UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________  FORM
10-K/A (AMENDMENT NO.1)  [X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,
2007  [
   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURUTIES EXCHANGE ACT OF 1934 For the transition period from _____to
______  Commission File No. 000-51202  CORDIA CORPORATION (Exact
name of registrant as specified in its charter)  Nevada
                                          11-2917728 (State of
Incorporation)
                            (I.R.S.
Employment Identification No.)  13275
W. Colonial Drive Winter Garden, Florida
                                       34787 (Address
of principal executive offices)
                                            (Zip
Code)  Registrants telephone number, including
area code: (407) 313-7000 __________________  Securities registered pursuant to Section 12(b) of the
Act: None  Securities registered pursuant to Section 12(g) of the
Act: Common Stock, Par Value $0.001 per share   Indicate by check mark if the registrant is
a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [   ] YES
    [X] NO  Indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. [  ] YES     [X]
NO  Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. [ X ] YES     [
  ] NO   Indicate by
check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrants knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
       [   ]  Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. . See the definitions of large
accelerated filer, accelerated filer, and smaller reporting company in Rule
12b-2 of the Exchange Act.  Large Accelerated Filer [   ]
   Accelerated Filer [   ]    Smaller
Reporting Company [X]    Non-Accelerated Filer [
  ]  Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). [   ] YES     [
X ] NO  At June 29, 2007, the aggregate market value of the
issuers common stock held by non-affiliates was $2,146,524 (based upon the
price at which the common stock was sold on such date)  At March 21, 2008, 6,327,388 shares of the registrants
Common Stock were outstanding.  Documents incorporated by reference:  1. Portions of the registrants Proxy
Statement prepared in connection with the 2008 Annual Meeting of Shareholders
(Part III, Items 10 - 14)


Explanatory Note  Cordia Corporation (the Company) is
amending its Annual Report on Form 10-K for the year ended December 31,
2007 (the Original 10-K) to restate its consolidated financial statements as
of and for the year ended December 31, 2007. This Annual Report on Form
10-K/A also includes the restatement of selected financial data, as of and for
the year ended December 31, 2007, as well as the restatement of quarterly
results of operations for that year.  As to the selected financial data as
of and for the year ended December 31, 2007 such amounts are derived from
audited financial statements included elsewhere in this Form 10-K/A. The
restated quarterly results of operations data are unaudited and, in the opinion
of management, have been prepared in accordance with U.S. generally accepted
accounting principles (GAAP) and reflect all adjustments that are necessary
for the fair presentation of the Companys financial position and results of
operations for these periods.  As previously disclosed in the Current
Report on Form 8-K dated May 15, 2007, the Audit Committee of the Board of
Directors of the Company (the Audit Committee) concluded that certain of the
Companys previously issued consolidated financial statements should no longer
be relied upon primarily due to errors related to overstatement of revenues and
understatement of expenses. The Company also restated its financial statements
to correct an additional error identified related to the valuation of goodwill
for a business acquired. A description of the restatement errors and the related
impact on the Companys consolidated financial statements follows.  Overstatement of Revenues and Understatement of
Expenses  The Company did not properly record
and eliminate intercompany transactions between its incumbent operations and
that of Midwest Marketing Group (Midwest) and its subsidiary Northstar
Telecom, Inc. (NST) acquired in August 2007.  Due to these errors,
revenues were overstated by $420,000 and expenses were understated by $156,000.  In addition, due to inadequate
communication between operational and accounting departments, expenses were
understated by an additional $137,000.  The Company has instituted additional
policies and procedures to ensure the correct and prompt recording of all
intercompany transactions and to improve the communication between the
accounting and operational departments of the Company.  Valuation of Goodwill  On August 15, 2007 the Company acquired all
of the capital stock of Midwest. Included in the preliminary estimated fair
values of assets acquired and liabilities assumed at the date of acquisition was
an overstatement of accounts receivable due to an inclusion of an intercompany
account of $105,000 in the balance.  This overstated accounts receivable
and understated goodwill by $105,000.  Impact of Restatements  The effects of these restatements on the
Companys consolidated financial statements as of and for the year ended
 December 31, 2007 are described in Note 2 to the Consolidated
Financial Statements included in this Annual Report on Form 10-K/A.  In conjunction with the errors in
accounting noted above, the Company identified material weaknesses in its
internal control over financial reporting at December 31, 2007, and
reported those to its Audit Committee. Please see Part II, Item 9A,
Disclosure Controls and Procedures, which has been restated, for a description
of these matters, and of certain remediation measures that the Company has
implemented or plans to implement in order to strengthen its internal control
over financial reporting.  The Company has not modified or updated the
disclosures in the Original 10-K, filed on March 31, 2008, other than as
required to reflect the effects of the restatement. As such, this Annual Report
on Form 10-K/A does not reflect all events that have occurred since the Company
filed the Original 10-K and does not modify or update those disclosures affected
by subsequent events, except as specifically referenced herein. The Company has
made no changes to the Items in the Original 10-K other than those described
below.    The Company has
not amended, and does not anticipate amending, any of its Form 10-Ks for any of
the years prior to the year ended December 31, 2007, nor does it anticipate
amending any of the Quarterly Reports on Form 10-Q that it originally filed for
any of the quarterly periods.  References to this Annual Report on Form
10-K/A shall, unless the context clearly indicates otherwise, refer to the
Original 10-K, as amended by this Annual Report on Form 10-K/A. The following
items have been amended as a result of the restatement and related matters: Part II  Item 6  Selected Financial
DataPart II  Item 7  Managements Discussion and Analysis of
Financial Condition and Results of OperationsPart II  Item 8 
Consolidated Financial Statements and Supplementary DataPart II 
Item 9A  Controls and ProceduresPart IV  Item 15  Exhibits and
Financial Statement Schedules                      TABLE
OF CONTENTS  PART I

PAGEItem 1.
Business
1Item 1A.
Risk Factors
4Item 1B.
Unresolved Staff Comments
6Item 2.
Properties
7Item 3.
Legal Proceedings
7Item 4.
Submission of Matters to a Vote of Security
Holders
7PART IIItem 5.
Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities
8Item 6.
Selected Financial Data
9Item 7.
Managements Discussion and Analysis of Financial
Condition and Results of Operation
10Item 7A.
Quantitative and Qualitative Disclosures About
Market Risk
21Item 8.
Financial Statements and Supplementary Data
21Item 9.
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
21Item 9A(T)
Controls and Procedures
22Item 9B.
Other Information
23PART IIIItem 10.
Directors, Executive Officers, and Corporate
Governance
24Item 11.
Executive Compensation
24Item 12.
Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
24Item 13.
Certain Relationships and Related Transactions, and
Director Independence
24Item 14.
Principal Accountant Fees and Services
24PART IVItem 15.
Exhibits and Financial Statement Schedules
25Signatures
27Certifications


Special Note
Regarding Forward-Looking Statements  Certain statements in this Report and in
the documents incorporated by reference herein constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. Factors
that might cause such a difference include, among others, uncertainties relating
to general economic and business conditions; governmental regulations; industry
trends; changes in demand for our products and services; uncertainties relating
to customer plans and commitments and the timing of orders received from
customers; announcements or changes in our pricing policies or those of our
competitors; unanticipated delays in the development, market acceptance or
installation of our products and services; availability of management and other
key personnel; availability, terms and deployment of capital; relationships with
third-party equipment suppliers; and worldwide political stability and economic
growth. The words believe, expect, anticipate, intend, plan, and
similar expressions identify forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date the statement was made.   PART IItem 1.
Business  General  Cordia Corporation (Cordia) is a global
telecommunications services firm generating revenue from the telecommunications
products and services it offers its customers domestically and internationally.
 An additional but lesser source of revenue comes from Carrier Access
Billing Services (CABS), which is compensation we receive from other
telecommunications carriers who utilize a portion of our leased loop to complete
long distance calls to our customers.  We provide business, residential,
and wholesale customers with local and long distance voice services utilizing
traditional wireline and Voice over Internet Protocol (VoIP) technologies.
 We also derive revenue from our web-based business process outsourcing
services (BPO Services), primarily billing services, which are offered on an
outsourced basis to other telecommunications service providers on a contractual
and on a month-to-month basis.  Our core business is our traditional
bundled wireline service offerings which represents a majority of our revenue,
followed by revenue derived from our VoIP service offerings and our business
process outsourcing.  We believe this revenue trend will continue.
 However, we expect our international revenues to grow more rapidly, on a
percentage basis, than our traditional CLEC business.  We believe the
purchase of Midwest Marketing Group, Inc. (Midwest), a Nebraska based
telemarketing firm, and its wholly-owned subsidiary Northstar Telecom, Inc.,
(NST), a competitive local exchange carrier, will contribute to the wireline
revenue trend as the transaction resulted in the acquisition of approximately
18,000 customers and increased our market penetration in the Qwest
Communications International, Inc. (Qwest) and Verizon Communications, Inc.
(Verizon) territories.  Furthermore, we believe the acquisition of a
domestic based telemarketing firm complements our recently launched call center
in Cebu, Philippines.  By bringing our telemarketing efforts in-house and
conducting customer service and additional outbound sales offshore we have the
ability to lower our customer acquisition costs and our general and
administrative expenses.  Wireline Services  We offer small business and residential
consumers wireline service by leasing a portion of the network owned by other,
larger telecommunications carriers, namely Verizon and Qwest.  These
leasing arrangements are controlled by multi-state, multi-year interconnection
and commercial services agreements that allow us to offer telecommunications
services to consumers without incurring the capital expenditures associated with
building our own network.   We have executed amendments to these
agreements securing long-term extensions and continued access to their networks.
 We also recently entered into a commercial services agreement with
McLeodUSA, Inc., which will allow for the expansion of our geographic footprint
as well broaden our underlying service provider portfolio and diminish our
reliance on larger telecommunications carriers.   1     We offer local
exchange, local access, domestic and international long distance telephone
services, and a full suite of local features and calling plans to small business
and residential consumers in Colorado, Iowa, Maryland, Massachusetts, Minnesota,
Nebraska, New Jersey, New Mexico, New York, North Dakota, Oregon, Pennsylvania,
Virginia, Washington, and Wisconsin through Cordia Communications Corp. (CCC),
My Tel Co, Inc. (MTC), and NST.  We are also licensed to provide local
and/or long distance telecommunications services, but are not actively marketing
or providing services, in Connecticut, Florida, Georgia, Idaho, Illinois,
Indiana, Kentucky, Louisiana, Michigan, Missouri, North Carolina, Ohio,
Oklahoma, Texas and Utah.  Applications on behalf of CCC and MTC for
authorization to operate as a local and long distance telecommunications carrier
are pending in the State of Arizona.  MTC distinguishes itself from CCC and NST
by targeting consumers in the secondary consumer credit market.  Sales
associated with MTC have been positive, however due to our serving consumers who
would otherwise have difficulty in obtaining telecommunications services because
of their credit history our bad debt results were higher than anticipated.
 As a result, during the fourth quarter of 2007 we ceased marketing under
this brand.  VoIP Services  We launched the commercial roll-out of our
VoIP service offering, a voice over broadband solution enabling delivery of
voice services over any broadband Internet Protocol (IP) connection through
our wholly-owned subsidiary CordiaIP Corp. (CordiaIP) in January 2006.
 We believe VoIP is the logical extension of our traditional wireline
telecommunications service offerings. To this end we have hired additional
personnel and built our own proprietary VoIP network, including our own network
software and operating support systems.  We offer a wide range of service plans
including a flat rate plan starting as low as $14.95 per month, combined with a
full suite of enhanced features which make our service an attractive value
proposition to existing and potential customers. We strive to be the worlds
local phone company® and give our customers the option of choosing their
desired area code, offering telephone numbers from more than forty (40)
countries and hundreds of cities worldwide. This will allow consumers to make
international calls at local rates, a feature not available with traditional
wireline service.  In addition, recognizing that a large percentage of the
United States population speaks Spanish as a primary language, we launched a
fully integrated Spanish language VoIP service.  This service, which is
identical in quality and functionality to its English counterpart, was designed
to be a purely Spanish language experience and includes all Spanish user
interfaces, voice prompts, invoices, customer service and targeted country
calling plans.  While the target market for our VoIP service is small
business and consumers, we also offer our service on both a wholesale and resale
basis.  International Services  We have focused on creating a niche in the
international VoIP marketplace as the worlds local phone company® by
providing value added services worldwide and creating partnerships and/or
acquiring international VoIP providers on a global scale.  In 2005, we
formed Cordia International Corp. (CIC) to serve as a holding and management
company for our overseas assets, which include our foreign based subsidiaries
and affiliates in Brazil, Hong Kong, India, and the Philippines.  We have
made significant investments in our international services and have not yet
reached a point of profitability relative to these efforts.  To date we
have incurred losses in executing our plan, and these investments have detracted
from the true value of our wireline business, which on a stand alone basis would
report a profit that is not apparent when reporting on a consolidated basis.
 In spite of our current costs and losses, we believe that our
international services, which had revenue growth of approximately 300% for the
period ended December 31, 2007 as compared to the same period in 2006, have long
term value and we will continue our efforts to develop these businesses so that
they become self-sustaining.  As previously stated, we currently have
operations in South America and the Asia Pacific (APAC) region.  In
Brazil, we are laying the foundation for the commercial launch of our VoIP
product by test marketing resold VoIP services of another licensed Brazilian
entity.  The Agéncia Nacional de Telecomunicações (ANATEL) has recently
completed its review of our VoIP application and has indicated that it will be
issuing our Brazilian subsidiary a Serviçe Comunicação Multimídia (SCM)
license.  We anticipate receipt of the license during the second quarter of
2008 followed by the full commercial launch of our own VoIP service.  2     In Hong Kong,
the Office of Telecommunications Authority (OFTA), has granted us the
authority to offer telecommunications services under a Public Non-Exclusive
Telecommunications Services (PNETS) License and VoIP service under a separate
Services-Based Operator license   We are in the process of
interconnecting with incumbent carriers in Hong Kong for the roll out of our
services and anticipate the commencement of services during 2008.  We
believe that Hong Kong serves as the gateway to Asia and represents the
opportunity to serve the more than 40% of the worlds internet and broadband
subscribers located in that region.  In India, subsequent to the balance sheet
date on February 27, 2008, our joint venture, Cordia LT Communication Private
Limited launched VoIP service offerings on a nationwide basis pursuant to the
license granted by the Ministry of Communications.  This license also
allows us to serve as an Internet Service Provider in India, although to date we
are only providing VoIP to our customers.  In the Philippines, we launched our
offshore call center during 2007.  The center provides the Company with
various services including outbound telemarketing, customer service, welcome
calls, and collections.  The launch of this location has allowed us to
serve our customers better at a reduced cost with increased savings.  In addition to our overseas holdings we
continue to foster bilateral relationships with international VoIP carriers. We
recently announced our network interconnection with Bayan Telecommunications,
Inc. (Bayan), the second largest Philippine landline provider.  This will
allow unlimited calling from Cordias international network to Bayans wire-line
and wireless customers sold by Cordia. Our goal in seeking out these global
partnerships is to gain low cost access to their networks, allowing us to
deliver high quality, low cost global communications services to our domestic
and international customers.  To date, our VoIP network includes
international Direct Inward Dial (DID) telephone numbers from more than forty
(40) countries; network points of presence in Hong Kong, India, Brazil and the
United States; and peering agreements with approximately ten (10) carriers.
 We believe that by blending our marketing capabilities, proprietary
billing and operation support systems (OSS), IP communications technology and
international bilateral agreements we can take advantage of the large disparity
between wholesale costs in some markets and retail rates in other markets to
create a competitive advantage in the international communications market.
 We believe that by offering a wide range of international numbers
integrated with broadband, wireline, wireless and VoIP services bundled from our
network and those of our peering partners we can create bundled service
offerings that present an attractive value proposition to our customers.  Business Process Outsourcing Service (BPO Services)  We offer an extensive outsourced service
product line, which includes as its primary offering outsourced billing on a
wholesale basis to telecommunications service providers.  Our wholesale
customers have access to our secure Internet enabled software systems in which
user-friendly web client front-ends called Workspaces serve as an interface for
integration with our software systems.  The services available to
wholesalers through our Workspaces are the same services utilized internally
for the provision of our own traditional wireline and VoIP services to our
customers.  As such, we are continuously updating and improving these
processes to ensure optimal functionality.  We believe our outsourced
solutions are an attractive offering because it is not a pre-packaged all or
nothing product; the wholesale customer has the power to assess their
organization and then adopt and utilize only the functions they believe will
increase their own profitability.  Our goal is to tailor our services to
our clients needs and create a mutually beneficial and profitable relationship.
 We believe this is achieved by offering process driven software whereby
client required modifications to our systems are made at the server level and
then instantly passed onto the clients end users, promoting our commitment to
the continuous development and improvement of our Workspaces.  We bill
these services on a predominantly per line basis and have experienced a decrease
in BPO Services revenues as a result of the decreased line count experienced by
our wholesale customers operations.  Accordingly, revenue derived from our
BPO Services has become a less material part of our total revenue.    3     Employees  As of March 3, 2008, subsequent to the
balance sheet date, we had four hundred sixty-three employees (463), three
hundred seventy-eight (378) of whom were employed on a full-time basis. At said
date, one hundred thirty-eight (138) were located at our offices in Fremont,
Nebraska, eighty-six (86) were located at our principal office in Winter Garden,
Florida, twenty-five (25) of our employees were located at our offices in White
Plains, New York,  one hundred eighty one (181) were located in our office
in Cebu, Philippines, twenty-eight (28) were located in our office in Brazil,
and five (5) were located in our Hong Kong office. None of our employees are
represented under a collective bargaining agreement. We believe our relations
with our employees to be good.  Information on Our Internet
Website  We make available, free of charge on our
website, our annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and all amendments to those reports as soon as
reasonably practicable after such material is electronically filed with or
furnished to the Securities and Exchange Commission (SEC). Our website address
is www.cordiacorp.com. This information is included in the Investor Relations
section on our website.   Item 1A. Risk
Factors  We face widespread competition that
may reduce our market share and harm our financial performance.  We face significant competition from a
number of different types of communications services providers, including
wireless telephone service providers, internet service providers, cable
companies, incumbent local exchange carriers, and other competitive local
exchange carriers.  In particular, we face increasing
competition from wireless telephone service providers. As wireless carriers
continue to improve their network coverage while lowering their prices, some
customers choose to eschew traditional wireline service completely and rely
solely on wireless service. We anticipate that this trend will continue,
particularly if wireless service rates continue to decline and the quality of
wireless service improves. Many of our
current and potential competitors have market presence, engineering, technical
and marketing capabilities as well as financial, personnel and other resources
more abundant than ours. Mergers or other combinations involving our competitors
may increase this risk factor. In addition, some of our competitors can conduct
operations or raise capital at a lower cost than we can and are subject to less
regulation, taxes or fees. Consequently, some competitors are able to charge
lower prices for their products and services, to develop and expand their
communications and network infrastructures more quickly, to adapt more swiftly
to new or emerging technologies and changes in customer requirements and to
devote greater resources to the marketing and sale of their products and
services. Competition may adversely impact
our revenues and profits in several ways, including:  

