**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
      SECURIT** **IES**


**EXCHANGE
      ACT OF 1934.**





For
      the
      quarterly period ended June 30, 2008


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 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 Companyx(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
              xNo




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, 2008, the number of shares outstanding of the registrant’s common stock, no
      par value (the only class of voting stock), was 37,224,926 .













PART
                  I.FINANCIAL
                  INFORMATIONItem
                  1.
              Financial
                  Statements
              1Item
                  2.
              Management's
                  Discussion And Analysis of Financial Condition and Results of
                  Operations
              14Item
                  3.
              Quantitative
                  and Qualitative Disclosures about Market Risk
              22Item
                  4.
              Controls
                  and Procedures
              22PART
                  II.OTHER
                  INFORMATIONItem
                  1.
              Legal
                  Proceedings
              22Item
                  1A.
              Risk
                  Factors
              22Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              22Item
                  3.
              Defaults
                  upon Senior Securities
              22Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              23Item
                  5.
              Other
                  Information
              23Item
                  6.
              Exhibits
                  and Reports on Form 8-K
              23





**PART
      I.** **Financial
      Information**


**Item
      1.** **Financial
      Statements**





**Creative** **Vistas, Inc.**


**Condensed** **Consolidated Balance Sheets**


**June 30, 2008**
              
              **December 31, 2007****(Unaudited)****Assets****Current
                  Assets**Cash
                  and bank balances
              
              **$**
              **2,540,203**
              
              **$**
              **1,960,340**Accounts
                  receivable, net of allowance for doubtful accounts of $469,980
                  and
                  $405,432
              
              
              **6,266,791**
              
              
              **6,187,551**Income
                  tax receivable
              
              
              **293,602**
              
              
              **448,126**Inventory
                  and supplies
              
              
              **976,646**
              
              
              **1,043,815**Prepaid
                  expenses
              
              
              **622,479**
              
              
              **270,930**Due
                  from related parties
              
              
              **2,530**
              
              
              **2,581****Total
                  current assets**
              
              
              **10,702,251**
              
              
              **9,913,343****Property
                  plant and equipment, net of depreciation**
              
              
              **8,862,756**
              
              
              **6,352,014****Deposits**
              
              
              **329,500**
              
              
              **125,498****Goodwill**
              
              
              **3,097,485**
              
              
              **3,101,598****Intangible
                  assets**
              
              
              **1,323,267**
              
              
              **1,717,003****Other
                  investments – available for sale securities**
              
              
              **5,530,200**
              
              
              **-****Restricted
                  cash**
              
              
              **-**
              
              
              **53,430****Deferred
                  financing costs, net**
              
              
              **621,423**
              
              
              **551,747****Deferred
                  income taxes**
              
              
              **37,315**
              
              
              **37,547****$**
              **30,504,197**
              
              **$**
              **21,852,180****Liabilities
                  and Shareholders' (Deficit)****Current
                  Liabilities**Bank
                  indebtedness
              
              **$**
              **2,853,108**
              
              **$**
              **-**Accounts
                  payable and accrued liabilities
              
              
              **6,428,880**
              
              
              **6,074,212**Current
                  portion of obligations under capital leases
              
              
              **1,673,482**
              
              
              **1,195,366**Deferred
                  income
              
              
              **181,761**
              
              
              **91,900**Deferred
                  income taxes
              
              
              **25,858**
              
              
              **25,858**Current
                  portion of term notes
              
              
              **1,750,000**
              
              
              **2,240,356**Current
                  portion of other payable
              
              
              **297,030**
              
              
              **303,030**Due
                  to related parties
              
              
              **7,601**
              
              
              **8,143****Total
                  current liabilities**
              
              
              **13,217,720**
              
              
              **9,938,865****Term
                  notes**
              
              
              **14,811,219**
              
              
              **13,565,421****Notes
                  payable to related parties**
              
              
              **1,500,000**
              
              
              **1,500,000****Obligations
                  under capital lease**
              
              
              **4,575,296**
              
              
              **3,184,103****Other
                  payables**
              
              
              **-**
              
              
              **303,030****Due
                  to related parties**
              
              
              **228,584**
              
              
              **233,203****34,332,819**
              
              
              **28,724,622****Shareholders'
                  (deficit)**Share
                  capitalAuthorized50,000,000 no par value preferred shares undesignated, none issued or outstanding100,000,000 no par value common shares 37,224,926 and 34,494,623 issued and outstandingCommon
                  stock
              
              
              **6,488,137**
              
              
              **1,439,307**Deferred
                  compensation
              
              
              **(636,372**
              **)**
              
              **-**Additional
                  paid-in capital
              
              
              **13,757,869**
              
              
              **4,958,871**Accumulated
                  (deficit)
              
              
              **(21,780,236**
              **)**
              
              **(12,445,468**
              **)**Accumulated
                  other comprehensive (losses)Foreign
                  currency translation adjustment
              
              
              **(741,371**
              **)**
              
              **(825,152**
              **)**Unrealized
                  loss on available for sale securities
              
              
              **(916,649**
              **)**
              
              **-****(3,828,622**
              **)**
              
              **(6,872,442**
              **)****$**
              **30,504,197**
              
              **$**
              **21,852,180**
  The
        accompanying notes are an integral part of these financial
        statements
  1
  **Creative
        Vistas, Inc.**
 **Condensed
        Consolidated Statements of Operations and Comprehensive
        Losses**
 **(Unaudited)**
 
 **Three****months ended**
              
              **Six months ended****June 30**
              
              **June 30****2008**
              
              **2007**
              
              **2008**
              
              **2007****Contract
                  and service revenue**Contract
              
              **$**
              **1,786,195**
              
              **$**
              **1,534,017**
              
              **$**
              **3,265,514**
              
              **$**
              **2,861,264**Service
              
              
              **10,803,125**
              
              
              **8,023,515**
              
              
              **20,095,102**
              
              
              **14,477,444**Other
              
              
              **5,541**
              
              
              **19,049**
              
              
              **15,600**
              
              
              **31,493****12,594,861**
              
              
              **9,576,581**
              
              
              **23,376,216**
              
              
              **17,370,201****Cost
                  of sales**Contract
              
              
              **1,083,059**
              
              
              **889,505**
              
              
              **1,983,766**
              
              
              **1,811,501**Service
              
              
              **8,669,381**
              
              
              **5,735,967**
              
              
              **16,076,602**
              
              
              **10,345,667****9,752,440**
              
              
              **6,625,472**
              
              
              **18,060,368**
              
              
              **12,157,168****2,842,421**
              
              
              **2,951,109**
              
              
              **5,315,848**
              
              
              **5,213,033****Operating
                  expenses**Project
              
              
              **266,018**
              
              
              **323,637**
              
              
              **592,073**
              
              
              **605,303**Selling
              
              
              **261,382**
              
              
              **211,726**
              
              
              **479,979**
              
              
              **387,570**General
                  and administrative
              
              
              **3,954,241**
              
              
              **1,996,591**
              
              
              **7,536,495**
              
              
              **3,747,547****4,481,641**
              
              
              **2,531,954**
              
              
              **8,608,547**
              
              
              **4,740,420****Income
                  (Loss) from operations**
              
              
              **(1,639,220**
              **)**
              
              **419,155**
              
              
              **(3,292,699**
              **)**
              
              **472,613****Interest
                  and other expenses**Net
                  financing expenses
              
              
              **1,383,466**
              
              
              **740,091**
              
              
              **5,816,383**
              
              
              **1,299,289**Amortization
                  of deferred charges
              
              
              **45,700**
              
              
              **46,575**
              
              
              **89,915**
              
              
              **91,851**Foreign
                  currency translation gain (loss)
              
              
              **(119,459**
              **)**
              
              **(559,237**
              **)**
              
              **135,775**
              
              
              **(578,155**
              **)****1,309,707**
              
              
              **227,429**
              
              
              **6,042,073**
              
              
              **812,985**Income
                  (loss) before income taxes
              
              
              **(2,948,927**
              **)**
              
              **191,726**
              
              
              **(9,334,772**
              **)**
              
              **(340,372**
              **)**Income
                  taxes
              
              
              **-**
              
              
              **-**
              
              
              **-**
              
              
              **-**Net
                  income (loss)
              
              
              **(2,948,927**
              **)**
              
              **191,726**
              
              
              **(9,334,772**
              **)**
              
              **(340,372**
              **)**Other
                  comprehensive income (loss):Unrealized
                  gain (loss) – available for sale securities
              
