SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549




FORM
10-Q




(Mark
one)




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


EXCHANGE
ACT OF 1934.





For the
quarterly period ended September 30, 2010


OR


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


EXCHANGE
ACT OF 1934


For the
transition period from _____ to _____




Commission
file number 0-16819


CREATIVE
VISTAS, INC.




(Exact
name of registrant as specified in its charter)




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




2100
Forbes Street


Unit
8-10


Whitby,
Ontario, Canada L1N 9T3


(905)
666-8676


(Address,
including zip code, and telephone number,


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




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No ̈




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




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.  (Check one):




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




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




 ̈
Yes                      x No




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




At  November
15, 2010, the number of shares outstanding of the registrant’s common stock, no
par value (the only class of voting stock), was 37,488,714.










PART
      I.FINANCIAL
      INFORMATIONItem 1.
                  Condensed
      Financial Statements
                  1Item 2.
                  Management's
      Discussion And Analysis of Financial Condition and Results of
      Operations
                  14Item 3.
                  Quantitative
      and Qualitative Disclosures about Market Risk
                  21Item 4.
                  Controls
      and Procedures
                  21PART
      II.OTHER
      INFORMATIONItem 1.
                  Legal
      Proceedings
                  21Item 1A.
                  Risk
      Factors
                  21Item 2.
                  Unregistered
      Sales of Equity Securities and Use of Proceeds
                  21Item 3.
                  Defaults
      upon Senior Securities
                  21Item 4.
                  Removed
      and Reserved
                  21Item 5.
                  Other
      Information
                  22Item 6.
                  Exhibits
                  22





PART
I.                      FINANCIAL
INFORMATION


Item
      1.
              Financial
      Statements





Creative Vistas, Inc.
                  Condensed Consolidated Balance
      Sheets
                
                September 30, 2010
                
                
                December 31, 2009(Unaudited)AssetsCurrent
      AssetsCash
      and bank balances
                
                $
                2,822,684
                
                
                $
                2,441,204Accounts
      receivable, net of allowance for doubtful accounts of $185,012 and
      $213,862
                
                
                4,197,715
                
                
                
                4,292,071Income
      tax receivable
                
                
                174,757
                
                
                
                257,142Inventory
      and supplies
                
                
                639,487
                
                
                
                789,005Prepaid
      expenses
                
                
                340,436
                
                
                
                347,048Total
      current assets
                
                
                8,175,079
                
                
                
                8,126,470Property,
      plant and equipment, net of depreciation
                
                
                4,906,234
                
                
                
                6,669,553Deposits
                
                
                232,557
                
                
                
                282,359Intangible
      assets
                
                
                112,487
                
                
                
                284,286Deferred
      financing costs, net
                
                
                261,858
                
                
                
                384,521Deferred
      income taxes
                
                
                37,093
                
                
                
                36,879$
                13,725,308
                
                
                $
                15,784,068Liabilities
      and Shareholders' (Deficiency)Current
      LiabilitiesBank
      indebtedness
                
                $
                1,999,016
                
                
                $
                1,960,057Accounts
      payable and accrued liabilities
                
                
                4,068,517
                
                
                
                4,555,320Current
      portion of obligations under capital leases
                
                
                1,519,647
                
                
                
                1,501,106Deferred
      income
                
                
                99,810
                
                
                
                84,502Deferred
      income taxes
                
                
                25,858
                
                
                
                25,858Current
      portion of term notes
                
                
                8,927,374
                
                
                
                1,750,000Total
      current liabilities
                
                
                16,640,222
                
                
                
                9,876,843Term
      notes
                
                
                6,863,590
                
                
                
                13,913,252Notes
      payable to related parties
                
                
                1,500,000
                
                
                
                1,500,000Obligations
      under capital leases
                
                
                2,285,522
                
                
                
                3,543,801Due
      to related parties
                
                
                224,145
                
                
                
                219,87627,513,479
                
                
                
                29,053,772Shareholders'
      (deficiency)Share
      capital50,000,000
      no par value preferred shares authorized; undesignated, none issued or
      outstanding100,000,000
      no par value common shares authorized:37,488,714
      at September 30, 2010 and 37,488,714 at December 31, 2009 issued and
      outstandingCommon
      stock
                
                
                6,555,754
                
                
                
                6,555,754Additional
      paid-in capital
                
                
                14,294,854
                
                
                
                14,158,942Accumulated
      (deficit)
                
                
                (33,390,492
                )
                
                
                (32,957,115
                )Accumulated
      other comprehensive losses
                
                
                (1,248,287
                )
                
                
                (1,027,285
                )(13,788,171
                )
                
                
                (13,269,704
                )$
                13,725,308
                
                
                $
                15,784,068





The
accompanying notes are an integral part of these financial
statements




1




Creative
Vistas, Inc.


Condensed
Consolidated Statements of Operations and Comprehensive Income
(Loss)


(Unaudited)





Three months ended
                
                
                Nine months endedSeptember 30
                
                
                September 302010
                
                
                2009
                
                
                2010
                
                
                2009Contract
      and service revenueContract
                
                $
                1,471,711
                
                
                $
                2,039,619
                
                
                $
                4,248,529
                
                
                $
                4,368,893Service
                
                
                9,684,677
                
                
                
                9,281,162
                
                
                
                26,452,922
                
                
                
                25,217,432Other
                
                
                587
                
                
                
                1,662
                
                
                
                2,983
                
                
                
                12,11711,156,975
                
                
                
                11,322,443
                
                
                
                30,704,434
                
                
                
                29,598,442Cost
      of sales (excluding depreciation)Contract
                
                
                1,049,019
                
                
                
                1,152,944
                
                
                
                2,620,893
                
                
                
                2,411,632Service
                
                
                7,142,072
                
                
                
                7,034,600
                
                
                
                20,013,012
                
                
                
                19,704,627Project
      expenses
                
                
                235,534
                
                
                
                229,520
                
                
                
                699,421
                
                
                
                666,687Selling
      expenses
                
                
                231,315
                
                
                
                205,248
                
                
                
                701,549
                
                
                
                610,888General
      and administrative expenses
                
                
                865,492
                
                
                
                1,370,361
                
                
                
                3,453,333
                
                
                
                4,193,898Depreciation
      expense
                
                
                536,917
                
                
                
                657,033
                
                
                
                1,720,121
                
                
                
                2,028,390Amortization
      of intangible assets
                
                
                57,737
                
                
                
                86,515
                
                
                
                173,284
                
                
                
                253,23810,118,086
                
                
                
                10,736,221
                
                
                
                29,381,613
                
                
                
                29,869,360Income
      (loss) from operations
                
                
                1,038,889
                
                
                
                586,222
                
                
                
                1,322,821
                
                
                
                (270,918
                )Interest
      and other expenses (income)Net
      financing expenses
                
                
                559,971
                
                
                
                585,668
                
                
                
                1,731,743
                
                
                
                1,766,402Amortization
      of deferred charges
                
                
                42,988
                
                
                
                41,008
                
                
                
                129,295
                
                
                
                120,537Foreign
      currency translation (gain) loss
                
                
                (197,414
                )
                
                
                (760,897
                )
                
                
                (104,840
                )
                
                
                (1,274,559
                )405,545
                
                
                
                (134,221
                )
                
                
                1,756,198
                
                
                
                612,380Income
      (loss) before income taxes
                
                
                633,344
                
                
                
                720,443
                
                
                
                (433,377
                )
                
                
                (883,298
                )Income
      taxes
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Net
      income (loss)
                
                
                633,344
                
                
                
                720,443
                
                
                
                (433,377
                )
                
                
                (883,298
                )Other
      comprehensive (loss):Foreign
      currency translation adjustment
                
                
                (345,703
                )
                
                
                (880,690
                )
                
                
                (221,002
                )
                
                
                (1,414,943
                )Comprehensive
      income (loss)
                
                $
                287,641
                
                
                $
                (160,247
                )
                
                $
                (654,379
                )
                
                $
                (2,298,241
                )Basic
      weighted-average shares
                
                
                37,488,714
                
                
                
                37,478,649
                
                
                
                37,488,714
                
                
                
                37,426,516Diluted
      weighted-average shares
                
                
                43,628,104
                
                
                
                44,508,726
                
                
                
                37,488,714
                
                
                
                37,426,516Basic
      earnings (loss) per share
                
                $
                0.02
                
                
                $
                0.02
                
                
                $
                (0.01
                )
                
                $
                (0.02
                )Diluted
      earnings per share
                
                $
                0.01
                
                
                $
                0.02
                
                
                $
                (0.01
                )
                
                $
                (0.02
                )




The
accompanying notes are an integral part of these financial
statements




2




Creative
Vistas, Inc.