The loss of customers and
market share;  

The possibility of
customers shifting to less profitable services;  

Forcing us to lower prices
or increase capital or marketing expenses to remain competitive; and  

Increasing our need to
incur additional costs in order to diversify by offering new products or
services.  We also anticipate increased domestic
competition in the VoIP market, as VoIP becomes more widely accepted among
consumers.  We believe this consumer driven market will result in lowered
prices and it will become difficult for a company our size to effectively
compete in the domestic marketplace for this service.   4     Our
reliance on our underlying carriers to offer telecommunications services may
affect our ability to attract customers and our reputation in the
telecommunications industry.  The services we wish to offer our customers
are not always made readily available to us on a resale basis while the
Incumbent Local Exchange Carrier (ILEC) that leases its underlying network to
us is able to offer them directly to the customer making the ILEC a more
attractive service provider.   These unavailable services, include but
are not limited to, point to point service, local data circuit service,
trademarked service such as Identacall, dedicated primary rate interface
service, high density local circuit service, and services that utilize the
underlying carriers fiber network.  A further element of risk is that we
depend on the ILEC to process our orders, address repair issues and install new
lines.  In the past, we have experienced difficulty with regard to the
underlying carriers timeliness in processing new orders, addressing repair
issues, and installing new lines.   The difficulty we encounter with
the ILEC in its response to these issues can adversely effect our reputation and
good will in the telecommunications industry and in essence affect our ability
to attract customers and reach a level of profitability.  New technologies may be developed
that could displace our service offerings. We expect
competition to intensify as new technologies, products and services are
developed. Changes in technology may permit new entrants into the communications
services marketplace, and as a result the future prospects of the wireline
industry and the success of our services remain uncertain. We cannot predict
which of many possible future technologies, products or services will be
important for us to develop in order to maintain our competitive position or
what expenditures will be required to develop and provide these technologies,
products or services. To the extent we do not keep pace with technological
advances or fail to timely respond to technology-driven changes in our industry,
we could lose market share or experience a decline in revenue and net
income.  Our industry is highly regulated and
continues to undergo various regulatory and legislative changes, which could
adversely affect our prospects and results of operations.  As a Competitive Local Exchange Carrier
(CLEC) we have traditionally been subject to significant regulation from
federal, state, and local authorities. This regulation imposes considerable
compliance costs on us, restricts our ability to adjust rates to reflect market
conditions and impacts our abilities to compete and respond to changing industry
conditions. Similarly, rule changes that permit customers to retain their
wireline or wireless numbers when switching to another service provider could
increase the number of our customers who choose to disconnect their wireline
service and rely exclusively on their wireless service for their communications
needs.  Due to the competitive, technological and
regulatory changes described above, the local communications industry has
recently experienced a decline in access lines, interstate and intrastate access
traffic and long distance traffic. The recent decline in access lines and usage,
coupled with the other changes resulting from competitive, technological and
regulatory developments, could materially adversely affect our core business and
future prospects.  At present the Federal Communications
Commission (FCC) does not regulate VoIP to the same extent as it does
traditional wireline services, although it has commenced a proceeding to examine
its role in the new Internet based environment for voice services.  The FCC
has however taken a proactive approach with respect to emergency services
dialing and accommodating law enforcement wiretaps and we believe we are fully
compliant with all FCC requirements.  We recognize however, the uncertainty
that exists with respect to the future direction of the FCC and any future
regulations it may impose on VoIP providers and the potential impact these
regulations may have on our business operations, in particular an increase in
our costs associated with providing VoIP thus lowering our profit margin.       5     Expanding
globally exposes us to additional regulatory requirements. Currently, we provide
services to customers in more than 70 countries. The stance taken by various
countries on the provision of VoIP ranges from total prohibition, to limitation
and control of the service by requiring licensing or other registration, to no
regulation at all.  It is our goal to expand our service offerings into
regions that treat VoIP as an unregulated service.  In addition to
compliance with the local regulatory framework in various countries, we must
also take into consideration any economic and trade sanctions based on United
States foreign policy and national security goals strictly prohibiting us from
conducting business or exporting telephone adapters to certain regions.  We are a small company that relies on
a few significant employees to ensure that our business operates efficiently.
 If we were to lose one of these employees it would effect our business
operations and we would experience difficulty in replacing one of these
employees.  Other larger companies have greater capital
resources and therefore greater recruitment capability than Cordia.  This
may limit our ability to hire new talent and retain current significant
employees. We have a very small staff of executives and significant employees.
 We rely on our executive officers, senior management and significant
employees to ensure that our telecommunications business operates efficiently.
 The loss of such an employee could harm our business, and it should be
noted that our employees are at-will.  We believe that our success in this
business depends on our ability to continue to attract and retain highly skilled
and knowledgeable telecommunications staff.  Failure of customers to pay bills in
a timely manner adversely affects our ability to pay our underlying network
provider.  We are responsible for timely payment to
our underlying carriers for use of their networks to provide telecommunications
service to our customers.  We depend on our customers payment of their
bills so that we can pay our underlying carrier for network access.
 Delinquency or non-payment of our customers stresses our liquidity and in
some instances may affect our ability to timely pay our suppliers. If we are
unable to pay or are late in paying our underlying network provider we may
experience a suspension of service, resulting in an interruption of our
customers telecommunications service.  The Company may be unable to obtain the capital
necessary to fund its operations.  The Company may need to raise additional
capital through debt or equity financing to fund operations. As of December 31,
2007, we have negative working capital of approximately
<R>$9,781,000</R>and have reported losses from
operations for the past two years.  The Company had approximately
$1,173,000 in cash and cash equivalents (including restricted cash) to fund its
operations.  If operations do not become sufficiently profitable we will
need to raise additional capital in order to have sufficient working capital to
fund our operations beyond 2008. We may not get funding when it is needed or on
favorable terms. In addition, the amount of capital that a company such as
Cordia is able to raise often depends on variables that are beyond its control,
such as the share price of its stock and its trading volume. As a result, the
Company may not be able to secure financing on terms attractive to it, or at
all. If the Company is able to consummate a financing arrangement, the amount
raised may not be sufficient to meet its future needs and may be highly
dilutive. If the Company cannot raise adequate funds to satisfy its capital
requirements, it may have to scale-back or sell operations.  Acquisitions and joint ventures may have an adverse
effect on the Companys business.  Cordia may make acquisitions or enter into
joint ventures as part of its long-term business strategy. Any such transaction
involves significant challenges and risks. The transaction may not advance
Cordia's business strategy; the company may not realize a satisfactory return on
the investment it makes; managements attention may be diverted from its other
business activities; or the Company may experience difficulty in the integration
of new employees, business systems, and technology. These factors could
adversely affect the Cordia's operating results or financial condition.  Item 1B. Unresolved Staff
Comments  None.  6      Item 2.
Properties  As of December 31, 2007, we leased property
in White Plains, New York; Winter Garden, Florida; Fremont, Nebraska; Central,
Hong Kong; Florianopolis, Brazil; and Cebu, Philippines.  In White Plains, New York we lease (1)
approximately 2,840 square feet of office space at a rental price of
approximately $5,206 per month plus utilities with incremental annual increases
in rent in years four and five of the lease term and (2) approximately 4,725
square feet at a rental price of $8,663 per month plus utilities with
incremental annual increases in rent commencing in year three of the lease term.
 Both leases are for a term of five years and expire on December 31, 2008
and July 31, 2010, respectively.  In Winter Garden, Florida, we lease
approximately 32,000 square feet of office space at a rental price of
approximately $19,226 per month plus utilities with incremental annual
increases.  The seven and 1⁄2 year lease term commenced on April 1, 2005.  In Fremont, Nebraska, we lease
approximately 20,000 square feet of office space at a rental price of $4,000 per
month plus utilities and maintenance.  The five year lease commenced on
April 1, 2003 and provides for lessees option to renew for an additional five
(5) year term.  We plan on renewing this lease agreement for the additional
five (5) year term with a monthly rental payment of $4,280 per month during the
renewal period.  In Central, Hong Kong, we lease
approximately 1,400 square feet of office space at a rental price of HK $26,258
or approximately US $3,373 per month plus management fees and air conditioning
charges totaling HK $4,146 or approximately US $534 per month.  The two (2)
year lease expires March 2008, however subsequent to the balance sheet date we
renewed our lease agreement for an additional two (2) years at a rental price of
HK$41,460 or approximately $5,327 per month plus management fees and air
conditioning charges.  The management fees and air conditioning charges
remain the same.  In Florianopolis, Brazil, we rent office
space on a month-to-month basis at a rate of R$1,500 or approximately US$900 per
month plus common charges.  Subsequent to the balance sheet date, we began
leasing additional office space subject to a five (5) year lease term, with an
expiration date of February 1, 2013, at a rate of R$8,200 or approximately
US$5,000 per month.  In Cebu, Philippines, we lease office space
under a five (5) year lease at a rental price of P$184,675 or approximately
US$3,820 per month plus common charges with incremental annual increases of
seven percent (7%) commencing in year two (2) of the lease.  The expiration
date of the lease is March 2012.  The above properties are in good condition
and suitable for Cordias operations.  Item 3. Legal
Proceedings  We are not currently a party to any legal
proceedings that we believe will have a material adverse effect on our financial
condition or results of operations.   In the ordinary course of
business we are sometimes named as the respondent in various
slamming/billing/service disputes with our customers, which are brought before
the Federal Communications Commission, the Better Business Bureau or the state
Public Utility Commission where our service is being offered. None of these
actions are, in our opinion, likely to have a material adverse effect on our
business or financial results.  Item 4. Submission of Matters
to a Vote of Security Holders  None for the period ended December 2007,
however our Annual Meeting of Shareholders is scheduled for May 21, 2008.
 Agenda items requiring shareholder vote are the election of directors,
ratification of the selection of our independent registered public accounting
firm, and director compensation.   7      PART IIItem 5. Market for Registrants
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities  Since June 7, 2002, our common stock has
been listed under the symbol CORG on the OTC Bulletin Board.  Prior to
that time, we were listed on the OTC Bulletin Board under the symbol CORC from
June 5, 2001 to June 6, 2002 and under the symbol CYOL from May 8, 2000 to
June 4, 2001. The following table represents the high and low per share bid
information for our common stock for each quarterly period in fiscal 2007 and
2006. Such high and low bid information reflects inter-dealer quotes, without
retail mark-up, mark-down or commissions and may not represent actual
transactions.  Year
Ended 2007
Year
Ended 2006High