              
              **1,941,633**
              
              
              **-**
              
              
              **(916,649**
              **)**
              
              **-**Foreign
                  currency translation adjustment
              
              
              **(96,891**
              **)**
              
              **(407,810**
              **)**
              
              **(452,498**
              **)**
              
              **(452,498**
              **)**Comprehensive
                  (loss)
              
              **$**
              **(1,104,185**
              **)**
              **$**
              **(216,084**
              **)**
              **$**
              **(10,703,919**
              **)**
              **$**
              **(792,870**
              **)**Basic
                  weighted-average shares
              
              
              **37,147,384**
              
              
              **33,576,678**
              
              
              **36,667,096**
              
              
              **33,475,041**Diluted
                  weighted-average shares
              
              
              **37,147,384**
              
              
              **39,132,316**
              
              
              **36,667,096**
              
              
              **33,475,041****Basic
                  earnings (loss) per share**
              
              **$**
              **(0.08**
              **)**
              **$**
              **0.01**
              
              **$**
              **(0.25**
              **)**
              **$**
              **(0.01**
              **)****Diluted
                  earnings (loss) per share**
              
              **$**
              **(0.08**
              **)**
              **$**
              **0.01**
              
              **$**
              **(0.25**
              **)**
              **$**
              **(0.01**
              **)**
  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,****2008**
              
              **2007****Operating
                  activities**Net
                  cash provided by (used in) operating activities
              
              **$**
              **(1,941,366**
              **)**
              **$**
              **690,980****Investing
                  activities**Payment
                  for acquisition
              
              
              **(300,000**
              **)**
              
              **-**Proceeds
                  of sales of property and equipment
              
              
              **34,920**
              
              
              **115,737**Purchase
                  of property and equipment
              
              
              **(994,708**
              **)**
              
              **(311,319**
              **)**Net
                  cash (used in) investing activities
              
              
              **(1,259,788**
              **)**
              
              **(195,582**
              **)****Financing
                  activities**Proceeds
                  from bank indebtedness
              
              
              **2,860,665**
              
              
              **-**Proceeds
                  from term note
              
              
              **2,500,000**
              
              
              **-**Deferred
                  financing cost
              
              
              **(167,380**
              **)**
              
              **-**Repayment
                  of notes payable
              
              
              **-**
              
              
              **(28,564**
              **)**Due
                  to related parties
              
              
              **(385**
              **)**
              
              **(913**
              **)**Repayment
                  of capital leases
              
              
              **(843,385**
              **)**
              
              **(554,724**
              **)**Issuance
                  of common shares
              
              
              **1,260**
              
              
              **-**Restricted
                  cash
              
              
              **52,894**
              
              
              **160,718**Repayment
                  of term notes
              
              
              **(647,167**
              **)**
              
              **(583,966**
              **)**Net
                  cash provided by (used in) financing activities
              
              
              **3,756,502**
              
              
              **(1,007,949**
              **)**Effect
                  of foreign exchange rate changes on cash
              
              
              **24,315**
              
              
              **(78,852**
              **)**Net
                  change in cash and cash equivalents
              
              
              **579,863**
              
              
              **(590,093**
              **)****Cash
                  and cash equivalents,**beginning of period
              
              
              **1,960,340**
              
              
              **3,560,181****Cash
                  and cash equivalents,**end of period
              
              **$**
              **2,540,203**
              
              **$**
              **2,969,278**
  The
        accompanying notes are an integral part of these financial
        statements
  3




**Creative
      Vistas, Inc.**


**Notes
      to Consolidated Condensed Financial Statements**


**June
      30, 2008 (Unaudited)**




**1.**  **Summary
      of Accounting Policies**




**Basis
      of presentation**




The
      accompanying unaudited condensed consolidated balance sheet as at June 30,
      2008,
      and the consolidated condensed statements of operations and cash flows for
      the
      periods ended June 30, 2007 and 2008, 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”), and Iview Digital Video Solutions Inc. (“Iview DSI”). Intercompany
      balances and transactions have been eliminated in consolidation. 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 accounting principles generally accepted in the United States.
      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 2008 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, 2007, filed with the Securities
      and
      Exchange Commission.




**Reclassifications**


Certain
      amounts from the June 30, 2007, 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 contemplates the realization of assets and liquidation
      of
      liabilities in the normal course of business. We have incurred losses of
      $9,334,772 for the six months ended June 30, 2008 and have an accumulated
      deficit of $21,780,236  at
      June
      30, 2008. In addition, we have working capital and stockholder deficits of
      $2,515,469 and $3,828,622, respectively at June 30, 2008.




We
      have
      outstanding term loans aggregating $17,763,627, together with common stock
      options and warrants, held by Laurus Master Fund Ltd, a Cayman Islands company,
      and/or its affiliates (“Laurus”). 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 in substantially all of our assets and, accordingly,
      in the event of any default under our agreements with Laurus, they could
      conceivably attempt to foreclose on our assets, which could cause us to
      terminate our operations. 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. (see
      Note 9)





Over
      the
      next twelve months the Company believes that its existing capital will be
      sufficient to sustain its operations. 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. No assurance can be made that such financing would be
      available, and if available it may take either the form of debt or equity.
      In
      either case, the financing could have a negative impact on our financial
      condition and our shareholders. 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 service provided by AC Technical by 20 percent
      to improve gross margins. This is in line with our competitors. 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. The Company believes that it will be eligible for research and
      development tax credits at year end for its research and development efforts
      during the year and these are additional sources of cash flow for the Company.
      The Company is also negotiating longer credit terms with its suppliers from
      45
      days to 60 to 75 days. For all the reasons mentioned above, we believe that
      we
      have adequate short term borrowing capability and that we will be able 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 and market
      value. 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. Inventory consists
      principally of parts, materials and supplies





**Earnings
      (loss) per share**




The
      Company applies Statement of Financial Accounting Standards No. 128, Earnings
      Per Share (FAS 128). Basic loss per share (“LPS”) is computed using the weighted
      average number of common shares outstanding during the period. Diluted LPS
      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
      using the treasury stock method. Dilutive common share equivalents are not
      considered in periods when their effect is antidilutive.




**2.**  **Deferred
      Financing Costs, Net**




Deferred
      financing costs, net are associated with the Company’s term notes from Laurus.
      For the period ended June 30, 2008, the amortization of deferred financing
      costs
      was $89,915 (2007 - $91,851).




Cost
            
            $
            1,104,081Accumulated
                amortization
            
            
            (482,658
            )$
            621,423




The
      estimated amortization expense for each of the next five fiscal years and
      thereafter is as follows:




**Year**
            
            
            **Amount**2008
            
            $
            96,6382009
            
            
            172,6282010
            
            
            163,4842011
            
            
            139,1792012
            
            
            33,5932013
            
            
            15,901$
            621,423




**3.**  **Other
      Investments– Available For Sale Securities**




On
      January 22, 2008, the Company entered into a Stock Purchase Agreement (the
      “Stock Purchase Agreement”) with Erato Corporation (“Erato”) pursuant to which
      the Company purchased and acquired from Erato 2,674,407 shares of common stock,
      par value $0.0001 per share (the “Shares”), of 180 Connect Inc., a Delaware
      corporation, for an aggregate purchase price of $5,444,940 paid by the Company
      by delivery to Erato of (i) 2,195,720 duly and validly issued shares of common
      stock of the Company and (ii) a common stock purchase warrant, exercisable
      for
      812,988 shares of common stock of the Company at an exercise price of $0.01
      per
      share.