Condensed
Consolidated Statements of Cash Flows


(Unaudited)





Nine months ended September
    30,2010
                
                
                2009Operating
      activitiesNet
      cash provided by (used in) operating activities
                
                $
                1,694,037
                
                
                $
                (860,282
                )Investing
      activitiesProceeds
      from sales of property and equipment
                
                
                11,634
                
                
                
                202,455Purchase
      of property and equipment
                
                
                (81,112
                )
                
                
                (67,563
                )Net
      cash provided by (used in) investing activities
                
                
                (69,478
                )
                
                
                134,892Financing
      activitiesProceeds
      from (repayment of) bank indebtedness
                
                
                (2,213
                )
                
                
                507,835Repayment
      of capital leases
                
                
                (1,127,010
                )
                
                
                (1,324,499
                )Repayment
      of term notes
                
                
                (75,000
                )
                
                
                (212,500
                )Net
      cash (used in) financing activities
                
                
                (1,204,223
                )
                
                
                (1,029,164
                )Effect
      of foreign exchange rate changes on cash
                
                
                (38,856
                )
                
                
                (439,358
                )Net
      change in cash and cash equivalents
                
                
                381,480
                
                
                
                (2,193,912
                )Cash and cash
      equivalents, beginning of period
                
                
                2,441,204
                
                
                
                4,770,337Cash and cash
      equivalents, end of period
                
                $
                2,822,684
                
                
                $
                2,576,425




The
accompanying notes are an integral part of these financial
statements


3




Creative
Vistas, Inc.


Notes
to Consolidated Condensed Financial Statements


September
30, 2010 (Unaudited)




1.           Summary
of Accounting Policies




Basis
of presentation




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





Reclassifications


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





Liquidity
and going concern




Our
consolidated condensed financial statements were prepared using accounting
principles generally accepted in the United States of America applicable to a
going concern, which contemplate the realization of assets and liquidation of
liabilities in the normal course of business. We have incurred a loss of
$433,377 for the nine months ended September 30, 2010 and have respective
working capital and shareholders' deficits of $8,465,143 and $13,788,171 at
September 30, 2010.





We have
outstanding term loans aggregating $15,790,964, together with common stock
options and warrants, held by Laurus Master Fund, Ltd. (“Laurus”) and its
related entities. We do not currently have the ability to repay the notes in the
event of a demand by the holder. Furthermore, we granted a security interest to
Laurus and its related entities in substantially all of our assets and,
accordingly, in the event of any default under our agreements with Laurus and
its related entities, they could conceivably attempt to foreclose on our assets,
which could cause us to terminate our operations. As of September 30, 2010,
there were 14,688,983 shares of common stock of CVAS issuable upon the exercise
of warrants and 129,155 shares issuable upon the exercise of options which were
issued to Laurus, and its related entities, Erato Corporation, Valens Offshore
Fund, Valens U.S. Fund, LLC and PSource Structured Debt Limited. Additionally,
there were 49 shares of common stock of Cancable Holding issuable upon the
exercise of options and 20 shares of common stock of Iview Holding issuable upon
the exercise of options to Laurus and its related entities.


4


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





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





Inventory





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




Earnings
(loss) per share




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




2.           Deferred
Financing Costs, Net




Deferred
financing costs, net are associated with the Company’s term notes. For the nine
months ended September 30, 2010, the amortization of deferred financing cost was
approximately $129,295 (2009 - $120,537).




Cost
                
                $
                1,150,693Accumulated
      amortization
                
                
                (888,835
                )$
                261,858




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




Year
                          
                          Amount2010
                          
                          $
                          43,3072011
                          
                          
                          149,5542012
                          
                          
                          46,0622013
                          
                          
                          22,935$
                          261,858




3.
            Intangible
      Assets




Cost
                
                
                Accumulated
                  amortization
                
                
                Net book valueCustomer
      relationships
                
                $
                1,378,641
                
                
                $
                1,266,154
                
                
                $
                112,487


5




Amortization
expense for the nine months period ended September 30, 2010 amounted to $173,284
(2009-$253,238). Amortization for the next three years is expected to total
approximately $112,487.




4.           Bank
Indebtedness




In 2008,
the Company established credit facilities with a Canadian chartered bank to
provide for borrowings by its subsidiaries, AC Technical and Cancable Inc. The
credit facilities for AC Technical and Cancable were $500,000 and $3,500,000
respectively and bear interest at the bank’s domestic prime rate plus 1.5% to
3.4% for Canadian dollar amounts. Interest is payable monthly. The facilities
are secured by an assignment of book debts, inventory, certain other assets and
life insurance. As at September 30, 2010, the interest rate of the Canadian
dollar amount was 4.0% to 5.9%. At September 30, 2010, the borrowings
outstanding under both facilities were $1,999,016 and the average borrowing
outstanding during the nine months ended September 30, 2010 was $1,979,500. The
Company banking facility agreements contain financial covenants pertaining to
maintenance of tangible net worth and debt service coverage ratio. In the event
of default, the bank could at its discretion cancel the facilities and demand
immediate repayment of all outstanding amounts.




5.
            Term
      Notes




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




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





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





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





The
Company Note bears interest at the prime rate plus 2% with a minimum rate of 7%.
Interest accrued on the term note but was not payable until April 1, 2006.
Interest is calculated on the basis of a 360 day year. The minimum monthly
payment on the term note is $137,500 commencing March 1, 2007 to February 1,
2011, with a balance of $4,950,000 payable on the maturity date. Through
September 30, 2010, the Company has issued warrants to purchase up to 3,888,000
shares of common stock of the Company at prices from $0.05 to $2.84 per share to
defer until maturity the principal repayments that were due from March 1, 2007
to September 1, 2010.




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


6




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




Interest
on the term notes for the nine months ended September 30, 2010 was $1,170,575
(2009: $1,096,632).




September 30,
                          2010
                        
                        
                        September 30,
                          2009Cancable
      Note interest at prime plus 1.75% (minimum of 7%), due December 31,
      2011
                        
                        $
                        5,148,754
                        
                        
                        $
                        5,148,754Company
      Note interest at prime plus 2% (minimum of 7%), due February 13,
      2011
                        
                        
                        7,287,500
                        
                        
                        
                        7,287,500Iview
      Note interest at prime plus 2% (minimum of 7%), due on February 13,
      2011
                        
                        
                        1,639,874
                        
                        
                        
                        1,764,874Company
      Second Notes. interest at 12%, due on June 24, 2013
                        
                        
                        2,500,000
                        
                        
                        
                        2,500,000Less: unamortized discount
                        
                        
                        (785,164
                        )
                        
                        
                        (1,064,603
                        )15,790,964
                        
                        
                        
                        15,636,525Less: current portion
                        
                        
                        8,927,374
                        
                        
                        
                        1,750,000$
                        6,863,590
                        
                        
                        $
                        13,886,525




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




Amount2010
                  
                  $
                  437,5002011
                  
                  
                  13,638,6282012
                  
                  
                  -2013
                  
                  
                  1,714,836$
                  15,790,964




6.           Net
Financing Expenses




Nine
      months ended September 30,2010
              
              
              2009Capital
      leases
              
              $
              436,453
              
              
              $
              475,167Interest
      on credit facility
              
              
              1,170,575
              
              
              
              1,096,632Interest
      on deferred principal repayment of term note
              
              
              84,934
              
              
              
              155,993Related
      parties
              
              
              39,781
              
              
              
              38,610$
              1,731,743
              
              
              $
              1,766,402





7.           Note
Payable to Related Parties





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




7




Interest
expense recognized for the nine months period ended September 30, 2010 was
$39,781 (2009 - $38,610).