Low

High

LowQuarter ended March 31
$
        1.00

$
         0.41

$
         2.83

$
       2.30Quarter ended June 30
$
        0.84

$
         0.31

$
         2.10

$
         .10Quarter ended September 30
$
        0.93

$
         0.65

$
         1.15

$
         .75Quarter ended December 31
$
        0.85

$
         0.35

$
         1.08

$
          80  As of March 21, 2008, there were 6,327,388
shares of our common stock outstanding held by approximately 143 shareholders of
record.  We do not currently pay dividends on our
common stock. We do not intend to declare or pay dividends on our common stock,
but to retain earnings, if any, for the operation and expansion of the business.  Recent Sales of Unregistered
Securities  There were no sales of unregistered
securities during the twelve-month periods ended December 31, 2007 and 2006,
respectively.  On March 7, 2005, we consummated a private
placement with Barron Partners, L.P., (Barron) a Delaware limited partnership
in which we issued 1,500,000 shares of Series A Convertible Preferred Stock, and
issued warrants to purchase 750,000 shares of our common stock at $2.00 per
share and warrants to purchase 750,000 shares of our common stock at $4.00 per
share.  Barron paid $1,500,000 in cash for the Series A Convertible
Preferred Stock and warrants.  The fair value of the warrants issued was
estimated on the date of grant at $122,415, using the Black-Scholes option
pricing model including expected volatility of 75% and average risk free rate of
3.825% and an expected life of three to four years.  Use of Proceeds from Registered
Securities  The 3,000,000 shares of common stock
underlying the Series A Convertible Preferred Stock and warrants were registered
on Form SB-2, registration number 333-124996, effective August 31, 2005.  During 2005, Barron purchased 330,000
shares of common stock by exercising 330,000 warrant shares at $2.00 per share.
 We used the proceeds received from the exercise of the warrant shares for
working capital and general corporate purposes.  During the second quarter
of 2006, we purchased the remaining 1,170,000 outstanding warrants, comprised of
420,000 warrants to purchase common stock at $2.00 per share and 750,000
warrants to purchase common stock at $4.00 per share for a purchase price of
$309,000.  As of December 31, 2006, there were no outstanding warrants.  8     As of December
31, 2007, there were no shares of Series A Convertible Preferred Stock
outstanding. Barron converted a total of 1,262,200 shares of Series A
Convertible Preferred Stock, converting 702,200 shares during 2005, 90,000
shares during 2006, and 470,000 shares during 2007.  On December 28, 2007,
Barron sold its remaining 237,800 shares of Series A Convertible Preferred Stock
to Cordia for a purchase price of $118,900 or $0.50 per share.  Upon
completion of the transaction, Cordia converted the shares into common stock.  Issuer Purchase of Equity
Securities  On May 30, 2007, the Board of Directors of
Cordia unanimously authorized Cordias management to spend an aggregate of
$500,000, until such time that the authorized amount is exhausted, to
re-purchase Cordias common and preferred stock so long as the market price did
not exceed $1 per share.  The repurchase plan was announced in Cordias
Form 8-K filed with the Securities and Exchange Commission on May 31, 2007.
 The following table represents the shares purchased in fiscal 2007.  Period
Total # Shares Purchased (1)
Average Price Per Share (2)
Total # of Shares Purchased as Part of
Publicly Announced Plans or Programs*
Approximate Dollar Value of Shares
That May Yet Be Purchased Under Plans or Programs(3)6/1/07  6/30/07
18,500
$0.85
All
$
               484,00011/1/07  11/30/07
2,500
$0.74
All
$
               482,00012/01/07  12/31/07
380,592
$0.52
All
$
               285,000  *All
purchases were made in open-market transactions pursuant to the Boards action
taken on May 30, 2007.  (1) These shares consist of
a total of 163,792 shares of Cordia Common Stock with an aggregate cost of
approximately $96,100 and a total of 237,800 shares of Preferred Stock with an
aggregate cost of approximately $118,900 for a total of $215,000. (2) Price per share
includes brokerage and commission fees. (3) The last purchase made
under this plan was in January 2008.  Item 6. Selected Financial
Data  The following selected consolidated
financial data should be read in conjunction with, and qualified by reference
to, the consolidated financial statements and notes thereto in Item 8 of this
report and Managements Discussion and Analysis of Financial Condition and
Result of Operations in Item 7 of this report. The comparability of the
following selected financial data is significantly impacted by various changes
in accounting principles.  <R> Years Ended December 31, 2007
2006
2005
2004
2003As RestatedOperating Revenues
$   43,369,000
$ 37,505,000
$ 41,951,000
$   13,229,000
$
    4,036,000Net (Loss) Income
$   (3,806,000)
$  (3,095,000)
$   1,265,000
$
     (170,000)
$
       584,000Net (Loss) Income Per Share:Basic (loss) Income
Per Share
$
           (0.67)
$
          (0.55)
$
           0.23
$
           (0.04)
$
             0.10Diluted (loss)
Income Per Share
$
           (0.67)
$
          (0.55)
$
           0.20
$
           (0.04)
$
             0.10Total Assets
$   12,081,000
$   9,291,000
$ 10,971,000
$
    5,547,000
$
    1,637,000Long-term Liabilities
$
    1,168,000
$
     113,000
$
     105,000
$
           3,000
$
                   -  </R>   9      Item 7. Managements Discussion
and Analysis of Financial Condition and Results of
Operation  Certain statements set forth below under
this caption constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Please refer to the first page
of this Report for additional factors relating to such statements, and see Risk
Factors in Item 1A of this report for discussion of certain risk factors
applicable to our business, financial condition and results of operations.  The following Managements Discussion and
Analysis of Financial Condition and Results of Operations (MD&A) is
intended to help the reader understand Cordia Corporation, our operations and
our present business environment. MD&A is provided as a supplement to, and
should be read in conjunction with, our consolidated financial statements and
the accompanying notes thereto contained in Item 15 of this report.  Overview  We are a global telecommunications firm
generating our revenue from the provision of telecommunications services
domestically and internationally to business, residential, and wholesale
customers. We provide both local and long distance services utilizing
traditional wireline and VoIP technologies. Historically, our traditional
bundled wireline service offerings have represented a majority of our revenue,
followed by revenue derived from our VoIP service offerings and business process
outsourced services. We believe that this trend will continue in 2008, as we
continue our expansion domestically into new states and internationally into new
markets. We believe the acquisition of a telemarketing firm and competitive
local exchange carrier, along with the launch of our call center in the
Philippines will encourage this trend as it resulted in an increased line count
and gave us the ability to lower our customer acquisition costs.  Our traditional wireline service offerings
include local exchange, local access, domestic and international long distance
telephone services, and a full suite of local features and calling plans to
small business and consumers in various states throughout the country, primarily
in the Qwest and Verizon territories.  We recently reached a commercial
agreement with another non-incumbent local exchange carrier in an effort to
expand our footprint, keep costs low, and reduce our reliance on the incumbent
carriers.  Our VoIP service offerings include a flat
rate plan starting as low as $14.95 per month, combined with a full suite of
enhanced features which make our service an attractive value proposition to
existing and potential customers. Customers also have the option of choosing
their desired area code with this service, being able to choose from more than
forty (40) countries and cities worldwide for their telephone number regardless
of their physical location  making any long distance or international call
local. As a complement to our mainstream VoIP service offering we also provide a
fully integrated Spanish language VoIP service through our wholly owned
subsidiary VOszIP, Corp. (VOszIP).  In addition, our service portfolio
includes our Magellan service which is supported by our internally developed
VoIP network.  Magellan customers get their own personal international
telephone number or extension that is routed through our IP platform to the
customers landline or mobile phone allowing customers to be reached anywhere in
the world at local rates.  We believe this service offering will be
attractive to executives traveling abroad and ex-patriates who need to stay in
touch with their colleagues, friends and family.  We use this product
internally to keep in touch with our offices and employees located abroad and/or
on field assignment.   As a result, we are constantly testing the
integrity of the service and making improvements on functionality based on our
experience with the service.  We also offer an extensive outsourced
service product line, which includes as its primary offering outsourced billing
on a wholesale basis to telecommunications service providers. Our wholesale
customers have access to our secure Internet enabled software systems in which
user-friendly web client front-ends called Workspaces serve as an interface for
integration with our software systems. The full suite of services available is
described in its entirety in Item 1.  10     Liquidity and Capital Resources  At December 31, 2007, we had cash and cash
equivalents, including restricted cash, of approximately $1,173,000, a decrease
of approximately $202,000 from amounts reported at December 31, 2006, and
negative working capital of approximately
<R>$9,781,000,</R> as compared to negative working
capital of approximately $2,749,000 reported at December 31, 2006.  The
decrease in working capital is primarily related to our costs associated with
funding our overseas subsidiaries in Hong Kong, Brazil and the Philippines, the
acquisition of the minority interest in Cordia Comunicações S/A f/k/a Canal West
S/A (CC Brazil) thus resulting in it becoming a wholly-owned subsidiary, the
funding of our new call center in the Philippines, our costs associated with the
expansion of our domestic and international VoIP service offerings, and the
launch of our advertising campaign during the second quarter of 2007 to promote
our Magellan service offerings.  At December 31, 2006, we had cash and cash
equivalents, including restricted cash, of approximately $1,375,000, a decrease
of approximately $971,000 from amounts reported at December 31, 2005, and
negative working capital of approximately $2,749,000, as compared to working
capital of approximately $1,156,000 reported at December 31, 2005.  The
decrease in working capital is primarily related to our repurchase of all our
outstanding warrants, totaling 1,170,000 for $309,000, our costs associated with
acquiring and funding our Hong Kong subsidiary, the acquisition of a majority
interest in Canal West, and our costs associated with the expansion of our
domestic and international VoIP service offerings.  Net cash provided by operating activities
for the year ended December 31, 2007, aggregated approximately $3,338,000 an
increase of approximately $2,030,000, from the amount provided during the year
ended December 31, 2006 of approximately $1,308,000.  The principal source
of net cash provided by operating activities for the year ended December 31,
2007 was primarily the increase in taxes payable, the provision for bad debts
and depreciation aggregating approximately $7,766,000. The use of cash
<R>$776,000</R> and the net loss for the period
amounting to approximately <R>$3,806,000.</R>  Net cash provided by operating activities
for the year ended December 31, 2006, aggregated approximately $1,308,000 an
increase of approximately $1,391,000, from the amount used during the year ended
December 31, 2005 of approximately $83,000.  The principal source of net
cash for the year ended December 31, 2006 was primarily the increase in accounts
payable and accrued expenses aggregating approximately $1,443,000. The use of
cash reported for year ended December 31, 2005 was the increase in accounts
receivable of approximately $6,900,000 and the use of cash necessary to post the
required LOCs, (offset against accrued interest), with Verizon, which totaled
approximately $1,400,000. These amounts were offset against the increase in
accrued expenses of approximately $2,105,000.  Net cash used by investing activities for
the year ended December 31, 2007, aggregated approximately $2,304,000 compared
to net cash used of approximately $1,491,000 as of December 31, 2006. Net cash
used by investing activities consisted primarily of expenditures for internally
developed software for our VoIP platform, and the purchase of computer equipment
amounting to approximately $1,406,000 (an increase of $276,000 from 2006) in
addition to the cash paid for acquiring Midwest amounting to approximately
$342,000 and our investment in unconsolidated affiliates of approximately
$339,000.  Net cash used by investing activities for
the year ended December 31, 2006, aggregated approximately $1,491,000 compared
to net cash used of approximately $1,344,000 as of December 31, 2005. For the
year ended December 31, 2006, net cash used by investing activities consisted
primarily of expenditures for internally developed software for our VoIP
platform of approximately $752,000, the purchase of computer equipment of
approximately $379,000, leasehold improvements of approximately $115,000 and for
the acquisition of a majority interest in Canal West and the acquisition of
Triamis totaling an aggregate of approximately $246,000.  For the period
ended December 31, 2005, net cash used by investing activities consisted of the
purchases of computer equipment of approximately $487,000, leasehold
improvements of approximately $255,000 and expenditures relating to internally
developed software of approximately $602,000.  11     Net cash used in
financing activities aggregated approximately $361,000 for the year ended
December 31, 2007, compared to net cash used by financing activities of
approximately $387,000 for the year ended December 31, 2006. The principal use
of cash by financing activities during fiscal year 2007 was the purchase of our
stock and for payments on capital lease obligations and the payment of long term
notes payable aggregating approximately $349,000.  The principal use of
cash by financing activities during fiscal year 2006 was the repurchase of our
stock warrants amounting to $309,000 and the repayment of a loan in the amount
of $57,000.  Net cash used in financing activities
aggregated approximately $387,000 for the year ended December 31, 2006, compared
to net cash provided by financing activities of approximately $2,072,000 for the
year ended December 31, 2005. The principal use of cash by financing activities
during fiscal year 2006 was the repurchase of our stock warrants amounting to
$309,000 and the repayment of a loan in the amount of $57,000. The principal
source of cash provided by financing activities in the 2005 period was
$1,455,000, attributed to our private placement of Series A Convertible
Preferred Stock and Warrants as discussed in Note 3 of the consolidated
financial statements, offset against our purchase of treasury stock aggregating
$40,000.  An additional $660,000 of proceeds was the result of the exercise
of 330,000 warrants associated with the private placement.  At December 31, 2007, our balance sheet
showed approximately $174,000 in restricted cash in the form of a Letter of
Credits (LOCs) of which $144,000 is for the benefit of Qwest secured by funds
deposited into a restricted money market account. The LOC is effective for a
term of one (1) year from June 25, 2007.   The LOC was due to
expanding our wireline service offerings into additional states covered by our
commercial services agreement with Qwest. The remaining $30,000 is a LOC that
our newly purchased subsidiary NST, had to obtain for the benefit of
Verizon.  At December 31, 2006, a significant portion
of our cash was restricted in the form of certificates of deposit totaling
$950,000 plus accrued interest of approximately $53,700. The certificates of
deposits matured in March 2007, and secured two (2) separate LOCs for New York
and New Jersey, which we were required to post with Verizon in conjunction with
our long-term wholesale agreement. In addition to the LOC's, our agreement with
Verizon required payment within 20 days of our receipt of Verizons bills. We do
not expect the agreements terms to have a material impact on our ongoing uses
of cash other than a strict requirement to maintain current payments.  The Company has incurred losses and also
has a negative working capital and a deficiency in stockholders' equity as of
December 31, 2007 and December 31, 2006. These conditions raise substantial
doubt about the Company's ability to continue as a going concern.  The Company recognized the need to
strengthen its financial position, maintain growth, and continue to carry out
its plans for its international expansion of VoIP and related value added
services and entered into a Factoring and Security Agreement (Factoring
Agreement) with Thermo Credit, LLC (Thermo), a Colorado limited liability
company, on September 21, 2007, as amended December 20, 2007.  Management believes that with the increase
in sales from NST and the cost savings generated from our lower customer
acquisition costs, the Company will generate sufficient cash flows from
operations to meet its obligations as they come due during the next twelve month
period.   We do, however, recognize the limiting effect that our
liquidity has on our growth rate and management may seek additional sources of
capital in the future, including but not limited to a private placement of the
Companys common stock, to neutralize this limitation in the future.  Off balance sheet arrangements  At December 31, 2007 and 2006, we have not
entered into any transactions with unconsolidated entities whereby  we have
financial guarantees, or other contingent arrangements that exposes us to
material continuing risks, contingent liabilities or any other obligations that
provide financing, liquidity, market risk or credit risk support to the Company.  12     Critical
Accounting Policies and Estimates  The Companys accounting policies are more
fully described in Note 1 of the consolidated financial statements.  As
discussed in Note 1, the preparation of financial statements and related
disclosures in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
about the future events that affect the amounts reported in the consolidated
financial statements and the accompanying notes. Management bases its estimates
on historical experience and on various other assumptions believed to be
reasonable under the circumstances.  Actual differences could differ from
these estimates under different assumptions or conditions.  The Company
believes that the following addresses the Companys most critical accounting
policies.  We recognize revenue in accordance with
Securities and Exchange Commission Staff Accounting Bulletin No. 104, Revenue
Recognition (SAB 104).  Under SAB 104, revenue is recognized at the
point of passage to the customer of title and risk of loss, when there is
persuasive evidence of an arrangement, the sales price is determinable, and
collection of the resulting receivable is reasonably assured.  We recognize
revenue as services are provided.  Revenues are reflected net of coupon
discounts.  Our allowance for doubtful accounts is
maintained to provide for losses arising from our customers inability to make
required payments.  If there is deterioration of our customers credit
worthiness and/or there is an increase in the length of time that the
receivables are past due greater than the historical assumptions used,
additional allowances may be required.  We account for income taxes in accordance
with Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes (SFAS No. 109).  Under SFAS No. 109, deferred tax assets and
liabilities are measured using enacted tax rates in effect for the year in which
the differences are expected to reverse.  Deferred tax assets are reflected
on the balance sheet when it is determined that it is more likely than not that
the asset will be realized. At December 31, 2007, a valuation allowance
aggregating approximately $1,754,000 was recorded to reflect the Companys net
deferred tax asset as $0. Due to current losses the Company could not determine
that it was more likely than not that the deferred tax asset originally
resulting from net operating loss carryforwards would be realized.  In addition, the calculation of our tax
liabilities involves the inherent uncertainty associated with the application of
complex tax laws. We are subject to examination by various taxing authorities.
We will adequately provided in our financial statements for additional taxes
that we estimate under FIN 48, Accounting for Uncertainty in Income
Taxes, may be required to be paid as a result of any such examinations. If a
payment ultimately proves to be unnecessary, the reversal of the tax liabilities
would result in tax benefits being recognized in the period we determine the
liabilities are no longer necessary. If an ultimate tax assessment exceeds our
estimate of tax liabilities, an additional charge to expense will result. As of
December 31, 2007 the Company has determined that it has no uncertain tax
positions requiring recognition under FIN 48.  Recoverability of Long-Lived Assets, Including
Goodwill  Goodwill represents the excess of costs
over the fair value of net assets of businesses acquired. Goodwill is tested at
least annually for impairment and is reviewed for impairment more frequently if
events and circumstances indicate that the asset might be impaired. SFAS
No. 142,Goodwill and Other Intangible Assets, requires the use of a
valuation model to determine the existence of a potential impairment of
goodwill. We estimate future cash flows using a discounted cash flow
methodology by assessing earnings that will be recognized in future periods.
 The valuation of goodwill could be affected if actual results differ
substantially from our estimates.    13     Intangible
assets acquired in a business combination are measured at fair value at the date
of acquisition. We assess the useful lives of other intangible assets to
determine whether events or circumstances warrant a revision to the remaining
period of amortization. If the estimate of an intangible asset's remaining
useful life is changed, the remaining carrying amount of the intangible asset is
amortized prospectively over the revised remaining useful life. Intangible
assets with estimable useful lives are amortized over their respective estimated
useful lives and reviewed for impairment whenever events or circumstances
indicate that the carrying value of such assets may not be recoverable. As of
December 31, 2007 and 2006, respectively, we had approximately $3,399,000
and $383,000 of goodwill and $557,000 and $9,000 of intangible assets with
estimable useful lives on our consolidated balance sheet. We do not have any
intangible assets with indefinite useful lives.  The following tables summarize the results
of our operations for the twelve (12) month periods ended December 31, 2007 and
December 31, 2006.  OPERATING REVENUES  The following table compares our operating revenue for
the years ended December 31, 2007 and 2006: <R>   Year Ended December 31,

Year Ended December 31,

Increase/ (Decrease)

% Change2007

2006

2007 v 2006

2007 v 2006As RestatedWireline Service
$   42,061,000

$ 36,349,000

$   5,712,000

15.71%VoIP Service
921,000

517,000

404,000

78.14%Business Process Outsourced Services
387,000

639,000

(252,000)

(39.44%)Total
$   43,369,000

$ 37,505,000

$   5,864,000

15.64%  Total operating revenues for the year ended
December 31, 2007, increased by approximately $5,864,000 or approximately 16%,
to approximately $43,369,000 as compared to approximately $37,505,000 reported
for the year ended December 31, 2006.  Our primary source of revenue is through
our wireline services and is earned primarily through the provisioning of
services to business, residential and wholesale customers for basic telephone
service, including local and long distance service, as well as ancillary
services such as voice mail and call waiting and to a lesser extent calls from
CABS billing.  For the twelve month period ended 2007, our wireline
services revenue was $42,061,000 an increase of approximately $5,712,000 from
the amount reported during 2006.  The increase in revenue attributed to the
acquisition of NST in 2007 was approximately $5,303,000.  This includes a
one time back billing of CABS Revenue increase of approximately $750,000.
 </R>  For the twelve month period ended 2007, our
VoIP service revenue was approximately $921,000 an increase of approximately
$404,000 as compared to amounts reported during the same period in 2006.
 Approximately $250,000 of the increase was related to the expansion of our
international services and the remainder due to increased penetration in the
domestic market.  For the twelve month period ended 2007,
Business Process Outsourced services (BPO service) revenue, which is income
earned through our outsourcing of billing services, data, and website technology
to wholesale telecommunications providers, decreased by approximately $252,000
or 39.44%  as compared to approximately $639,000 reported for the year
ended December 31, 2006.  This change occurred as a result of our wholesale
customers decreased line counts. We expect this revenue source to be
insignificant over the next couple of quarters due to decreasing line counts
experienced by our BPO customers.  14     The following table compares
our operating revenue for the years ended December 31, 2006 and 2005:  Year Ended December 31,

Year Ended December 31,

Increase/ (Decrease)

% Change2006

2005

2006 v 2005

2006 v 2005Wireline Service
$   36,349,000

$ 41,202,000

$   (4,853,000)

(11.78%)VoIP Service
517,000

36,000

481,000

N/ABusiness Process Outsourced Services
639,000

713,000

(74,000)

(10.38%)Total
$   37,505,000

$ 41,951,000

$   (4,446,000)

(10.60%)  Total operating revenues for the year ended
December 31, 2006, decreased by approximately $4,446,000 or approximately 10.6%,
to approximately $37,505,000 as compared to approximately $41,951,000 reported
for the year ended December 31, 2005.  Our primary source of revenue for these
periods was our wireline service, and was earned through the provisioning of
services to business, residential and wholesale customers for basic telephone
service, including local and long distance service, as well as ancillary
services such as voice mail and call waiting.  For the 12 month period
ended December 31, 2006, wireline revenue was $36,349,000 as compared to
wireline revenue of approximately $41,202,000 reported in the comparable period
in 2005.  For the twelve month period ended 2006, our
VoIP service revenue was approximately $517,000 an increase of approximately
$481,000 as compared to amounts reported during the same period in 2005.
  Approximately $75,000 was related to our international services and
approximately $442,000 was related to our domestic services for the twelve month
period ended 2006.  Prior to 2006, we had focused on the
aggressive growth of our retail customer base and on increasing our line counts
resulting in a higher bad debt expense because many of these customers were a
high credit risk.  During 2006, we focused on obtaining better qualified
customers by utilizing credit scoring. However, while credit scoring results in
a better quality customer base it limits the pool of potential customers from
which we can provide our services.  As a result, the number of retail
telephone lines we billed in 2006 declined from the same period in 2005.
 An additional factor to this decline was scaling back our telemarketing
efforts during the first half of 2006.  For the twelve month period ended December
31, 2006, BPO service revenue, consisting primarily of income earned through our
outsourcing of billing services, data, and website technology to wholesale
telecommunications providers, decreased by approximately $74,000 or 10%  to
$639,000 as compared to approximately $713,000 reported in the same period in
2005.  This change occurred as a result of our wholesale customers
decreased line counts.   COST OF REVENUE  The following table compares our cost of revenues for the
years ended December 31, 2007 and 2006:  Resale and Wholesale Line Charges <R> Year Ended December 31,

Year Ended December 31,

Increase/ (Decrease)

% Change2007

2006

2007 v 2006

2007 v 2006As RestatedResale and
Wholesale Line Charges
$
    25,298,000

$
    20,309,000

$
    4,989,000

24.57% </R>  15     Resale and
wholesale line charges are direct costs associated with all of our
telecommunications subsidiaries, and represent our network access fees paid in
order to provide local and long distance telephone service to our customers.
These expenses vary in direct correlation to the size of our telecommunications
customer base. We have experienced an increase of approximately
<R>$4,989,000</R> during fiscal year 2007. The
majority of this increase is attributable to the increase in our wireline
customers during 2007. The amount of the increase attributed to Northstar is
approximately <R>$2,708,000</R> for fiscal 2007. The
increase is also due in part to higher wholesale line charges for our wireline
services and increased cost associated with the roll out of our international
operations and VoIP services.  Approximately $863,000 of our total cost of
sales is attributed to our VoIP operations as compared to approximately $467,000
for the 2006 period.  Year Ended December 31,

Year Ended December 31,

Increase/ (Decrease)

% Change2006

2005

2006 v 2005

2006 v 2005Resale and
Wholesale Line Charges
$
    20,309,000

$
    21,807,000

$
 (1,498,000)

(6.9)%  We experienced a decrease of approximately
$1,498,000 for fiscal year 2006 as compared to fiscal year 2005. The majority of
this decrease is due to our smaller customer base in the 2006 period.
 However, this decrease was offset by higher surcharges imposed under the
pricing terms of our commercial agreement with Verizon.  In addition, we
experienced an increase in our costs associated with providing VoIP services of
approximately $443,000 during fiscal year 2006, as compared to fiscal year 2005,
when we had no significant costs associated with our VoIP services.  GROSS PROFIT  The following table compares our gross profit for the
years ended December 31, 2007 and 2006:   Year Ended December 31,

Year Ended December 31,

Increase/ (Decrease)

