**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **WASHINGTON,
        D.C. 20549**
  **FORM
        10-Q**
  (Mark
        one)
  **xQUARTERLY
        REPORT
        PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURIT** **IES**
 **EXCHANGE
        ACT OF 1934.**
 
 For
        the
        quarterly period ended September 30, 2008
 
 OR
 
 **rTRANSITION
        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
                
                **2100
                  Forbes Street**
                **Unit
                  8-10**
                **Whitby,
                  Ontario, Canada**
                (Address
                  of Principal Executive Offices)
              
              **86-0464104**
                (I.R.S.
                  Employer
                Identification
                  No.)
                
                **L1N
                  9T3**
                (Zip
                  Code)
  **(905)
        666-8676**
 (Registrant’s
        Telephone Number, Including Area Code)
  **Not
        Applicable**
 (Former
        Name, Former Address and Former Fiscal Year if Changed Since Last
        Report)
 
 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
o
  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 o
              
              Accelerated
                  Filer oNon-Accelerated
                  Filer o
              
              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).  o Yes  xNo
  Indicate
        the number of shares outstanding of each of the issuer's classes of common
        stock, as of the latest practicable date.
  At
        November 14, 2008, the number of shares outstanding of the registrant’s common
        stock, no par value (the only class of voting stock), was 37,224,926 .
  
  PART
                  I.
                Financial
                  InformationItem
                  1.
              Financial
                  Statements
              1Item
                  2.
              Management's
                  Discussion And Analysis of Financial Condition and Results of
                  Operations
              14Item
                  3.
              Quantitative
                  and Qualitative Disclosures about Market Risk
              22Item
                  4.
              Controls
                  and Procedures
              22PART
                  II.
                OTHER
                    INFORMATIONItem
                  1.
              Legal
                  Proceedings
              22Item
                  1A.
              Risk
                  Factors
              23Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              23Item
                  3.
              Defaults
                  upon Senior Securities
              23Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders.
              23Item
                  5.
              Other
                  Information
              23Item
                  6.
              Exhibits
                  and Reports on Form 8-K
              23
  
 
 **PART
        I.****FINANCIAL
        INFORMATION**
 **Item
        1.**  **Financial
        Statements**
 **Creative Vistas, Inc.**
                **Condensed Consolidated Balance Sheets**
              
              **September 30, 2008**
              
              **December 31, 2007****(Unaudited)****Assets****Current
                  Assets**Cash
                  and bank balances
              
              **$**
              **5,625,189**
              
              **$**
              **1,960,340**Accounts
                  receivable, net of allowance for doubtful accounts of $389,669
                  and
                  $405,432
              
              
              **6,453,916**
              
              
              **6,187,551**Income
                  tax receivable
              
              
              **250,000**
              
              
              **448,126**Inventory
                  and supplies
              
              
              **1,032,922**
              
              
              **1,043,815**Prepaid
                  expenses
              
              
              **526,367**
              
              
              **270,930**Due
                  from related parties
              
              
              **2,411**
              
              
              **2,581****Total
                  current assets**
              
              
              **13,890,805**
              
              
              **9,913,343****Property
                  plant and equipment, net of depreciation**
              
              
              **10,226,330**
              
              
              **6,352,014****Deposits**
              
              
              **358,810**
              
              
              **125,498****Goodwill**
              
              
              **3,087,879**
              
              
              **3,101,598****Intangible
                  assets**
              
              
              **1,105,974**
              
              
              **1,717,003****Restricted
                  cash**
              
              
              **-**
              
              
              **53,430****Deferred
                  financing costs, net**
              
              
              **593,184**
              
              
              **551,747****Deferred
                  income taxes**
              
              
              **36,775**
              
              
              **37,547****$**
              **29,299,757**
              
              **$**
              **21,852,180****Liabilities
                  and Shareholders' (Deficit)****Current
                  Liabilities**Bank
                  indebtedness
              