5




On
      January 30, 2008, the Company entered into a Warrant Purchase Agreement with
      Laurus, Erato Corporation, Valens U.S. Fund, LLC and Valens Offshore SPV I,
      Ltd.
      (collectively, the “Sellers”) pursuant to which the Company purchased and
      acquired from the Sellers, warrants to purchase 450,000 shares of common stock
      at an exercise price of $0.01 per share of 180 Connect Inc. The aggregate
      purchase price paid by the Company in exchange for the 180 Connect Warrants
      was
      $1,001,909 paid by the Company by delivery to the Sellers of common stock
      purchase warrants, exercisable for 506,250 shares of common stock of the Company
      at an exercise price of $0.01 per share.




The
      above
      investment, which is classified as available for sale securities, was recorded
      as its fair value as at June 30, 2008, of $5,530,200 and had a cost basis of
      $6,446,849. The unrealized loss of $916,649 was recorded as a component of
      other
      comprehensive losses.





**4.**  **Intangible
      Assets**




**Cost**
            
            **Accumulated**
              **amortization**
            
            **Net book value****Customer
                relationships**
            
            $
            1,663,366
            
            $
            599,505
            
            $
            1,063,861**Trade
                name**
            
            
            1,279,209
            
            
            1,019,803
            
            
            259,406$
            2,942,575
            
            $
            1,619,308
            
            $
            1,323,267




Amortization
      expense for the six month period ended June 30, 2008 amounted to $379,936
      (2007-$300,000).




**5.**  **Bank
      Indebtedness**




During
      the period ended March 31, 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 facility for AC Technical and Cancable
      was $500,000 and $3,500,000 respectively. Revolving credit loans bear interest
      at the bank’s domestic prime rate plus 1.5% 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, 2008,
      the interest rate of the Canadian dollar amount was 6.25%. At June 30, 2008,
      the
      borrowings outstanding under this facility were $2,853,108. T he
      Company banking facility agreements contain financial covenants pertaining
      to
      maintenance of the tangible net worth and debt service coverage ratio. In the
      event of default, the bank would at its discretion to cancel the facilities
      and
      demand immediate repayment of all outstanding amounts.





**6.** **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”) (see
      Note 9). 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%. Interest accrued on the term note but was not payable until February 1,
      2006. Interest is calculated on the basis of a 360 day year. The minimum monthly
      payment on the term note is $81,726 commencing from October 1, 2006. 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.




6


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 Holding (up to
      20%
      of the outstanding shares of 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 and 20% of Iview Holding
      are
      accounted for as minority interests. Because Cancable and Iview Holding have
      incurred losses, no minority interest has been recognized at June 30,
      2008.




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,
      2009, with a balance of $4,950,000 payable on the maturity date. Through June
      30, 2008, the Company has issued warrants to purchase up to 1,728,000 shares
      of
      common stock of the Company at prices from $0.90 to $2.84 per share to defer
      until maturity the principal repayments that were due from March 1, 2007 to
      June
      1, 2008.




The
      Iview
      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 $8,333 commencing March 1, 2007 to 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 December 31, 2011.





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”). 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 month period ended June 30, 2008 was $631,437
      (2007: $846,574).





**Amount**Cancable
                Note interest at prime plus 1.75% (minimum of 7%), due December 31,
                2011
            
            $
            5,148,754Company
                Note interest at prime plus 2% (minimum of 7%), due February 13,
                2010
            
            
            8,250,000Iview
                Note bears interest at prime plus 2% (minimum of 7%), due on February
                13,
                2011
            
            
            1,864,873Company
                Second Notes interest at 12%, due on June 24, 2013
            
            
            2,500,000Less:
                unamortized discount on Company Second Notes
            
            
            (1,202,409
            )16,561,218Less:
                current portion
            
            
            1,750,000$
            14,811,219




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




**Amount**2008
            
            $
            875,0002009
            
            
            1,750,0002010
            
            
            5,875,0002011
            
            
            6,763,6272013
            
            
            1,297,591$
            16,561,218




7


**7.**  **Net
        Financing Expenses**




**Six
                months ended June 30,****2008**
            
            **2007**Capital
                leases
            
            $
            247,550
            
            $
            180,624Interest
                on terms and credit facility
            
            
            631,437
            
            
            846,574Cost
                of deferred principal repayment on term notes – 648,000
                warrants
            
            
            628,238
            
            
            246,459Warrants
                issued for proposed new financing
            
            
            3,723,565
            
            
            -Financing
                cost for the extension for the warrants issued (Note 9)
            
            
            560,735
            
            
            -Others
            
            
            24,858
            
            
            25,632$
            5,816,383
            
            $
            1,299,289




Included
      in net financing expenses is the fair value of $3,723,565 for 2,030,865 warrants
      to purchase the Company’s common stock issued in January 2008 as
      follows:





(i)
      On
      January 22, 2008 the Company entered into a letter agreement with Erato
      Corporation for Erato to provide up to $12,000,000 in financing to the Company
      on such terms and conditions as the Company and Erato shall mutually agree
      (the
“Bridge Financing”). Any proceeds from the Bridge Financing may only be used by
      the Company for the purpose of financing a third party. The Company does not
      currently have an agreement to provide financing to any such third party. As
      consideration for the letter agreement, the Company issued to Erato a warrant
      to
      purchase up to 1,738,365 shares of common stock of the Company at an exercise
      price of $0.01 per share. Because the Company does not currently have any
      agreement to provide financing to a third party, the financing has not occurred
      and, as a result, the Company expensed the value of the warrants. The fair
      value
      of the warrants of $3,144,685 was measured using the Black-Scholes option
      pricing model using the following assumptions: risk free interest rate of 4.23%,
      expected dividend yield of 0%, volatility of 45%, share price of $1.81 and
      the
      expected life of the warrants of 50 years (see Note 9).




(ii)
      On
      January 30, 2008, the Company entered into a non-binding letter of intent with
      Valens U.S. Fund, LLC (the “Letter Agreement”) in which Valens U.S. Fund, LLC
      confirmed its intention to provide up to $4,000,000 in financing to a subsidiary
      of the Company. As consideration for the Letter Agreement, the Company issued
      to
      Laurus, Erato, Valens U.S. Fund, LLC and Valens Offshore SPV I, Ltd. warrants
      to
      purchase 292,500 shares of common stock of the Company at an exercise price
      of
      $0.01 per share. The Letter Agreement was only an expression of the present
      intentions of the parties and no binding legal obligation will exist until
      the
      parties sign a definitive agreement. As a result, the Company expensed the
      value
      of the warrants. The fair value of the warrants of $578,880 was measured using
      the Black-Scholes option pricing model using the following assumptions: risk
      free interest rate of 4.44%, expected dividend yield of 0%, volatility of 45%,
      share price of $1.98 and the life of the warrants of 50 years. (see Note
      9)




**8.**  **Note
      Payable to Related Parties**





In
      September 2004, the Company issued two promissory notes with an aggregate
      principal amount of $3,300,000. On September 30, 2004, the Company repaid
      an aggregate of $1,800,000 of the principal balance. The outstanding principal
      of $1,500,000 bears interest at 3% per annum with no fixed terms of repayment.
      The notes, each with a face amount of $750,000, are due to The Burns Trust
      (the
      Company’s president is one of the beneficiaries of the trust) and the Navaratnam
      Trust (the Company’s CEO is one of the beneficiaries of the trust),
      respectively. During the period ended June 30, 2006, both the notes were
      transferred to Malar Trust Inc. (the Company’s CEO is the shareholder of Malar
      Trust Inc.).




Interest
      expense recognized for the six month period end of June 30, 2008 was $24,858
      (2007 - $24,155).




8


**9.**  **Shareholders’
      (Deficit)**




The
      Company has total authorized share capital of 50,000,000 preferred shares,
      no
      par value and 100,000,000 common shares, no par value.




During
      the period ended March 31, 2008, the Company entered into a consulting agreement
      by issuing 222,414 common shares stock in consideration for investor relations
      services rendered for 2008 with the fair value of $448,200. The expense in
      the
      amount of $211,828 was recorded under general and administrative expenses for
      the six month period ended June 30, 2008. The remaining balance was recorded
      as
      deferred compensation. Additionally, the Company issued 2,000 common shares
      to
      an employee for the exercise of an employee stock option for cash aggregating
      $1,260.