8.           Shareholders’
(Deficit)




Options


In
conjunction with the issuance of the Cancable Note and Iview Notes in 2006, the
Company had granted Laurus options to purchase up to 49% of Cancable Holding
Corp. and 20% of Iview Holding Corp. The financial statements of Cancable
Holding Corp. and Iview Holding Corp. have negative equity on a stand alone
basis.  At such time when these entities have positive equity and
generate net income, the Company will account for the options granted to Laurus
as non-controlling interests.
  The
Company’s Stock Option Plan is intended to provide incentives for key employees,
directors, consultants and other individuals providing services to the Company
by encouraging their ownership of the common stock of the Company and to aid the
Company in retaining such key employees, directors, consultants and other
individuals upon whose efforts the Company’s success and future growth depends
and in attracting other such employees, directors, consultants and
individuals.
  The Plan
is administered by the Board of Directors, or its Compensation
Committee.  Under the Plan, options on a total of 4,000,000 shares of
common stock may be issued.  Shares of common stock covered by options
which have terminated or expired prior to exercise are available for further
options under the Plan.    The maximum aggregate number of
shares of Stock that may be issued under the Plan as “incentive stock options”
is 3,500,000 shares.  No options may be granted under the Plan after
June 30, 2011; provided, however, that the Board of Directors may at any time
prior to that date amend the Plan.
  Options
under the Plan may be granted to key employees of the Company, including
officers or directors of the Company, and to consultants and other individuals
providing services to the Company.  Options may be granted to eligible
individuals whether or not they hold or have held options previously granted
under the Plan or otherwise granted or assumed by the Company.  In
selecting individuals for options, the Committee may take into consideration any
factors it may deem relevant, including its estimate of the individual’s present
and potential contributions to the success of the Company.
  The
Committee may, in its discretion, prescribe the terms and conditions of the
options to be granted under the Plan, which terms and conditions need not be the
same in each case, subject to the following:
 
 a.
              Option
      Price.  The price at which each share of common stock covered by
      an option granted under the Plan may not be less than the market value per
      share of the common stock on the date of grant of the
      option.  The date of the grant of an option shall be the date
      specified by the Committee in its grant of the option, which date will
      normally be the date the Committee determines to make such
      grant.
 
 b.
              Option
      Period.  The period for exercise of an option shall in no event
      be more than five years from the date of grant.  Options may, in
      the discretion of the Committee, be made exercisable in installments
      during the option period.
 
 c.
              Exercise
      of Options.  For the purpose of assisting an Optionee to
      exercise an option, the Company may make loans to the Optionee or
      guarantee loans made by third parties to the Optionee, on such terms and
      conditions as the Board of Directors may
  authorize.
 
 d.
              Lock-Up
      Period.  Without the consent of the Company, an Optionee may not
      sell more than fifty percent of the shares issued under the Plan for a
      period of two years from the date that the Optionee exercises the option.
      The Committee may also impose other terms and conditions, not inconsistent
      with the terms of the Plan, on the grant or exercise of options, as it
      deems advisable.




8





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





At
September 30, 2010, options to purchase 1,605,000 shares of common stock were
outstanding. These options vest ratably in annual installments, over the four
year period from the date of grant. As of September 30, 2010, there was $28,275
of total unrecognized compensation cost related to non-vested share-based
compensation arrangements granted under the Plan. That cost is expected to be
recognized over a remaining weighted average period of 1.29 years. At September
30, 2010, 1,387,500 options were vested. The cost recognized for the nine months
period ended September 30, 2010 was $50,900 (2009: $10,813) which was recorded
as general and administrative expenses.





In
valuing the options issued, the following assumptions were used




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





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




Shares
                
                
                Weighted-Average
                  Exercise
                  Price
                
                
                Weighted-Average
                  Remaining
                  Contractual
                  Term
                
                
                Intrinsic
                  ValueOptionsOutstanding
      at December 31, 2008
                
                
                2,939,000
                
                
                $
                1.22
                
                
                
                4.75
                
                
                
                -Granted
                
                
                500,000
                
                
                $
                0.70
                
                
                
                4.23
                
                
                
                -Exercised
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Forfeited
      or expired
                
                
                (1,434,000
                )
                
                $
                2.07
                
                
                
                2.69
                
                
                
                -Outstanding
      at December 31, 2009
                
                
                2,005,000
                
                
                $
                0.65
                
                
                
                2.03
                
                
                
                -Granted
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Exercised
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Forfeited
      or expired
                
                
                (400,000
                )
                
                $
                0.63
                
                
                
                1.22
                
                
                
                -Outstanding
      at September 30, 2010
                
                
                1,605,000
                
                
                $
                0.65
                
                
                
                1.29
                
                
                
                -Exercisable
      at September 30, 2010
                
                
                1,387,500
                
                
                $
                0.65
                
                
                
                0.93
                
                
                
                -




As ofSeptember 30, 2010, the aggregate intrinsic value of all
stock options outstanding and expected to vest was approximately $0.00and the aggregate intrinsic value of
currently exercisable stock options was approximately $0.00.  Theintrinsic value of each option is the
difference between the fair market value ofthecommon stock and the exercise price of
such option to the extent it is “in-the-money”.  Aggregateintrinsic value represents the value that
would have been received by the holders of in-the-money options had they
exercised their options on the last trading day of the year and sold the
underlying shares at the closing stock price on such day.  The
intrinsic value calculation is based on the $0.05closing stock price ofthecommonstock onSeptember 30, 2010, the last trading day ofthe second quarter of fiscal
2010.  There were noin-the-money options outstanding and
exercisable as ofSeptember
30, 2010.


9





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




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





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




Exercise
                          Price
                        
                        
                        Weighted
                          Average
      Number
                          Outstanding
                        
                        
                        Weighted
                          Average
                          Contractual
      Life
                        
                        
                        Weighted
                          Average
                          Exercise
      Price
                        
                        
                        Number
                          Exercisable
                        
                        
                        Exercise
                          Price$
                        0.63
                        
                        
                        
                        1,495,000
                        
                        
                        
                        1.28
                        
                        
                        $
                        0.63
                        
                        
                        
                        1,307,500
                        
                        
                        $
                        0.63$
                        0.90
                        
                        
                        
                        100,000
                        
                        
                        
                        1.42
                        
                        
                        $
                        0.90
                        
                        
                        
                        75,000
                        
                        
                        $
                        0.90$
                        1.12
                        
                        
                        
                        10,000
                        
                        
                        
                        2.73
                        
                        
                        $
                        1.12
                        
                        
                        
                        5,000
                        
                        
                        $
                        1.121,605,000
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        1,387,500





Warrants




The
Company uses the Black-Scholes option pricing model to value warrants issued to
non-employees, based on the market price of our common stock at the time the
warrants are issued. All outstanding warrants may be exercised by the holder at
any time. During the nine months ended September 30, 2010, in connection with
financing, the Company issued warrants to purchase 972,000 shares of common
stock. The fair value of the warrants of $84,934 was measured using the
Black-Scholes option pricing model using the following assumptions: risk free
interest rate of 1.08% to 2.20%, expected dividend yield of 0%, volatility of
140% to 150%, exercise prices of $0.05 to $0.12 and the life of the warrants 4
years.