% Change2007

2006

2007 v 2006

2007 v 2006As RestatedGross Profit
$
    18,072,000

$
    17,196,000

$
 876,000

5.09%  For 2007 our gross profit increased
<R>$876,000 (5.09%) from the prior year due to a revenue increase
of 15.64% offset, in part, by a decrease in gross profit margin.  Gross
profit margin decreased to 41.67%</R> in 2007 from 45.85% in 2006.
 The decrease in gross profit margin is due to an increase of wholesale
line charges of approximately $1,000,000, disproportionately higher expenses and
losses associated with the roll out of the VOIP and international operations,
and loss of BPO revenue with no reduction in line charges offset, in part, by
the one-time back billing of CABS revenue of approximately $750,000.   Year Ended December 31,

Year Ended December 31,

Increase/ (Decrease)

% Change2006

2005

2006 v 2005

2006 v 2005Gross
Profit
$
    17,196,000

$
    20,144,000

$
 (2,948,000)

(14.63)%  For 2006, our gross profit decreased 14.63%
to approximately $17,196,000 from approximately $20,144,000 in 2005. This
decrease is primarily due to a revenue decrease of 10.6% and a decrease in gross
profit margin.  The gross profit margin decreased to 45.85% in 2007 from
48.01% in 2005 due to an increase in our wholesale line charges in 2006 as
compared to 2005, and the costs associated with providing our VoIP services
during 2006, which were immaterial in 2005.  16     OPERATING
EXPENSES  The following table compares our operating expenses for
the years ended December 31, 2007 and 2006:  Year Ended
December 31,

Year Ended
December 31,

Increase/ (Decrease)

% Change2007

2006

2007 v 2006

2007 v 2006Sales and Marketing
$   2,773,000

$   4,158,000

$    (1,385,000)

(33.31%)Bad Debts
4,111,000

3,079,000

1,032,000

33.52%General and Administrative
13,559,000

12,083,000

1,476,000

12.22%Impairment of Goodwill
284,000

17,000

267,000

N/ADepreciation and Amortization
1,154,000

756,000

398,000

52.65%Total
$ 21,881,000

$ 20,093,000

$
    1,788,000

8.90%  Consolidated operating expenses increased
by approximately $1,788,000 or approximately 8.90%, to approximately $21,881,000
for fiscal 2007, as compared to approximately $20,093,000 during fiscal 2006.
 Approximately $1,212,000 of the increase is related to NST, our VoIP and
international operations account for approximately $1,166,000 of the increase
and our wireline and corporate operations showed a reduction of approximately
$590,000 in related operating expenses.  Sales and Marketing  For fiscal 2007, sales and marketing
expenses decreased by approximately $1,385,000 to approximately $2,773,000 as
compared to approximately $4,158,000 reported in the prior year. This decrease
is primarily due to decreases in telemarketing costs associated with obtaining
customers as a result of opening our Philippines and Nebraska call centers.   Bad Debts  For fiscal 2007, our bad debt expense
increased by approximately $1,032,000 to approximately, $4,111,000 from
approximately $3,079,000 reported in the prior year. The increase is primarily
the result of additional bad debt incurred from MTCs operations. MTC reported
no bad debt during the 2006 fiscal year. We expect that our increased efforts,
close monitoring of our receivables, and the cessation of marketing our MTC
brand will enable us to effectively manage our bad debt exposure in the
future.  General and Administrative  General and administrative (G&A)
expenses include, but are not limited to salaries, rent, office expenses,
insurance, commissions, telephone, bank and credit card processing fees, license
expense and registration fees. G&A expenses increased by approximately
$1,476,000, for fiscal 2007 compared to the same period in 2006. This was due
primarily to an increase in costs associated with both our domestic and
international VoIP initiatives and development and launch of Magellan services. For fiscal 2007
approximately $1,623,000, of the increase is related to our VoIP and
international operations which was offset by a decrease of approximately
$888,000 which is related to our wireline and corporate operations. The portion
of wireline G&A associated with Midwest and NST totaled approximately
$741,000. Other factors include increases in rent, total increase of
approximately $140,000, general office expenses and insurance costs, total
increase of approximately $55,000 and our increase in salaries and payroll
related expense, totaling approximately $1,389,000, due to having approximately
150 more employees as of December 31, 2007, than we had at December 31, 2006.
 We believe that G&A expense will increase in 2008, as compared to
2007, due to the inclusion of the international operations, Midwest and NST for
the full twelve months.  17     Impairment of
Goodwill  At March 31, 2007, the Company evaluated
the goodwill associated with the purchase of Triamis Group Limited (Triamis)
and deemed the carrying value of the goodwill to be impaired. In accordance with
FASB 142 the Company wrote down the goodwill with an impairment charge of
$284,000.  Depreciation and Amortization  Depreciation and amortization expense
increased approximately $398,000 during fiscal 2007, compared to the prior year,
due to additions of depreciable office equipment, time associated with our
rollout of VoIP, which was capitalized and depreciated in accordance with
Statement of Position (SOP) 98-1, and our expenditures relating to leasehold
improvements which were made during the build-out of our Florida office.
Depreciation and amortization associated with Midwest and NST totaled
approximately $62,000.  Depreciation on equipment and capitalized
software costs are calculated using the straight line method and declining
balance method over a three (3) year period. Amortization of leasehold
improvements and other assets is computed using the straight-line method over
the lesser of the estimated useful lives of the asset or the remaining lease
term. The following table compares our operating expenses for
the years ended December 31, 2006 and 2005:  Year Ended
December 31,

Year Ended
December 31,

Increase/ (Decrease)

% Change2006

2005

2006 v 2005

2006 v 2005Sales and Marketing
$  4,158,000

$   4,336,000

$   (178,000)

(4.11)%Bad Debts
3,079,000

5,382,000

(2,303,000)

(42.79)%General and Administrative
12,083,000

8,978,000

3,105,000

34.58%Impairment of Goodwill
17,000

-

17,000

-%Depreciation and Amortization
756,000

314,000

442,000

140.76%Total
$20,093,000

$ 19,010,000

$ 1,083,000

5.67%  Consolidated operating expenses increased
by approximately $1,083,000 or approximately 5.67%, to approximately $20,093,000
for fiscal 2006, as compared to approximately $19,010,000 during fiscal 2005.
 The increase is due to expenses incurred relating to the hiring,
development and deployment of personnel, software systems and infrastructure
necessary to support CCCs operations, and the expansion of our domestic and
international deployment of VoIP services during the 2006 period.  Sales and Marketing  For fiscal 2006, sales and marketing
expenses decreased by approximately $178,000 to approximately $4,158,000 as
compared to approximately $4,336,000 reported in the prior year. These decreases
are primarily due to a reduction in telemarketing costs during 2006, as compared
to 2005, when we were aggressively growing our retail wireline customer base.
 Although we will increase our efforts to add additional retail wireline
customers and market our VoIP and Magellan services on an international scale
we expect our sales and marketing expenses to decrease in 2007 with the opening
of our call center in the Philippines.  Bad Debts  For fiscal 2006, our bad debt expense
decreased by approximately $2,303,000 to approximately $3,079,000, from
approximately $5,382,000, reported in the prior year. The decrease is primarily
due to the write-off of the bulk of our questionable receivables throughout
fiscal 2005 and qualifying our new customers through credit scoring.
    We anticipate that doubtful accounts and/or bad debt
will continue to represent a significant portion of our expenses.  18      General and Administrative  General and administrative expenses
include, but are not limited to salaries, rent, office expenses, insurance,
commissions, telephone, bank and credit card processing fees, license expense
and registration fees. G&A expenses increased by approximately $3,105,000,
for fiscal 2006 compared to the same period in 2005. This was due primarily to
increase in costs associated with both our domestic and international VoIP
initiatives and development of Magellan.  Other factors include increases
in rent, total increase of approximately $342,000, general office expenses and
insurance costs, total increase of approximately $291,000  and our increase
in salaries totaling approximately $2,152,000, due to having thirty-one (31)
more employees as of December 31, 2006, than we had at December 31, 2005.  Impairment of Goodwill  At December 31, 2006, the Company evaluated
the goodwill associated with the purchase of our majority owned Brazilian
entity, Canal West, and deemed the carrying value of the goodwill to be
impaired. In accordance with FASB 142 the Company wrote down the goodwill to
$0.  Depreciation and Amortization  Depreciation and amortization expense
increased approximately $442,000 during fiscal 2006, compared to the prior year,
due to additions of depreciable office equipment, time associated with our
rollout of VoIP, which was capitalized and depreciated in accordance with
Statement of Position (SOP) 98-1, and our expenditures relating to leasehold
improvements which were made during the build-out of our Florida office.  Depreciation on equipment and capitalized
software costs are calculated using an accelerated method and the straight line
method over a three (3) year period. Amortization of leasehold improvements and
other assets is computed using the straight-line method over the estimated
useful lives of the asset or the remaining lease term.  LONG TERM DEBT OBLIGATION Long-term debt and operating lease obligations as of
December 31, 2007, mature as follows:  Payments dueLess than





More ThanObligations

Total

1 year

2-3 years

4-5 years

5 yearsNotes Payable

$   1,757,000

$
       639,000

$   1,118,000

$
               -

$
               -Telephone Capital Lease

42,000

15,000

27,000

-

-Rental (Office)

1,731,000

469,000

774,000

488,000

-TOTAL OBLIGATIONS

$   3,530,000

$
    1,123,000

$   1,919,000

$
    488,000

$
               -   19     Recent
Accounting Pronouncements  Statement of Financial Accounting
Standard No. 161, Disclosures About Derivative Instruments and Hedging
Activities (SFAS No. 161)  In March 2008, the Financial Accounting
Standards Board (FASB) issued FASB Statement No. 161, Disclosures About
Derivative Instruments and Hedging Activities.  The new standard is
intended to improve financial reporting about derivative instruments and hedging
activities by requiring enhanced disclosures to enable investors to better
understand their effects on an entitys financial position, financial
performance, and cash flows.  It is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008,
with early application encouraged.  The Company is currently evaluating the
impact of adopting SFAS. No. 161 on its financial statements.  Statement of Financial Accounting
Standard 141 Revised (SFAS No. 141(R)): Business Combinations  In December 2007, the FASB issued SFAS
No. 141(R), Business Combinations (Revised), to replace SFAS
No. 141, Business Combinations. SFAS No. 141(R) requires the
use of the acquisition method of accounting, defines the acquirer, establishes
the acquisition date and broadens the scope to all transactions and other events
in which one entity obtains control over one or more other businesses. This
statement is effective for business combinations or transactions entered into
for fiscal years beginning on or after December 15, 2008. We are still
evaluating the impact of SFAS No. 141(R), however, the adoption of this
statement is not expected to have a material impact on our financial position or
results of operations.  Statement of Financial Standard No. 160
(SFAS No. 160) Noncontrolling interest in Consolidated Financial Statements 
an amendment of ARB 51  In December 2007, the FASB issued SFAS
No. 160, Noncontrolling Interests in Consolidated Financial Statements 
an amendment of ARB No. 51. SFAS No. 160 establishes accounting
and reporting standards for the noncontrolling interest in a subsidiary and for
the retained interest and gain or loss when a subsidiary is deconsolidated. This
statement is effective for financial statements issued for fiscal years
beginning on or after December 15, 2008.  We do not expect a material
impact on our financial position or results of operations.  Statement of Financial Accounting
Standard 159 (SFAS 159): The Fair Value Option for Financial Assets and
Financial Liabilities  In February 2007, the FASB issued SFAS No.
159, "The Fair Value Option for Financial Assets and Financial Liabilities"
(SFAS No. 159). SFAS No. 159 permits entities to choose to measure, on an
item-by-item basis, specified financial instruments and certain other items at
fair value. Unrealized gains and losses on items for which the fair value option
has been elected are required to be reported in earnings at each reporting date.
SFAS No. 159 is effective for fiscal years beginning after November 15, 2007,
the provisions of which are required to be applied prospectively. The Company
expects to adopt SFAS No. 159 in the first quarter of 2008.  Statement of Financial Accounting Standard
No. 157, Fair Value Measurements (SFAS No. 157)  In September 2006, the FASB issued SFAS
No. 157, Fair Value Measurements (SFAS No. 157). SFAS
No. 157 defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles and establishes a hierarchy
that categorizes and prioritizes the sources to be used to estimate fair value.
SFAS No. 157 also expands financial statement disclosures about fair value
measurements. On February 12, 2008, the FASB issued FASB Staff Position
(FSP) 157-2 which delays the effective date of SFAS No. 157 for one year,
for all nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). SFAS No. 157 and FSP 157-2 are effective for
financial statements issued for fiscal years beginning after November 15,
2007. We will elect  a partial deferral of SFAS No. 157 under the
provisions of FSP 157-2 related to the measurement of fair value used when
evaluating goodwill, other intangible assets, and other long-lived assets for
impairment and valuing asset retirement obligations and liabilities for exit or
disposal activities. The impact of partially adopting SFAS No. 157
effective January 1, 2008 will not be material to our financial statements.  20     Financial
Accounting Standards Board (FASB) Interpretation No. 48; Accounting for
Uncertainty in Income Taxes (FIN48)  In June 2006, the Financial Accounting
Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109 (FIN
48), which provides clarification related to the process associated with
accounting for uncertain tax positions recognized in consolidated financial
statements. FIN 48 prescribes a more-likely-than-not threshold for financial
statement recognition and measurement of a tax position taken, or expected to be
taken, in a tax return. FIN 48 also provides guidance related to, among other
things, classification, accounting for interest and penalties associated with
tax positions, and disclosure requirements. We have adopted FIN 48 effective
January 1, 2007 and there is no impact of adopting FIN 48 on our consolidated
financial statements.  Item 7A. Quantitative and
Qualitative Disclosures About Market Risk  We earn a majority of our revenue in U.S.
dollars where our primary operating activities are located.  We also
maintain offices and operate in Brazil, Hong Kong, and the Philippines, which
creates an exposure to loss if any of those currencies appreciate against the
dollar.  We believe however, that any risk due to currency rate exchange
fluctuations is immaterial as our operations overseas do not represent a
majority of our business.  Item 8. Financial Statements
and Supplementary Data  The following consolidated financial
statements, notes thereto, and the related independent registered public
accounting firms report contained on page F-1 to the Companys consolidated
financial statements are herein incorporated:  Report of Independent Registered Public
Accounting Firm  Consolidated Balance Sheets  December 31,
2007 (restated)  and 2006  Consolidated Statements of Operations 
Years ended December 31, 2007 (restated), 2006, and 2005  Consolidated Statements of Stockholders
Equity (Deficit)  Years ended December 31, 2007 (restated), 2006, and 2005  Consolidated Statements of Cash Flows 
Years ended December 31, 2007 (restated), 2006, and 2005  Notes to Consolidated Financial Statements
 Years ended December 31, 2007 (restated), 2006, and 2005   Item 9. Changes In and
Disagreements With Accountants on Accounting and Financial
Disclosure  None.  21      Item 9A(T). Controls and
Procedures <R> (a) Evaluation
of Disclosure Controls and Procedures  Under the
supervision and with the participation of our management, including our Chief
Executive Officer (CEO) and Chief Financial Officer (CFO), we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as
amended (the  Act), as of the end of the period covered by this report.
Based on that evaluation, the CEO and CFO concluded that our disclosure controls
and procedures as of the end of the period covered by this report are
functioning effectively to provide reasonable assurance that the information
required to be disclosed by us in reports filed under the Act is (i) recorded,
processed, summarized, and reported within the time period specified in the
SECs rules and forms and (ii) accumulated and communicated to our management,
including the CEO and CFO, as appropriate to allow timely decisions regarding
disclosure. A control system cannot provide absolute assurance, however, that
the objectives of the control systems are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within a company have been detected. In
connection with the original filing of our annual report for the year ended
December 31, 2007 of Form 10-K, our management, with the participation
of our CEO and CFO, evaluated the effectiveness of our disclosure controls and
procedures and our internal control over financial reporting as of December 31,
2007 and, based on this evaluation, had previously concluded that our disclosure
controls and procedures were effective as of December 31, 2007. Subsequent to the evaluation made in connection with the filing of
our Form 10-K for the year ended December 31, 2007 and in connection with the
restatement and the filing of this Form 10-K/A, our management, with the
participation of our CEO and CFO, re-evaluated the effectiveness of the design
and operation of our disclosure controls and procedures and concluded that,
because of the material weakness in our internal control over financial
reporting, our disclosure controls and procedures were not effective as of
December 31,2007.  (b)
Managements Annual Report on Internal Control over Financial Reporting  Our
management, with the participation of our CEO and CFO, evaluated the
effectiveness or our disclosure controls and procedures as of December 31, 2007,
the period covered by this report.  The term disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act,
means controls and other procedures of a company that are designed to ensure
that information required to be disclosed by a company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SECs rules and forms.
 Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the companys management, including its
principal executive and principal financial officers, as appropriate to allow
timely decisions regarding required disclosure.  Management recognizes that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving their objectives and management
necessarily applies its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.    Further, because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements.  Therefore, even those systems determined to be
effective can provide only reasonable assurance of achieving their control
objectives.  In connection with the filing of the original Form 10-K in March
2007, our management included Managements Annual Report on Internal Control
over Financial Reporting therein, which expressed that management believed that
the Companys internal control over financial reporting was effective as of
December 31, 2007. As a result of the restatement of our consolidated financial
statements, we have subsequently concluded that a material weakness in internal
control over financial reporting existed as of December 31, 2007 and,
accordingly, have revised our conclusions based on a new assessment of the
effectiveness of our internal control over financial reporting and have now
concluded that our internal control over financial reporting was not effective
as of December 31, 2007. The Public Company Accounting Oversight Boards Auditing Standard
No. 2 defines a material weakness as a significant deficiency, or a
combination of significant deficiencies, that results in there being a more than
remote  22     likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected. Management identified a
material weakness in internal control over financial reporting in connection
with this revised assessment.  In making this
revised assessment, we used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control  Integrated Framework. Based on our revised assessment, we determined
that our internal control over financial reporting was not effective.  This annual
report does not include an attestation report of the Companys registered public
accounting firm regarding internal control over financial reporting.
 Managements report was not subject to attestation by the Companys
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only managements
report in this annual report.  (c) Changes in
Internal Control over Financial Reporting  No change in
our internal control over financial reporting occurred during the fiscal quarter
ended December 31, 2007 that has materially affected, or is reasonably likely to
affect, our internal control over financial reporting.  Subsequent to
December 31, 2007, the Company has implemented, or plans to implement, certain
measures to remediate the identified material weaknesses and to enhance the
Companys internal control over its quarterly and year-end financial reporting
processes. As of the date of the filing of this Annual Report on Form 10-K/A,
the Company has implemented the following measures:  

Increased the size, expertise and training of the finance
and accounting staff to include adequate resources for ensuring
GAAP.  