During
      the period ended June 30, 2008, the Company entered into a consulting agreement
      by issuing 300,000 common shares stock in consideration for investor relations
      services rendered for 2008 with the fair value of $600,000. The expense in
      the
      amount of $200,000 was recorded under general and administrative expenses.
      The
      remaining balance was recorded as deferred compensation. Additionally, the
      Company issued 10,169 common shares for the payment of outstanding legal fees
      in
      the amount of $25,117.




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




**Options**




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 amends 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 be purchased 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.




9


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. In no event shall any option be
                exercisable more than five years from the date of grant thereof.





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 impose such other terms and conditions, not inconsistent with
                the
                terms of the Plan, on the grant or exercise of options, as it deems
                advisable.





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. Because the Company
      has not previously granted options to employees, for purposes of 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.





On
      June
      30, 2006, the Company granted to employees options to purchase 2,317,000 shares
      of common stock at $0.63 per share; the options expire on June 30, 2011. During
      2007, the Company granted to employees options to purchase 1,226,000 shares
      of
      common stock, at prices ranging from $0.90 to $2.59 per share; the options
      expire in 2012.




At
      June
      30, 2008 options to purchase 2,939,000 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, 2008, there was $1,249,120 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
      the four year vesting period. At June 30, 2008, 786,500 options were vested.
      The
      cost recognized for the six month period ended June 30, 2008 was $202,706
      (2007:$127,060) which was recorded as general and administrative
      expenses.





In
      valuing the options issued, the following assumptions were used;





2008
            
            2007Expected
                volatility
            45%
            
            45%Expected
                dividends
            0%
            
            0%Expected
                term (in years)
            3.0
                – 4.5
            
            3.0
                –
                4.5Risk-free
                rate
            4.25%
                - 5.13%
            
            4.25%
                - 5.13%





A
      summary
      of option activity under the Plan during the period ended June 30, 2008 is
      presented below:





Options
            
            Shares
            
            Weighted-Average
              Exercise
              Price
            
            Weighted-Average
              Remaining Contractual
              Term
            
            Intrinsic
              ValueOutstanding
                at December 31, 2007
            
            
            3,222,000
            
            $
            0.63
            
            
            4.75
            
            
            -Granted
            
            
            -
            
            
            -Exercised
            
            
            (2,000
            )
            $
            0.63Forfeited
                or expired
            
            
            (281,000
            )
            $
            0.63Outstanding
                at June 30, 2008
            
            
            2,939,000
            
            $
            1.22
            
            
            3.75
            
            $
            0.67Exercisable
                at June 30, 2008
            
            
            786,500
            
            $
            0.63
            
            
            -
            
            
            -




10





**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 period ended March 31, 2008, in connection with financing
      and acquisition arrangements, the Company issued warrants to purchase 3,674,103
      shares of common stock. The fair value of the warrants of $6,470,357 was
      measured using the Black-Scholes option pricing model using the following
      assumptions: risk free interest rate of 2.18% to 4.44%, expected dividend yield
      of 0%, volatility of 45%, exercise prices of $0.01 to $2.84 and the life of
      warrants of 4 to 50 years. During the period ended June 30, 2008, in connection
      with financing arrangements, the Company issued warrants to purchase 2,284,784
      shares of common stock. The fair value of the warrants of $2,447,030 was
      measured using the Black-Scholes option pricing model using the following
      assumptions: risk free interest rate of 4.19%, expected dividend yield of 0%,
      volatility of 120% to 125%, exercise prices of $1.07 to $1.90 and the life
      of
      the warrants 4 to 10 years.




As
      of
      June 30, 2008, we had the following common stocks warrants
      outstanding:




Issue
                  Date
              
              Expiry
                  Date
              
              Number
                  of
                warrants
              
              Exercise Price
                Per share
              
              Value-issue
                date
              
              Issued for01-05-2004
              
              
              01-05-2009
              
              
              540,000
              
              $
              0.33
              
              $
              447,463
              
              Consulting
                  and investment banking fees09-30-2004
              
              
              09-30-2009
              
              
              199,500
              
              $
              1.00
              
              $
              111,853
              
              Consulting
                  and investment banking fees09-30-2004
              
              
              09-30-2016
              
              
              2,250,000
              
              $
              1.15
              
              $
              1,370,000
              
              Financing*03-31-2005
              
              
              03-31-2012
              
              
              100,000
              
              $
              1.20
              
              $
              60,291
              
              Financing04-30-2005
              
              
              04-30-2017
              
              
              100,000
              
              $
              1.01
              
              $
              44,309
              
              Financing*05-31-2005
              
              
              05-31-2012
              
              
              100,000
              
              $
              1.01
              
              $
              56,614
              
              Financing06-22-2005
              
              
              06-22-2017
              
              
              313,000
              
              $
              1.00
              
              $
              137,703
              
              Financing*06-30-2005
              
              
              06-30-2017
              
              
              100,000
              
              $
              0.90
              
              $
              50,431
              
              Financing*07-31-2005
              
              
              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
              
              Financing*04-01-2007
              
              
              04-01-2016
              
              
              108,000
              
              $
              1.15
              
              $
              50,529
              
              Financing*05-01-2007
              
              
              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
              
              
              2,350
              
              $
              0.01
              
              $
              4,650
              
              Financing01-30-2008
              
              
              01-30-2058
              
              
              582,367
              
              $
              0.01
              
              $
              1,152,551
              
              Financing01-30-2008
              
              
              01-30-2058
              
              
              214,033
              
              $
              0.01
              
              $
              423,588
              
              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
              
              $
              669,756
              
              Financing06-23-2008
              
              
              06-23-2018
              
              
              1,333,333
              
              $
              0.01
              
              $
              1,423,232
              
              Financing13,268,483




* In
      May
      2008, the Company entered an amendment to extend the expiry date of Stock
      Purchase Warrants issued to Laurus from the expiry dates from 2011 to 2016
      and
      from 2016 to 2017. The changes in value of warrants in the amount of $560,735
      were recorded under net financing costs.


11




**10.**  **Major
      Customers**




During
      the six months ended June 30, 2008 the Company derived 58.8% (2007:59.4%) of
      its
      revenue from a single customer. The accounts receivable from this customers
      comprises 39.5% (2007: 28.0%) of the total trade receivable **.**




**11.**  **Segment
      Information**




We
      determine and disclose our segments in accordance with SFAS No. 131 “Disclosures
      about Segments of an Enterprise and Related Information”, which uses 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 cased entity
      which is also the wholly owned subsidiary of Cancable Inc. (collectively, the
      “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.




12


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
      DVSI




Iview
      Digital Solutions Inc. (“Iview DVSI”), a corporation incorporated under the laws
      of the Province of Ontario, is a newly formed subsidiary incorporated in late
      2005 to focus on providing video surveillance products and technologies to
      the
      market.




**June
                30, 2008**
            
            **June
                30, 2007****Sales:**Cancable
            
            $
            19,267,812
            
            $
            13,816,347AC
                Technical
            
            
            4,004,510
            
            
            3,492,185Iview
            
            
            103,894
            
            
            59,019Creative
                Vistas, Inc.
            
            
            -
            
            
            2,650**Consolidated
                Total**
            
            $
            23,376,216
            
            $
            17,370,201**Depreciation
                and amortization:**Cancable
            
            $
            1,098,335
            
            $
            730,849AC
                Technical
            
            
            20,427
            
            
            20,060**Consolidated
                Total**
            
            $
            1,118,762
            
            $
            750,909**INTEREST
                EXPENSES:**Cancable
            
            $
            487,897
            
            
            500,853AC
                Technical
            
            
            -
            
            
            1,650Iview
            
            
            71,096
            
            
            101,011AC
                Acquisition
            
            
            24,859
            
            
            24,155Creative
                Vistas, Inc.
            