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


10





Issue Date
                        
                        Expiry Date
                        
                        
                        Number of
                          warrants
                        
                        
                        Exercise Price
                          Per share
                        
                        
                        Value-issue
                          date
                        
                        Issued for09-30-2004
                        
                        
                        09-30-2016
                        
                        
                        
                        2,250,000
                        
                        
                        $
                        1.15
                        
                        
                        $
                        1,370,000
                        
                        Financing03-31-2005
                        
                        
                        03-31-2012
                        
                        
                        
                        100,000
                        
                        
                        $
                        1.20
                        
                        
                        $
                        60,291
                        
                        Financing04-30-2005
                        
                        
                        04-30-2017
                        
                        
                        
                        100,000
                        
                        
                        $
                        1.01
                        
                        
                        $
                        44,309
                        
                        Financing05-31-2005
                        
                        
                        05-31-2012
                        
                        
                        
                        100,000
                        
                        
                        $
                        1.01
                        
                        
                        $
                        56,614
                        
                        Financing06-22-2005
                        
                        
                        06-22-2017
                        
                        
                        
                        313,000
                        
                        
                        $
                        1.00
                        
                        
                        $
                        137,703
                        
                        Financing06-30-2005
                        
                        
                        06-30-2017
                        
                        
                        
                        100,000
                        
                        
                        $
                        0.90
                        
                        
                        $
                        50,431
                        
                        Financing07-31-2005
                        
                        
                        07-31-2012
                        
                        
                        
                        100,000
                        
                        
                        $
                        1.05
                        
                        
                        $
                        56,244
                        
                        Financing08-31-2005
                        
                        
                        08-31-2012
                        
                        
                        
                        100,000
                        
                        
                        $
                        1.05
                        
                        
                        $
                        22,979
                        
                        Financing09-30-2005
                        
                        
                        09-30-2012
                        
                        
                        
                        100,000
                        
                        
                        $
                        0.80
                        
                        
                        $
                        36,599
                        
                        Financing10-31-2005
                        
                        
                        10-31-2012
                        
                        
                        
                        100,000
                        
                        
                        $
                        0.80
                        
                        
                        $
                        27,367
                        
                        Financing11-30-2005
                        
                        
                        11-30-2012
                        
                        
                        
                        100,000
                        
                        
                        $
                        0.80
                        
                        
                        $
                        16,392
                        
                        Financing12-31-2005
                        
                        
                        12-31-2012
                        
                        
                        
                        100,000
                        
                        
                        $
                        0.80
                        
                        
                        $
                        10,270
                        
                        Financing02-13-2006
                        
                        
                        02-13-2016
                        
                        
                        
                        1,927,096
                        
                        
                        $
                        0.01
                        
                        
                        $
                        1,529,502
                        
                        Financing03-01-2007
                        
                        
                        03-01-2016
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.90
                        
                        
                        $
                        39,519
                        
                        Financing04-01-2007
                        
                        
                        04-01-2016
                        
                        
                        
                        108,000
                        
                        
                        $
                        1.15
                        
                        
                        $
                        50,529
                        
                        Financing05-01-2007
                        
                        
                        05-01-2011
                        
                        
                        
                        108,000
                        
                        
                        $
                        1.25
                        
                        
                        $
                        54,941
                        
                        Financing06-01-2007
                        
                        
                        06-01-2011
                        
                        
                        
                        108,000
                        
                        
                        $
                        2.28
                        
                        
                        $
                        101,470
                        
                        Financing07-01-2007
                        
                        
                        07-01-2011
                        
                        
                        
                        108,000
                        
                        
                        $
                        2.10
                        
                        
                        $
                        93,307
                        
                        Financing08-01-2007
                        
                        
                        08-01-2011
                        
                        
                        
                        108,000
                        
                        
                        $
                        2.55
                        
                        
                        $
                        112,117
                        
                        Financing09-01-2007
                        
                        
                        09-01-2011
                        
                        
                        
                        108,000
                        
                        
                        $
                        2.73
                        
                        
                        $
                        118,647
                        
                        Financing10-01-2007
                        
                        
                        10-01-2011
                        
                        
                        
                        108,000
                        
                        
                        $
                        2.43
                        
                        
                        $
                        105,362
                        
                        Financing11-01-2007
                        
                        
                        11-01-2011
                        
                        
                        
                        108,000
                        
                        
                        $
                        2.60
                        
                        
                        $
                        111,868
                        
                        Financing12-01-2007
                        
                        
                        12-01-2011
                        
                        
                        
                        108,000
                        
                        
                        $
                        2.55
                        
                        
                        $
                        107,284
                        
                        Financing01-01-2008
                        
                        
                        01-01-2012
                        
                        
                        
                        108,000
                        
                        
                        $
                        2.84
                        
                        
                        $
                        108,331
                        
                        Financing01-22-2008
                        
                        
                        01-22-2058
                        
                        
                        
                        812,988
                        
                        
                        $
                        0.01
                        
                        
                        $
                        1,470,687
                        
                        Acquisition01-22-2008
                        
                        
                        01-22-2058
                        
                        
                        
                        1,738,365
                        
                        
                        $
                        0.01
                        
                        
                        $
                        3,144,685
                        
                        Financing01-30-2008
                        
                        
                        01-30-2058
                        
                        
                        
                        506,250
                        
                        
                        $
                        0.01
                        
                        
                        $
                        1,001,909
                        
                        Financing01-30-2008
                        
                        
                        01-30-2058
                        
                        
                        
                        292,500
                        
                        
                        $
                        0.01
                        
                        
                        $
                        578,880
                        
                        Financing02-01-2008
                        
                        
                        02-01-2012
                        
                        
                        
                        108,000
                        
                        
                        $
                        2.09
                        
                        
                        $
                        85,612
                        
                        Financing03-01-2008
                        
                        
                        03-01-2012
                        
                        
                        
                        108,000
                        
                        
                        $
                        2.04
                        
                        
                        $
                        80,253
                        
                        Financing04-01-2008
                        
                        
                        04-01-2012
                        
                        
                        
                        108,000
                        
                        
                        $
                        1.09
                        
                        
                        $
                        162,748
                        
                        Financing05-01-2008
                        
                        
                        05-01-2012
                        
                        
                        
                        108,000
                        
                        
                        $
                        1.19
                        
                        
                        $
                        103,180
                        
                        Financing06-01-2008
                        
                        
                        06-01-2012
                        
                        
                        
                        108,000
                        
                        
                        $
                        1.02
                        
                        
                        $
                        88,114
                        
                        Financing06-23-2008
                        
                        
                        06-23-2018
                        
                        
                        
                        627,451
                        
                        
                        $
                        0.01
                        
                        
                        $
                        560,736
                        
                        Financing06-23-2008
                        
                        
                        06-23-2018
                        
                        
                        
                        1,333,333
                        
                        
                        $
                        0.01
                        
                        
                        $
                        1,211,168
                        
                        Financing02-01-2009
                        
                        
                        02-01-2013
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.25
                        
                        
                        $
                        22,728
                        
                        Financing03-01-2009
                        
                        
                        03-01-2013
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.19
                        
                        
                        $
                        17,277
                        
                        Financing04-01-2009
                        
                        
                        04-01-2013
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.18
                        
                        
                        $
                        15,868
                        
                        Financing05-01-2009
                        
                        
                        05-01-2013
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.16
                        
                        
                        $
                        14,557
                        
                        Financing06-01-2009
                        
                        
                        06-01-2013
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.27
                        
                        
                        $
                        24,105
                        
                        Financing07-01-2009
                        
                        
                        07-01-2013
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.27
                        
                        
                        $
                        24,105
                        
                        Financing08-01-2009
                        
                        
                        08-01-2013
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.25
                        
                        
                        $
                        22,786
                        
                        Financing09-01-2009
                        
                        
                        09-01-2013
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.16
                        
                        
                        $
                        14,567
                        
                        Financing10-01-2009
                        
                        
                        10-01-2013
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.12
                        
                        
                        $
                        10,921
                        
                        Financing11-01-2009
                        
                        
                        11-01-2013
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.15
                        
                        
                        $
                        13,656
                        
                        Financing12-01-2009
                        
                        
                        12-01-2013
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.08
                        
                        
                        $
                        7,275
                        
                        Financing01-01-2010
                        
                        
                        01-01-2014
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.08
                        
                        
                        $
                        7,292
                        
                        Financing02-01-2010
                        
                        
                        02-01-2014
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.12
                        
                        
                        $
                        10,925
                        
                        Financing03-01-2010
                        
                        
                        03-01-2014
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.08
                        
                        
                        $
                        25,484
                        
                        Financing04-01-2010
                        
                        
                        04-01-2014
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.09
                        
                        
                        $
                        8,461
                        
                        Financing05-01-2010
                        
                        
                        05-01-2014
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.07
                        
                        
                        $
                        8,457
                        
                        Financing06-01-2010
                        
                        
                        06-01-2014
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.07
                        
                        
                        $
                        6,572
                        
                        Financing07-01-2010
                        
                        
                        07-01-2014
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.07
                        
                        
                        $
                        6,566
                        
                        Financing08-01-2010
                        
                        
                        08-01-2014
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.07
                        
                        
                        $
                        6,562
                        
                        Financing09-01-2010
                        
                        
                        09-01-2014
                        
                        
                        