Enhanced
the accounting policies and procedures to provide adequate, sufficient,
and useful guidance.  

Increased the level of interdepartmental communication in a
way that will foster information sharing between our finance staff and
operational personnel. The Company
anticipates that these remediation actions represent ongoing improvement
measures.  Furthermore,
while the Company has taken steps to remediate the material weaknesses, these
steps may not be adequate to fully remediate those weaknesses, and additional
measures may be required. The effectiveness of its remediation efforts will not
be known until the Company can test those controls in connection with the
management tests of internal controls over financial reporting that the Company
will perform as of December 31, 2008.  </R>  Item 9B. Other
Information  None.  23      PART IIIItem 10.  Directors,
Executive Officers, and Corporate
Governance  Information regarding our directors and
executive officers is incorporated by reference to the section entitled
Election of Directors appearing in our Proxy Statement for out Annual Meeting
of Stockholders to be filed with the Securities and Exchange Commission (the
Commission) within 120 days after the of our year ended December 31, 2007.  Item 11.  Executive
Compensation  Information regarding executive
compensation is incorporated by reference to the section entitled Executive
Compensation appearing in our Proxy Statement for out Annual Meeting of
Stockholders to be filed with the Commission within 120 days after the of our
year ended December 31, 2007.  Item 12.  Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder
Matters  Information regarding security ownership of
certain beneficial owners and management is incorporated by reference to the
information set forth under the caption Security Ownership of Certain
Beneficial Owners and Management Ownership in our Proxy Statement for our
Annual Meeting of Stockholders to be filed with the Commission within 120 days
after the end of our year ended December 31, 2007.  Item 13.  Certain
Relationships and Related Transactions, and Director
Independence  Information regarding certain relationships
and related transactions is incorporated by reference to the information set
forth under the caption Certain Relationships and Related Transactions in our
Proxy Statement for our Annual Meeting of Stockholders to be filed with the
Commission within 120 days after the end of our year ended December 31,
2007.  Item 14.  Principal
Accountant Fees and Services  Information regarding our principal
accountant fees and services is incorporated by reference to the information set
forth under the caption Principal Accountant Fees and Services in our Proxy
Statement for the Annual Meeting of Stockholders to be filed with the Commission
within 120 days after the end of our year ended December 31, 2007.   24      PART IVItem 15.  Exhibits and
Financial Statement Schedules  Exhibit No.

Description2.1

Articles of Incorporation (incorporated by
reference to Exhibit B(1) of our Form 10-Q field withthe Commission on May 16, 2000).2.2

Revised Bylaws (incorporated by reference to
Exhibit B(4) of our Form 10-Q filed with theCommission on May 16, 2000).2.3

Articles of Merger of Vestex, Inc. and
CyberopticLabs, Inc. (incorporated by reference to Exhibit B(2) of our
Form 10-Q filed with the Commission on May 16, 2000)4.1

Specimen Common Stock Certificate (incorporated by
reference to Exhibit 4.1 of our Form 10-KSB filed with the Commission on April 14,
2001).10.1

Cordia Corporation 2001 Equity Incentive Plan
(incorporated by reference to Exhibit 10.1of ourForm 10-KSB filed with the Commission on April 14,
2001).10.2

Preferred Stock Purchase Agreement (incorporated by
reference to Exhibit 10.1 of our Form 8-Kfiled with the Commission on March 7,
2005)10.3

Registration Rights Agreement (incorporated by
reference to Exhibit 10.2 of our Form 8-K filedwith the Commission on March 7, 2005).10.4

Certificate of Designation of Preferences
(incorporated by reference to Exhibit 10.3 of our Form 8-K filed with the
Commission on March 7, 2005).10.5

Common Stock Purchase Warrant A (incorporated by
reference to Exhibit 10.4 of our Form 8-Kfiled with the Commission on March 7,
2005).10.6

Common Stock Purchase Warrant B (incorporated by
reference to Exhibit 10.5 of our Form 8-Kfiled with the Commission on March 7,
2005).  25      10.7

Amendment to Preferred Stock Purchase Agreement
(incorporated by reference to Exhibit 10.1of our Form 8-K/A filed with the Commission on
March 11, 2005).10.8

Agreement to Clarify the Terms of Warrant A and
Warrant B (incorporated by reference of Exhibit 10.1 to our Form 8-K/A
filed with the Commission on April 6, 2005).10.9

Common Stock Purchase Warrant A corrected as of
April 6, 2005 (incorporated by reference toExhibit 10.2 of our Form 8-K/A filed with the
Commission on April 6, 2005).10.1

Common Stock Purchase Warrant B corrected as of
April 6, 2005 (incorporated by reference toExhibit 10.3 of our Form 8-K/A filed with the
Commission on April 6, 2005).10.11

Amendment to Registration Rights Agreement
(incorporated by reference to Exhibit 10.1 of ourForm 8-k filed with the Commission on April 27,
2005).  10.12

Qwest Master Services Agreement for Qwest Platform
Plus Service (incorporated by reference to Exhibit 10.12 of our Amendment
No. 4 to Form SB-2/A filed with the Commission on August 15, 2005,
Registration No. 333-124996)10.13

Verizon Wholesale Advantage Services Agreement
(certain portions were omitted based upon a request for confidential
treatment;  Non public information has been filed with the
Commission)(incorporated by reference to Exhibit 10.13
of our Amendment No. 5 to Form SB-2/A filed with the Commission on August
29, 2005, Registration No. 333-124996)11.1

Computation of Per Share (Loss) Earnings21

Subsidiaries  list of all subsidiaries,
jurisdiction of incorporation and names under whichsubsidiaries do business.23

Consent of Lazar Levine & Felix, LLP 
Independent Registered Public Accounting Firm31.1

Certification of Cordia Corporations Principal
Executive Officer, Joel Dupré, pursuant toSection 302 of the Sarbanes-Oxley Act of
2002.31.2

Certification of Cordia Corporations Principal
Financial Officer, Gandolfo Verra, pursuant toSection 302 of the Sarbanes-Oxley Act of
2002.32.1

Certificate of Cordia Corporations Principal
Executive Officer, Joel Dupré, pursuant toSection 906 of the Sarbanes-Oxley Act of
2002.32.2

Certification of Cordia Corporations Principal
Financial Officer, Gandolfo Verra, pursuantto Section 906 of the Sarbanes-Oxley Act of
2002.      26      SIGNATURES   In accordance Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized. CORDIA
CORPORATION  May 20, 2008

By: /s/ Joel DupréJoel DupréChief Executive OfficerMay 20, 2008

By: /s/ Gandolfo VerraGandolfo VerraChief Financial
Officer    In accordance with the Exchange Act, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities stated on May 20, 2008.   Signature

Title/s/ Joel Dupré

Chief Executive Officer, Chairman of
the Board/s/ Kevin Griffo

Director/s/ John Scagnelli

Director/s/ Robert Majernik

Director/s/ Yoshiyasu Takada

Director   27        CORDIA CORPORATION AND
SUBSIDIARIES DECEMBER 31, 2007, 2006, AND 2005   INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS Page(s)Report of Independent Registered Public Accounting
Firm
F-1Consolidated Balance Sheets
F-2Consolidated Statements of Operations
F-3Consolidated Statements of Stockholders' Equity
(Deficit)
F-4Consolidated Statements of Cash Flows
F-5Notes to Consolidated Financial Statements
F-6 - F-30          REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM  The Board of Directors and Stockholders Cordia Corporation  We have audited the accompanying
consolidated balance sheets of Cordia Corporation and subsidiaries as of
December 31, 2007 and 2006, and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for each of the years
in the three year period ended December 31, 2007. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits. We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United
States).  Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Companys internal control over financial reporting.
Accordingly, we express no such opinion.  An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable
basis for our opinion. In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects,
the financial position of Cordia Corporation and subsidiaries as of December 31,
2007 and 2006, and the results of their operations and their cash flows for each
of the years in the three year period ended December 31, 2007 in conformity with
accounting principles generally accepted in the United States of America.  The accompanying financial statements have
been prepared assuming that the company will continue as a going concern. As
discussed in Note 1 to the financial statements, the Company has negative
working capital, a stockholders deficit and has suffered losses from operations
that raise substantial doubt about its ability to continue as a going concern.
Managements plans in regard to those matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.  As discussed in Note 2 to the Consolidated
Financial Statements, the Company has restated its Consolidated Financial
Statements for the year ended December 31, 2007.   /s/ LAZAR LEVINE & FELIX LLP  New York, New York March 28, 2008 (May 20, 2008, as to the effects of
the restatement discussed in Note 2)        F-1      CORDIA CORPORATION AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETS <R> December 31,2007

2006As RestatedSee Note 2ASSETSCurrent
AssetsCash
 and cash equivalents
$
               999,039

$
                370,832Cash
 restricted
173,848

1,003,707Accounts
receivable, less allowance for doubtful accounts of2,002,823
(2007) and  $931,050 (2006)
2,178,984

4,538,342Prepaid
expenses
1,427,093

620,338Accrued
usage receivable
314,215

340,498TOTAL
CURRENT ASSETS
5,093,179

6,873,717Property
and equipment, at costOffice
and computer equipment
2,006,879

1,166,522Computer
software
2,059,386

1,353,670Leasehold
improvements
561,505

370,2364,627,770

2,890,428Less:
Accumulated depreciation/amortization
2,237,604

1,110,326NET
PROPERTY AND EQUIPMENT
2,390,166

1,780,102Other
AssetsGoodwill
3,398,972

383,317Security
deposits and other assets
861,791

253,417Investment
in unconsolidated affiliates
336,541

-TOTAL
OTHER  ASSETS
4,597,304

636,734TOTAL
ASSETS
$
          12,080,649

$
             9,290,553LIABILITIES
AND STOCKHOLDERS' (DEFICIT)Current
LiabilitiesCapital
lease obligations, current portion
$
                 12,953

$
                  11,990Note
payable, current portion
557,062

-Accounts
payable
4,018,814

3,445,144Accrued
expenses
939,769

1,000,569Billed
 taxes payable
8,029,921

3,966,608Deferred
revenue
1,315,900

1,198,727TOTAL
CURRENT LIABILITIES
14,874,419

9,623,038Noncurrent
LiabilitiesDeferred
rent
82,378

72,037Deferred
income tax liability
2,004

-Notes
Payable, net of current portion
1,058,804

-Capital
lease obligation, net of current portion
25,221

38,175TOTAL
NONCURRENT LIABILITIES
1,168,407

110,212MINORITY INTEREST
IN SUBSIDIARY
-

2,745COMMITMENTS
AND CONTINGENCIESStockholders'
(Deficit)Preferred
stock, $.001 par value; 5,000,000 shares authorized,707,800
(2006)  shares issued and outstanding
-

708Common
stock, $.001 par value; 100,000,000 shares authorized,6,916,574
(2007) and  5,808,774 (2006) shares issued
6,917

5,809Additional
paid-in capital
6,707,581

6,159,395Comprehensive
(loss)
(48,121)

(3,540)Accumulated
deficit
(10,307,761)

(6,502,020)(3,641,384)

(339,648)Less:
Treasury stock, at cost 589,186 (2007), and 187,594 (2006) common shares
(320,793)

(105,794)TOTAL
STOCKHOLDERS' (DEFICIT)
(3,962,177)

(445,442)TOTAL
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
$
          12,080,649

$
             9,290,553 </R> See notes to consolidated
financial statements.   F-2       CORDIA CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS   Years Ended December 31,<R>2007

2006

2005As RestatedSee Note 2RevenuesWireline services
$
         42,061,489

$
            36,349,028

$
        41,202,610VoIP
services
920,295

516,965

35,770Business process
outsourced services
387,394

638,887

712,83543,369,178

37,504,880

41,951,215Cost of RevenuesResale
and wholesale line charges
25,297,665

20,308,992

21,807,095Gross
Profit
18,071,513

17,195,888

20,144,120Operating
ExpensesSales and
marketing
2,772,471

4,158,275

4,336,415Bad debts
4,110,988

3,079,163

5,381,753General and
administrative
13,559,472

12,082,509

8,978,211Impairment of
Goodwill
284,117

17,067

-Depreciation
1,153,915

755,896

313,99821,880,963

20,092,910

19,010,377Operating
(Loss) Income
(3,809,450)

(2,897,022)

1,133,743Other
Income (Expenses)Interest
income
34,974

35,998

35,097Interest
expense
(29,546)

(3,690)

(8,739)5,428

32,308

26,358(Loss) Income
Before Income Taxes and Minority Interest
(3,804,022)

(2,864,714)

1,160,101Income
Tax Provision (Benefit)
4,464

254,669

(105,359)(Loss) Income
Before Minority Interest
(3,808,486)

(3,119,383)

1,265,460Minority
interest in loss of subsidiary
2,745

24,092

-Net (Loss) Income
(3,805,741)

(3,095,291)

1,265,460Dividends on
preferred stock
-

-

(212,415)Net (Loss) Income
applicable to common stockholders
$
         (3,805,741)

$
            (3,095,291)

$
          1,053,045Basic
(Loss) Income per share
$
                  (0.67)

$
                     (0.55)

$
                   0.23Weighted
Average Common Shares Outstanding
5,674,397

5,602,370

4,675,779Diluted
(Loss) Income per share
$
                  (0.67)

$
                     (0.55)

$
                   0.20Weighted Average
Common and Common Equivalent Shares Outstanding
5,674,397

5,602,370

6,379,229<?R> See notes to consolidated
financial statements.     F-3





CORDIA CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DEFICIT)YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005 Preferred Stock
Common Stock

Treasury
StockAdditionalNumber of

Number of

Paid-In
Number of

Comprehensive
Accumulated
TotalShares
Amount
Shares
Amount
Capital
Shares
Amount
Loss
Deficit
Equity/DeficitBalance,
December 31, 2004
-
$
           -
4,541,210
$
      4,541
$3,660,087
77,694
$
    (55,998)
$
                       -
$
  (4,459,774)
$
       (851,144)Preferred Stock
IssuedNet of fees
1,500,000
1,500


1,453,500




1,455,000Warrant
valuation




122,415



(122,415)
-Beneficial
conversion feature




90,000



(90,000)
-Common Stock
issued:Employees


30,000
30
23,970




24,000Non employees


36,000
36
44,964




45,000Preferred shares
converted to common
(702,200)
(702)
702,200
702





-Exercise of
Warrant A


330,000
330
659,670




660,000Treasury Shares
Purchased





100,000
(40,000)


(40,000)Net Income








1,265,460
1,265,460Balance,
December 31, 2005
797,800
798
5,639,410
5,639
6,054,606
177,694
(95,998)
-
(3,406,729)
2,558,316Common Stock
issued:Acquisition 
Triamis Group Ltd.


79,364
80
199,918




199,998Preferred shares
converted to common
(90,000)
(90)
90,000
90





-Warrant Purchase
Agreement




(309,000)




(309,000)Treasury Shares
Purchased





9,900
(9,796)


(9,796)Stock option
expense




213,871




213,871Foreign Currency
Transaction







(3,540)

(3,540)Net Loss








(3,095,291)
(3,095,291)Balance,
December 31, 2006
707,800
708
5,808,774
5,809
6,159,395
187,594
(105,794)
(3,540)
(6,502,020)
(445,442)Common stock
issued:Non
employees


100,000
100
69,900




70,000Acquisition
 Midwest


300,000
300
239,700




240,000Preferred
shares converted to common
(707,800)
(708)
707,800
708





-Treasury
Shares Purchased  Common





163,792
(96,099)


(96,099)Treasury
Shares Purchased  Preferred





237,800
(118,900)


(118,900)Stock
option expense




238,586




238,586Comprehensive
Loss - Foreign Currency Transactions







(44,581)

(44,581)Net
Loss (As restated)








(3,805,741)
(3,805,741)Balance,
December 31, 2007 (As restated)
-
$
           -
6,916,574
$
      6,917
$6,707,581
589,186
$
  (320,793)
$
           (48,121)
$
(10,307,761)
$
    (3,962,177) See notes
to consolidated financial statements.