            
            5,232,531
            
            
            671,620**CONSOLIDATED
                TOTAL**
            
            $
            5,816,383
            
            
            1,299,289**Net
                (Loss):**Cancable
            
            $
            (3,231,567
            )
            $
            1,087,989AC
                Technical
            
            
            400,784
            
            
            42,160Iview
            
            
            (150,023
            )
            
            (65,440
            )AC
                Acquisition
            
            
            (24,859
            )
            
            (24,155
            )Corporate
                (1)
            
            
            (6,329,107
            )
            
            (1,380,926
            )**Consolidated
                Total**
            
            $
            (9,334,772
            )
            $
            (340,372
            )**TOTAL
                ASSETS**Cancable
            
            $
            16,444,277
            
            $
            10,009,446AC
                Technical
            
            
            3,712,508
            
            
            3,762,839Iview
            
            
            1,301,630
            
            
            1,526,031AC
                Acquisition
            
            
            -
            
            
            -Creative
                Vistas, Inc.
            
            
            9,045,782
            
            
            4,337,629Consolidated
                Total
            
            $
            30,504,197
            
            $
            19,635,945**CAPITAL
                ASSETS**Cancable
            
            $
            8,033,961
            
            $
            4,879,244AC
                Technical
            
            
            828,795
            
            
            817,507**Consolidated
                Total**
            
            $
            8,862,756
            
            $
            5,696,751**CAPITAL
                EXPENDITURES**Cancable
            
            $
            3,811,432
            
            $
            2,425,482AC
                Technical
            
            
            10,948
            
            
            3,917Iview
            
            
            -
            
            
            -AC
                Acquisition
            
            
            -
            
            
            -**CONSOLIDATED
                TOTAL**
            
            $
            3,822,380
            
            $
            2,429,399




(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.


13




Revenues
      by geographic destination and product group were as follows:





**June 30, 2008**
            
            **June 30, 2007**Contract
            
            $
            3,265,514
            
            $
            2,861,264Service
            
            
            20,095,102
            
            
            14,477,444Others
            
            
            15,600
            
            
            31,493Total
                sales to external customers
            
            $
            23,376,216
            
            $
            17,370,201





Revenue
      generated by the Company in Canada and the United States was $22,072,321
      (2007:$17,370,201) and $1,303,895 (2007: $Nil), respectively.





**12.**  **Subsequent
      Events**





All
      the
      shares of 180 Connect Inc. owned by the Company recorded as Other Investment
      (see Note 3) was subsequently acquired by a third party.




**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 the 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, 2008**


**to
      Period Ended June 30, 2007**




For
      purposes of this “Management’s Discussion and Analysis or Plan of Operation”, we
      compared the three month period ended June 30, 2008, to the comparable period
      in
      2007.




Sales :
      Sales
      for the three month period ended 2008 increased 31.5% to $12,594,900 from
      $9,576,600 for the three month period ended 2007. The increase in revenue was
      mainly due to the increase in service revenue of the Cancable Segment to
      $10,395,900 for the three month period ended 2008 from $7,679,800 for the same
      period in 2007.




14


(a)
      Cancable Segment - This segment includes Cancable Inc., Cancable, Inc., XL
      Digital and OSS-IM View (collectively, “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. In October 2007, we acquired XL Digital which
      is
      incorporated under the laws of Ontario and with the same principal business
      activity of Cancable Inc. XL Digital, with over 70 employees, provides its
      deployment and provisioning services for Rogers Cable Inc. within two
      territories where the Company did not previously have a presence.  Total
      revenue of this segment for the second quarter of fiscal 2008 was $10,395,900
      from $7,679,800 for the same period in fiscal 2007. The increase reflects
      continued growth in revenue, particularly from having Rogers Cable Inc as a
      customer. We continued to allocate resources to support the growth of our
      business. Total revenue generated in the United States in the second quarter
      of
      fiscal 2008 was $1,024,300 and there was no such revenue in the same period
      of
      fiscal 2007.  Rogers
      Cable Inc. is Cancable Group’s largest customer and the revenue from this
      customer for the second quarter of fiscal 2008 was approximately $6,853,800
      or
      65.9% of its total Cancable revenue compared to $5,772,300 or 75.2% for the
      three month ended June 30, 2007. The increase was mainly primarily to the
      acquisition of XL Digital. (b) AC Technical segment - Total revenue of AC
      Technical segment was $2,157,800 for the second quarter of fiscal year 2008
      compared to $1,854,400 for the second quarter of fiscal year 2007. Contract
      revenue increased to $1,786,200 for the three months ended June 30, 2008
      compared to $1,534,000 for the same period of fiscal 2007. This increase was
      mainly due to an increase in the number of subcontracts for the provision of
      services to government and commercial contracts. The service revenue has
      increased to $407,200 for the three months ended June 30, 2008 from $343,700
      for
      the same period of fiscal 2007. Service revenue primarily represents the
      cumulative effect of the growth in contracts and number of customers over the
      past few years. We have experienced a significant increase in the number of
      inquiries for systems from the government and retail sector. This increased
      interest in security products and services may result in our achieving increased
      revenues in future periods if we are successful in attracting new customers
      or
      obtaining additional projects from existing customers. There is no assurance
      that the Company will be able to attract new customers.




Cost
      of Goods Sold :
      Cost of
      goods sold as a percentage of revenue for the three months ended June 30, 2008
      was $9,752,400 or 77.0% of revenues compared to $6,625,500 or 69.2% of revenues
      for the three month period ended June 30, 2007. The increase in cost of sales
      as
      a percentage of sales resulted principally from the increase
      in cost of sales of the service revenue from $5,736,000 for the three month
      period ended June 30, 2007 to $8,669,4 00
      for
      the three month period ended June 30, 2008. (a) Cancable segment - Cost of
      sales
      of this segment was $8,509,400 for the three months ended June 30, 2008, which
      is comprised principally of labor expenses $6,621,100, vehicle expenses $911,800
      and material cost $688,900. The increase in cost of sales is primarily due
      to
      the revenue growth discussed above. (b) AC Technical segment - Cost of sales
      of
      this segment was $1,054,500. The material cost was $535,800 or 24.8% of the
      AC
      Technical revenue for the three months ended June 30, 2008 compared to $630,400
      or 34.0% of revenues in the same period of fiscal 2007. The decrease in
      percentage of the material cost was mainly due to some contracts having less
      material needs. On the other hand, the labor and subcontractor cost increased
      to
      $491,600 or 22.7% of AC Technical revenues for the three months ended June
      30,
      2008 and $360,500 or 19.4% of AC Technical revenues for fiscal 2007. The
      increase in labor and subcontractor cost was mainly due to the increase in
      revenue.




Project,
      Selling, General and Administrative Expenses :
      Project, selling, general and administrative expenses for the three months
      ended
      June 30, 2008 was $4,481,600 or 35.6% of revenues compared to $2,513,900 or
      26.3% of revenues for the same period of fiscal 2007. The balance is mainly
      comprised of the following:




Project
      cost was decreased to $266,000 or 2.1% of revenue for the three months ended
      June 30, 2008, compared to $323,600 or 3.4% for the same period of fiscal year
      2007. Project cost was mainly related to the AC Technical segment. The balance
      mainly includes the salaries and benefits of indirect staff amounting to
      $163,300 in the second quarter of fiscal 2008 compared to $181,700 for the
      same
      period of fiscal 2007. The decrease was mainly due to the decrease in the number
      of indirect staff. The automobile and travel expenses were approximately $58,600
      for the three months ended June 30, 2008 compared to $81,900 for the same period
      of fiscal 2007. The decrease was mainly due to less travel by the staff this
      year.




15


Selling
      expense was $261,400 or 2.1% of revenues for the second quarter of 2008 compared
      to $211,800 or 2.2% of revenues for the first quarter of fiscal 2007. Selling
      expenses were mainly related to AC Technical segment. As at June 30, 2008,
      we
      have the same number of salespersons, 5, in AC Technical segment as we did
      at
      June 30, 2007. salaries and commission to salespersons for the three months
      ended June 30, 2008 of $133,200 compared to $139,000 for the same period of
      fiscal 2007 amount with no material fluctuation. The advertising and promotion
      and trade show expenses were $39,700 in the second quarter of fiscal 2008
      compared to $15,600 for the same period of fiscal 2007.