                        108,000
                        
                        
                        $
                        0.05
                        
                        
                        $
                        4,615
                        
                        Financing14,688,983


11




9.           Major
Customers




During
the nine months ended September 30, 2010, the Company derived 64.7% (2009:56.1%)
of its revenue from two customers. The accounts receivable from these customers
comprise 48.9% (2009: 43.2%) of the total trade receivable.




10.        Segment
Information




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




Cancable




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




AC
Technical




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




Iview DSI




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


12




September 30, 2010
                
                
                September, 2009Sales:Cancable
                
                $
                25,326,425
                
                
                $
                24,038,095AC
      Technical
                
                
                5,330,092
                
                
                
                5,381,474Iview
                
                
                45,961
                
                
                
                77,713Creative
      Vistas, Inc.
                
                
                1,956
                
                
                
                101,160Consolidated
      Total
                
                $
                30,704,434
                
                
                $
                29,598,442Depreciation
      and amortization:Cancable
                
                $
                1,658,529
                
                
                $
                1,975,213AC
      Technical
                
                
                31,336
                
                
                
                26,616Iview
                
                
                30,256
                
                
                
                26,561Consolidated
      Total
                
                $
                1,720,121
                
                
                $
                2,028,390Net
      Financing expense:Cancable
                
                $
                1,140,384
                
                
                $
                1,091,242Iview
                
                
                79,801
                
                
                
                93,392AC
      Acquisition
                
                
                39,780
                
                
                
                38,610Creative
      Vistas, Inc.
                
                
                471,178
                
                
                
                543,158Consolidated
      Total
                
                $
                1,731,743
                
                
                $
                1,766,402Net
      Income (Loss):Cancable
                
                $
                (39,621
                )
                
                $
                (926,396
                )AC
      Technical
                
                
                287,846
                
                
                
                477,042Iview
                
                
                (79,864
                )
                
                
                (26,739
                )AC
      Acquisition
                
                
                (39,780
                )
                
                
                (38,610
                )Corporate
      (1)
                
                
                (561,958
                )
                
                
                (368,595
                )Consolidated
      Total
                
                $
                (433,377
                )
                
                $
                (883,298
                )Total
      AssetsCancable
                
                $
                8,630,873
                
                
                $
                11,778,753AC
      Technical
                
                
                3,116,884
                
                
                
                3,320,309Iview
                
                
                823,509
                
                
                
                893,422Creative
      Vistas, Inc.
                
                
                1,154,042
                
                
                
                1,964,068Consolidated
      Total
                
                $
                13,725,308
                
                
                $
                17,956,552Property,
      plant and equipmentCancable
                
                $
                4,117,570
                
                
                $
                6,310,494AC
      Technical
                
                
                756,848
                
                
                
                763,066Iview
                
                
                31,816
                
                
                
                69,346Consolidated
      Total
                
                $
                4,906,234
                
                
                $
                7,142,906Property,
      Plant and Equipment ExpendituresCancable
                
                $
                74,738
                
                
                $
                43,398AC
      Technical
                
                
                6,374
                
                
                
                19,759Iview
                
                
                -
                
                
                
                4,406Consolidated
      Total
                
                $
                81,112
                
                
                $
                67,563




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




Revenues
by geographic destination and product group were as follows:





September 30,2010
                
                
                September 30,2009Contract
                
                $
                4,248,529
                
                
                $
                4,368,893Service
                
                
                26,452,922
                
                
                
                25,217,432Others
                
                
                2,983
                
                
                
                12,117Total
      sales to external customers
                
                $
                30,704,434
                
                
                $
                29,598,442





For the
nine months ended September 30, 2010, revenue generated by the Company in Canada
and the United States was $25,870,130 (2009:$24,169,306) and $4,834,304 (2009:
$5,429,136), respectively.


13




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, each included elsewhere in this report.  The following
discussion contains certain forward-looking statements that involve risks and
uncertainties.  Our actual results could differ materially from those
discussed therein.  Factors that could cause or contribute to such
differences include, but are not limited to, risks and uncertainties related to
the need for additional funds, the rapid growth of our operations and our
ability to operate profitably a number of new projects.  Except as
required by law, we do not intend to publicly release the results of any
revisions to those forward-looking statements that may be made to reflect any
future events or circumstances.
  Results
of Operations
 Comparison
of Three Month Period Ended September 30, 2010
 to
Three Month Period Ended September 30, 2009
  For
purposes of the following section, we compared the three month period ended
September 30, 2010 to the comparable period in 2009.
  Sales:  Sales for the three months
ended September 30, 2010 decreased 1.5% to $11,157,000 from $11,322,400 for the
three months ended September 30, 2009.  The decrease in revenue was
primarily due to the decrease in contract revenue of the AC Technical Segment to
$1,471,700 for the three month period ended September 30, 2010 from $2,039,600
for the corresponding period in 2009.  The decrease was offset by the
increase in service revenue of the Cancable Segment to $9,393,300 for the three
month period ended September 30, 2010 from $8,889,600 for the corresponding
period in 2009.
  (a)           Cancable Segment – This segmentincludes, but is not
limited to, Cancable Inc., XL Digital Services, Inc. and 2141306 Ontario Inc.
(collectively, the “Cancable Group”).  Theprincipal activity is provisioning the
deployment and servicing of broadband technologies in both residential and
commercial markets.  Theservices offered by theCancable Group(e.g. network deployment, IT integration, and
support services)enable the cable television and
telecommunications industries to deliver a high quality broadband experience to
their customers.  The total revenue from the Cancable segment was
$9,393,300for the three months endedSeptember30, 2010, compared to $8,889,600for same period in 2009, representing
an increase of $503,700or5.7%. The increase in revenue was primarily
related to the increase in revenue generated from our customer Rogers Cable Inc.
Rogers Cable Inc. is Cancable Group’s largest customer and the revenue from this
customer for the three months endedSeptember30, 2010 was $6,441,900or 68.6% of total Cancable revenue compared to
$5,371,300or60.4% for same period in 2009. Total revenue
generated in the United States for the three months endedSeptember30, 2010 was $1,776,459compared to $1,702,800for same period in
2009.
  (b)           AC
Technical segment - Total revenue oftheAC Technical segment was $1,753,500for the three months endedSeptember30, 2010 compared to $2,401,900for the corresponding period in 2009.
Thedecrease in revenue primarily resulted
from thedecrease in contract revenue to
$1,471,700for the three months endedSeptember30, 2010 compared to $2,039,600for same period in 2009.  The
service revenue was $291,400for the three months endedSeptember30, 2010, compared to $391,500for same period in
2009.
  Cost of
sales:  Cost of sales for the three months ended September 30,
2010 was $8,191,100 or 73.4% of revenues compared to $8,187,500 or 72.3% of
revenues for same period in 2009.
  (a)           Cancable
Segment – Cost of sales of this segment were $7,016,100 for the three months
ended September 30, 2010, compared to $6,920,200 for corresponding period in
2009, representing an increase of $95,900 or 1.4%. The balance is comprised
principally of labor expenses of $5,525,600, vehicle expenses of $617,800 and
material cost of $408,700.  For the three months ended September 30,
2009, cost of sales was comprised principally of labor expenses of $5,390,900,
vehicle expenses of $504,200 and material cost of $516,700. The increase in cost
of sales was primarily due to the increase in revenue.