F-4





CORDIA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For
the Years Ended December 31<R>2007

2006

2005As RestatedSee Note 2Cash Flows
From Operating ActivitiesNet
(Loss) Income from operations
$
     (3,805,741)

$
   (3,095,291)

$
  1,265,460Adjustments
to reconcile net income (loss) to net cash(Used)
 provided by operations(Gain)
loss on investments
2,781

-

-Compensatory
stock expense
238,585

213,871

61,500Bad
debt expense
4,110,988

3,079,163

5,381,753Depreciation
and amortization expense
1,186,997

755,896

313,998Impairment
of goodwill
284,117

17,067

-Deferred
taxes
2,004

269,000

(269,000)Minority
interest
(2,745)

(24,092)

-(Increase)
decrease in assets, net of acquisition:Restricted
cash
829,859

397,351

(1,401,058)Accounts
receivable
(776,351)

(1,624,672)

(6,951,163)Prepaid
expenses and other current assets
(501,754)

(105,762)

(182,656)Accrued
usage receivable
76,130

(7,964)

(69,520)Security
deposits
(50,958)

(84,226)

(101,044)Increase
(decrease) in liabilities:Accounts
payable
(24,934)

736,360

(607,338)Accrued
expenses
(429,950)

495,659

(107,975)Taxes
Payable
2,468,395

211,214

2,213,369Income
taxes payable
-

(109,000)

109,000Unearned
income
(279,677)

37,165

293,835Other
long term assets
-

119,305

(75,000)Deferred
rent
10,341

26,627

42,570NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
3,338,087

1,307,671

(83,269)Cash Flows
From Investing ActivitiesCapitalized
software costs
(705,716)

(751,658)

(602,012)Leasehold
improvements
(191,269)

(115,186)

(255,050)Purchase
of property and equipment
(700,660)

(378,713)

(487,305)Payments
for majority interest in Canal West, net of cash acquired
(25,000)

(34,277)

-Investment
in unconsolidated affiliates
(339,322)

-

-Payment
for acquisition of Midwest, net of cash acquired
(342,207)

-

-Payment
for acquisition of Triamis, net of cash acquired
-

(211,410)

-NET
CASH USED BY INVESTING ACTIVITIES
(2,304,174)

(1,491,244)

(1,344,367)Cash Flows
From Financing ActivitiesNet
proceeds from issuance of preferred stock
-

-

1,455,000Net
proceeds from exercise of warrants
-

-

660,000Principal
payments on capital leases
(11,991)

(11,099)

(2,643)Payment
of long-term debt
(134,134)

-

-Payments
of loans payable to affiliates
-

(57,000)

-Payment
of warrant buyback
-

(309,000)

-Purchase
of treasury stock
(215,000)

(9,796)

(40,000)NET
CASH  (USED) PROVIDED BY FINANCING ACTIVITIES
(361,125)

(386,895)

2,072,357Effect
of exchange rate changes on cash
(44,581)

(3,540)

-(Decrease)
Increase in Cash
628,207

(574,008)

644,721Cash,
Beginning
370,832

944,840

300,119Cash,
Ending
$          999,039

$       370,832

$     944,840Supplemental
Disclosures of Cash Flow Information - Cash paid during the year
 for:Interest
$            29,546

$
           3,592

$
         8,739Income
Tax
$
              3,538

$       175,000

$       54,641Supplemental
Disclosure of Non Cash investing and financing activities:Restricted Common
stock issued:36,000
shares for investor relations agreement valued at $45,000;  (18,000
shares earned and expended)
$
                     -

$
                   -

$       22,500Stock
issued to non-employees (100,000 shares)
70,000

-

-Issuance of
 note payable
1,750,000

-

-Stock issued in
Midwest acquisition (300,000 shares)
240,000

-

-Stock issued in
Triamis acquisition (79,364 shares)
-

200,000

-Conversion of
preferred stock (708,000 shares)
708

90

-Purchase
accounting adjustment for goodwill
1,179,268

52,001

-Payment for
investment in Canal West reflected in accounts payable
-

25,000

-The Company
obtained capital lease equipment in the amount of $63,907 during fiscal
year ended December 31, 2005
</R>


F-5


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES AND PRACTICES  Operations  Cordia Corporation and its wholly-owned
subsidiaries (the Company) operate as a competitive local exchange carrier,
long distance provider, VoIP provider and valued added service provider on a
domestic and international scale.  The Company currently provides local and
long distance telecommunications services to businesses and individuals in
Colorado, Idaho, Iowa, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey,
New Mexico, New York, North Dakota, Oregon, Pennsylvania, Utah, Virginia,
Washington, and Wisconsin. The telecommunications services provided by Cordia
Communications Corp. (CCC), My Tel Co, Inc. (MTC), and Northstar Telecom
(NST) are subject to regulation at the federal, state and local levels. Delays
in receiving required regulatory approvals or the enactment of new adverse
regulation or regulatory requirements may have a material adverse effect upon
our operations.  The Company operates through different subsidiaries, but
management believes that all such subsidiaries constitute a single operating
segment since the subsidiaries have similar economic characteristics.  Principles of Consolidation  The consolidated financial statements
include the accounts of Cordia Corporation (Cordia) and its subsidiaries 
companies that it controls and in which it has a majority voting interest. All
material intercompany balances and transactions have been eliminated.  Use of Estimates  The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Accordingly, actual
results could differ from those estimates.  Going Concern <R> These consolidated financial statements
have been prepared assuming that the Company will continue as a going concern.
The Company has incurred a net loss of approximately $3,806,000 for the 2007
year and also has a negative working capital of approximately $9,781,000 and a
deficiency in stockholders' equity of approximately $3,962,000 as of December
31, 2007. These conditions raise substantial doubt about the Company's ability
to continue as a going concern. Management believes that the Company will be
able to generate sufficient cash flows from operations to meet its obligations
as they come due during 2008. In its efforts to strengthen its financial
position the Company may also have to raise cash from additional sources such as
shortterm funding, which may include receivables financing, to cover short-term
cash deficiencies that may arise.  </R>  Cash and Cash Equivalents  The Company classifies as cash and cash
equivalents amounts on deposit in banks and cash invested in various highly
liquid instruments with maturities of three months or less at the time of
purchase.


F-6


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES AND PRACTICES (cont'd)  Accounts Receivable  Accounts receivable are shown net of
allowance for bad debts.  The Company provides for estimated losses on
accounts receivable, based on prior bad debt experience and a review of existing
receivables. The Company recognized bad debt expense of $4,111,000 and
$3,079,000, in fiscal 2007 and 2006, respectively, to increase its accounts
receivable allowance.  In addition the allowance was increased in 2007 by
$390,000 with the acquisition of Midwest Marketing Group, Inc.  The Company
wrote off uncollectible accounts net of recoveries of $3,429,000 and $3,013,000
in 2007 and 2006, respectively  Fair Value of Financial Instruments  The carrying amounts of cash, accounts
receivable, accounts payable and accrued expenses approximate fair value due to
the short-term nature of these items. The carrying amount of debt also
approximates fair value since the interest rates on these instruments
approximate market interest rates.  Property and Equipment  Property and equipment are stated at cost
less accumulated depreciation. For financial reporting purposes, depreciation is
provided using accelerated methods over useful lives ranging from three to seven
years for furniture and equipment.  Capitalized software is depreciated
using the straight-line method over a three (3) year period.  Leasehold
improvements are amortized over the lesser of its economic life or the life of
their respective leases.   Expenditures that significantly increase
value or extend useful asset lives are capitalized. Expenditures for
maintenance, repairs and renewals of a minor nature are charged against
operations as incurred.  Goodwill  Goodwill represents the excess of the cost
of an acquired entity over the net of the amounts assigned to assets acquired
and liabilities assumed. The Company accounts for its goodwill in accordance
with Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and
Other Intangible Assets, which requires the company to test goodwill for
impairment annually or whenever events or changes in circumstances indicate that
the carrying value of an asset may not be recoverable, rather than amortize.  During 2007, the Company determined that
the carrying amount of the goodwill associated with the purchase of Triamis
exceeded its fair value, which was estimated based on the present value of
expected future cash inflows.  Accordingly, a goodwill impairment loss of
approximately $284,000 was recognized.  At December 31, 2006, the Company evaluated
the goodwill associated with the purchase of our majority owned Brazilian
entity, Canal West, and deemed the carrying value of the goodwill to be
impaired. In accordance with FASB 142 the Company wrote down the goodwill to $0
and recognized a loss of approximately $17,000.  The Company has determined that there were
no other impairment adjustments required as of December 31, 2007 or 2006.  The following table shows the changes to
goodwill for the fiscal year ended December 31, 2007 and 2006. 2007
2006<R>

As restatedSee Note 2Beginning Balance

$
         383,000
$
                   -Acquisitions

3,300,000
383,000Impairment

(284,000)
-Ending Balance
                                  </R>

$
      3,399,000
$
       383,000


F-7


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES AND PRACTICES (cont'd)  Intangible Assets  Intangible assets, which were comprised of
customer lists, are included in security deposits and other assets on our
balance sheet At December 31, 2007and 2006, our intangible assets are as
follows:  Gross Carrying
Amount

Accumulated Amortization

Net Carrying
AmountDecember 31, 2007
$
    713,000

$
    156,000

$
    557,000December 31, 2006
$
    105,000

$
      96,000

$
        9,000  The increase in the gross carrying value of
customer lists at December 31, 2007 relates to the acquisition of NST (see Note
6).  Future amortization expense associated with
intangible assets is $151,000, $203,000 and $203,000 in 2008, 2009, and 2010,
respectively, totaling $557,000.  The Company amortizes its customer lists
over three (3) years on a straight line basis. Amortization expense associated
with intangible assets for fiscal years 2007, 2006, and 2005 was $60,000,
$77,000, and $19,000, respectively.  Capitalized Software  The Company capitalizes both internal and
external costs to develop computer software for internal use. These costs are
accounted for under the provisions of Statement of Position (SOP) 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use. SOP 98-1 permits the capitalization of certain costs,
including internal payroll costs, incurred in connection with the development or
acquisition of software for internal use. Accordingly, certain costs of this
internal-use software are capitalized beginning at the software application
development phase.  Capitalized software costs are amortized
using the straight-line method over the expected useful life of the software,
which is generally three years.  Concentrations of Credit Risk, Significant
Customers and Key Suppliers  Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of cash
and cash equivalents and accounts receivable.  The Company from time to time may maintain
cash balances, which exceed the Federal Depository Insurance Coverage limit. The
Company performs periodic reviews of the relative credit rating of its bank to
lower its risk.  At December 31, 2007, the Company had cash and cash
equivalents held in financial institutions in excess of Federal Deposit
Insurance Corporation (FDIC) limits in the amount of approximately
$600,000.  The Companys accounts receivable subject
the Company to credit risk, as collateral is generally not required. The large
number of customers mitigates the concentration of credit risk. No customer
represented more than 10% of the Companys consolidated operating revenues for
each of the years ended December 31, 2007, 2006 and 2005.  No customer
represented more than 10% of the Companys account receivable balance at
December 31, 2007 and 2006. See bad debt discussion below.  The Company leases network space from
incumbent local exchange carriers (ILECs) that are major competitors of the
Company, and is dependent upon the availability of network owned by the ILECs.
The


F-8


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES AND PRACTICES (cont'd)  Company is exposed to risk associated with
failing to obtain favorable renewal contract terms with these suppliers, which
include rates that are subject to industry regulation, and to risk regarding the
timeliness of supplier processing of the Companys orders for its customers.  The Company primarily uses three vendors
for obtaining and providing telecommunication services. If these vendors were
unable to meet the Companys needs, management believes that the Company could
obtain a portion of another carrier network on comparable terms and that its
operating results would not be materially adversely affected; however, if
unfavorable terms could not be reached or services were disrupted, the Company
may incur significant costs to integrate its network to the new network, which
could have a material adverse effect on the Companys financial condition and
results of operations.  Revenue Recognition  Telecommunication income is recognized as
services are provided. The Company recognizes revenues in accordance with the
Securities and Exchange Commission, Staff Accounting Bulletin 104, Revenue Recognition (SAB 104). Under SAB 104,
revenue is recognized when there is persuasive evidence of an arrangement,
delivery has occurred or services have been rendered, the sales price is
determinable, and collectability is reasonably assured.  Amounts invoiced and collected in advance
of being earned are recorded as deferred revenue.  Services
utilized/rendered, but not billed are recorded as accrued usage receivable.  Advertising Costs  Advertising costs are expensed as incurred.
For the years ended December 31, 2007, 2006 and 2005, which are included in
sales and marketing costs, aggregated approximately $2,465,000, $3,835,000 and
$4,336,000, respectively.  Comprehensive Income (Loss)  Comprehensive Loss consists of foreign
currency translations adjustments.  Comprehensive Income (Loss) is as
follows:  Year Ended December 31,

2007
2006
2005As restated<R>

See Note 2Net (Loss) Income

$(3,805,741)
$(3,095,291)
$1,265,460Foreign currency translation, net
 $0 tax benefit
(44,617)
(3,540)

-Comprehensive (Loss) Income

$(3,850,358)
$(3,098,831)
$1,265,460 </R> Stock-Based Compensation  SFAS No. 148, Accounting for Stock Based
Compensation-Transition and Disclosure, (SFAS No. 148), amended FASB Statement
No. 123, Accounting for Stock-based Compensation, (SFAS No. 123), and provided
alternative methods of transition for a voluntary change to the fair value
method of accounting for stock-based compensation. However, it allowed an entity
to continue to measure compensation cost for those instruments using the
intrinsic value method of accounting prescribed by Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees, (APB No. 25),
provided it discloses the effect of SFAS No. 123, as amended by SFAS No. 148, in
the footnotes to the financial statements. Until the adoption of SFAS No.
123(R), Share-Based Payment, which became effective for the Company in January
2006, the Company chose to continue to account for stock-based compensation
using the intrinsic value method for prior periods.  See note 4 below for
accounting under SFAS No. 123(R).


F-9


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES AND PRACTICES (cont'd)  Compensation expense, if any, based on the
intrinsic value method is recognized on a straight-line basis over the vesting
term. Had the Company elected to recognize compensation cost based on fair value
of the stock options at the date of grant under SFAS No. 148, such costs would
have been recognized ratably over the vesting period of the underlying
instruments and the Companys net income applicable to common shareholders and
earnings per share would have changed to the pro forma amounts indicated in the
table below:  As reported
Pro Forma2005Net Income applicable to common stockholders
$1,053,000
$
   825,000Basic Income per share
$
        0.23
$
         0.18Diluted Income per share
$
        0.20
$
         0.13  The fair value of each option grant was
estimated on the date of the grant using the Black-Scholes option-pricing model
with the following weighted-average assumptions for 2005, expected volatility of
112.09%; risk-free rate of  4.06%; and expected life of 3 to 4 years.  Income Taxes The Company recognizes deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the Company's financial statements or tax returns. Under
this method, deferred tax assets and liabilities are determined based on
temporary differences between the financial statement carrying amounts and the
tax bases of assets and liabilities using enacted tax rates in effect for the
years in which the differences are expected to reverse.  A valuation allowance is provided to the
extent the Company cannot determine that the ultimate realization of net
deferred tax assets is more likely than not.  Earnings (loss) Per Share  Earnings (loss) per common share are
calculated under the provisions of SFAS No. 128, Earnings per Share. SFAS No.
128 requires the Company to report both basic earnings per share, which is based
on the weighted-average number of common share outstanding, and diluted earnings
per share, which is based on the weighted-average number of common shares
outstanding plus all potential dilutive common shares outstanding. Diluted
earnings (loss) per share for 2007 and 2006 is the same as basic earnings per
share as the effect of the common stock purchase options and warrants
outstanding, on such calculation, would have been anti-dilutive.  Weighted average number of shares
outstanding was 5,674,397, 5,602,370 and 4,675,779, for basic earnings per
share, and 5,674,397, 5,602,370 and 6,379,229, for diluted earnings per share
for 2007, 2006 and 2005, respectively.   In 2007 and 2006, a total of
110,408 and 521,182 respectively, potential dilutive shares were excluded in the
calculation of diluted earnings per share as their impact was anti-dilutive.  In 2005,  diluted earnings per share
was calculated by dividing net income by  average number of common shares
increased by 1,104,584 shares for the assumed conversion of the preferred stock
and 598,866 shares for the assumed exercise of stock options.


F-10


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES AND PRACTICES (cont'd)  Recent Accounting Pronouncements Affecting
the Company  Statement of Financial Accounting
Standard No. 161, Disclosures About Derivative Instruments and Hedging
Activities (SFAS No. 161)  In March 2008, the Financial Accounting
Standards Board (FASB) issued FASB Statement No. 161, Disclosures About
Derivative Instruments and Hedging Activities.  The new standard is
intended to improve financial reporting about derivative instruments and hedging
activities by requiring enhanced disclosures to enable investors to better
understand their effects on an entitys financial position, financial
performance, and cash flows.  It is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008,
with early application encouraged.  The Company is currently evaluating the
impact of adopting SFAS. No. 161 on its financial statements.  Statement of Financial Accounting Standard 141 Revised
(SFAS No. 141(R)): Business Combinations  In December 2007, the FASB issued SFAS
No. 141(R), Business Combinations (Revised), to replace SFAS
No. 141, Business Combinations. SFAS No. 141(R) requires the
use of the acquisition method of accounting, defines the acquirer, establishes
the acquisition date and broadens the scope to all transactions and other events
in which one entity obtains control over one or more other businesses. This
statement is effective for business combinations or transactions entered into
for fiscal years beginning on or after December 15, 2008. We are still
evaluating the impact of SFAS No. 141(R), however, the adoption of this
statement is not expected to have a material impact on our financial position or
results of operations.  Statement of Financial Standard No. 160 (SFAS No.
160) Noncontrolling interest in Consolidated Financial Statements  an
amendment of ARB 51  In December 2007, the FASB issued SFAS
No. 160, Noncontrolling Interests in Consolidated Financial Statements 
an amendment of ARB No. 51. SFAS No. 160 establishes accounting
and reporting standards for the noncontrolling interest in a subsidiary and for
the retained interest and gain or loss when a subsidiary is deconsolidated. This
statement is effective for financial statements issued for fiscal years
beginning on or after December 15, 2008.  We do not expect a material
impact on our financial position or results of operations.  Statement of Financial Accounting
Standard 159 (SFAS 159): The Fair Value Option for Financial Assets and
Financial Liabilities  In February 2007, the FASB issued SFAS No.
159, "The Fair Value Option for Financial Assets and Financial Liabilities"
(SFAS No. 159). SFAS No. 159 permits entities to choose to measure, on an
item-by-item basis, specified financial instruments and certain other items at
fair value. Unrealized gains and losses on items for which the fair value option
has been elected are required to be reported in earnings at each reporting date.
SFAS No. 159 is effective for fiscal years beginning after November 15, 2007,
the provisions of which are required to be applied prospectively. The Company
expects to adopt SFAS No. 159 in the first quarter of 2008.  Statement of Financial Accounting Standard
No. 157, Fair Value Measurements (SFAS No. 157)  In September 2006, the FASB issued SFAS
No. 157, Fair Value Measurements (SFAS No. 157). SFAS
No. 157 defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles and establishes a hierarchy
that categorizes and prioritizes the sources to be used to estimate fair value.
SFAS No. 157 also expands financial statement disclosures about fair value
measurements. On February 12, 2008, the FASB issued FASB Staff Position
(FSP) 157-2 which delays the effective date of SFAS No. 157 for one year,
for all nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least


F-11


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES AND PRACTICES (cont'd)  annually). SFAS No. 157 and FSP 157-2
are effective for financial statements issued for fiscal years beginning after
November 15, 2007. We will elect  a partial deferral of SFAS
No. 157 under the provisions of FSP 157-2 related to the measurement of
fair value used when evaluating goodwill, other intangible assets, and other
long-lived assets for impairment and valuing asset retirement obligations and
liabilities for exit or disposal activities. The impact of partially adopting
SFAS No. 157 effective January 1, 2008 will not be material to our
financial statements.  Financial Accounting Standards Board
(FASB) Interpretation No. 48; Accounting for Uncertainty in Income Taxes
(FIN48)  In June 2006, the Financial Accounting
Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109 (FIN
48), which provides clarification related to the process associated with
accounting for uncertain tax positions recognized in consolidated financial
statements. FIN 48 prescribes a more-likely-than-not threshold for financial
statement recognition and measurement of a tax position taken, or expected to be
taken, in a tax return. FIN 48 also provides guidance related to, among other
things, classification, accounting for interest and penalties associated with
tax positions, and disclosure requirements. We have adopted FIN 48 effective
January 1, 2007 and there is no impact of adopting FIN 48 on our consolidated
financial statements.