General
      and administrative expenses were $3,954,200 or 31.4% of revenues for the three
      month period ended June 30 31, 2008 compared to $1,996,600 or 20.8% for the
      same
      period of fiscal 2007. The balance for the three months ended June 30, 2008
      is
      mainly comprised of $124,900 of professional fees related to fees for the
      quarterly reports and other corporate matters. In addition, investor relations
      expenses amounted to $353,300 for the three month period ended June 30, 2008
      compared to $231,000 for the same period last year. Total salaries and benefits
      to administrative staff were $1,173,500 for the second quarter of 2008 compared
      to $628,200 for the same period last year. The increase in balance was a result
      of the Company hiring additional employees who were required for the expansion
      of the business. Total depreciation of property plant and equipment was $617,800
      for the second quarter of fiscal 2008 compared to $405,600 for the same period
      of last year. The increase in balance was mainly due to the increase in
      property, plant and equipment.




Interest
      and other Expenses :
      Interest and net other expenses for the three months ended June 30, 2008, was
      $1,309,700 or 10.4% of revenues compared to net expenses of $227,400 or 2.4%
      of
      revenues for the same period of fiscal 2007. The balance for the current period
      is primarily comprised of the amortization of deferred charges amounting to
      $45,700 compared to $46,600 for the same period of fiscal 2007. Additionally,
      net financing expenses increased to $1,383,500 or 11.0% of revenues compared
      to
      $740,100 or 7.7% of revenues for the same period of fiscal 2007. The Company
      has
      issued 324,000 warrants with a value of $354,000 to defer the principal
      repayment in the second quarter of fiscal 2008. For the same period of fiscal
      2007, the Company issued 324,000 warrants with a value of $206,900 to defer
      the
      principal repayment. The interest due with respect to the Company’s credit
      facility was $312,500 for the three months ended June 30, 2008 compared to
      $527,433 in the same period of 2007. The decrease in the balance was due to
      the
      decrease in interest rate and outstanding payables of the term notes.
      Additionally, the Company entered an amendment with Laurus to extend certain
      Stock Purchase Warrants, the changes in value was $536,700 which was recorded
      under net financing costs and there was no such expenses for the same period
      of
      last year.




Income
      taxes :
      No
      income tax was paid for the period ended June 30, 2008, which was mainly due
      to
      the Company’s losses carried forward to offset all income generated by the
      Company. All prior taxes have already been accounted for in the income tax
      recoverable and therefore, there is no additional provision for income taxes
      recoverable and deferred tax asset.




Net
      Income/Loss :
      Net
      loss for the three months ended June 30, 2008 was $2,948,900 compared to net
      income of $191,800 for the three month period ended June 30, 2007. The Company’s
      operating loss was $1,639,200 for the second quarter of fiscal 2008 compared
      to
      operating income of $419,200 for the same period of fiscal 2007. The loss was
      primarily attributed to the Company’s allocation of resources to grow the
      business in the United States and more costs incurred.




**Results
      of Operations**


**Comparison
      of Six Month Period Ended June 30, 2008**


**to
      Period Ended June 30, 2007**




For
      purposes of this “Management’s Discussion and Analysis or Plan of Operation”, we
      compared the first six month period ended June 30, 2007, to the comparable
      period in 2006.




Sales :
      Sales
      for the six month period ended 2008 increased 34.6% to $23,376,200 from
      $17,370,200 for the six month period ended 2007. The increase in revenue was
      mainly due to the increase in service revenue of Cancable Segment to $19,267,800
      for the six month period ended 2008 from $13,816,300 for the same period in
      2007.




16


(a)
      Cancable Segment - This segment includes Cancable Inc., Cancable, Inc., XL
      Digital and OSS-IM View (collectively, “Cancable Group”). Total revenue of this
      segment for the six month period ended 2008 was $19,267,800 from $13,816,300
      for
      the same period in fiscal 2007. The increase reflects continued growth in
      revenue, particularly with the business from Rogers Cable Inc. We continued
      to
      allocate resources to support the growth of our business. Total revenue
      generated in the United States in the second quarter of fiscal 2008 was
      $1,303,900 and there was no such revenue for the same period of last
      year.  Rogers
      Cable Inc. is Cancable Group’s largest customer and the revenue from this
      customer for the six month period ended June 30, 2008 was approximately
      $13,361,900 or 69.3% of its total Cancable revenue compared to $10,136,000
      or
      74.7% for the six months ended June 30, 2007. (b) AC Technical segment - Total
      revenue of AC Technical segment was $4,004,500 for the six months ended June
      30,
      2008 compared to $3,492,200 for the six months ended of fiscal year 2007.
      Contract revenue increased to $3,177,200 for the six months ended June 30,
      2008
      compared to $2,824,000 for the same period of fiscal 2007. This increase was
      mainly due to an increase in the number of subcontracts for the provision of
      services to government and commercial contracts. The service revenue has
      increased to $827,300 for the six months ended June 30, 2008 from $661,100
      for
      the same period of fiscal 2007. Service revenue primarily represents the
      cumulative effect of the growth in contracts and number of customers over the
      past few years. We have experienced a significant increase in the number of
      inquiries for systems from the government and retail sector. This increased
      interest in security products and services may result in our achieving increased
      revenues in future periods if we are successful in attracting new customers
      or
      obtaining additional projects from existing customers. There is no assurance
      that the Company will be able to attract new customers.




Cost
      of Goods Sold :
      Cost of
      goods sold as a percentage of revenue for the six months ended June 30, 2008
      was
      $18,060,400 or 77.3% of revenues compared to $12,157,200 or 70.0% of revenues
      for the six month period ended June 30, 2007. (a) Cancable segment - Cost of
      sales of this segment was $16,076,600 for the six months ended June 30, 2008
      which is mainly comprised of labor expenses $11,944,600, vehicle expenses
      $1,617,200 and material cost $1,228,700 (b) AC Technical segment - Cost of
      sales
      of this segment was $1,919,400. The material cost was $1,127,700 or 28.1% of
      the
      AC Technical revenue for the six months ended June 30, 2008 compared to
      $1,227,100 or 35.1% of revenues in the same period of fiscal 2007. The decrease
      in percentage of the material cost was mainly due to some contracts requiring
      less materials. On the other hand, the labor and subcontractor cost increased
      to
      $755,100 or 18.9% of AC Technical revenues for the six months ended June 30,
      2008, from $657,500 or 18.8% of AC Technical revenues for the six months ended
      June 30, 2007 with no material fluctuation.




Project,
      Selling, General and Administrative Expenses :
      Projects, selling, general and administrative expenses for the six months ended
      June 30, 2008 was $8,608,500 or 36.8% of revenues compared to $4,740,420 or
      27.3% of revenues for the same period of fiscal 2007. The balance is mainly
      comprised of the following:




Project
      cost was $592,100 or 2.5% of revenue for the six months ended June 30, 2008,
      compared to $605,300 or 4.4% for the same period of fiscal year 2007. Project
      cost was mainly related to the AC Technical segment. The balance mainly includes
      the salaries and benefits of indirect staff amounting to $357,900 for the six
      months ended June 30, 2008, compared to $339,500 for the same period of fiscal
      2007. The decrease in expenses was mainly due to the decrease in indirect staff.
      The automobile and travel expenses were approximately $124,600 for the six
      month
      period ended June 30, 2008 compared to $146,500 for the same period of fiscal
      2007. The decrease in balance was mainly due to the decrease in number of
      vehicles and less travel for the six months ended June 30, 2008.




Selling
      expenses were $479,900 or 2.1% of revenues for the six month period ended 2008
      compared to $387,600 or 2.2% of revenues for the same period of fiscal 2007.
      Selling expenses were mainly related to the AC Technical segment. The balance
      for the six months ended June 30, 2008 is mainly comprised of salaries and
      commission to salespersons of $307,700 compared to $219,600 for the same period
      of fiscal 2007. The increase was mainly due to the increase in commission and
      the hiring of additional employees. The advertising, promotion and trade show
      expenses were $67,700 for the six months ended June 30, 2008, and $50,900 for
      the same period of fiscal 2006. There was no material fluctuation for two fiscal
      years.