14




(b)           AC
Technical Segment – Cost of sales of this segment were $1,155,700. The material
cost was $794,600 or 45.3% of the AC Technical revenue for the three months
ended September 30, 2010 compared to $873,200 or 36.4% of revenues in the same
period of fiscal 2009. The increase in percentage of material costs was
primarily a result of some contracts needing more material needs. The dollar
decrease is primarily attributable to the decrease in revenue. On the other hand, the labor and
subcontractor costincreased to $344,900or19.7% of AC Technical revenues for the three
months endedSeptember
30, 2010compared to$347,000or14.4% of AC Technical revenues for thecorrespondingperiod of fiscal 2009.  Thedecrease in labor and subcontractor costresulted primarily from the
decrease in revenue.
  Project expenses:
Project expenses increased to $235,500 or 2.1% of revenue for the three months
ended September 30, 2010, compared to $229,500 or 2.0% for the same period in
2009. These expenses were mainly related to the AC Technical
segment.  The balance mainly includes the salaries and benefits of
indirect staff amounting to $153,700 in the third quarter of fiscal 2010
compared to $146,900 for the same period of fiscal 2009 with no material
fluctuation. In addition, automobile and travel expenses increased to $57,300
for the three months ended September 30, 2010 compared to $55,800 for the same
period of fiscal 2009. There was no material fluctuation in automobile and
travel expenses.
  Selling expenses:
Selling expenses were $231,300 or 2.1% of revenues for the third quarter of
fiscal 2010 compared to $205,200 or 1.8% of revenues for the same period in
2009.  Selling expenses were mainly related to the AC Technical
segment.  The balance for the three months ended September 30, 2010 is
mainly comprised of salaries and commission to salespersons of $102,700
(compared to $102,300 for the same period of fiscal 2009) and advertising,
promotion and trade show expenses of $39,900 in the third quarter of fiscal 2010
compared to $17,600 for the same period of fiscal 2009.
  General and administrative
expenses: General and administrative expenses were $865,500 or 7.8% of
revenues for the third quarter of fiscal 2010 compared to $1,370,400 or 12.1%
for the same period in 2009. The balance for the three months ended September
30, 2010 included $198,300 of professional fees related to the preparation
of the quarterly reports and other corporate matters compared to $123,800 for
the same period in 2009. Investor relations expenses were $30,000 for third
quarter of fiscal 2009 and the Company had no such expense for the third quarter
of fiscal 2010. Salaries and benefits to administrative staff were $532,800 for
the third quarter of fiscal 2010 compared to $784,700 for the corresponding
period of 2009. The decrease in general and administrative expenses was
primarily the result of cost reduction initiatives.
  Depreciation: Total
depreciation of property plant and equipment was $536,900 for the third quarter
of fiscal 2010 compared to $657,000 for the same period in 2009.  The
decrease in the balance was primarily due to the disposals of property, plant
and equipment in 2009.
  Amortization of intangible
assets: Amortization of customer relationships and trade name was $57,700
for the three months ended September 30, 2010 compared to $86,500 for the same
period of fiscal 2009.  The decrease was mainly due to the trade name
related to the acquisition in 2006 and 2007 being fully amortized.
  Interest and other expenses
(income):  Interest and other expenses for the three months
ended September 30, 2010 were $405,500 or 3.6% of revenues compared to interest
and other income of $134,200 or 1.2% of revenues for the same period in
2009. The balance for the three months ended September 30, 2010 was primarily
comprised of net financing expenses of $560,000 or 5.0% of revenues compared to
$585,700 or 5.2% of revenues for the same period of 2009.  The
interest due with respect to the Company’s credit facilities was $398,900 for
the three months ended September 30, 2010 compared to $376,300 for the same
period in 2009.  Additionally, the foreign currency translation gain
for the quarter ended September 30, 2010 was $197,400 compared to a foreign
currency translation gain of $760,900 for the same period of 2009. The
fluctuation, which was related to foreign currency translation of term notes,
resulted because the Canadian dollar traded higher than the U.S. dollar in the
three months ended September 30, 2010 as compared to the same period of
2009.
  Income
taxes:  No income taxes were paid and/or owed during the three
months ended September 30, 2010 and 2009, which was mainly due to the Company’s
losses carried forward to offset all income generated by the Company. Because of
this and because we have fully reserved substantially all of our deferred income
tax assets, there was no provision and/or benefit for income taxes.
  15




Net
Income/Loss:  Net income for the third quarter of fiscal 2010
was $633,300 compared to a net income of $720,400 for the same period in 2009.
The Company’s operating income was $1,038,900 for the three months ended
September 30, 2010 compared to $586,200 for the corresponding period of
2009.  The increase in operating income for the third quarter of
fiscal 2010 was primarily attributable to the result of cost reduction
initiatives.
  Results
of Operations
 Comparison
of Nine Month Period Ended September 30, 2010
 to
Period Ended September 30, 2009
  For
purposes of the following section, we compared the nine months ended September
30, 2010 to the corresponding period in 2009.
  Sales:  Sales for the nine month
period ended 2010 increased 3.7% to $30,704,400 from $29,598,400 for the nine
month period ended 2009.  The increase in revenue was driven
predominately by the continued growth in service revenue of the Cancable segment
to $25,326,400 for the nine month period ended 2010 from $24,038,100 for the
same period in 2009.
  (a)           Cancable
Segment – This segment includes, but is not limited to, Cancable Inc., XL
Digital Service, Inc. and 2141306 Ontario Inc. (collectively, the “Cancable
Group”).  The principal activity is providing the deployment and
servicing of broadband technologies in both residential and commercial
markets.  The services offered by the Cancable Group
(e.g.  network deployment, IT integration and support services) enable
companies in the cable television and telecommunications industries to deliver a
high quality broadband experience to their customers.  The total
revenue from the Cancable segment was $25,326,400 for the nine months ended
September 30, 2010, compared to $24,038,100 for same period in 2009. The
increase in revenue was primarily due to the increase in revenue generated from
our customer Rogers Cable Inc. Rogers Cable Inc. is Cancable Group’s largest
customer and the revenue from this customer for the nine months ended September
30, 2010 was $16,774,200 or 66.2% of total Cancable Group’s revenue compared to
$13,571,900 or 56.5% of total Cancable Group’s revenue for same period in 2009.
The increase in revenue was attributable to growth in our business and exchange
rate fluctuations. The increase in revenue from Rogers Cable Inc. was offset
with the decrease in revenue generated in the United States. Total revenue
generated in the United States for the nine months ended September 30, 2010 was
$4,834,300 compared to $5,429,100 for same period in 2009.
  (b)           AC
Technical segment - Total revenue of the AC Technical segment was $5,330,100 for
the nine months ended September 30, 2010 compared to $5,381,500 for the
corresponding period in 2009. The decrease in revenue was mainly due to the
decrease in contract revenue which was $4,248,500 for the nine months ended
September 30, 2010 compared to $4,368,900 for same period in
2009.  The service revenue was $1,114,400 for the nine months ended
September 30, 2010, compared to $1,018,500 for same period in 2009.
  Cost of
sales:  Cost of sales for the nine months ended September 30,
2010 was $22,633,900 or 73.7% of revenues compared to $22,116,300 or 74.7% of
revenues for same period in 2009.
  (a)           Cancable
segment – Cost of sales of this segment was $19,593,900 or 77.3% of Cancable
Group’s revenue for the nine months ended September 30, 2010 compared to
$19,312,500 or 80.3% of Cancable Group’s revenue for the nine months ended
September 30, 2009. Cost of sales is comprised principally of labor expenses of
$15,279,700, vehicle expenses of $1,675,700 and material cost of $1,249,000. For
the nine months ended September 30, 2009, cost of sales was comprised
principally of labor expenses of $14,928,300, vehicle expenses of $1,431,800 and
material cost of $1,427,200.
  (b) AC
Technical segment – Direct expenses of this segment were $2,953,622. The
material cost was $1,739,300 or 32.6% of the AC Technical revenue for the nine
months ended September 30, 2010 compared to $1,752,100 or 32.6% of revenues in
the same period of fiscal 2009. The decrease in material costs was primarily a
result of the decrease in revenue. On the other hand, labor and
subcontractor costincreased to $1,177,400or22.1% of AC Technical revenues for theninemonths endedSeptember30, 2010 compared to $944,000or17.5% of AC Technical revenues for the same
period of fiscal 2009.  The increase in labor and subcontractor cost
was mainly due to some contracts requiring more labor
hours.


