SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549




FORM
10-Q




(Mark
one)




x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES


EXCHANGE
ACT OF 1934.





For the
quarterly period ended June 30, 2010


OR


 ̈ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES


EXCHANGE
ACT OF 1934


For the
transition period from _____ to _____




Commission
file number 0-16819


CREATIVE
VISTAS, INC.




(Exact
name of registrant as specified in its charter)




Arizona
              (State
      or other jurisdiction of
              incorporation
      or organization
            6770
              (Primary
      Standard Industrial
              Classification
      Code Number)
            86-0464104
              (I.R.S.
      Employer
              Identification
      No.)




2100
Forbes Street


Unit
8-10


Whitby,
Ontario, Canada L1N 9T3


(905)
666-8676


(Address,
including zip code, and telephone number,


including
area code, of registrant’s principal executive offices)




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. Yes x No  ̈




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes  ̈  No  ̈




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.  (Check one):




Large
      Accelerated Filer  ̈
                Accelerated
      Filer  ̈Non-Accelerated
      Filer  ̈
                Smaller
      Reporting Company x(Do
      not check if a smaller reporting company)




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).




 ̈
Yes     x No




Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.




At August
13, 2010, the number of shares outstanding of the registrant’s common stock, no
par value (the only class of voting stock), was 37,488,714.













PART
      I.FINANCIAL
      INFORMATIONItem
      1.
                Condensed
      Financial Statements
                1Item
      2.
                Management's
      Discussion And Analysis of Financial Condition and Results of
      Operations
                13Item
      3.
                Quantitative
      and Qualitative Disclosures about Market Risk
                20Item
      4.
                Controls
      and Procedures
                20PART
      II.OTHER
      INFORMATIONItem
      1.
                Legal
      Proceedings
                20Item
      1A.
                Risk
      Factors
                20Item
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                20Item
      3.
                Defaults
      upon Senior Securities
                20Item
      4.
                Removed
      and Reserved
                20Item
      5.
                Other
      Information
                20Item
      6.
                Exhibits
                21







PART
I.                      FINANCIAL
INFORMATION


Item
      1.
            Financial
      Statements





Creative Vistas, Inc.
                    Condensed Consolidated Balance Sheets
                  
                  June 30, 2010
                  
                  
                  December 31, 2009(Unaudited)AssetsCurrent
      AssetsCash
      and bank balances
                  
                  $
                  2,189,692
                  
                  
                  $
                  2,441,204Accounts
      receivable, net of allowance for doubtful accounts of $178,582 and
      $213,862
                  
                  
                  4,544,251
                  
                  
                  
                  4,292,071Income
      tax receivable
                  
                  
                  364,224
                  
                  
                  
                  257,142Inventory
      and supplies
                  
                  
                  665,643
                  
                  
                  
                  789,005Prepaid
      expenses
                  
                  
                  233,416
                  
                  
                  
                  347,048Total
      current assets
                  
                  
                  7,997,226
                  
                  
                  
                  8,126,470Property,
      plant and equipment, net of depreciation
                  
                  
                  5,333,988
                  
                  
                  
                  6,669,553Deposits
                  
                  
                  269,160
                  
                  
                  
                  282,359Intangible
      assets
                  
                  
                  168,309
                  
                  
                  
                  284,286Deferred
      financing costs, net
                  
                  
                  296,623
                  
                  
                  
                  384,521Deferred
      income taxes
                  
                  
                  36,775
                  
                  
                  
                  36,879$
                  14,102,081
                  
                  
                  $
                  15,784,068Liabilities
      and Shareholders' (Deficiency)Current
      LiabilitiesBank
      indebtedness
                  
                  $
                  2,019,672
                  
                  
                  $
                  1,960,057Accounts
      payable and accrued liabilities
                  
                  
                  4,532,304
                  
                  
                  
                  4,555,320Current
      portion of obligations under capital leases
                  
                  
                  1,061,211
                  
                  
                  
                  1,501,106Deferred
      income
                  
                  
                  62,572
                  
                  
                  
                  84,502Deferred
      income taxes
                  
                  
                  25,858
                  
                  
                  
                  25,858Current
      portion of term notes
                  
                  
                  8,952,374
                  
                  
                  
                  1,750,000Total
      current liabilities
                  
                  
                  16,653,991
                  
                  
                  
                  9,876,843Term
      notes
                  
                  
                  6,747,056
                  
                  
                  
                  13,913,252Notes
      payable to related parties
                  
                  
                  1,500,000
                  
                  
                  
                  1,500,000Obligations
      under capital lease
                  
                  
                  3,081,581
                  
                  
                  
                  3,543,801Due
      to related parties
                  
                  
                  217,800
                  
                  
                  
                  219,87628,200,428
                  
                  
                  
                  29,053,772Shareholders'
      (deficiency)Share
      capital50,000,000
      no par value preferred shares authorized; undesignated, none issued or
      outstanding100,000,000
      no par value common shares authorized: 37,488,714 at June 30, 2010 and
      37,488,714 at December 31, 2009 issued and outstandingCommon
      stock
                  
                  
                  6,555,754
                  
                  
                  
                  6,555,754Additional
      paid-in capital
                  
                  
                  14,272,321
                  
                  
                  
                  14,158,942Accumulated
      (deficit)
                  
                  
                  (34,023,838
                  )
                  
                  
                  (32,957,115
                  )Accumulated
      other comprehensive losses
                  
                  
                  (902,584
                  )
                  
                  
                  (1,027,285
                  )(14,098,347
                  )
                  
                  
                  (13,269,704
                  )$
                  14,102,081
                  
                  
                  $
                  15,784,068





The
accompanying notes are an integral part of these financial
statements


1


Creative
Vistas, Inc.


Condensed
Consolidated Statements of Operations and Comprehensive Loss


(Unaudited)


Three months ended
                
                
                Six months endedJune 30
                
                
                June 302010
                
                
                2009
                
                
                2010
                
                
                2009Contract
      and service revenueContract
                
                $
                1,662,091
                
                
                $
                1,105,234
                
                
                $
                2,776,818
                
                
                $
                2,329,274Service
                
                
                8,646,467
                
                
                
                8,027,123
                
                
                
                16,768,246
                
                
                
                15,936,270Other
                
                
                1,287
                
                
                
                1,468
                
                
                
                2,395
                
                
                
                10,45410,309,845
                
                
                
                9,133,825
                
                
                
                19,547,459
                
                
                
                18,275,998Cost
      of sales  (excluding depreciation)Contract
                
                
                1,017,603
                
                
                
                630,173
                
                
                
                1,571,874
                
                
                
                1,404,980Service
                
                
                6,522,220
                
                
                
                6,312,101
                
                
                
                12,870,947
                
                
                
                12,523,736Project
      expenses
                
                
                234,088
                
                
                
                213,514
                
                
                
                463,887
                
                
                
                437,167Selling
      expenses
                
                
                202,109
                
                
                
                206,633
                
                
                
                470,234
                
                
                
                405,640General
      and administrative expenses
                
                
                1,364,203
                
                
                
                1,588,064
                
                
                
                2,587,835
                
                
                
                2,823,534Depreciation
      expense
                
                
                584,338
                
                
                
                669,511
                
                
                
                1,183,204
                
                
                
                1,371,357Amortization
      of intangible assets
                
                
                57,812
                
                
                
                84,330
                
                
                
                115,548
                
                
                
                166,7229,982,373
                
                
                
                9,704,326
                
                
                
                19,263,529
                
                
                
                19,133,136Income
      (loss) from operations
                
                
                327,472
                
                
                
                (570,501
                )
                
                
                283,930
                
                
                
                (857,138
                )Interest
      and other expenses (income)Net
      financing expenses
                
                
                577,403
                
                
                
                575,069
                
                
                
                1,171,771
                
                
                
                1,180,734Amortization
      of deferred charges
                
                
                43,376
                
                
                
                38,531
                
                
                
                86,308
                
                
                
                79,529Foreign
      currency translation (gain) loss
                
                
                353,849
                
                
                
                (757,352
                )
                
                
                92,574
                
                
                
                (513,662
                )974,628
                
                
                
                (143,752
                )
                
                
                1,350,653
                
                
                
                746,601(Loss)
      before income taxes
                
                
                (647,156
                )
                
                
                (426,749
                )
                
                
                (1,066,723
                )
                
                
                (1,603,739
                )Income
      taxes
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Net
      (loss)
                
                
                (647,156
                )
                
                
                (426,749
                )
                
                
                (1,066,723
                )
                
                
                (1,603,739
                )Other
      comprehensive (loss):Foreign
      currency translation adjustment
                
                
                472,246
                
                
                
                (833,782
                )
                
                
                124,701
                
                
                
                (534,253
                )Comprehensive
      (loss)
                
                $
                (174,910
                )
                
                $
                (1,260,531
                )
                
                $
                (942,022
                )
                
                $
                (2,137,992
                )Basic
      and diluted weighted-average shares
                
                
                37,488,714
                
                
                
                37,412,644
                
                
                
                37,488,714
                
                
                
                37,403,694Basic
      and diluted (loss) per share
                
                $
                (0.02
                )
                
                $
                (0.01
                )
                
                $
                (0.03
                )
                
                $
                (0.04
                )




The
accompanying notes are an integral part of these financial
statements




2




Creative
Vistas, Inc.