17


General
      and administrative costs were $7,546,500 or 32.2% of revenues for the six month
      period ended June 30, 2008 compared to $3,747,500 or 21.5% for same period
      of
      fiscal 2007. The balance for the six month period ended June 30, 2008, is
      comprised of $328,200 of professional fees related to fees for the quarterly
      reports and other corporate matters. The investor relations expenses increased
      to $495,500 for the six month period ended June 30, 2008, compared to $288,000
      for the same period last year. Total salaries and benefits to administrative
      staff increased to $2,259,800 for the six month period ended June 30, 2008
      compared to $1,143,100 for the same period last year. The increase was mainly
      due to the increase in headcounts. Total depreciation of property plant and
      equipment was $1,188,800 for the six months ended June 30, 2008, compared to
      $750,900 for the same period of last year. The increase was mainly due to the
      addition of capital assets.




Interest
      and other Expenses (Income) :
      Interest and net other expenses for the six months ended June 30, 2008, of
      $6,042,100 or 25.8% of revenues compared to net expenses of $813,000 or 4.7%
      of
      the revenues for the same period of fiscal 2007. The balance for the current
      period is primarily comprised of the amortization of deferred charges amounting
      to $89,900 compared to $91,900 for the same period of fiscal 2007. Additionally,
      net financing expenses increased to $5,816,400 or 24.9% of revenues compared
      to
      $1,299,300 or 7.5% of revenues for the same period of fiscal 2007. During the
      three months ended March 31, 2008, the Company entered into two financing
      arrangements in which the Company has issued 2,030,865 warrants with a value
      of
      $3,723,600. The interest due with respect to the Company’s credit facility was
      $631,400 for the six months ended June 30, 2008 compared to $846,400 in the
      same
      period of 2007. The decrease in the balance was due to the decrease in interest
      rate and outstanding payables of the term notes.




Income
      taxes :
      No
      income tax provision for the period ended June 30, 2008 which was mainly due
      to
      the Company has losses carried forward to offset all income generated from
      the
      Company. All prior taxes already been accounted for in the income tax
      recoverable and therefore, there is no additional provision for income taxes
      recoverable and deferred tax asset.




Net
      Income/Loss :
      Net
      loss for the six months ended June 30, 2008 was $9,334,800 compared to net
      loss of $340,300 for the six month period ended June 30, 2007. The Company’s
      operating loss was $3,292,700 for the six months ended 2008 compared to
      operating income of $472,700 for the same period of fiscal 2007. The loss was
      primarily attributed to the financing transactions in January 2008.




**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, 2008, we had $2,540,200 in cash. We believe that cash
      from
      operations and our credit facilities with our banks will continue to be adequate
      to satisfy the ongoing working capital needs of the Company. During fiscal
      year
      2008, our primary objectives in managing liquidity and cash flows will be to
      ensure financial flexibility to support growth and entry into new markets and
      improve inventory management and to accelerate the collection of accounts
      receivable.




Net
      Cash Used in Operating Activities .
      Net
      cash used in operating activities amounted to $1,941,400 for the six months
      ended June 30, 2008. The changes in operating assets and liabilities resulted
      in
      a net cash of $4,270, which included a $220,300 increase in accounts receivable,
      a $48,400 decrease in inventory, a $569,600 increase in prepaid expenses, a
      $506,300 increase in accounts payable, a $147,500 increase in income tax
      recoverable and a $92,000 increase in deferred revenue.




Comparison
      of the balance sheet as at June 30, 2008 to December 31, 2007




Accounts
      Receivable




Our
      accounts receivable increased to $6,266,800 as at June 30, 2008 from $6,187,600
      as at December 31, 2007. Accounts receivable of the Cancable segment were
      $4,452,900 as at June 30, 2008 compared to $3,989,100 as at December 31, 2007.
      The increase in balance was mainly due to the increase in revenue. Accounts
      receivable of the AC Technical segment were $1,690,300 as at June 30, 2008
      compared to $2,083,200 as at December 31, 2007. The
      decrease in balance was mainly due to the timing of payments from our customers.




18


Inventory




Inventory
      on hand at
      June 30, 2008 was $976,700 compared to $1,043,800 as at December 31, 2007.
      The
      inventory of the Cancable segment as at June 30, 2008 was $319,100 compared
      to
      $363,600 as at December 31, 2007. There was no material fluctuation from the
      fiscal year ended December 31, 2007. The inventory of AC Technical segment
      as at
      June 30, 2008 was $453,400 compared to $638,900 as at December 31, 2007. The
      level of inventory was higher as at December 31, 2007 as we had purchased the
      inventory closed to year ended for jobs to be started during the first quarter
      of 2008.




Accounts
      Payable and Accrued Liabilities




Accounts
      payable increased to approximately $6,428,900 as at June 30, 2008 from
      $6,074,200 as at December 31, 2007. The increase was mainly due to the timing
      of
      payments to our suppliers.




Deferred
      Revenue




Deferred
      revenue increased to $181,800 as at June 30, 2008 compared to a balance of
      $91,900 as at December 31, 2007. This increase was mainly due to the timing
      of
      payments by our customers. Deferred revenue primarily relates to payments
      associated with contracts in which revenue is recognized on a percentage of
      completion basis.




Incomes
      Taxes Recoverable




The
      decrease in income taxes recoverable was mainly due to the Company’s receipt of
      a refund from the Government relating to the losses carried back to prior years
      and investment tax credits.




Net
      Cash Used in Investing Activities .
      Net
      cash used in investing activities was $1,259,800 for the six months ended June
      30, 2008, compared to $195,600 used for the six months ended June 30, 2007.
      The
      balance for both periods was mainly due to the purchase of property and
      equipment of the Company and offset by the sale proceeds from the sale of
      property and equipment. For the six month period ended June 30, 2008, the
      Company has paid $300,000 for the acquisition of XL Digital.




Net
      Cash Provided From Financing Activities .
      Net
      cash provided by financing activities was $3,756,500 for the six months ended
      June 30, 2008 compared to net cash used of $1,007,900 for the six months ended
      June 30, 2007. Last year’s balance mainly represents the repayment of capital
      leases and term notes in the amount of $1,138,700. The current year balance
      represents net proceeds received from new banking facilities set up with a
      Canadian financial institution in the amount of $2,860,700. The balance was
      offset with the repayment of term notes and capital leases in the amount of
      $1,490,600. Additionally, the Company has issued a term loan to LV
      Administration Service Inc. in the amount of $2,500,000 with total financing
      cost of $167,380. Total net proceeds from this term loan were
      $2,332,620.




Our
      capital requirements have grown since our inception with the growth of our
      operations and staffing. We expect our capital requirements to continue to
      increase in the future as we seek to expand our operations. On September 30,
      2004, we obtained funding through a series of agreements with Laurus. In 2006,
      through our wholly owned subsidiary, we acquired all of the issued and
      outstanding shares of capital stock and any other equity interests of Cancable.
      Simultaneously, Cancable 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. We completed a refinancing transaction with Laurus in
      February 2006; we issued to Laurus a secured term note (the “Company Note”) in
      the amount of $8,250,000 and Iview DSI issued to Laurus a secured term note
      (the
“Iview Note”) in the amount of $2,000,000. Simultaneously with the closing of
      this refinancing transaction, we paid off the entire outstanding principal
      amount and all obligations due to Laurus under the Secured Convertible Term
      Note
      dated September 30, 2004, the Secured Convertible Minimum Borrowing Note dated
      September 30, 2004 and the Secured Revolving Note dated September 30, 2004
      (collectively, the “2004 Notes”) and such 2004 Notes were subsequently
      cancelled.  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”). The Company also issued to Valens
      Offshore and Valens U.S. warrants to purchase up to 1,333,333 and 627,451 shares
      of common stock, respectively, of the Company with an exercise price of $0.01
      per share. The loans are secured by all of the assets of the Company and all
      its
      subsidiaries.


19





Over
      the
      next twelve months we believe that our existing capital will be sufficient
      to
      sustain our operations. Management plans to seek additional capital in the
      future to fund operations, growth and expansion through additional equity,
      debt
      financing or credit facilities. We have had early stage discussions with
      investors about potential investment in our firm at a future date. No assurance
      can be made that such financing would be available, and if available it may
      take
      either the form of debt or equity. In either case, the financing could have
      a
      negative impact on our financial condition and our shareholders.