16




Project expenses:
Project expenses increased to $699,400 or 2.3% of revenue for the nine months
ended September 30, 2010, compared to $666,700 or 2.3% of revenue for the same
period in 2009. These expenses were mainly related to the AC Technical
segment.  The balance mainly includes the salaries and benefits of
indirect staff amounting to $460,200 in the nine months ended September 30, 2010
compared to $437,300 for the same period of fiscal 2009 with no material change.
Automobile and travel expenses increased to $176,200 for the nine months ended
September 30, 2010 compared to $159,400 for the same period of fiscal 2009.
There was no material change in the percentage of revenue for automobile and
travel expenses.
  Selling expenses:
Selling expenses were $701,500 or 2.3% of revenues for the nine months ended
September 30, 2010 compared to $610,900 or 2.1% of revenues for the same period
in 2009. Selling expenses were mainly related to AC Technical
segment.  The balance for the nine months ended September 30, 2010 is
mainly comprised of salaries and commissions to salespersons of $298,900
(compared to $298,200 for the same period of fiscal 2009),
and  advertising, promotion and trade show expenses of $136,100
(compared to $70,200 for the same period of fiscal 2009).
  General and administrative
expenses: General and administrative expenses were $3,453,300 or 11.2% of
revenues for the nine months ended September 30, 2010 compared to $4,193,900 or
14.2% for the same period in 2009. The balance for the nine months ended
September 30, 2010 included $461,700 of professional fees related to the
preparation of quarterly reports and other corporate matters compared to
$396,600 for the same period in 2009. Investor relations expenses were $50,000
for the nine months ended September 30, 2010 compared to $120,000 for the same
period of fiscal 2009. Salaries and benefits to administrative staff were
$1,652,200 for the nine months ended September 30, 2010 compared to $2,015,500
for the corresponding period of 2009. The decrease in general and administrative
expenses was primarily the result of cost reduction initiatives.
  Depreciation: Total
depreciation of property plant and equipment was $1,720,100 for the nine months
ended September 30, 2010 compared to $2,028,400 for the same period in
2009.   The decrease in the balance was primarily due to the
disposals in 2009.
  Amortization of intangible
assets: Amortization of customer relationships and trade name was
$173,300 for the nine months ended September 30, 2010 compared to $253,200 for
the same period of fiscal 2009.  The decrease was mainly due to the
trade name acquired in 2006 and 2007 being fully amortized.
  Interest and other expenses
(income):  Interest and net other expenses for the nine months
ended September 30, 2010 were $1,756,200 or 5.7% of revenues compared to
$612,400 or 2.1% of revenues for the same period in 2009. The balance for the
nine months ended September 30, 2010 was primarily comprised of net financing
expenses which decreased to $1,731,800 or 5.6% of revenues compared to
$1,766,400 or 6.0% of revenues for the same period of 2009.  The
interest due with respect to the Company’s credit facilities was $1,170,600 for
the nine months ended September 30, 2010 compared to $1,096,600 for the same
period in 2009.  Additionally, the foreign currency translation gain
for the nine months ended September 30, 2010 was $104,800 compared to a foreign
currency translation gain of $1,274,600 for the same period of 2009. The
fluctuation, which was related to foreign currency translation of term notes,
resulted because the Canadian dollar traded higher than the U.S. dollar in the
nine months ended September 30, 2010 as compared to the same period of
2009.
  Income
taxes:  No income taxes were paid and/or owed during the nine
months ended September 30, 2010 and 2009, which was mainly due to the Company’s
losses carried forward to offset all income generated by the Company. Because
of this and because we have fully reserved substantially all of our deferred
income tax assets, there was no provision and/or benefit for income
taxes.
  Net
Income/Loss:  Net loss for the nine months ended September 30,
2010 was $433,400 compared to a net loss of $883,300 for the same period in
2009. The Company’s operating income was $1,322,800 for the nine months ended
September 30, 2010 compared to an operating loss of $270,900 for the same period
of 2009. This growth in operating income was primarily the result of cost
reduction initiatives.




17




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 September 30, 2010, we had $2,822,684 in cash. We believe that cash
from operations and our credit facilities with our banks will continue to be
adequate to satisfy our working capital needs for the next year as we do not
expect Laurus to demand acceleration of their loans. During the remaining
portion of fiscal year 2010, our primary objectives in managing liquidity and
cash flows will be to ensure financial flexibility to support growth and entry
into new markets by improving inventory management and accelerating the
collection of accounts receivable.
  In
addition, we have introduced cost cutting initiatives within the Administration,
Project and Selling departments to improve efficiency and also to improve cash
flow.  We have also increased our rates for services provided by AC
Technical to improve gross margins. This is in line with our competitors.
Finally, we expect to realize additional benefits from our research and
development efforts within the next 12 months as we start to introduce our own
line of customized products to the industry. These products and technologies are
expected to improve gross margins.  We plan to seek additional capital
in the future to fund operations, growth and expansion including through
additional equity or debt financing or credit facilities. We have had early
stage discussions with investors about potential investment in our company at a
future date however no assurance can be made that such financing would be
available, and if available that it would be on terms acceptable to
us.
 
 Net Cash Provided by
Operating Activities.  Net cash provided by operating
activities amounted to $1,694.000 for the nine months ended September 30, 2010.
The changes in operating assets and liabilities resulted in a use of cash of
$451,400, which included a $722,000 increase in accounts receivable, a $163,500
decrease in inventory, a $60,200 decrease in prepaid expenses, a $71,000
decrease in accounts payable, a $86,200 decrease in income tax receivable and a
$13,300 increase in deferred revenue.
  Comparison of  the
balance sheet as at September 30, 2010 to December 31, 2009
  Accounts
Receivable
  Our
accounts receivable decreased by approximately $94,400 compared to the balance
as at December 31, 2009. Accounts receivable of the Cancable segment was
$3,026,100 as at September 30, 2010 compared to $2,959,800 as at December 31,
2009.  Accounts receivable of the AC Technical segment was $1,150,400
as at September 30, 2010 compared to $1,088,800 as at December 31,
2009.  The fluctuation in balance was mainly due to the timing of
payments from our customers.
  Inventory
  Inventory
at September 30, 2010 was $639,500 compared to $789,000 as at December 31, 2009.
The inventory of the Cancable segment as at September 30, 2010 was $218,400
compared to $261,200 as at December 31, 2009.   The inventory of
the AC Technical segment as at September 30, 2010 was $380,300 compared to
$440,225 as at December 31, 2009.
  Accounts Payable and Accrued
Liabilities
  Accounts
payable decreased by a minor amount to approximately $4,068,500 as at September
30, 2010 from $4,555,300 as at December 31, 2009.
  Deferred
Income
  Deferred
income increased to $99,800 as at September 30, 2010 compared to $84,500 as at
December 31, 2009. Deferred income primarily relates to payments associated with
contracts in which revenue is recognized on a percentage of completion
basis.
  Net Cash Provided By (Used
in) Investing Activities.  Net cash used in investing
activities was $69,500 for the nine months ended September 30, 2010, compared to
net cash provided by investing activities of $134,900 for the nine months ended
September 30, 2009. The change was mainly due to a decline in proceeds received
from the sale of property and equipment of approximately $202,500 in 2009
compared to approximately $11,600 in 2010.