Condensed
Consolidated Statements of Cash Flows


(Unaudited)


Six months ended June 30,2010
                
                
                2009Operating
      activitiesNet
      cash provided by (used in) operating activities
                
                $
                455,005
                
                
                $
                (472,814
                )Investing
      activitiesProceeds
      from sales of property and equipment
                
                
                7,611
                
                
                
                196,925Purchase
      of property and equipment
                
                
                (36,966
                )
                
                
                (19,619
                )Net
      cash provided by (used in) investing activities
                
                
                (29,355
                )
                
                
                177,306Financing
      activitiesProceeds
      from (repayment of) bank indebtedness
                
                
                76,503
                
                
                
                (98,436
                )Repayment
      of capital leases
                
                
                (744,678
                )
                
                
                (887,594
                )Repayment
      of term notes
                
                
                (50,000
                )
                
                
                (187,500
                )Net
      cash (used in) financing activities
                
                
                (718,175
                )
                
                
                (1,173,530
                )Effect
      of foreign exchange rate changes in cash
                
                
                41,013
                
                
                
                (147,173
                )Net
      change in cash and cash equivalents
                
                
                (251,512
                )
                
                
                (1,616,211
                )Cash and cash
      equivalents, beginning of period
                
                
                2,441,204
                
                
                
                4,770,337Cash and cash
      equivalents, end of period
                
                $
                2,189,692
                
                
                $
                3,154,126




The
accompanying notes are an integral part of these financial
statements


3


Creative
Vistas, Inc.


Notes
to Consolidated Condensed Financial Statements


June
30, 2010 (Unaudited)




1.
            Summary
      of Accounting Policies




Basis
of presentation




The
accompanying unaudited condensed consolidated balance sheet as at June 30, 2010,
and the consolidated condensed statements of operations and cash flows for the
periods ended June 30, 2009 and 2010, include the accounts of Creative Vistas,
Inc. (“CVAS”), Creative Vistas Acquisition Corp. (“AC Acquisition”), AC
Technical Systems Ltd. (“AC Technical”), Cancable Holding Corp. (“Cancable
Holding”), Cancable Inc., Cancable, Inc., Cancable XL Inc., XL Digital Services
Inc. (“XL Digital”), 2141306 Ontario Inc., Iview Holding Corp. (“Iview
Holding”), Iview Digital Video Solutions Inc. (“Iview DSI”) and OSSIM View
Inc.  All material inter-company accounts, transactions and profits
have been eliminated.   In the opinion of management, these
condensed consolidated financial statements reflect all adjustments (consisting
of normal recurring adjustments) that are necessary for a fair presentation of
the results for and as of the periods shown.  The accompanying
condensed consolidated financial statements have been prepared in conformity
with United States generally accepted accounting principles.  However,
certain information or footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. The results of operations for such periods
are not necessarily indicative of the results expected for 2010 or for any
future period. These financial statements should be read in conjunction with the
financial statements and related notes included in our Annual Report on Form
10-K for the fiscal year ended December 31, 2009, filed with the Securities and
Exchange Commission.





Reclassifications


Certain
amounts from the June 30, 2009 financial statements have been reclassified to
conform to the current year’s presentation.





Liquidity
and going concern




Our
consolidated condensed financial statements were prepared using accounting
principles generally accepted in the United States of America applicable to a
going concern, which contemplate the realization of assets and liquidation of
liabilities in the normal course of business. We have incurred a loss of
$1,066,723 for the six months ended June 30, 2010 and have respective working
capital and accumulated deficits of $8,656,765 and $34,023,838 at June 30,
2010.





We have
outstanding term loans aggregating $15,699,430, together with common stock
options and warrants, held by Laurus Master Fund, Ltd. (“Laurus”) and its
related entities. We do not currently have the ability to repay the notes in the
event of a demand by the holder. Furthermore, we granted a security interest to
Laurus and its related entities in substantially all of our assets and,
accordingly, in the event of any default under our agreements with Laurus and
its related entities, they could conceivably attempt to foreclose on our assets,
which could cause us to terminate our operations. As of June 30, 2010, there
were 14,364,983 shares of common stock of CVAS issuable upon the exercise of
warrants and 129,155 shares issuable upon the exercise of options which were
issued to Laurus, and its related entities, Erato Corporation, Valens Offshore
Fund, Valens U.S. Fund, LLC and PSource Structured Debt Limited. Additionally,
there were 49 shares of common stock of Cancable Holding issuable upon the
exercise of options and 20 shares of common stock of Iview Holding issuable upon
the exercise of options to Laurus and its related entities.





The
Company has introduced cost cutting initiatives within the Administration,
Project and Selling departments to improve efficiency within the Company and
also improve cash flow.  The Company has also increased its rates for
services provided by AC Technical to improve gross margins. This is in line with
our competitors. Finally, the Company also expects to see the benefits of its
research and development efforts within the next 12 months as it starts to
introduce its own line of customized products to the industry. These products
and technologies are expected to improve gross margins.  Management
plans to seek additional capital in the future to fund operations, growth and
expansion through additional equity, debt financing or credit facilities. The
Company has had early stage discussions with investors about potential
investment in the Company at a future date however no assurance can be made that
such financing would be available, and if available that it would be on terms
acceptable to us. In either case, the financing could have a negative impact on
our financial condition and our shareholders. Despite this, we believe that we
have adequate cash and borrowing capability under our credit facilities to
sustain our operations and continue as a going concern for a reasonable period
of time although there can be no assurance of this.


4





The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.





Inventory





Inventory
consists of materials and supplies and is stated at the lower of cost or
market.  Cost is generally determined on the first in, first out
basis.  The inventory is net of estimated obsolescence, and excess
inventory based upon assumptions about future demand and market
conditions.





Earnings
(loss) per share




Basic
earnings (loss) per share (“EPS”) is computed using the weighted average number
of common shares outstanding during the period.  Diluted EPS is
computed using the weighted average number of common and dilutive potential
common shares outstanding during the period.  Dilutive potential
common shares consist of common stock issuable upon exercise of stock options
and warrants and conversion of debt using the treasury stock method. Adjustments
to earnings per share calculation include reversing interest related to the
convertible debts and changes in derivative instruments. During periods when
losses are incurred dilutive common shares are not considered in the EPS
computations as their effect would be anti-dilutive.




2.
            Deferred
      Financing Costs, Net




Deferred
financing costs, net are associated with the Company’s term notes. For the six
months ended June 30, 2010, the amortization of deferred financing cost was
approximately $86,308 (2009 - $79,529).




Cost
                      
                      $
                      1,121,271Accumulated
      amortization
                      
                      
                      (824,648
                      )$
                      296,623




The
estimated amortization expense for each of the next four fiscal years is as
follows:




Year
                            
                            Amount2010
                            
                            $
                            84,2552011
                            
                            
                            145,3252012
                            
                            
                            44,7582013
                            
                            
                            22,285$
                            296,623




3.
            Intangible
      Assets




Cost
                    
                    
                    Accumulated
                      amortization
                    
                    
                    Net book valueCustomer
      relationships
                    
                    $
                    1,367,925
                    
                    
                    $
                    1,199,616
                    
                    
                    $
                    168,309




5




Amortization
expense for the six months period ended June 31, 2010 amounted to $115,548
(2009-$166,722). Amortization for the next three years is expected to
approximate $168,309.




4.
            Bank
      Indebtedness




In 2008,
the Company established credit facilities with a Canadian chartered bank to
provide for borrowings by its subsidiaries, AC Technical and Cancable
Inc.  The credit facilities for AC Technical and Cancable were
$500,000 and $3,500,000 respectively and bear interest at the bank’s domestic
prime rate plus 1.5% to 3.4% for Canadian dollar amounts.  Interest is
payable monthly. The facilities are secured by an assignment of book debts,
inventory, certain other assets and life insurance. As at June 30, 2010, the
interest rate of the Canadian dollar amount was 4.0% to 5.9%. At June 30, 2010,
the borrowings outstanding under both facilities were $2,019,672 and the average
borrowing outstanding during the six months ended June 30, 2010 was
$1,989,900.  The Company banking facility agreements contain financial
covenants pertaining to maintenance of tangible net worth and debt service
coverage ratio. In the event of default, the bank could at its discretion cancel
the facilities and demand immediate repayment of all outstanding
amounts.





5.
            Term
      Notes




In
January 2006, concurrently with the closing of the acquisition of Cancable Inc.,
the Company entered into a series of agreements with Laurus whereby Cancable
issued to Laurus a secured term note (the “Cancable Note”) in the amount of
$6,865,000 and Cancable Holding issued to Laurus a related option to purchase up
to 49 shares of common stock of Cancable Holding (up to 49% of the outstanding
shares of Cancable Holding) at a price of $0.01 per share (the “Option”). The
loan is secured by all of the assets of the Company and its
subsidiaries.





The
Cancable Note bears interest at the prime rate plus 1.75% with a minimum rate of
7%, and requires minimum monthly payments of $81,726 until the indebtedness is
paid in full except that the Company is not obligated, except upon an event of
default, to pay more than 25% of the original principal amount prior to December
31, 2011.