F-12


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   <R> NOTE 2:  RESTATEMENT
OF FINANCIAL STATEMENTS  In preparing
the Form 10-Q, for the quarter ended March 31, 2008, we determined that there
were errors in the prior years financial statements.   There was an
overstatement of revenues and related accounts receivable, an understatement of
our cost of revenues and related accounts payable for the prior period,
 and an error in the valuation of goodwill requiring the restatement of our
financial statements for the fiscal year ended December 31, 2007 in this Form
10-K/A.  The Company
did not properly record and eliminate intercompany transactions between its
incumbent operations and that of Midwest Marketing Group, Inc. (Midwest) and
its subsidiary Northstar Telecom, Inc. (NST) acquired in August 2007.
 Due to these errors, revenues were overstated by $420,000 and expenses
were understated by $156,000.  In addition, due to inadequate communication
between operational and accounting departments, expenses were understated by an
additional $137,000.  On August 15, 2007, the Company acquired all of the
capital stock of Midwest.  Included in the preliminary estimated fair value
of assets acquired and liabilities assumed at the date of acquisition was an
overstatement of accounts receivable due to an inclusion of an intercompany
account of $105,000 in the balance.  This overstated accounts receivable
and understated goodwill by $105,000.  As a result of
the adjustments described above and noted below, our management concluded, and
informed the Audit Committee of the Company's Board of Directors and in a
current report on Form 8-K filed on May 15, 2008, that (1) our previously issued
financial statements and any related report of our independent registered public
accounting firm for the fiscal years ended December 31, 2007 should no longer be
relied upon because of the aforementioned errors in those financial statements,
(2) our earnings and press releases and similar communications should no longer
be relied upon to the extent that they relate to these financial statements, and
(3) our financial statements and Original Form 10-K for the fiscal year ended
December 31, 2007 should be restated to reflect the correct accounting for the
items discussed above.  The following
table summarizes the impact of the restatement discussed above on the previously
issued Consolidated Financial Statements as of December 31, 2007 for the year
ended December 31, 2007..  As of December 31, 2007As PreviouslyReported
Adjustment
As RestatedConsolidated Balance SheetAccounts Receivable, less allowance for doubtful
accounts
$   2,859,531
$(680,547)
$2,178,984Goodwill
3,293,468
105,504
3,398,972Accounts payable
3,881,337
137,477
4,018,814Accumulated Deficit
(9,595,241)
(712,520)
(10,307,761)  As of December 31, 2007As PreviouslyReported
Adjustment
As RestatedConsolidated Statement of OperationsRevenues
$
               43,788,682
$
           (419,504)
$
     43,369,178Cost of Revenues
25,004,649
293,016
25,297,665Net income
(3,093,221)
(712,520)
(3,805,741)Net income per common share:Basic
$
                       (0.55)
$
                 (0.12)
$
             (0.67)Diluted
$
                       (0.55)
$
                 (0.12)
$
             (0.67)


F-13


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 2:  RESTATEMENT
OF FINANCIAL STATEMENTS (contd)  As of December 31, 2007As PreviouslyReported
Adjustment
As RestatedConsolidated Statement of Cash FlowsNet (Loss) income from operations
$
                (3,093,221)
$
       (712,520)
$
     (3,805,741)(Increase) decrease in accounts receivable
(1,351,394)
575,043
(776,351)(Decrease) increase in accounts payable
(162,411)
137,477
(24,934)  </R> NOTE 3 - RELATED PARTY TRANSACTIONS  The Company periodically borrows funds from
shareholders and affiliates of shareholders. The loans bear interest at a rate
of 12% per annum and are payable on demand. Interest expense resulting from
related party loans totaled $0 during the years ended December 31, 2007 and
2006, and totaled $2,958 during the year ended December 31, 2005.  At
December 31, 2007 and 2006, there were no loans outstanding to shareholders
and/or its affiliates.  NOTE 4 - STOCKHOLDERS' EQUITY  Private Placement  On March 7, 2005, the Company consummated a
private placement with Barron Partners, L.P., ("Barron") a Delaware limited
partnership in which the Company issued 1,500,000 shares of Series A Convertible
Preferred Stock, and issued warrants to purchase 750,000 shares of our common
stock at $2.00 per share and warrants to purchase 750,000 shares of our common
stock at $4.00 per share.  The Series A Preferred stock is convertible at
any time at a 1:1 conversion rate of Series A Preferred to Common stock. Barron
paid $1,500,000 in cash for the Series A Convertible Preferred Stock and
warrants. The 3,000,000 shares of common stock underlying the Series A Preferred
and warrants were registered on Form SB-2, registration number 333-124996,
effective August 31, 2005.  During 2005, Barron purchased 330,000
shares of common stock by exercising 330,000 warrant shares at $2.00 per share.
 On June 14, 2006, the Company entered into a Warrant Purchase Agreement
with Barron to repurchase the remaining 1,170,000 warrants.  The closing
for this transaction occurred on June 21, 2006. A total of 1,170,000 warrants,
420,000 A Warrants and 750,000 B Warrants, were purchased by Cordia from Barron
for a purchase price of $309,000 representing $0.20 per A Warrants and $0.30 per
B Warrants.  The warrants were thereafter cancelled by Cordia and as a
result as of December 31, 2006, the Company had no outstanding warrants.  As of December 31, 2007, there were no
shares of Series A Convertible Preferred Stock outstanding. Barron converted a
total of 1,262,200 shares of Series A Convertible Preferred Stock, converting
702,200 shares during 2005, 90,000 shares during 2006, and 470,000 shares during
2007.  On December 28, 2007, Barron sold its remaining 237,800 shares of
Series A Convertible Preferred Stock to Cordia for a purchase price of $118,900
or $0.50 per share.  Upon completion of the transaction, Cordia converted
the shares into common stock.  In accordance with the guidance of EITF
98-5, Accounting for Convertible Securities with Beneficial Conversion Features
or Contingently Adjustable Conversion Ratios (EITF 98-5), the value of the
warrants and beneficial conversion have been accounted for as a dividend paid to
Series A Preferred and have been deducted from net income for the purpose of
determining net income available to common stockholders.


F-14


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005    NOTE 4 - STOCKHOLDERS' EQUITY
(contd)  Compensatory Stock  On January 25, 2005, the Company issued a
total of 30,000 restricted shares of its common stock, to current employees and
board members, and accordingly, recognized $24,000 (fair marker value) as
compensatory stock expense.  On April 6, 2005, the Company issued 36,000
restricted shares of its common stock to a consulting firm pursuant to the terms
of a one (1) year consulting agreement. The shares were valued at $45,000 (fair
market value) and were prorated over the term of the agreement. Compensation
expense aggregated $7,500 and $37,500 in 2006 and 2005, respectively.  On October 17, 2007, the Company issued
100,000 restricted shares of its common stock valued at $70,000 to a consulting
firm pursuant to a one (1) year consulting agreement for Investor Relations
Services.  In the event that the Company terminates the agreement because
of a material breach by the consultant, the restricted shares of stock shall be
returned on a pro rata basis calculated by multiplying 1/12 the value of 100,000
shares times the value of the balance of the term at the time of
termination.  Acquisitions  On August 15, 2007, the Company completed
the purchase of Midwest and NST. Partial consideration for the transaction was
comprised of 300,000 shares of Cordia Corporation restricted common stock,
valued at $0.80 per share, which was the market value at closing, issued on a
pro rata basis to each of the selling shareholders based on their percentage of
ownership of Midwest.  (See Note 6).  Share Repurchase Program  On May 30, 2007, the Board of Directors of
Cordia unanimously authorized Cordias management to spend an aggregate of
$500,000, until such time that the authorized amount is exhausted, to
re-purchase Cordias common and preferred stock so long as the market price did
not exceed $1 per share.  The repurchase plan was announced in Cordias
Form 8-K filed with the Securities and Exchange Commission on May 31, 2007. The
following represents the shares purchased in fiscal 2007.  Period
Total # Shares Purchased (1)
Average Price Per Share (2)
Total # of Shares Purchased as Part of
Publicly Announced Plans or Programs*
Approximate Dollar Value of Shares
That May Yet Be Purchased Under Plans or Programs(3)6/1/07  6/30/07
18,500
$0.85
All
$484,00011/1/07  11/30/07
2,500
$0.74
All
$482,00012/01/07  12/31/07
380,592
$0.52
All
$285,000 *All
purchases were made in open-market transactions pursuant to the Boards action
taken on May 30, 2007.  (1) These shares consist of
a total of 163,792 shares of Cordia Common Stock with an aggregate cost of
approximately $96,000 plus brokerage fees and a total of 237,800 shares of
Preferred Stock with an aggregate cost of approximately $119,000 for a total of
$215,000. (2) Price per share
includes brokerage and commission fees. (3) The last purchase made
under this plan was in January 2008.


F-15


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 4 - STOCKHOLDERS' EQUITY
(contd)  On July 21, 2006, the Board of Directors of
Cordia Corporation unanimously authorized Cordias management to spend up to an
aggregate of $500,000 through December 31, 2006 to re-purchase Cordias common
stock when market conditions are favorable for that purpose and so long as the
market price did not exceed $1 per share.  The repurchase plan was
announced in Cordias Form 8-K filed with the Securities and Exchange Commission
on May 31, 2006.  The following represents the shares purchased during
fiscal 2006:  Period
Total # Shares Purchased
Average Price Per Share(1)
Total # of Shares Purchased as Part of
Publicly Announced Plans or Programs*
Approximate Dollar Value of Shares
That May Yet Be Purchased Under Plans or Programs (2)08/1/06  08/31/06
5,000
$1.04
All
$495,00009/01/06  09/30/06
4,900
$0.93
All
$490,000 *All
purchases were made in open-market transactions pursuant to the Boards actions
taken on July 21, 2006, and the acquired shares are reflected as treasury
stock.  (1) Price per share
includes brokerage and commission fees. (2) The last purchase made
under this plan was in September 2006  NOTE 5 - EMPLOYEE STOCK
COMPENSATION  On May 23, 2003, Cordias shareholders
voted to amend the 2001 Equity Incentive Plan (the "Plan") by authorizing an
additional 1,000,000 shares. The total number of shares of Cordia's common stock
authorized for issuance under the Plan is 6,000,000, subject to adjustment for
events such as stock dividends and stock splits.  Effective January 1, 2006, the Plan is
accounted for in accordance with the recognition and measurement provisions of
Statement of Financial Accounting Standards ("FAS") No. 123 (revised 2004),
Share-Based Payment ("FAS 123(R)"), which replaces FAS No. 123, Accounting for
Stock-Based Compensation, and supersedes Accounting Principles Board Opinion
("APB") No. 25, Accounting for Stock Issued to Employees, and related
interpretations. FAS 123(R) requires compensation costs related to share-based
payment transactions, including employee stock options, to be recognized in the
financial statements.  In addition, the Company adheres to the guidance set
forth within Securities and Exchange Commission ("SEC") Staff Accounting
Bulletin ("SAB") No. 107, which provides the Staff's views regarding the
interaction between FAS 123(R) and certain SEC rules and regulations and
provides interpretations with respect to the valuation of share-based payments
for public companies.  Prior to January 1, 2006, the Company
accounted for similar transactions in accordance with APB No. 25, which employed
the intrinsic value method of measuring compensation cost. Accordingly,
compensation expense was not recognized for fixed stock options if the exercise
price of the option equaled or exceeded the fair value of the underlying stock
at the grant date.


F-16


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 5 - EMPLOYEE STOCK COMPENSATION
(contd)  While FAS No. 123 encouraged recognition of
the fair value of all stock-based awards on the date of grant as expensed over
the vesting period, companies were permitted to continue to apply the intrinsic
value-based method of accounting prescribed by APB No. 25 and disclose certain
pro-forma amounts as if the fair value approach of FAS 123 had been applied.
 In December 2002, FAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, an amendment of FAS 123, was issued,
which, in addition to providing alternative methods of transition for a
voluntary change to the fair value method of accounting for stock-based employee
compensation, required more prominent pro-forma disclosures in both the annual
and interim financial statements. The Company complied with these disclosure
requirements for all applicable periods prior to January 1, 2006.  In adopting FAS 123(R), the Company applied
the modified prospective approach to transition. Under the modified prospective
approach, the provisions of FAS 123(R) are to be applied to new awards and to
awards modified, repurchased, or cancelled after the required effective date.
Additionally, compensation cost for the portion of awards for which the
requisite service has not been rendered that are outstanding as of the required
effective date shall be recognized as the requisite service is rendered on or
after the required effective date. The compensation cost for that portion of
awards shall be based on the grant-date fair value of those awards as calculated
for either recognition or pro-forma disclosures under FAS 123.  As a result of the adoption of FAS 123(R),
the Company's results of operations for the year ended December 31, 2007 and
2006 include share-based compensation expense totaling approximately $239,000
and $214,000, respectively. This expense is reflected in theCondensedConsolidated Statements of Operations within general and administrative
expense.  No deferred tax asset has been recognized in the income statement
for share-based compensation arrangements.  There was no employee stock
compensation expense reported, under APB No. 25, for the year ended December 31,
2005.  Stock option compensation expense is the
estimated fair value of options granted using the Black-Scholes option pricing
model, amortized on a straight-line basis over the vesting period for the entire
portion of the award. The Company adjusts this expense by actual forfeitures
rather then using estimated forfeitures, as required by FAS 123(R) for employee
options, since the forfeiture rate based upon historical data was determined to
be immaterial. The following are the weighted average assumptions used in 2007
and 2006, respectively,; issuances averaged an expected volatility of 115% and
122%; an average risk free rate of 4.59% and 4.99% and an expected life of three
years, respectively.  As of December 31, 2007 and 2006, there
were approximately $235,000 and $474,000 of total unrecognized compensation cost
arising from nonvested compensation related to stock option awards.  The
cost is expected to be recognized over a weighted-average period of 1.9 and 1.7
years respectively.


F-17


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 5 - EMPLOYEE STOCK COMPENSATION
(contd)  The Plan is administered by a committee of
the board of directors having full and final authority and discretion to
determine when and to whom awards should be granted. The committee will also
determine the terms, conditions and restrictions applicable to each award.
Transactions under the Plan are summarized as follows:  Options

Weighted
AverageOutstanding

Exercise
PriceBalance, January 1, 2005
937,000

$1.13Granted with 2 year
vesting
211,000

1.90Exercised
-Expired
-Balance, December 31,
2005
1,148,000

$1.27Granted with 3 year
vesting
312,500

1.81Exercised
-Expired
12,000

.85Balance, December 31,
2006
1,448,500

$1.39Granted with 3 year
vesting
400,000

.65Exercised
-Expired
53,000

2.13Balance December 31, 2007
1,795,500

$1.20  As of December 31, 2007, there were
1,303,833 options outstanding that were exercisable.  Additional
information as of December 31, 2007 with respect to all outstanding options is
as follows:  Options Outstanding



Options
ExercisableWeighted AverageNumber

Remaining Contractual

Weighted Average



Weighted AverageRange of Prices

Outstanding

Life

Exercise Price

Number Exercisable

Exercise Price$0.40 -
$0.60

854,000

.25

$0.60

854,000

$0.60$0.61 -
$2.36

884,500

3.57

$1.31

392,833

$1.85$5.00 -
$11.25

57,000

3.79

$8.60

57,000

$8.60$0.40 -
$11.25

1,795,500

1.66

$1.20

1,303,833

$1.33


F-18


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005    NOTE 6  FOREIGN CURRENCY
TRANSACTIONS  The functional currency of Triamis and
Cordia HK Limited (Cordia HK) is the local currency, the Hong Kong dollar
(HK$), the functional currency of CC Brazil f/k/a Canal West is the local
currency, the Brazilian Real (R$), and the functional currency of Cordia
Phils, Inc. is the local currency, the Filipino Peso (P$). For these foreign
operations, the assets and liabilities have been translated into US dollars
using period-end exchange rates in effect as of the balance sheet date and
revenue and expenses have been translated using average daily exchange rates for
the period. The resulting cumulative translation adjustment of approximately
$48,000 is included in comprehensive (loss) as a separate component of
stockholders equity in the consolidated balance sheet.  NOTE 7  ACQUISITIONS  Midwest Marketing Group,
Inc.  On August 15, 2007, MTC completed the
purchase of Midwest Marketing Group, Inc. (Midwest), a Nebraska corporation.
MTC purchased all of the outstanding common stock of Midwest resulting in the
acquisition of both Midwest and its wholly-owned subsidiary NST, a Nebraska
corporation that operates as a competitive local exchange carrier primarily in
the Qwest territory. Total consideration for the purchase of the outstanding
Midwest stock was 300,000 shares of Cordia Corporation restricted common stock,
valued at $.80 per share, which was the market value at closing, and issued on a
pro rata basis to each of the selling shareholders based on their percentage of
ownership, $500,000 in cash and a three (3) year note (Note) in the amount of
$1,750,000 bearing interest of 6% per annum with monthly payments of principal
and interest. The Note is subject to post closing adjustment for (1) selling
shareholders non-payment of certain obligations incurred prior to and still
outstanding as of August 15, 2007 or (2) if the estimates and schedule relied
upon in determining the value of the Note is in the aggregate $100,000 greater
than or lesser than the actual amounts payable and receivable as of August 15,
2007 as determined on or before April 15, 2008. In addition, as part of the
transaction one of the selling shareholders of Midwest has been hired by the
Company to serve as Vice President of Call Center Operations subject to a two
(2) year employment agreement commencing on May 21, 2007. Compensation pursuant
to the employment agreement is comprised of an annual salary of $175,000, and an
option to purchase up to 50,000 shares of Cordia Corporation common stock at
$0.75 per share, at the then current market value. The options vest over a three
(3) year period with 50% of the option shares vesting on the first anniversary
of the grant date and the balance vesting in 25% increments on the second and
third anniversary of the grant date. Other performance based incentive
compensation may be paid in the form of cash, stock and/or options during the
term of the employment agreement based upon the employees performance and the
growth and profitability of the Company. The agreement is terminable with or
without cause.