***Recent
      Accounting Pronouncements***




In
      May
      2008, the FASB issued FAS 163 (“FAS 163”), “Accounting for Financial Guarantee
      Insurance Contracts—an interpretation of FASB Statement No. 60 **”.** This
      Statement interprets Statement 60 and amends existing accounting pronouncements
      to clarify their application to the financial guarantee insurance contracts
      included within the scope of this Statement. FAS 163 is not expected to have
      a
      material impact on the Company’s consolidated financial statements.




In
      May
      2008, the FASB issued FAS 162 (“FAS 162”), “The Hierarchy of Generally Accepted
      Accounting Principles.” This statement identifies the sources of accounting
      principles and the framework for selecting the principles to be used in the
      preparation of financial statements of nongovernmental entities that are
      presented in conformity with GAAP. Although this statement formalizes the
      sources and hierarchy of GAAP within the authoritative accounting literature,
      it
      does not change the accounting principles that are already in place. This
      statement will be effective 60 days following the SEC’s approval of the Public
      Company Accounting Oversight Board amendments to AU Section 411, “The
      Meaning of Present Fairly in Conformity With Generally Accepted Accounting
      Principles.” FAS 162 is not expected to have a material impact on the Company’s
      consolidated financial statements.





In
      April
      2008, the FASB issued FSP FAS 142-3, *Determination
      of the Useful Life of Intangible Assets* (“FSP
      FAS 142-3”). FSP FAS No. 142-3 amends the factors that should be considered in
      developing renewal or extension assumptions used to determine the useful life
      of
      a recognized intangible asset under FAS 142, *Goodwill
      and Other Intangible Assets* (“FAS
      142”). The intent of FSP FAS 142-3 is to improve the consistency between the
      useful life of a recognized intangible asset under FAS 142 and the period of
      expected cash flows used to measure the fair value of the asset under FAS 141(R)
      and other applicable accounting literature. FSP FAS 142-3 is effective for
      financial statements issued for fiscal years beginning after December 15,
      2008 and must be applied prospectively to intangible assets acquired after
      the
      effective date. The Company has not determined the impact, if any, of the
      adoption of FSP FAS 142-3.





Effective
      January 1, 2008, we adopted the provisions of FAS 157, *Fair
      Value Measurements,* except
      as it applies to those nonfinancial assets and nonfinancial liabilities as
      noted
      in proposed FSP FAS 157-b. The partial adoption of FAS 157 did not have a
      material impact on our consolidated financial position, results of operations
      or
      cash flows. FAS No. 157 defines fair value, establishes a framework for
      measuring fair value in generally accepted accounting principles, and expands
      disclosures about fair value measurements. This statement does not require
      any
      new fair value measurements, but provides guidance on how to measure fair value
      by providing a fair value hierarchy used to classify the source of the
      information. In February 2008, the FASB issued FASB Staff Position (“FSP”)
      157-2, *Effective Date of FASB Statement No. 157,* which
      delays the effective date of FAS 157 for all nonfinancial assets and
      nonfinancial liabilities, except for items that are recognized or disclosed
      at
      fair value in the financial statements on a recurring basis (at least
      annually).




In
      March
      2008, the FASB issued FAS No. 161, *Disclosures about Derivative Instruments and Hedging Activities, an amendment
      of
      FASB Statement No. 133,* which
      requires additional disclosures about the objectives of the derivative
      instruments and hedging activities, the method of accounting for such
      instruments under FAS 133 and its related interpretations, and a tabular
      disclosure of the effects of such instruments and related hedged items on our
      financial position, financial performance, and cash flows. FAS 161 is effective
      for us beginning January 1, 2009. We are currently assessing the potential
      impact that adoption of FAS 161 may have on our financial
      statements.


20




Effective
      January 1, 2008, we adopted the provisions of FAS 159, *The
      Fair Value Option for Financial Assets and Financial
      Liabilities* .
      The
      adoption did not have a material impact on our consolidated financial position,
      results of operations or cash flows. FAS 159 gives us the irrevocable option
      to
      carry many financial assets and liabilities at fair values, with changes in
      fair
      value recognized in earnings.


In
      December 2007, the FASB issued FAS 141R, *Business Combinations* ,
      which
      replaces FAS 141. The statement retains the purchase method of accounting for
      acquisitions, but requires a number of changes, including changes in the way
      assets and liabilities are recognized in the purchase accounting. It also
      changes the recognition of assets acquired and liabilities assumed arising
      from
      contingencies, requires the capitalization of in-process research and
      development at fair value, and requires the expensing of acquisition-related
      costs as incurred. FAS 141R is effective for us beginning January 1, 2009
      and will apply prospectively to business combinations completed on or after
      that
      date.




In
      December 2007, the FASB issued FAS 160, *Noncontrolling Interests in Consolidated Financial Statements, an amendment
      of
      ARB No. 51,* which
      changes the accounting and reporting for minority interests. Minority interests
      will be re-characterized as non-controlling interests and will be reported
      as a
      component of equity separate from the parent’s equity, and purchases or sales of
      equity interests that do not result in a change in control will be accounted
      for
      as equity transactions. In addition, net income attributable to the
      non-controlling interest will be included in consolidated net income on the
      face
      of the income statement and, upon a loss of control, the interest sold, as
      well
      as any interest retained, will be recorded at fair value with any gain or loss
      recognized in earnings. FAS 160 is effective for us beginning January 1, 2009
      and will apply prospectively, except for the presentation and disclosure
      requirements, which will apply retrospectively. We are currently assessing
      the
      potential impact that adoption of FAS 160 may have on our financial
      statements.




**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 six critical accounting estimates: accounts receivable
      allowances, goodwill, revenue, inventory, accounting for income taxes and
      financial instruments. See our Form 10-K for the year ended December 31, 2007,
      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.




21


For
      further information about these and other risks, uncertainties and factors,
      please review the disclosure included in our December 31, 2007, Annual Report
      on
      Form 10-K under the caption “Risk Factors.”




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**




We
      maintain a system of disclosure controls and procedures, as such term is defined
      in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed
      to
      provide reasonable assurance that information required to be disclosed by us
      in
      the reports that we file under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in the SEC’s rules and
      forms, and that such information is accumulated and communicated to our
      management, including our Chief Executive Officer and Chief Financial Officer,
      as appropriate, to allow timely decisions regarding required
      disclosures.




We
      have
      carried out an evaluation under the supervision and with the participation
      of
      the Company’s management, including the Company’s Chief Executive Officer and
      Chief Financial Officer, of the effectiveness of the des ign
      and
      operation of our disclosure controls and procedures. Based upon their evaluation
      and subject to the foregoing ,
      the
      Chief Executive Officer and Chief Financial Officer concluded that such controls
      and procedures were effective as of the end of the period covered by this
      report, in all material respects, to ensure that required information will
      be
      disclosed on a timely basis in our reports filed under the Exchange
      Act.




In
      designing and evaluating the disclosure controls and procedures, our management
      recognized that any controls and procedures, no matter how well designed and
      operated, can provide only reasonable assurance of achieving the desired control
      objectives, and our management necessarily was required to apply their judgment
      in evaluating the cost-benefit relationship of  possible
      controls and procedures.





There
      were no changes in our internal control over financial reporting that occurred
      during the quarter ended June 30, 2008, that have materially affected, or are
      reasonably likely to materially affect our internal control over financial
      reporting.




**PART
      II.**  **OTHER
      INFORMATION**




**Item
      1.**  **Legal
      Proceedings**




Not
      applicable.




**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**




Not
      applicable.




**Item
      3.**  **Defaults
      upon Senior Securities**




Not
      applicable.




22


**Item
      4.**  **Submission
      of Matters to a Vote of Security Holders**




Not
      applicable.




**Item
      5.**  **Other
      Information**




Not
      applicable.




**Item
      6.**  **Exhibits**




(a)  Exhibits




31.1
            
            Certification
                of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200231.2
            
            Certification
                of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200232.1
            
            Chief
                Executive Officer certification pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                200232.2
            
            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





Dated:
                August 14, 2008




23