In
February 2006, the Company and its subsidiaries, Iview Holding and Iview DSI
entered into a series of agreements with Laurus pursuant to a refinancing
transaction whereby the Company issued to Laurus a secured term note (the
“Company Note”) in the amount of $8,250,000, Iview DSI issued to Laurus a
secured term note (the “Iview Note”) in the amount of $2,000,000, the Company
issued to Laurus a related warrant to purchase up to 2,411,003 shares of common
stock of the Company (up to 7.5% of the outstanding shares of the Company) at a
price of $0.01 per share (the “Warrant”) and Iview Holding issued to Laurus a
related option to purchase up to 20 shares of common stock of Iview Holding (up
to 20% of the outstanding shares of Iview Holding) at a price of $0.01 per share
(the “Option”). The loans are secured by all of the assets of the Company and
its subsidiaries. Simultaneously with the closing of this refinancing
transaction, the Company paid off the entire outstanding principal amount and
all obligations due to Laurus under a Secured Convertible Term Note, a Secured
Convertible Minimum Borrowing Note and a Secured Revolving Note, all dated
September 30, 2004 (collectively, the “2004 Notes”) and such 2004 Notes were
subsequently cancelled.





The
options held by Laurus to acquire 49% of Cancable Holding and 20% of Iview
Holding are accounted for as noncontrolling interests.  Because the
options have not been exercised and because Cancable Holding and Iview Holding
have incurred losses, no noncontrolling interests have been recognized at June
30, 2010.





The
Company Note bears interest at the prime rate plus 2% with a minimum rate of 7%.
Interest accrued on the term note but was not payable until April 1,
2006.  Interest is calculated on the basis of a 360 day
year.  The minimum monthly payment on the term note is $137,500
commencing March 1, 2007 to February 1, 2011, with a balance of $4,950,000
payable on the maturity date. Through June 30, 2010, the Company has issued
warrants to purchase up to 3,564,000 shares of common stock of the Company at
prices from $0.07 to $2.84 per share to defer until maturity the principal
repayments that were due from March 1, 2007 to June 1, 2010.




The Iview
Note bears interest at the prime rate plus 2% with a minimum rate of
7%.  Interest is calculated on the basis of a 360 day
year.  The minimum monthly payment on the term note is $8,333 through
February 1, 2011, with the balance of $1,600,000 payable on the maturity date.
The Company is not obligated, except upon an event of default, to pay more than
25% of the original principal amount prior to February 13,
2011.


6


In June
2008, the Company and its subsidiary,Cancable Inc., entered
into a financing transaction whereby the Company issued to Valens Offshore SPV
II, Corp. (“Valens Offshore”) and Valens U.S. SPV I, LLC (“Valens U.S.”) secured
term notes in the amount of $1,700,000 and $800,000, respectively (collectively,
the “Company Second Notes”). Valens Offshore and Valens U.S. are entities
related to Laurus.  The Company also issued to Valens Offshore and
Valens U.S. warrants to purchase up to 1,333,333 and 627,451 shares,
respectively, of common stock of the Company at a price of $0.01 per share. The
loans are secured by all of the assets of the Company and all its
subsidiaries.





Interest
on the term notes for the six months ended June 30, 2010 was $771,607 (2009:
$683,587).





June 30, 2010
                
                
                June 30, 2009Cancable
      Note interest at prime plus 1.75% (minimum of  7%), due December
      31, 2011
                
                $
                5,148,754
                
                
                $
                5,148,754Company
      Note interest at prime plus 2% (minimum of  7%), due February
      13, 2011
                
                
                7,287,500
                
                
                
                7,287,500Iview
      Note interest at prime plus 2% (minimum of 7%), due on February 13,
      2011
                
                
                1,664,874
                
                
                
                1,764,874Company
      Second Notes. interest at 12%, due on June 24, 2013
                
                
                2,500,000
                
                
                
                2,500,000Less:
      unamortized discount
                
                
                (901,698
                )
                
                
                (1,064,603
                )15,699,430
                
                
                
                15,636,525Less:
      current portion
                
                
                8,952,374
                
                
                
                1,750,000$
                6,747,056
                
                
                $
                13,886,525




The
principal payments for the next four fiscal years are as follows:




Amount2010
                                
                                $
                                875,0002011
                                
                                
                                13,226,1282012
                                
                                
                                -2013
                                
                                
                                1,598,302$
                                15,699,430




6.
            Net
      Financing Expenses




Six months ended June 30,2010
                      
                      
                      2009Capital
      leases
                      
                      $
                      306,552
                      
                      
                      $
                      376,968Interest
      on credit facility
                      
                      
                      771,607
                      
                      
                      
                      683,587Interest
      on deferred principal repayment of term note
                      
                      
                      67,191
                      
                      
                      
                      94,535Related
      parties
                      
                      
                      26,421
                      
                      
                      
                      25,644$
                      1,171,771
                      
                      
                      $
                      1,180,734





7.
            Note
      Payable to Related Parties





Notes
payable to related parties consists of two notes payable for $750,000 bearing
interest at 3% per annum and having  no fixed terms of repayment.
However, pursuant to the Laurus Financing, these notes have been subordinated to
the Company’s obligations to Laurus and they are classified as non-current. The
notes are due to Malar Trust Inc. (the Company’s chairman is the shareholder of
Malar Trust Inc.).


7




Interest
expense recognized for the six months period ended June 30, 2010 was $26,421
(2009 - $25,644).




8.
            Shareholders’
      (Deficit)




Options




In
conjunction with the issuance of the Cancable Note and Iview Notes in 2006, the
Company had granted Laurus options to purchase up to 49% of Cancable Holding
Corp. and 20% of Iview Holding Corp.. The financial statements of Cancable
Holding Corp. and Iview Holding Corp. have negative equity on a stand alone
basis.  At such time when these entities have positive equity and
generate net income, the Company will account for the options granted to Laurus
as non-controlling interests.




The
Company’s Stock Option Plan is intended to provide incentives for key employees,
directors, consultants and other individuals providing services to the Company
by encouraging their ownership of the common stock of the Company and to aid the
Company in retaining such key employees, directors, consultants and other
individuals upon whose efforts the Company’s success and future growth depends
and in attracting other such employees, directors, consultants and
individuals.




The Plan
is administered by the Board of Directors, or its Compensation
Committee.  Under the Plan, options on a total of 4,000,000 shares of
common stock may be issued.  Shares of common stock covered by options
which have terminated or expired prior to exercise are available for further
options under the Plan.    The maximum aggregate number of
shares of Stock that may be issued under the Plan as “incentive stock options”
is 3,500,000 shares.  No options may be granted under the Plan after
June 30, 2011; provided, however, that the Board of Directors may at any time
prior to that date amend the Plan.




Options
under the Plan may be granted to key employees of the Company, including
officers or directors of the Company, and to consultants and other individuals
providing services to the Company.  Options may be granted to eligible
individuals whether or not they hold or have held options previously granted
under the Plan or otherwise granted or assumed by the Company.  In
selecting individuals for options, the Committee may take into consideration any
factors it may deem relevant, including its estimate of the individual’s present
and potential contributions to the success of the Company.




The
Committee may, in its discretion, prescribe the terms and conditions of the
options to be granted under the Plan, which terms and conditions need not be the
same in each case, subject to the following:





a.
              Option
      Price.  The price at which each share of common stock covered by
      an option granted under the Plan may not be less than the market value per
      share of the common stock on the date of grant of the
      option.  The date of the grant of an option shall be the date
      specified by the Committee in its grant of the option, which date will
      normally be the date the Committee determines to make such
      grant.





b.
            Option
      Period.  The period for exercise of an option shall in no event
      be more than five years from the date of grant.  Options may, in
      the discretion of the Committee, be made exercisable in installments
      during the option period.





c.
            Exercise
      of Options.  For the purpose of assisting an Optionee to
      exercise an option, the Company may make loans to the Optionee or
      guarantee loans made by third parties to the Optionee, on such terms and
      conditions as the Board of Directors may
  authorize.





d.
            Lock-Up
      Period.  Without the consent of the Company, an Optionee may not
      sell more than fifty percent of the shares issued under the Plan for a
      period of two years from the date that the Optionee exercises the option.
      The Committee may also impose other terms and conditions, not inconsistent
      with the terms of the Plan, on the grant or exercise of options, as it
      deems advisable.


8





The fair
value of each option award is estimated on the date of grant using the
Black-Scholes option valuation model, using the assumptions noted in the
following table. Expected volatility is based on the historical volatility of
the Company’s stock, and other factors. The Company uses historical data to
estimate employee termination within the valuation model. The Company has
assumed that the life of the options will be equal to one-half of the combined
vesting period and contractual life (i.e., that employees will exercise the
options at the midpoint between the vesting and expiry date of the options). The
risk-free rates used to value the options are based on the U.S. Treasury yield
curve in effect at the time of grant.





At June
30, 2010, options to purchase 1,605,000 shares of common stock were
outstanding.  These options vest ratably in annual installments, over
the four year period from the date of grant.  As of June 30, 2010,
there was $78,200 of total unrecognized compensation cost related to non-vested
share-based compensation arrangements granted under the Plan. That cost is
expected to be recognized over a reminaing weighted average period of 1.5 years.
At June 30, 2010, 1,327,500 options were vested. The cost recognized for the six
months period ended June 30, 2010 was $46,200 (2009: $6,300) which was recorded
as general and administrative expenses.