F-19


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 7  ACQUISITIONS (contd)  The acquisition has been accounted for
using the purchase method of accounting in accordance with SFAS No. 141,
Business Combinations. The purchase price was first allocated to tangible and
any material identifiable intangible assets. The excess purchase price was
allocated to goodwill.  The following table summarizes the preliminary estimated
fair values of assets acquired and liabilities assumed at the date of
acquisition:  Purchase Price:Notes Payable (3 Years)

$
    1,750,000Restricted Common Stock (300,000 @
$.80)

240,000Cash

500,000Total Purchase Price

$
    2,490,000Asset Acquired:Cash

$
       158,000Accounts Receivable

869,000Other Current Assets

285,000Intangible Assets

608,000Fixed Assets

140,000Other assets

9,000Current Liabilities Assumed:Accounts
Payable

(599,000)Accrued
Expenses

(523,000)Taxes Payable

(1,441,000)Unearned
Income

(397,000)Goodwill

3,381,000Total Purchase Price

$
    2,490,000  The following unaudited pro forma information of the
Company is provided to give effect to the Midwest acquisitions assuming it
occurred as of January 1 of the periods, presented:  <R>

Years Ended December
31,2007

2006

2005As RestatedNet sales

$   50,984,000

$
      46,063,000

$
  47,272,000Net loss

(4,553,000)

(3,248,000)

1,230,000Net loss per share:Basic

(.78)

(.55)

.25Diluted

(.78)

(.55)

.18 </R>   The pro forma information presented above
is for illustrative purposes only and is not indicative of results that may have
been achieved if the acquisition had occurred as of the beginning of the
Companys 2007, 2006 or 2005 fiscal year or of future operating performance.


F-20


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 7  ACQUISITIONS
(contd)  Canal West  On July 31, 2006,
The Company acquired a 51% interest in Canal West, a Brazilian corporation
originally formed as a limited liability partnership for a cash price of
$45,000. Goodwill of approximately $17,000 was recorded based on the residual
purchase price after allocating the purchase price to the fair market value of
tangible and intangible assets acquired of approximately $32,000 less
liabilities assumed of approximately $23,000. In accordance with FAS 142
Goodwill and Other Intangible Assets (SFAS 142) goodwill will not be
amortized but will be tested at least annually for impairment.The
unaudited pro forma financial information for year ended December 31, 2006 and
2005 was deemed immaterial and has not been provided.  At December 31, 2006, the Company
determined that the goodwill associated with the purchase of this company should
be written down to $0. The minority interest of approximately $3,000 at December
31, 2006 represents the liability related to the 49% minority ownership interest
in Canal West.  Management believed that Canal West had
shown growth potential since July 2006 and on February 1, 2007, the Company
increased its interest in Canal West by 26.75% to 77.75%. In return for the
issuance of an additional 149,137 shares of Canal West, the Company invested an
additional $50,000 as working capital.  The minority interest liability of
$3,000 has been reduced to $0 in 2007 representing the cumulative losses
attributable to the 22.25% minority ownership in Canal West.  On April 2,
2007, the minority shareholders of Canal West sold their 22.25% interest to CIC.
 On or about April 5, 2007, CIC transferred its 100% interest in Canal West
to its 100% owned subsidiary Cordia do Brasil Participações Ltda a Brazilian
entity formed for the purpose of serving as a holding company for CICs
Brazilian subsidiaries. The unaudited pro forma financial information for the
year ended December 31, 2007, was deemed immaterial and has not been provided.
 During the fourth quarter of 2007, Canal Wests name was changed to Cordia
Comunicações S/A (CC Brazil f/k/a Canal West).  Triamis Group Limited  On February 15, 2006, the Company, through
its subsidiary CIC, completed the acquisition of Triamis Group Limited
(Triamis), a privately held Hong Kong corporation. The Company acquired a 100%
interest in Triamis by purchasing its outstanding stock, which totaled 10,000
shares, for a cash purchase price of $200,000 and the equivalent of $200,000 in
shares of Cordias common stock, or 79,364 shares of common stock, which at the
time had a cash value of $2.52 per share. Triamis is a provider of WiFi and VoIP
services in the Asian Pacific region.  The results of operations of Triamis
have been included in our consolidated results of operations subsequent to its
acquisition on February 15, 2006.  The values of assets acquired were
estimated at fair market value. The following table presents an allocation of
the purchase price based on the estimated fair values of the assets acquired and
the liabilities assumed at the date of acquisition:  Total  consideration

$
                  417,000Less: cash balance acquired

6,000$
                  411,000Allocated to:Other current assets

$
                              -Property, plant and equipment, net

41,000Current liabilities assumed

(13,000)Goodwill

383,000$
                  411,000


F-21


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 7  ACQUISITIONS
(contd)  Goodwill was recorded based on the residual
purchase price after allocating the purchase price to the fair market value of
tangible and intangible assets acquired less liabilities assumed. In accordance
with FAS 142 Goodwill and Other Intangible Assets (SFAS 142) goodwill will
not be amortized but will be tested at least annually for impairment.  In
2007, the Company determined that the goodwill was impaired and recorded a
charge of approximately $284,000.  The unaudited pro
forma financial information for the year ended December 31, 2005 was deemed
immaterial and has not been provided. Further, unaudited pro forma financial
information for the year ended December 31, 2006 has not been provided as
Triamis had minimal operations during the period from January 1, 2006 through
February 15, 2006, the date of acquisition.  Investments in unconsolidated affiliates  In 2007, the Company invested approximately
$300,000 for a 49% interest in a telecommunication joint venture based in India.
 In February of 2008 this joint venture launched nationwide VOIP service in
India pursuant to a license granted by the Indian Ministry of Communication.  In addition, pursuant to an investment
agreement, the Company may invest up to $60,000 for a 40% interest in a
Philippine telecommunication company.  As of December 31, 2007 the company
had invested approximately $40,000 (comprised of cash, equipment and services
rendered).  NOTE 8  FACTORING AND SECURITY
AGREEMENT  On September 21, 2007, the Company entered
into a Factoring and Security Agreement with Thermo Credit, LLC (Thermo), a
Colorado limited liability company, in which the Company offered to sell,
transfer, and assign certain eligible receivables to Thermo in exchange for
payment of the net value of the purchased receivables after deducting applicable
LEC and billing fees, adjustments and reserves.  The Agreement, as amended on December 20,
2007, is for a term of three (3) years from closing and provides for a purchase
commitment of up to $5,000,000 of eligible receivables. Collections made on the
transferred receivables that exceed the amount paid by Thermo to Cordia shall be
remitted to Cordia by Thermo on succeeding purchase dates.  Purchases made by Thermo are made subject
to an initial advance rate of 80% less a factor commission of 1.25% on the gross
amount purchased. In addition the agreement included an initial commitment fee
of 2.5% of the initial purchase commitment.  Pursuant to the terms of the agreement, the
Company sells its trade accounts receivable to Thermo on a pre-approved,
non-recourse basis. The accounts are sold at the invoice amount subject to a
factor commission of 1.25% and other miscellaneous fees. Trade accounts
receivable not sold to Thermo remain in the Company's custody and control and
the Company maintains all credit risk on those accounts.  As of December 31, 2007, approximately
$1,851,000 of the Companys trade accounts receivable were non-recourse
receivables due from Thermo.  Summarized below are the components of the
Companys Trade accounts receivable :  Trade accounts receivable


$  2,331,000Less: allowance for bad debts


(2,003,000)328,000Due from factor


1,851,000Net accounts receivable


$
 2,179,000  During 2007 the Company received
$14,400,000 from Thermo under this agreement.


F-22


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005    NOTE 9  INCOME TAXES  The tax effect of the temporary
differences that give rise to deferred tax assets are presented below:  Year Ended December
31,2007

2006

2005Deferred Tax Assets:Accounts Receivable
$
      665,000

$
       378,000

$
   328,000Option Expense
181,000

95,000

-Net Operating Losses
928,000

830,000

-Valuation Allowances
(1,754,000)

(1,225,000)

(50,000)20,000

78,000

278,000Deferred Tax Liabilities:Fixed Assets
(20,000)

(78,000)

(9,000)Net Deferred Tax Asset
$
                  -

$
                   -

$
   269,000  The Company increased its valuation
allowance by $529,000 and $1,175,000 in 2007 and 2006, respectively.  Due
to current losses the Company could not determine that it was more likely than
not that the deferred tax asset originally resulting from net operating loss
carryforwards, would be realized  The Company has generated net operating
loss carryforwards aggregating approximately $2,000,000 at December 31, 2007 for
federal and state income tax purposes.  These carryforwards are available
to offset future taxable income and expire at various dates through 2027.


F-23


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 9  INCOME TAXES (contd)  The components of income before income tax
expense (benefit) and the components of income tax expense (benefit) are as
follows:  <R>
Years Ended December 31,2007

2006

2005As RestatedIncome (loss)before income taxDomestic

$   (2,106,000)

$
     (2,331,000)

$
    1,160,000Foreign

(1,698,000)

(534,000)

-(3,804,000)

(2,865,000)

1,160,000CurrentFederal
-

-

31,000Foreign

-

-

-State
2,000

25,000

133,0002,000

25,000

164,000DeferredFederal
-

196,000

(223,000)Foreign

2,000

-

-State
-

34,000

(46,000)2,000

230,000

(269,000)$
          4,000

$
         255,000

$
    (105,000) </R>  A reconciliation of the difference between the expected
tax rate using the statutory federal tax rate and the Companys effective tax
rate is as follows:  Years Ended December 31,2007

2006

2005U.S Federal income tax statutory rate
(34.0%)

(34.0%)

34.0%State income tax, net of federal income tax
benefit
0.1%

5.4%

4.7Deferred tax asset valuation allowance
15.2%

19.7%

-Foreign losses without tax benefits
18.7%

-

-Net operating loss benefit
-

-

(47.8)Effective tax rate
-

(8.9%)

(9.1%)


F-24


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005    NOTE 9  INCOME TAXES (contd)  TAX CONTINGENCIES.  The Company complies with the provisions of
FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes  An
Interpretation of FASB Statement No. 109 ("FIN No. 48"). FIN No. 48
addresses the determination of whether tax benefits claimed, or expected to be
claimed, on a tax return should be recorded in the financial statements. Under
FIN No. 48, the Company may recognize the tax benefit from an uncertain tax
position only if it is more likely than not that the tax position will be
sustained on examination by the taxing authorities, based on the technical
merits of the position. The Company has determined that it has no uncertain tax
positions requiring recognition under FIN No. 48.  The Company's policy is to recognize
interest and penalties accrued on any unrecognized tax benefits as a component
of income tax expense. As of the date of adoption of FIN 48, the Company did not
have any accrued interest or penalties associated with any unrecognized tax
benefits.  The Company files income tax returns in the
U.S. federal jurisdiction and various foreign and state jurisdictions. The
Company has not been audited by the Internal Revenue Service.  The Company
does not believe there will be any material changes in its unrecognized tax
positions over the next twelve months.   NOTE 10  RESTRICTED CASH  As a result of expanding our wireline
service offerings into additional states covered by our commercial services
agreement with Qwest Communications International, Inc. (Qwest) we obtained a
Letter of Credit (LOC) for the benefit of Qwest in the amount of $143,000. The
LOC is secured by funds which we deposited into a restricted money market
account. The LOC is effective for a term of one (1) year from June 25, 2007. In
addition, our newly acquired entity Northstar Telecom, Inc., has a $30,000 LOC
with Verizon, raising our amount of restricted cash at December 31, 2007 to
approximately $174,000, which includes interest of $1,000.  At December 31, 2006, the Company held two
Certificates of Deposit (CDs) totaling $950,000 plus accrued interest of
approximately $54,000.  The CDs secured two Letters of Credit (LOCs),
which were required as a result of its contract with Verizon Communications. The
CDs matured in March 2007 and are not renewable.  As the Company is unable
to withdraw the funds prior to maturity, the amounts are shown as restricted
cash.    The LOCs expired in April 2007.


F-25


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 11  OBLIGATIONS UNDER CAPITAL
LEASES  Capital Leases  The Company is the lessee of telephone
equipment under two capital leases both expiring in September 2010. The assets
and liabilities under capital leases are recorded at the lower of the present
value of the minimum lease payments or the fair value of the asset. The assets
are depreciated over the lower of their related lease term or their estimated
productive lives. Depreciation of assets under capital leases is included in
depreciation expense for the years ending December 31, 2007, 2006 and 2005 and
aggregated approximately $21,000, $24,000 and $5,000 respectively.   Following is a summary of property held under capital
leases:  2007

2006

2005Telephone Equipment
$
      64,000

$
    64,000

$   64,000Less:  Accumulated depreciation
(50,000)

(29,000)

(5,000)$
      14,000

$
    35,000

$   59,000  Minimum future lease payments under capital leases by
year as of December 31, 2007 are:  Years Ended December 31,2008

$
    15,0002009

15,0002010

12,000Total minimum lease payments

42,000Less:  Amount representing interest

4,000Present value of net minimum lease payment

$
    38,000  Interest rates on capitalized leases are 7.750% and are
imputed based on the companys incremental borrowing rate at the inception of
each lease or the lessors implicit rate of return.


F-26


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 12  COMMITMENTS  Operating Leases  We lease certain facilities and equipment
for use in our operations under both capital and operating leases. Total rent
expense under operating leases amounted to $722,000 in 2007, $576,000 in 2006
and $281,000 in 2005.  At December 31, 2007, the Company is
committed for annual rentals under seven (7) separate non-cancelable operating
leases for its office space through fiscal 2012. Future minimum rental
commitments under these leases for years subsequent to December 31, 2007, are as
follows:  Years EndedDecember 312008

$
                 469,0002009

408,0002010

366,0002011

305,0002012

183,000$
              1,731,000  Loans Payable  At December 31, 2007, $1,616,000 is due to
the former shareholders of Midwest Marketing Group.  The note bears
interest at 6% per annum and is due in equal monthly installments of principal
and interest through August 15, 2010.  Scheduled principal payments of
$557,000, $592,000 and $467,000 are due in 2008, 2009 and 2010,
respectively.  At December 31, 2006, the Company did not
have any outstanding loans.  Employee Benefit Plan  In 2004, the Company began the Cordia
Corporation 401(k) Profit Sharing Plan covering all eligible employees. Under
the plan, the Company matches on an elective basis, 50% of the first 6%
contributed by the employee, for an aggregate maximum of 3%. Participating
employees shall become vested in employer contributions after three (3) years of
service. If a participating employee is terminated or resigns before the three
(3) year vesting period employer contributions shall be forfeited. The plan
became effective January 1, 2004, and employee and employer contributions
commenced April 16, 2004.  For the Plan year beginning on January 1,
2006 and to the present, the Company has implemented a fully-vested safe harbor
matching contribution to all eligible participants.  Under the safe harbor
matching contribution, the Company matches 100% of employee deferrals up to 3%
of compensation, plus 50% of cash deferrals in excess of 3% of compensation not
to exceed 5% of compensation.  Employee contributions totaled approximately
$125,000, $91,000 and $77,000 for December 31, 2007, 2006, and 2005.
 Employer contributions totaled approximately $78,000, $55,000 and $32,000
for December 31, 2007, 2006, and 2005.  Network Commitments  The Company has minimum commitments with
network providers through 2012.  The aggregate minimum commitment is
approximately $3,000,000 in 2008 increasing to approximately $4,000,000 in
2012.


F-27


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005    NOTE 13  QUARTERLY FINANCIAL DATA
UNAUDITED <R> 2007

First
Second
Third
FourthAs RestatedRevenues

$
    10,237,000
$
      9,909,000
$
      11,934,000
$
  11,289,000Gross profit

4,707,000
4,555,000
5,363,000
3,447,000Net (loss)

(641,000)
(1,032,000)
(304,000)
(1,829,000)Net (loss) per share:Basic

($0.11)
($0.18)
($0.05)
($0.32)Diluted

($0.11)
($0.18)
($0.05)
($0.32)Weighted average common
 sharesBasic

5,620,924
5,616,451
5,611,473
5,716,776Diluted

5,620,924
5,616,451
5,611,473
5,716,7762006

First
Second
Third
FourthRevenues

$
    10,066,000
$
      9,223,000
$
        8,492,000
$
    9,724,000Gross profit

4,748,000
4,233,000
3,913,000
4,302,000Net (loss) income

103,000
(339,000)
(932,000)
(1,927,000)Net (loss) income per share:Basic

$0.02
($0.06)
($0.17)
($0.34)Diluted

$0.02
($0.06)
($0.17)
($0.34)Weighted average common
 sharesBasic

5,529,841
5,631,080
5,626,874
5,620,924Diluted

7,004,879
5,631,080
5,626,874
5,620,924   </R>


F-28


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005   NOTE 14  BUSINESS SEGEMENT AND GEOGRAPHIC
INFORMATION  The Company is operating in a single
business segment, in accordance with the rules of SFAS No. 131 (Disclosure
About Segments of an Enterprise and Related Information).  Although the
Companys business is primarily conducted in the United States, operations are
also carried out overseas through our foreign subsidiaries in the Philippines,
Hong Kong and Brazil.  Information about the Companys operations by
geographic area is as follows: <R> Year Ended December 31,

2007
2006
2005As RestatedRevenuesUnited States

$
           43,056,000
$
           37,430,000
$
         41,951,000Foreign

313,000
75,000
-$
           43,369,000
$
           37,505,000
$
         41,951,000Long-lived assetsUnited States

$
             5,894,000
$
             1,908,000
$
           1,507,000Foreign

988,000
509,000
-$
             6,882,000
$
             2,417,000
$
           1,507,000Total assetsUnited States


$
           10,559,000
$
             8,730,000
$
         10,971,000Foreign

1,522,000
561,000

-$
           12,081,000
$
             9,291,000
$
         10,971,000  </R>


F-29


CORDIA CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(AS
RESTATED)For the Years Ended December 31, 2007, 2006, and
2005    NOTE 15 - SUBSEQUENT EVENTS  (a) Launch of Services in
India  On February 27, 2008, subsequent to the
balance sheet date, the Company launched through its joint venture in India its
VoIP service offerings on a nationwide basis pursuant to the license granted by
the Ministry of Communications.  This license also allows the Company to
serve as an Internet Service Provider in India, although to date it is only
providing VoIP to its customers.   (b) Letter of Intent to
Acquire Pre-paid Companies  In March 2008 the Company signed a letter
of intent to acquire the six companies comprising the TSI Group (TSI), a
distributor of prepaid telecommunications services. In addition, Cordia will
enter into an investment agreement to acquire a minority interest in Wholetel,
Inc., a startup company affiliated with TSI that operates a turnkey products and
services delivery system for retailers and consumers. The transaction is subject
to satisfactory completion of due diligence.


F-30