountain Center, Inc., JJ&V Communications, Inc.,
    Tumbleweed HS Inc., Piedmont Telecommunications Inc., 180
    Digital Interiors, Inc., HD Complete, Inc., Ironwood
    Communications Inc. and Queens Cable Contractors, Inc., 180
    Connect Inc. (a Canadian corporation), Wirecomm Systems Inc. and
    Wirecomm America Inc.(3)10
.33

Amendment Agreement, dated July 2, 2007, by and among
    Laurus Master Fund, Ltd., 180 Connect Inc. (a Nevada
    corporation), Mountain Center, Inc., JJ&V Communications,
    Inc., Tumbleweed HS Inc., Piedmont Telecommunications Inc., 180
    Digital Interiors, Inc., HD Complete, Inc., Ironwood
    Communications Inc. and Queens Cable Contractors, Inc.(3)10
.34

Common Stock Purchase Warrant, dated July 2, 2007, by and
    between Laurus Master Fund, Ltd. and the Company(3)10
.35

Tri-Party Letter Agreement, dated July 10, 2007, by and
    among Laurus Master Fund, Ltd., 180 Connect Inc. (a Canadian
    corporation), Howard S. Balter and Ilan M. Slasky(3)10
.36

Home Services Provider Agreement, dated May 1, 2007,
    between DirecTV, Inc., a California corporation and 180 Connect
    Inc.(*)(^)10
.37

Home Services Provider Agreement, dated May 1, 2007,
    between DirecTV, Inc., a California corporation and Mountain
    Center, Inc.(*)(^)10
.38

Form of Stock Appreciation Rights Agreement(3)10
.39

Executive Employment Agreement, dated August 1, 2007, by
    and between Mark Burel and 180 Connect Inc. (a Nevada
    corporation)(3)10
.40

Executive Employment Agreement, dated December 1, 2006, by
    and between Steven Westberg and 180 Connect Inc. (a Nevada
    corporation)(3)10
.41

Executive Employment Agreement, dated July 1, 2006, by and
    between Peter Giacalone and 180 Connect Inc. (a Nevada
    corporation)(3)10
.42

Amended Director Employment Agreement, dated September 30,
    2006, by and between M. Brian McCarthy and 180 Connect Inc. (a
    Nevada corporation)(3)10
.43

Letter Agreement, dated August 3, 2007, by and between M.
    Brian McCarthy and 180 Connect Inc. (a Nevada corporation)(3)10
.44

Executive Employment Agreement, dated October 17, 2007, by
    and between Kyle Hall and 180 Connect Inc. (a Nevada
    corporation(*)10
.45

Form of Stock Option Agreement(5)10
.46

Form of Restricted Stock Units Agreement(5)10
.47

2007 Long-Term Incentive Plan(5)10
.48

Warrant to Purchase Common Stock, dated November 9, 2007,
    issued to Magnetar Capital Master Fund, Ltd. to purchase up to
    356,952 shares of the Companys common stock(*)10
.49

Amended and Restated 180 Connect Inc. Equity Plan for
    Non-Employee Directors(*)10
.50

Unit Purchase Option Clarification Agreement, dated as of
    September 30, 2007, by and between 180 Connect Inc. and
    Wedbush Morgan Securities Inc.(*)10
.51

Warrant Clarification Agreement, dated as of September 30,
    2007, by and between 180 Connect Inc. and Continental Stock
    Transfer & Trust Company(*) 83




---



##### Table of Contents



ExhibitNumber10
.52

Form of Note issued by Ad.Venture Partners, Inc. to each of
    Howard S. Balter and Ilan M. Slasky(6)21
.1

Subsidiaries of 180 Connect Inc.23
.1

Consent of Independent Registered Public Accounting Firm(*)23
.2

Consent of Independent Registered Public Accounting Firm(*)31
.1

Section 302 Certification from Peter Giacalone(*)31
.2

Section 302 Certification from Steven Westberg(*)32
.1

Section 906 Certification from Peter Giacalone and Steven
    Westberg(*)     (1)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    (SEC File
    No. 000-51456)
    filed with the Commission on March 15, 2007.(2)
    
    Incorporated by reference to the Companys Registration
    Statement on
    Form S-1
    (SEC File
    No. 333-124141)
    filed with the Commission on April 18, 2005, as amended on
    May 27, 2005, July 1, 2005, August 8, 2005,
    August 17, 2005, and August 24, 2005.(3)
    
    Incorporated by reference to the Companys Registration
    Statement on
    Form S-4
    (Sec File
    No. 333-142319)
    filed with the Commission on April 24, 2007, as amended on
    June 11, 2007, July 11, 2007, July 12, 2007,
    August 3, 2007 and August 9, 2007.(4)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    (SEC File
    No. 001-33670)
    filed with the Commission on August 30, 2007.(5)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    (SEC File
    No. 001-33670)
    filed with the Commission on September 10, 2007.(6)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    (SEC File
    No. 000-51456)
    filed with the Commission on January 30, 2007.(*)
    
    Filed herewith(^)
    
    Certain provisions of this exhibit have been omitted and filed
    separately with the Commission pursuant to an application for
    confidential treatment under
    Rule 24b-2
    promulgated under the Securities Exchange Act of 1934, as
    amended. 84