In
valuing the options issued, the following assumptions were used





2010Expected
      volatility
                  
                  140%Expected
      dividends
                  
                  0%Expected
      term (in years)
                  
                  4.0Risk-free
      rate
                  
                  1.35% - 1.82%





A summary
of option activity under the Plan during the year ended December 31, 2009 and
the six months ended June 30, 2010 is presented below:


Shares
                
                
                Weighted-Average
                  Exercise
                  Price
                
                
                Weighted-Average
                  Remaining
                  Contractual
                  Term
                
                
                Intrinsic
                  ValueOptionsOutstanding
      at December 31, 2008
                
                
                2,939,000
                
                
                $
                1.22
                
                
                
                4.75
                
                
                
                -Granted
                
                
                500,000
                
                
                $
                0.70
                
                
                
                4.23
                
                
                
                -Exercised
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Forfeited
      or expired
                
                
                (1,434,000
                )
                
                $
                2.07
                
                
                
                2.69
                
                
                
                -Outstanding
      at December 31, 2009
                
                
                2,005,000
                
                
                $
                0.65
                
                
                
                2.03
                
                
                
                -Granted
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Exercised
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Forfeited
      or expired
                
                
                (400,000
                )
                
                $
                0.63
                
                
                
                1.47
                
                
                
                -Outstanding
      at June 30, 2010
                
                
                1,605,000
                
                
                $
                0.65
                
                
                
                1.55
                
                
                
                -Exercisable
      at June 30, 2010
                
                
                1,327,500
                
                
                $
                0.65
                
                
                
                1.05
                
                
                
                -




As of
June 30, 2010, the aggregate intrinsic value of all stock options outstanding
and expected to vest was approximately $0.00 and the aggregate intrinsic value
of currently exercisable stock options was approximately $0.00.  The
intrinsic value of each option is the difference between the fair market value
of the common stock and the exercise price of such option to the extent it is
“in-the-money”.  Aggregate intrinsic value represents the value that
would have been received by the holders of in-the-money options had they
exercised their options on the last trading day of the year and sold the
underlying shares at the closing stock price on such day.  The
intrinsic value calculation is based on the $0.07 closing stock price of
the common stock on June 30, 2010, the last trading day of the second
quarter of fiscal 2010.  There were no in-the-money options
outstanding and exercisable as of June 30, 2010.





Since
there were no options exercised during the year ended December 31, 2009 or the
six months ended June 30, 2010, there was no intrinsic value of options
exercised.




9




The total
fair value of options granted during the six months ended June 30, 2010 and the
year ended December 31, 2009 was approximately $0 (none were granted in 2010)
and $120,153 respectively.





The
following table summarizes information about fixed price stock options at June
30, 2010:




Exercise
                      Price
                    
                    Weighted
                      Average Number
                      Outstanding
                    
                    
                    Weighted
                      Average
                      Contractual Life
                    
                    
                    Weighted
                      Average
                      Exercise Price
                    
                    
                    Number
                      Exercisable
                    
                    
                    Exercise
                      Price$
                    0.63
                    
                    
                    1,495,000
                    
                    
                    
                    1.53
                    
                    
                    $
                    0.63
                    
                    
                    
                    1,247,500
                    
                    
                    $
                    0.63$
                    0.90
                    
                    
                    100,000
                    
                    
                    
                    1.67
                    
                    
                    $
                    0.90
                    
                    
                    
                    75,000
                    
                    
                    $
                    0.90$
                    1.12
                    
                    
                    10,000
                    
                    
                    
                    2.98
                    
                    
                    $
                    1.12
                    
                    
                    
                    5,000
                    
                    
                    $
                    1.121,605,000
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,327,500





Warrants




The
Company uses the Black-Scholes option pricing model to value warrants issued to
non-employees, based on the market price of our common stock at the time the
warrants are issued. All outstanding warrants may be exercised by the holder at
any time. During the six months ended June 30, 2010, in connection with
financing, the Company issued warrants to purchase 628,000 shares of common
stock.  The fair value of the warrants of $67,191 was measured using
the Black-Scholes option pricing model using the following assumptions: risk
free interest rate of 1.67% to 2.20%, expected dividend yield of 0%, volatility
of 140% to 150%, exercise prices of $0.07 to $0.12 and the life of the warrants
4 years.




As of
June 30, 2010, we had the following common stock warrants
outstanding:




Issue Date
                                
                                Expiry Date
                                
                                Number of
                                  warrants
                                
                                
                                Exercise Price
                                  Per share
                                
                                
                                Value-issue
                                  date
                                
                                Issued for09-30-2004
                                
                                09-30-2016
                                
                                2,250,000
                                
                                
                                $
                                1.15
                                
                                
                                $
                                1,370,000
                                
                                Financing03-31-2005
                                
                                03-31-2012
                                
                                100,000
                                
                                
                                $
                                1.20
                                
                                
                                $
                                60,291
                                
                                Financing04-30-2005
                                
                                04-30-2017
                                
                                100,000
                                
                                
                                $
                                1.01
                                
                                
                                $
                                44,309
                                
                                Financing05-31-2005
                                
                                05-31-2012
                                
                                100,000
                                
                                
                                $
                                1.01
                                
                                
                                $
                                56,614
                                
                                Financing06-22-2005
                                
                                06-22-2017
                                
                                313,000
                                
                                
                                $
                                1.00
                                
                                
                                $
                                137,703
                                
                                Financing06-30-2005
                                
                                06-30-2017
                                
                                100,000
                                
                                
                                $
                                0.90
                                
                                
                                $
                                50,431
                                
                                Financing07-31-2005
                                
                                07-31-2012
                                
                                100,000
                                
                                
                                $
                                1.05
                                
                                
                                $
                                56,244
                                
                                Financing08-31-2005
                                
                                08-31-2012
                                
                                100,000
                                
                                
                                $
                                1.05
                                
                                
                                $
                                22,979
                                
                                Financing09-30-2005
                                
                                09-30-2012
                                
                                100,000
                                
                                
                                $
                                0.80
                                
                                
                                $
                                36,599
                                
                                Financing10-31-2005
                                
                                10-31-2012
                                
                                100,000
                                
                                
                                $
                                0.80
                                
                                
                                $
                                27,367
                                
                                Financing11-30-2005
                                
                                11-30-2012
                                
                                100,000
                                
                                
                                $
                                0.80
                                
                                
                                $
                                16,392
                                
                                Financing12-31-2005
                                
                                12-31-2012
                                
                                100,000
                                
                                
                                $
                                0.80
                                
                                
                                $
                                10,270
                                
                                Financing02-13-2006
                                
                                02-13-2016
                                
                                1,927,096
                                
                                
                                $
                                0.01
                                
                                
                                $
                                1,529,502
                                
                                Financing03-01-2007
                                
                                03-01-2016
                                
                                108,000
                                
                                
                                $
                                0.90
                                
                                
                                $
                                39,519
                                
                                Financing04-01-2007
                                
                                04-01-2016
                                
                                108,000
                                
                                
                                $
                                1.15
                                
                                
                                $
                                50,529
                                
                                Financing05-01-2007
                                
                                05-01-2011
                                
                                108,000
                                
                                
                                $
                                1.25
                                
                                
                                $
                                54,941
                                
                                Financing06-01-2007
                                
                                06-01-2011
                                
                                108,000
                                
                                
                                $
                                2.28
                                
                                
                                $
                                101,470
                                
                                Financing07-01-2007
                                
                                07-01-2011
                                
                                108,000
                                
                                
                                $
                                2.10
                                
                                
                                $
                                93,307
                                
                                Financing08-01-2007
                                
                                08-01-2011
                                
                                108,000
                                
                                
                                $
                                2.55
                                
                                
                                $
                                112,117
                                
                                Financing09-01-2007
                                
                                09-01-2011
                                
                                108,000
                                
                                
                                $
                                2.73
                                
                                
                                $
                                118,647
                                
                                Financing10-01-2007
                                
                                10-01-2011
                                
                                108,000
                                
                                
                                $
                                2.43
                                
                                
                                $
                                105,362
                                
                                Financing11-01-2007
                                
                                11-01-2011
                                
                                108,000
                                
                                
                                $
                                2.60
                                
                                
                                $
                                111,868
                                
                                Financing12-01-2007
                                
                                12-01-2011
                                
                                108,000
                                
                                
                                $
                                2.55
                                
                                
                                $
                                107,284
                                
                                Financing01-01-2008
                                
                                01-01-2012
                                
                                108,000
                                
                                
                                $
                                2.84
                                
                                
                                $
                                108,331
                                
                                Financing01-22-2008
                                
                                01-22-2058
                                
                                812,988
                                
                                
                                $
                                0.01
                                
                                
                                $
                                1,470,687
                                
                                Acquisition01-22-2008
                                
                                01-22-2058
                                
                                1,738,365
                                
                                
                                $
                                0.01
                                
                                
                                $
                                3,144,685
                                
                                Financing01-30-2008
                                
                                01-30-2058
                                
                                506,250
                                
                                
                                $
                                0.01
                                
                                
                                $
                                1,001,909
                                
                                Financing01-30-2008
                                
                                01-30-2058
                                
                                292,500
                                
                                
                                $
                                0.01
                                
                                
                                $
                                578,880
                                
                                Financing02-01-2008
                                
                                02-01-2012
                                
                                108,000
                                
                                
                                $
                                2.09
                                
                                
                                $
                                85,612
                                
                                Financing03-01-2008
                                
                                03-01-2012
                                
                                108,000
                                
                                
                                $
                                2.04
                                
                                
                                $
                                80,253
                                
                                Financing04-01-2008
                                
                                04-01-2012
                                
                                108,000
                                
                                
                                $
                                1.09
                                
                                
                                $
                                162,748
                                
                                Financing05-01-2008
                                
                                05-01-2012
                                
                                108,000
                                
                                
                                $
                                1.19
                                
                                
                                $
                                103,180
                                
                                Financing06-01-2008
                                
                                06-01-2012
                                
                                108,000
                                
                                
                                $
                                1.02
                                
                                
                                $
                                88,114
                                
                                Financing06-23-2008
                                
                                06-23-2018
                                
                                627,451
                                
                                
                                $
                                0.01
                                
                                
                                $
                                560,736
                                
                                Financing06-23-2008
                                
                                06-23-2018
                                
                                1,333,333
                                
                                
                                $
                                0.01
                                
                                
                                $
                                1,211,168
                                
                                Financing02-01-2009
                                
                                02-01-2013
                                
                                108,000
                                
                                
                                $
                                0.25
                                
                                
                                $
                                22,728
                                
                                Financing03-01-2009
                                
                                03-01-2013
                                
                                108,000
                                
                                
                                $
                                0.19
                                
                                
                                $
                                17,277
                                
                                Financing04-01-2009
                                
                                04-01-2013
                                
                                108,000
                                
                                
                                $
                                0.18
                                
                                
                                $
                                15,868
                                
                                Financing05-01-2009
                                
                                05-01-2013
                                
                                108,000
                                
                                
                                $
                                0.16
                                
                                
                                $
                                14,557
                                
                                Financing06-01-2009
                                
                                06-01-2013
                                
                                108,000
                                
                                
                                $
                                0.27
                                
                                
                                $
                                24,105
                                
                                Financing07-01-2009
                                
                                07-01-2013
                                
                                108,000
                                
                                
                                $
                                0.27
                                
                                
                                $
                                24,105
                                
                                Financing08-01-2009
                                
                                08-01-2013
                                
                                108,000
                                
                                
                                $
                                0.25
                                
                                
                                $
                                22,786
                                
                                Financing09-01-2009
                                
                                09-01-2013
                                
                                108,000
                                
                                
                                $
                                0.16
                                
                                
                                $
                                14,567
                                
                                Financing10-01-2009
                                
                                10-01-2013
                                
                                108,000
                                
                                
                                $
                                0.12
                                
                                
                                $
                                10,921
                                
                                Financing11-01-2009
                                
                                11-01-2013
                                
                                108,000
                                
                                
                                $
                                0.15
                                
                                
                                $
                                13,656
                                
                                Financing12-01-2009
                                
                                12-01-2013
                                
                                108,000
                                
                                
                                $
                                0.08
                                
                                
                                $
                                7,275
                                
                                Financing01-01-2010
                                
                                01-01-2014
                                
                                108,000
                                
                                
                                $
                                0.08
                                
                                
                                $
                                7,292
                                
                                Financing02-01-2010
                                
                                02-01-2014
                                
                                108,000
                                
                                
                                $
                                0.12
                                
                                
                                $
                                10,925
                                
                                Financing03-01-2010
                                
                                03-01-2014
                                
                                108,000
                                
                                
                                $
                                0.08
                                
                                
                                $
                                25,484
                                
                                Financing04-01-2010
                                
                                04-01-2014
                                
                                108,000
                                
                                
                                $
                                0.09
                                
                                
                                $
                                8,461
                                
                                Financing05-01-2010
                                
                                05-01-2014
                                
                                108,000
                                
                                
                                $
                                0.07
                                
                                
                                $
                                8,457
                                
                                Financing06-01-2010
                                
                                06-01-2014
                                
                                108,000
                                
                                
                                $
                                0.07
                                
                                
                                $
                                6,572
                                
                                Financing14,364,983
  10




9.
            Major
Customers




During
the six months ended June 30, 2010, the Company derived 62.9% (2009:61.3%) of
its revenue from two customers.  The accounts receivable from these
customers comprise 44.7% (2009: 33.1%) of the total trade receivable.




10.
            Segment
      Information




We
determine and disclose our segments using a “management” approach for
determining segments. The management approach designates the internal
organization that is used by management for making operating decisions and
assessing performance as the source of the reportable segments. Our management
reporting structure provides for the following segments:




Cancable




Cancable
Inc. and its wholly owned subsidiaries XL Digital Services, Inc. and 2141306
Ontario Inc are Canadian based entities. Cancable, Inc. is a US based entity
which is also the wholly owned subsidiary of Cancable Inc. (collectively,
“Cancable”). Cancable is in the business of providing deployment and servicing
of broadband technologies in both residential and commercial markets. The
Cancable service offering, network deployment, IT integration, and support
services, enable the cable television and telecommunications industries to
deliver a high quality broadband experience to their customers. Cancable’s
clients rely on Cancable’s knowledge and expertise to rapidly deploy the latest
technologies to support advanced cable services, cable broadband Internet access
and DSL. Services provisioned include new installations, reconnections,
disconnections, service upgrades and downgrades, inbound technical call center
sales and trouble resolution for cable Internet subscribers, and network
servicing for broadband video, data, and voice services for residential,
business, and commercial marketplaces.




AC
Technical




A.C.
Technical Systems Ltd. (“AC Technical”), a corporation incorporated under the
laws of the Province of Ontario, is engaged in the engineering, design,
installation, integration and servicing of various types of security
systems.




Iview
DSI




Iview
Digital Video Solutions Inc. (“Iview DSI”) and its wholly owned subsidiary OSSIM
View Inc. are corporations incorporated under the laws of the Province of
Ontario. Iview DSI is a subsidiary incorporated in late 2005 to focus on
providing video surveillance products and technologies to the
market.


11




June 30, 2010
                  
                  
                  June 30, 2009Sales:Cancable
                  
                  $
                  15,933,108
                  
                  
                  $
                  15,148,463AC
      Technical
                  
                  
                  3,576,632
                  
                  
                  
                  2,979,554Iview
                  
                  
                  36,320
                  
                  
                  
                  47,973Creative
      Vistas, Inc.
                  
                  
                  1,399
                  
                  
                  
                  100,008Consolidated
      Total
                  
                  $
                  19,547,459
                  
                  
                  $
                  18,275,998Depreciation
      and amortization:Cancable
                  
                  $
                  1,142,055
                  
                  
                  $
                  1,337,277AC
      Technical
                  
                  
                  20,946
                  
                  
                  
                  16,996Iview
                  
                  
                  20,203
                  
                  
                  
                  17,084Consolidated
      Total
                  
                  $
                  1,183,204
                  
                  
                  $
                  1,371,357Interest
      expense:Cancable
                  
                  $
                  771,837
                  
                  
                  $
                  741,115Iview
                  
                  
                  49,844
                  
                  
                  
                  62,640AC
      Acquisition
                  
                  
                  26,421
                  
                  
                  
                  25,644Creative
      Vistas, Inc.
                  
                  
                  323,669
                  
                  
                  
                  351,335Consolidated
      Total
                  
                  $
                  1,171,771
                  
                  
                  $
                  1,180,734Net
      (Loss):Cancable
                  
                  $
                  (765,194
                  )
                  
                  $
                  (1,304,393
                  )AC
      Technical
                  
                  
                  202,836
                  
                  
                  
                  83,034Iview
                  
                  
                  (51,644
                  )
                  
                  
                  (57,557
                  )AC
      Acquisition
                  
                  
                  (26,421
                  )
                  
                  
                  (25,644
                  )Corporate
      (1)
                  
                  
                  (426,300
                  )
                  
                  
                  (299,179
                  )Consolidated
      Total
                  
                  $
                  (1,066,723
                  )
                  
                  $
                  (1,603,739
                  )Total
      AssetsCancable
                  
                  $
                  8,798,549
                  
                  
                  $
                  10,826,011AC
      Technical
                  
                  
                  3,193,054
                  
                  
                  
                  2,621,073Iview
                  
                  
                  757,445
                  
                  
                  
                  1,056,703Creative
      Vistas, Inc.
                  
                  
                  1,353,033
                  
                  
                  
                  2,233,573Consolidated
      Total
                  
                  $
                  14,102,081
                  
                  
                  $
                  16,737,360Property,
      plant and equipmentCancable
                  
                  $
                  4,547,587
                  
                  
                  $
                  6,392,991AC
      Technical
                  
                  
                  745,622
                  
                  
                  
                  695,328Iview
                  
                  
                  40,779
                  
                  
                  
                  72,952Consolidated
      Total
                  
                  $
                  5,333,988
                  
                  
                  $
                  7,161,271Property,
      Plant and Equipment ExpendituresCancable
                  
                  $
                  30,592
                  
                  
                  $
                  14,074AC
      Technical
                  
                  
                  6,374
                  
                  
                  
                  1,139Iview
                  
                  
                  -
                  
                  
                  
                  4,406Consolidated
      Total
                  
                  $
                  36,966
                  
                  
                  $
                  19,619




(1)
            Corporate
      expenses primarily include certain stock-based compensation for consulting
      and advisory services, which we do not internally allocate to our segments
      because they are related to our common stock and are non-cash in
      nature.