18




Net Cash Provided By
Financing Activities. Net cash used in financing activities was
$1,204,200 for the nine months ended September 30, 2010 compared to $1,029,200
for the nine months ended September 30, 2009. The change was mainly because we
borrowed approximately $507,800 during the nine months ended September 30, 2009
under our line of credit and had net outflows of approximately $2,200 for
payments of such indebtedness in 2010. In addition, our capital lease repayments
during the nine months ended September 30, 2010 declined by approximately
$197,500 as payments under certain leases were completed by the end of the first
quarter of 2009.




Recent Accounting
Pronouncements – The following Accounting Standards Codification Updates
have been issued by the Financial Accounting Standards Board (“FASB”), or became
effective, since the beginning of the current period covered by these financial
statements:




Pronouncement
            
            Issued
            
            TitleASU
      No. 2010-01
            
            January 
      2010
            
            Equity
      (Topic 505):  Accounting for Distributions to Shareholders with
      Components of Stock and Cash – a consensus of the FASB Emerging Issues
      Task ForceASU
      No. 2010-02
            
            January 
      2010
            
            Consolidation
      (Topic 810):  Accounting and Reporting for Decreases in Ownership of
      a Subsidiary – a Scope ClarificationASU
      No. 2012-03
            
            January
      2010
            
            Extractive
      Activities – Oil and Gas (Topic 932): Oil and Gas Reserve Estimation and
      DisclosuresASU
      No. 2010-04
            
            January
      2010
            
            Accounting
      for Various Topics: Technical Corrections to SEC
  ParagraphsASU
      No. 2010-05
            
            January
      2010
            
            Compensation 
      - Stock Compensation (Topic718): Escrowed Share Arrangements and the
      Presumption of CompensationASU
      No. 2010-06
            
            January
      2010
            
            Fair
      Value Measurements and Disclosures (Topic 820): Improving Disclosures
      about Fair Value Measurements




ASU
      No. 2010-07
            
            January
      2010
            
            Not-for-Profit
      Entities (Topic 958): Not-for-Profit Entities – Mergers and
      AcquisitionsASU
      No. 2010-08
            
            February
      2010
            
            Technical
      Corrections to Various TopicsASU
      No. 2010-09
            
            February
      2010
            
            Subsequent
      Events (Topic 855): Amendments to Certain Recognition and Disclosure
      RequirementsASU
      No. 2010-10
            
            February
      2010
            
            Consolidation
      (Topic 810): Amendments for Certain Investment FundsASU
      No. 2010-11
            
            March 
      2010
            
            Derivatives
      and Hedging (Topic 815): Scope Exception Related to Embedded Credit
      DerivativesASU
      No. 2010-12
            
            April
      2010
            
            Income
      Taxes (Topic 740): Accounting for Certain Tax Effects of the 2010 Health
      Care Reform Acts (SEC Update)ASU
      No. 2010-13
            
            April
      2010
            
            Compensation—Stock
      Compensation (Topic 718): Effect of Denominating the Exercise Price of a
      Share-Based Payment Award in the Currency of the Market in Which the
      Underlying Equity Security Trades—a consensus of the FASB Emerging Issues
      Task Force


19





ASU
      No. 2010-14
            
            April
      2010
            
            Accounting
      for Extractive Activities—Oil & Gas—Amendments to Paragraph
      932-10-S99-1 (SEC Update)ASU
      No. 2010-15
            
            April
      2010
            
            Financial
      Services—Insurance (Topic 944): How Investments Held through Separate
      Accounts Affect an Insurer’s Consolidation Analysis of Those Investments—a
      consensus of the FASB Emerging Issues Task ForceASU
      No. 2010-16
            
            April
      2010
            
            Entertainment—Casinos
      (Topic 924): Accruals for Casino Jackpot Liabilities—a consensus of the
      FASB Emerging Issues Task ForceASU
      No. 2010-17
            
            April
      2010
            
            Revenue
      Recognition—Milestone Method (Topic 605): Milestone Method ofRevenue
      Recognition—a consensus of the FASB Emerging Issues Task
    ForceASU
      No. 2010-18
            
            April
      2010
            
            Receivables
      (Topic 310): Effect of a Loan Modification When the Loan is Part of a Pool
      That is Accounted for as a Single Asset—a consensus of the FASB Emerging
      Issues Task Force





To the
extent appropriate, the guidance in the above “Accounting Standards Codification
Updates” are already reflected in our condensed consolidated financial
statements and management does not anticipate that these accounting
pronouncements will have any future effect on our condensed consolidated
financial statements.





There
were no other accounting standards and interpretations recently issued by the
FASB, which are expected to a have a material impact on the Company's financial
position, results of operations or cash flows.





Off Balance Sheet
Arrangements




None




DISCUSSION
OF CRITICAL ACCOUNTING ESTIMATES




Critical
accounting estimates are those that management deems to be most important to the
portrayal of our financial condition and results of operations, and that require
management’s most difficult, subjective or complex judgments, due to the need to
make estimates about the effects of matters that are inherently uncertain. We
have identified the following critical accounting estimates: accounts receivable
allowances, revenue, inventory, and financial instruments. See our Form 10-K for
the year ended December 31, 2009 for a discussion of our critical accounting
estimates.





CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS




This
quarterly report contains forward-looking statements about our company that are
not historical facts but, rather, are statements about future expectations. When
used in this document, the words “anticipates,” “believes,” “expects,”
“intends,” “should” and similar expressions as they relate to us, or to our
management, are intended to identify forward-looking statements. However,
forward-looking statements in this document are based on management’s current
views and assumptions and may be influenced by factors that could cause actual
results, performance or events to be materially different from those projected.
These forward-looking statements are subject to numerous risks and
uncertainties. Important factors, some of which are beyond our control, could
cause actual results, performance or events to differ materially from those in
the forward-looking statements. These factors include impact of general economic
conditions in North America, changes in laws and regulations, fluctuation in
interest rates and access to capital markets.


20




Our
actual results or performance could differ materially from those expressed in,
or implied by, these forward-looking statements and, accordingly, we cannot
predict whether any of the events anticipated by the forward-looking statements
will transpire or occur, or if any of them do, what impact they will have on our
results of operations and financial condition.




For
further information about these and other risks, uncertainties and factors,
please review the disclosure included in Annual Report on Form 10-K for the year
ended December 31, 2009 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




Evaluation of Disclosure Controls and
Procedures   We maintain disclosure controls and procedures
that are designed to ensure that information required to be disclosed in our
filings under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the SEC. This information is accumulated to allow timely decisions
regarding required disclosure. As of September 30, 2010, the end of the period
covered by this quarterly report on Form 10Q, our management, including our
Chief Executive Officer and Chief Financial Officer, assessed the effectiveness
of our disclosure controls and procedures, as such terms are defined under
rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act
of 1934, as amended. Based on this assessment, our management concluded that our
disclosure controls and procedures were effective as of the end period covered
by this quarterly report.




Changes in Internal Control Over
Financial Reporting   There has not been any change in our
internal control over financial reporting (as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our third
fiscal quarter of 2010 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.




PART
II.                      OTHER
INFORMATION




Item
      1.
              Legal
      Proceedings




None.




Item 1A.
            Risk
      Factors




This item
is not applicable to the Company because we are a smaller reporting
company.




Item
      2.
              Unregistered
      Sales of Equity Securities and Use of
Proceeds




None.




Item
      3.
              Defaults
      upon Senior Securities




None.




Item
      4.
              [Removed
      and Reserved]




Not
applicable.


21




Item
      5.
              Other
      Information




During
the period covered by this quarterly report, there has been no material change
in the nomination process for directors.




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





By:
              /s/ Heung Hung LeeHeung
      Hung Lee, CFO





Dated:
November 15, 2010


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