Revenues
by geographic destination and product group were as follows:





June 30, 2010
                  
                  
                  June 30, 2009Contract
                  
                  $
                  2,776,818
                  
                  
                  $
                  2,329,274Service
                  
                  
                  16,768,246
                  
                  
                  
                  15,936,270Others
                  
                  
                  2,395
                  
                  
                  
                  10,454Total
      sales to external customers
                  
                  $
                  19,547,459
                  
                  
                  $
                  18,275,998





For the
six months ended June 30, 2010, revenue generated by the Company in Canada and
the United States was $16,489,613 (2009:$14,549,626) and $3,057,846 (2009:
$3,726,372), respectively.


12




Item
      2.
            Management's
      Discussion And Analysis of Financial Condition and Results of
      Operations




The
following discussion of the financial condition and results of operations should
be read in conjunction with the consolidated financial statements and related
notes thereto.  The following discussion contains certain
forward-looking statements that involve risks and uncertainties.  Our
actual results could differ materially from those discussed
therein.  Factors that could cause or contribute to such differences
include, but are not limited to, risks and uncertainties related to the need for
additional funds, the rapid growth of our operations and our ability to operate
profitably a number of new projects.  Except as required by law, we do
not intend to publicly release the results of any revisions to those
forward-looking statements that may be made to reflect any future events or
circumstances.




Results
of Operations


Comparison
of Three Month Period Ended June 30, 2010


to
Three Month Period Ended June 30, 2009




For
purposes of this “Management’s Discussion and Analysis of Results of
Operations”, we compared the three month period ended June 30, 2010 to the
comparable period in 2009.




Sales:  Sales
for the three months ended June 30, 2010 increased 12.9% to $10,309,800 from
$9,133,800 for the three months ended June 30, 2009.  The increase in
revenue was mainly due to the increase in service revenue of the Cancable
Segment to $8,256,000 for the three month period ended June 30, 2010 from
$7,693,100 for the corresponding period in 2009.




(a)           Cancable
Segment – This segment includes Cancable Inc., Cancable, Inc., XL Digital
Services, Inc. and 2141306 Ontario Inc. (collectively, the “Cancable
Group”).  The principal activity is provisioning the deployment and
servicing of broadband technologies in both residential and commercial
markets.  The Cancable Group’s service offering, network deployment,
IT integration, and support services, enable the cable television and
telecommunications industries to deliver a high quality broadband experience to
their customers.  The total revenue from the Cancable segment was
$8,256,000 for the three months ended June 30, 2010, compared to $7,693,100 for
same period in 2009, representing an increase of $562,900 or 7.3%. The increase
in revenue was primarily related to the increase in revenue generated from our
customer Rogers Cable Inc. Rogers Cable Inc. is Cancable Group’s largest
customer and the revenue from this customer for the three months ended June 30,
2010 was $5,614,300 or 68.0% of total Cancable revenue compared to $4,346,600 or
56.5% for same period in 2009. The increase in revenue from Rogers Cable Inc.
was offset with the decrease in revenue generated in the United States. Total
revenue generated in the United States for the three months ended June 30, 2010
was $1,466,600 compared to $1,752,300 for same period in 2009.




(b)          
AC Technical segment - Total revenue of the AC Technical segment was $2,029,400
for the three months ended June 30, 2010 compared to $1,411,700 for the
corresponding period in 2009. The increase in revenue primarily resulted from
the increase in contract revenue to $1,638,900 for the three months ended June
30, 2010 compared to $1,077,700 for same period in 2009.  The service
revenue was $390,400 for the three months ended June 30, 2010, compared to
$334,000 for same period in 2009.




Cost of
sales:  Cost of sales for the three months ended June 30, 2010
was $7,539,800 or 73.1% of revenues compared to $6,942,300 or 76.0% of revenues
for same period in 2009.




(a)           Cancable
Segment – Direct expenses of this segment were $6,630,400 for the three months
ended June 30, 2010 which is comprised principally of labor expenses of
$4,975,100, vehicle expenses of $528,100 and material cost of
$455,600.




(b)           AC
Technical Segment – Direct expenses of this segment were $1,113,000. The
material cost was $515,600 or 25.4% of the AC Technical revenue for the three
months ended June 30, 2010 compared to $434,900 or 30.8% of revenues in the same
period of fiscal 2009. The decrease in percentage of material costs was
primarily a result of some contracts having less material needs. The dollar
increase is primarily attributable to an increase in revenue. On the other hand,
the labor and subcontractor cost increased to $586,800 or 28.9% of AC Technical
revenues for the three months ended June 30, 2010 compared to $307,500 or
21.8% of AC Technical revenues for the corresponding period of fiscal
2009.  The increase in labor and subcontractor cost resulted primarily
from the increase in revenue.


13


Project expenses:
Project expenses increased to $234,100 or 2.3% of revenue for the three months
ended June 30, 2010, compared to $213,500 or 2.3% for the same period in 2009.
These expenses were mainly related to the AC Technical segment.  The
balance mainly includes the salaries and benefits of indirect staff amounting to
$158,700 in the second quarter of fiscal 2010 compared to $143,100 for the same
period of fiscal 2009 with no material fluctuation. In addition, automobile and
travel expenses increased to $55,800 for the three months ended June 30, 2010
compared to $46,400 for the same period of fiscal 2009. There was no material
fluctuation in the percentage of revenue for automobile and travel
expenses.




Selling expenses:
Selling expenses were $202,100 or 2.0% of revenues for the second quarter of
fiscal 2010 compared to $206,600 or 2.3% of revenues for the same period in
2009.  Selling expenses were mainly related to the AC Technical
segment.  The balance for the three months ended June 30, 2010 is
mainly comprised of salaries and commission to salespersons of $87,400 compared
to $99,160 for the same period of fiscal 2009.  The advertising and
promotion, and trade show expenses were $29,200 in the second quarter of
fiscal 2010 compared to $23,100 for the same period of fiscal 2009.




General and administrative
expenses: General and administrative expenses were $1,364,200 or 13.2% of
revenues for the second quarter of fiscal 2010 compared to $1,588,100 or 17.4%
for the same period in 2009. The balance for the three months ended June 30,
2010 was mainly comprised of $123,500 of professional fees related to
preparation of the quarterly reports and other corporate matters compared to
$112,800 for the same period in 2009. Investor relations expenses of $20,000 for
second quarter of fiscal 2010 compared to $45,000 for the same period of fiscal
2009. Salaries and benefits to administrative staff of $545,800 for the second
quarter of fiscal 2010 compared to $641,700 for the corresponding period of
2009. Additionally, the insurance and occupancy expenses were $180,900 for
the three months ended June 30, 2010 compared to $166,500 for the same
period of fiscal 2009. The decrease in general and administrative expenses
was primarily the result of cost reduction initiatives.




Depreciation: Total
depreciation of property plant and equipment was $584,300 for the second quarter
of fiscal 2010 compared to $669,500 for the same period in 2009.  The
decrease in the balance was primarily due to the disposals of property, plant
and equipment during the fiscal 2009.




Amortization of intangible
assets: Amortization of customer relationships and trade name was $57,800
for the three months ended June 30, 2010 compared to $84,300 for the same period
of fiscal 2009.  The decrease was mainly due to the trade name related
to the acquisition in 2006 and 2007 being fully amortized.




Interest and other expenses
(income):  Interest and other expenses for the three months
ended June 30, 2010 were $974,600 or 9.5% of revenues compared to interest and
other income of $143,800 or 1.6% of revenues for the same period in 2009. The
balance for the three months ended June 30, 2010 was primarily comprised of net
financing expenses of $577,400 or 5.6% of revenues compared to $575,100 or 6.3%
of revenues for the same period of 2009.  The interest due with
respect to the Company’s credit facilities was $394,900 for the three months
ended June 30, 2010 compared to $307,400 for the same period in
2009.  Additionally, the foreign currency translation loss for the
quarter ended June 30, 2010 was $353,800 compared to a foreign currency
translation gain of $757,400 for the same period of 2009. The fluctuation, which
arises from the foreign currency translation of term notes, resulted because the
Canadian dollar traded higher in 2010 as compared to the same period of
2009.




Income
taxes:  No income taxes were paid and/or owed during the three
months ended June 30, 2010 and 2009, which was mainly due to the Company’s
losses.




Net
Income/Loss:  Net loss for the second quarter of fiscal 2010
was $647,200 compared to a net loss of $426,700 for the same period in 2009. The
Company’s operating income was $327,500 for the three months ended June 30, 2010
compared to an operating loss of $570,500 for the corresponding period of
2009.  The operating income for the second quarter of fiscal 2010 was
primarily attributed to the increase of revenue.




14


Results
of Operations


Comparison
of Six Month Period Ended June 30, 2010


to
Period Ended June 30, 2009




For
purposes of this “Management’s Discussion and Analysis of Results of
Operations”, we compared the six months ended June 30, 2010 to the corresponding
period in 2009.




Sales:  Sales
for the six month period ended 2010 increased 7.0% to $19,547,500 from
$18,276,000 for the six month period ended 2009.  The increase in
revenue was mainly due to the increase in service revenue of the Cancable
segment to $15,933,100 for the six month period ended 2010 from $15,148,500 for
the same period in 2009.




(a)           Cancable
Segment – This segment includes Cancable Inc., Cancable, Inc., XL Digital
Serviecs, Inc. and 2141306 Ontario Inc. (collectively, the “Cancable
Group”).  The principal activity is providing the deployment and
servicing of broadband technologies in both residential and commercial
markets.  The Cancable Group’s service offering, network deployment,
IT integration and support services enable companies in the cable television and
telecommunications industries to deliver a high quality broadband experience to
their customers.  The total revenue from the Cancable segment was
$15,933,100 for the six months ended June 30, 2010, compared to $15,148,500 for
same period in 2009. The increase in revenue was primarily due to the increase
in revenue generated from our customer Rogers Cable Inc. Rogers Cable Inc. is
Cancable Group’s largest customer and the revenue from this customer for the six
months ended June 30, 2010 was $10,332,300 or 64.8% of total Cancable Group’s
revenue compared to $8,200,700 or 54.1% of total Cancable Group’s revenue for
same period in 2009. The increase in revenue was attributable to growth in our
business and exchange rate fluctuations. The increase in revenue from Rogers
Cable Inc. was offset with the decrease in revenue generated in the United
States. Total revenue generated in the United States for the six months ended
June 30, 2010 was $3,057,800 compared to $3,726,400 for same period in
2009.




(b)           AC
Technical segment - Total revenue of the AC Technical segment was $3,576,600 for
the six months ended June 30, 2010 compared to $2,979,600 for the corresponding
period in 2009. The increase in revenue was mainly due to the increase in
contract revenue which was $2,776,800 for the six months ended June 30, 2010
compared to $2,329,300 for same period in 2009.  The service revenue
was $823,000 for the six months ended June 30, 2010, compared to $696,200 for
same period in 2009.




Cost of
sales:  Cost of sales for the six months ended June 30, 2010
was $14,442,800 or 73.89% of revenues compared to $13,928,700 or 76.2% of
revenues for same period in 2009.




(a)           Cancable
segment – Cost of sales of this segment was $12,616,200 or 79.2% of Cancable
Group’s revenue for the six months ended June 30, 2010 compared to $12,392,300
or 81.8% for the six months ended June 30, 2009. Cost of sales is comprised
principally of labor expenses of $9,754,200, vehicle expenses of $1,057,900 and
material cost of $840,300. For the six months ended June 30, 2009, cost of sales
was comprised principally of labor expenses of $9,537,400, vehicle expenses of
$927,500 and material cost of $910,600.




(b) AC
Technical segment – Direct expenses of this segment were $1,797,900. The
material cost was $944,700 or 26.4% of the AC Technical revenue for the six
months ended June 30, 2010 compared to $878,900 or 29.5% of revenues in the same
period of fiscal 2009. The decrease in percentage of material costs was
primarily a result of some contracts requiring less material. On the other hand,
labor and subcontractor cost increased to $832,100 or 23.3% of AC Technical
revenues for the six months ended June 30, 2010 compared to $597,100 or 20.0% of
AC Technical revenues for the same period of fiscal 2009.  The
increase in labor and subcontractor cost was mainly due to some contracts
requiring more labor hours and the increase in revenue.


15


Project expenses:
Project expenses increased to $463,900 or 2.4% of revenue for the six months
ended June 30, 2010, compared to $437,200 or 2.4% of revenue for the same period
in 2009. These expenses were mainly related to the AC Technical
segment.  The balance mainly includes the salaries and benefits of
indirect staff amounting to $306,500 in the six months ended June 30, 2010
compared to $290,400 for the same period of fiscal 2009 with no material change.
Automobile and travel expenses increased to $118,900 for the six months ended
June 30, 2010 compared to $103,600 for the same period of fiscal 2009. There was
no material change in the percentage of revenue for automobile and travel
expenses.




Selling expenses:
Selling expenses were $470,200 or 2.4% of revenues for the six months ended June
30, 2010 compared to $405,600 or 2.2% of revenues for the same period in 2009.
Selling expenses were mainly related to AC Technical segment.  The
balance for the six months ended June 30, 2010 is mainly comprised of salaries
and commissions to salespersons of $196,900 compared to $195,900 for the same
period of fiscal 2009. The   advertising, promotion and trade
show expenses were $96,200 compared to $52,600 for the same period of
fiscal 2009.




General and administrative
expenses: General and administrative expenses were $2,587,800 or 13.2% of
revenues for the six months ended June 30, 2010 compared to $2,823,500 or 15.4%
for the same period in 2009. The balance for the six months ended June 30, 2010
was mainly comprised of $258,600 of professional fees related to preparation of
quarterly reports and other corporate matters compared to $212,400 for the same
period in 2009. Investor relations expenses of $50,000 for the six months ended
June 30, 2010 compared to $90,000 for the same period of fiscal 2009. Salaries
and benefits to administrative staff of $1,119,400 for the six months ended June
30, 2010 compared to $1,239,800 for the corresponding period of 2009.
Additionally, the insurace and occupancy expenses were $343,9 The
decrease in general and administrative expenses was primarily the result of cost
reduction initiatives.




Depreciation: Total
depreciation of property plant and equipment was $1,183,200 for the six months
ended June 30, 2010 compared to $1,371,400 for the same period in
2009.   The decrease in the balance was primarily due to the
disposals of property, plant and equipment last year.




Amortization of intangible
assets: Amortization of customer relationships and trade name was
$115,500 for the six months ended June 30, 2010 compared to $166,700 for the
same period of fiscal 2009.  The decrease was mainly due to the trade
name acquired in 2006 and 2007 being fully amortized.




Interest and other expenses
(income):  Interest and net other expenses for the six months
ended June 30, 2010 were $1,350,700 or 6.9% of revenues compared to $746,600 or
4.1% of revenues for the same period in 2009. The balance for the six months
ended June 30, 2010 was primarily comprised of net financing expenses which
decreased to $1,171,800 or 6.0% of revenues compared to $1,180,700 or 6.5% of
revenues for the same period of 2009.  The interest due with respect
to the Company’s credit facilities was $771,600 for the six months ended June
30, 2010 compared to $683,587 for the same period in
2009.  Additionally, the foreign currency translation loss for the six
months ended June 30, 2010 was $92,600 compared to a foreign currency
translation gain of $513,700 for the same period of 2009. The fluctuation, which
arises from the foreign currency translation of term notes, resulted because the
Canadian dollar traded higher in 2010 as compared to the same period of
2009.




Income
taxes:  No income taxes were paid and/or owed during the six
months ended June 30, 2010 and 2009, which was mainly due to the Company’s
losses.




Net
Income/Loss:  Net loss for the six months ended June 30, 2010
was $1,066,700 compared to a net loss of $1,603,700 for the same period in 2009.
The Company’s operating income was $283,900 for the six months ended June 30,
2010 compared to an operating loss of $857,100 for the same period of 2009. This
growth in operating income was primarily the result of the revenue
growth.


16




Liquidity
and Capital Resources
  Since our
inception, we have financed our operations through bank debt, loans and equity
from our principals, loans from third parties and funds generated by our
business. At June 30, 2010, we had $2,189,692 in cash. We believe that cash from
operations and our credit facilities with our banks will continue to be adequate
to satisfy our working capital needs for the next year since we do not
anticipate that Laurus will demand repayment of their term notes with us during
such period. During the remaining portion of fiscal year 2010, our primary
objectives in managing liquidity and cash flows will be to ensure financial
flexibility to support growth and entry into new markets by improving inventory
management and accelerating the collection of accounts receivable.
  In
addition, we have introduced cost cutting initiatives within the Administration,
Project and Selling departments to improve efficiency and also to improve cash
flow.  We have also increased our rates for services provided by AC
Technical to improve gross margins. This is in line with our competitors.
Finally, we expect to  see the benefits of our  research and
development efforts within the next 12 months as we start to introduce our own
line of customized products to the industry. These products and technologies are
expected to improve gross margins.  We plan to seek additional capital
in the future to fund operations, growth and expansion through additional
equity, debt financing or credit facilities and we have had early stage
discussions with investors about potential investment in our company at a future
date however no assurance can be made that such financing would be available,
and if available that it would be on terms acceptable to us.
 
 Net Cash Provided by
Operating Activities.  Net cash provided by operating
activities amounted to $455,000 for the six months ended June 30, 2010. The
changes in operating assets and liabilities resulted in a use of cash of
$451,400, which included a $941,500 increase in accounts receivable, a $118,400
decrease in inventory, a $124,700 decrease in prepaid expenses, a $380,644
increase in accounts payable, a $111,900 increase in income tax receivable and a
$21,700 decrease in deferred revenue.
  Comparison of  the
balance sheet as at June 30, 2010 to December 31, 2009
  Accounts
Receivable
  Our
accounts receivable increased by approximately $252,200 compared to the balance
as at December 31, 2009. Accounts receivable of the Cancable segment were
$3,013,100 as at June 30, 2010 compared to $2,959,800 as at December 31,
2009.  Accounts receivable of the AC Technical segment were
$1,497,200 as at June 30, 2010 compared to $1,088,800 as at December 31,
2009.  The fluctuation in balance was mainly due to the timing of
payments from our customers and the increase in sales.
  Inventory
  Inventory
at June 30, 2010 was $665,700 compared to $789,000 as at December 31, 2009. The
inventory of the Cancable segment as at June 30, 2010 was $195,700 compared to
$261,200 as at December 31, 2009.   The inventory of AC Technical
segment as at June 30, 2010 was $411,500 compared to $440,225 as at December 31,
2009.
  Accounts Payable and Accrued
Liabilities
  Accounts
payable decreased by a minimal amount to approximately $4,532,300 as at June 30,
2010 from $4,555,300 as at December 31, 2009.
  Net Cash Provided By (Used
in) Investing Activities.  Net cash used by investing
activities was $29,400 for the six months ended June 30, 2010, compared to net
cash provided of $177,300 for the six months ended June 30, 2009. The change was
mainly due to a decline in proceeds received from the sale of property and
equipment of approximately $196,900 in 2009 compared to approximately $7,600 in
2010.
  Net Cash Provided By
Financing Activities.  Net cash used in financing activities
was $718,200 for the six months ended June 30, 2010 compared to $1,173,500 for
the six months ended June 30, 2009. The change mainly arose because we borrowed
approximately $76,500 in the current quarter under our line of credit and had
net outflows of approximately $98,400 for payments of such indebtedness in
2009.   In addition, our capital lease repayments in the current
quarter declined by approximately $142,000 as certain leases have been paid
since the first quarter of 2009.
  17
  Recent Accounting
Pronouncements – The following Accounting Standards Codification Updates
have been issued, or became effective, since the beginning of the current period
covered by these financial statements:
  Pronouncement
                
                Issued
                
                TitleASU
      No. 2010-01
                
                January 
      2010
                
                Equity
      (Topic 505):  Accounting for Distributions to Shareholders with
      Components of Stock and Cash – a consensus of the FASB Emerging Issues
      Task ForceASU
      No. 2010-02
                
                January 
      2010
                
                Consolidation
      (Topic 810):  Accounting and Reporting for Decreases in Ownership of
      a Subsidiary – a Scope ClarificationASU
      No. 2012-03
                
                January
      2010
                
                Extractive
      Activities – Oil and Gas (Topic 932): Oil and Gas Reserve Estimation and
      DisclosuresASU
      No. 2010-04
                
                January
      2010
                
                Accounting
      for Various Topics: Technical Corrections to SEC
  ParagraphsASU
      No. 2010-05
                
                January
      2010
                
                Compensation 
      - Stock Compensation (Topic718): Escrowed Share Arrangements and the
      Presumption of CompensationASU
      No. 2010-06
                
                January
      2010
                
                Fair
      Value Measurements and Disclosures (Topic 820): Improving Disclosures
      about Fair Value MeasurementsASU
      No. 2010-07
                
                January
      2010
                
                Not-for-Profit
      Entities (Topic 958): Not-for-Profit Entities – Mergers and
      AcquisitionsASU
      No. 2010-08
                
                February
      2010
                
                Technical
      Corrections to Various TopicsASU
      No. 2010-09
                
                February
      2010
                
                Subsequent
      Events (Topic 855): Amendments to Certain Recognition and Disclosure
      RequirementsASU
      No. 2010-10
                
                February
      2010
                
                Consolidation
      (Topic 810): Amendments for Certain Investment FundsASU
      No. 2010-11
                
                March 
      2010
                
                Derivatives
      and Hedging (Topic 815): Scope Exception Related to Embedded Credit
      DerivativesASU
      No. 2010-12
                
                April
      2010
                
                Income
      Taxes (Topic 740): Accounting for Certain Tax Effects of the 2010 Health
      Care Reform Acts (SEC Update)ASU
      No. 2010-13
                
                April
      2010
                
                Compensation—Stock
      Compensation (Topic 718): Effect of Denominating the Exercise Price of a
      Share-Based Payment Award in the Currency of the Market in Which the
      Underlying Equity Security Trades—a consensus of the FASB Emerging Issues
      Task ForceASU
      No. 2010-14
                
                April
      2010
                
                Accounting
      for Extractive Activities—Oil & Gas—Amendments to Paragraph
      932-10-S99-1 (SEC Update)ASU
      No. 2010-15
                
                April
      2010
                
                Financial
      Services—Insurance (Topic 944): How Investments Held through Separate
      Accounts Affect an Insurer’s Consolidation Analysis of Those Investments—a
      consensus of the FASB Emerging Issues Task ForceASU
      No. 2010-16
                
                April
      2010
                
                Entertainment—Casinos
      (Topic 924): Accruals for Casino Jackpot Liabilities—a consensus of the
      FASB Emerging Issues Task ForceASU
      No. 2010-17
                
                April
      2010
                
                Revenue
      Recognition—Milestone Method (Topic 605): Milestone Method ofRevenue
      Recognition—a consensus of the FASB Emerging Issues Task
    ForceASU
      No. 2010-18
                
                April
      2010
                
                Receivables
      (Topic 310): Effect of a Loan Modification When the Loan is Part of a Pool
      That is Accounted for as a Single Asset—a consensus of the FASB Emerging
      Issues Task Force
  18
  To the
extent appropriate, the guidance in the above Accounting Standards Codification
Updates is already reflected in our condensed consolidated financial statements
and management does not anticipate that these accounting pronouncements will
have any future effect on our condensed consolidated financial
statements.
 
 There
were no other accounting standards and interpretations recently issued which are
expected to a have a material impact on the Company's financial position,
results of operations or cash flows.
 
 Off
Balance Sheet Arrangements
  None
  DISCUSSION
OF CRITICAL ACCOUNTING ESTIMATES
  Critical
accounting estimates are those that management deems to be most important to the
portrayal of our financial condition and results of operations, and that require
management’s most difficult, subjective or complex judgments, due to the need to
make estimates about the effects of matters that are inherently uncertain. We
have identified the following critical accounting estimates: accounts receivable
allowances, revenue, inventory,  and financial instruments. See our
Form 10-K for the year ended December 31, 2009 for a discussion of our critical
accounting estimates.
  CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
  This
quarterly report contains forward-looking statements about our company that are
not historical facts but, rather, are statements about future expectations. When
used in this document, the words “anticipates,” “believes,” “expects,”
“intends,” “should” and similar expressions as they relate to us, or to our
management, are intended to identify forward-looking statements. However,
forward-looking statements in this document are based on management’s current
views and assumptions and may be influenced by factors that could cause actual
results, performance or events to be materially different from those
projected.  These forward-looking statements are subject to numerous
risks and uncertainties.  Important factors, some of which are beyond
our control, could cause actual results, performance or events to differ
materially from those in the forward-looking statements. These factors include
impact of general economic conditions in North America, changes in laws and
regulations, fluctuation in interest rates and access to capital
markets.
  Our
actual results or performance could differ materially from those expressed in,
or implied by, these forward-looking statements and, accordingly, we cannot
predict whether any of the events anticipated by the forward-looking statements
will transpire or occur, or if any of them do, what impact they will have on our
results of operations and financial condition.
  For
further information about these and other risks, uncertainties and factors,
please review the disclosure included in our December 31, 2009 Annual Report on
Form 10-K under the caption “Risk Factors.”
  19
  You
should not place undue reliance on any forward-looking statements. Except as
otherwise required by federal securities laws, we undertake no obligation to
publicly update or revise any forward-looking statements or risk factors,
whether as a result of new information, future events, changed circumstances or
any other reason after the date of this quarterly report.
  Item
      3.
              Quantitative
      and Qualitative Disclosures about Market
Risk
  This item
is not applicable to the Company because we are a smaller reporting
company.
  Item
      4.
              Controls
      and Procedures
  Evaluation of Disclosure Controls and
Procedures   We maintain disclosure controls and procedures
that are designed to ensure that information required to be disclosed in our
filings under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the SEC.  This information is accumulated to allow timely
decisions regarding required disclosure.  As of June 30, 2010, the end
of the period covered by this quarterly report on Form 10Q, our management,
including our Chief Executive Officer and Chief Financial Officer, assessed the
effectiveness of our disclosure controls and procedures, as such terms are
defined under rules 13a-15(e) and 15d-15(e) promulgated under the
Securities Exchange Act of 1934, as amended. Based on this assessment, our
management concluded that our disclosure controls and procedures were effective
as of the end period covered by this quarterly report.
  Changes in Internal Control Over
Financial Reporting   There has not been any change in our
internal control over financial reporting (as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our second
fiscal quarter of 2010 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial
reporting.
  PART
      II.
              OTHER
      INFORMATION
  Item
      1.
              Legal
      Proceedings
  None.
  Item
      1A.
              Risk
      Factors
  This item
is not applicable to the Company because we are a smaller reporting
company.
  Item
      2.
              Unregistered
      Sales of Equity Securities and Use of
Proceeds
  None.
  Item
      3.
              Defaults
      upon Senior Securities
  None.
  Item
      4.
              [Removed
      and Reserved]
  Not
applicable.
  Item
      5.
              Other
      Information
  During
the period covered by this quarterly report, there has been no material change
in the nomination process for directors.
  20
  Exhibits
  [Note:
If any material contracts were entered into since March 31, 2010, please add
them to exhibits list.]
  31.1
              Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002
 
 31.2
              Certification
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002
 32.1
              Chief
      Executive Officer certification pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002
 32.2
              Chief
      Financial Officer certification pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002
  SIGNATURES
  In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
  CREATIVE
      VISTAS, INC.By:
                /s/ Dominic BurnsDominic
      Burns, CEO
 
 By:
                  /s/ Heung Hung LeeHeung
      Hung Lee, CFO
 
 Dated:  August
13, 2010
  21