              **$**
              **2,289,479**
              
              **$**
              **-**Accounts
                  payable and accrued liabilities
              
              
              **6,879,725**
              
              
              **6,074,212**Current
                  portion of obligations under capital leases
              
              
              **2,155,377**
              
              
              **1,195,366**Deferred
                  income
              
              
              **125,043**
              
              
              **91,900**Deferred
                  income taxes
              
              
              **25,858**
              
              
              **25,858**Current
                  portion of term notes
              
              
              **1,750,000**
              
              
              **2,240,356**Current
                  portion of other payable
              
              
              **283,018**
              
              
              **303,030**Due
                  to related parties
              
              
              **7,242**
              
              
              **8,143****Total
                  current liabilities**
              
              
              **13,515,742**
              
              
              **9,938,865****Term
                  notes**
              
              
              **14,418,459**
              
              
              **13,565,421****Notes
                  payable to related parties**
              
              
              **1,500,000**
              
              
              **1,500,000****Obligations
                  under capital lease**
              
              
              **5,142,262**
              
              
              **3,184,103****Other
                  payables**
              
              
              **-**
              
              
              **303,030****Due
                  to related parties**
              
              
              **217,801**
              
              
              **233,203****34,794,264**
              
              
              **28,724,622****Shareholders'
                  (deficit)**Share
                  capitalAuthorized50,000,000
                  no par value preferred shares undesignated, none issued or
                  outstanding100,000,000
                  no par value common shares 37,224,926 and 34,494,623 issued and
                  outstandingCommon
                  stock
              
              
              **6,488,137**
              
              
              **1,439,307**Deferred
                  compensation
              
              
              **(318,186**
              **)**
              
              **-**Additional
                  paid-in capital
              
              
              **13,859,221**
              
              
              **4,958,871**Accumulated
                  (deficit)
              
              
              **(25,110,246**
              **)**
              
              **(12,445,468**
              **)**Accumulated
                  other comprehensive (losses)Foreign
                  currency translation adjustment
              
              
              **(413,433**
              **)**
              
              **(825,152**
              **)****(5,494,507**
              **)**
              
              **(6,872,442**
              **)****$**
              **29,299,757**
              
              **$**
              **21,852,180**
  The
        accompanying notes are an integral part of these financial
        statements
  1
  **Creative
        Vistas, Inc.**
 **Condensed
        Consolidated Statements of Operations and Comprehensive
        Losses**
 **(Unaudited)**
 
 **Three months ended**
              
              **Nine months ended****September 30**
              
              **September 30****2008**
              
              **2007**
              
              **2008**
              
              **2007****Contract
                  and service revenue**Contract
              
              **$**
              **1,756,739**
              
              **$**
              **1,715,233**
              
              **$**
              **5,022,254**
              
              **$**
              **4,576,497**Service
              
              
              **12,204,635**
              
              
              **9,427,146**
              
              
              **32,299,736**
              
              
              **23,904,590**Other
              
              
              **33,208**
              
              
              **11,082**
              
              
              **48,807**
              
              
              **42,575****13,994,582**
              
              
              **11,153,461**
              
              
              **37,370,797**
              
              
              **28,523,662****Direct
                  Expenses (excluding depreciation)**Contract
              
              
              **1,169,824**
              
              
              **1,184,318**
              
              
              **3,153,590**
              
              
              **3,150,460**Service
              
              
              **10,082,945**
              
              
              **6,711,549**
              
              
              **26,159,547**
              
              
              **16,902,575****Project
                  expenses**
              
              
              **269,309**
              
              
              **328,355**
              
              
              **861,381**
              
              
              **933,658****Selling
                  expenses**
              
              
              **259,436**
              
              
              **193,189**
              
              
              **739,415**
              
              
              **580,759****General
                  and administrative expenses**
              
              
              **2,745,487**
              
              
              **1,448,742**
              
              
              **8,783,283**
              
              
              **4,145,380****Depreciation
                  expenses**
              
              
              **728,492**
              
              
              **459,402**
              
              
              **1,847,254**
              
              
              **1,210,311****Amortization
                  of intangible assets expenses**
              
              
              **188,622**
              
              
              **150,000**
              
              
              **568,557**
              
              
              **450,000****15,444,115**
              
              
              **10,475,555**
              
              
              **42,113,027**
              
              
              **27,373,143****Income
                  (Loss) from operations**
              
              
              **(1,449,533**
              **)**
              
              **677,906**
              
              
              **(4,742,230**
              **)**
              
              **1,150,519****Interest
                  and other expenses**Net
                  financing expenses
              
              
              **603,392**
              
              
              **844,469**
              
              
              **6,419,775**
              
              
              **2,143,758**Realized
                  loss on disposal of available for sale securities
              
              
              **822,916**
              
              
              **-**
              
              
              **822,916**
              
              
              **-**Amortization
                  of deferred charges
              
              
              **69,666**
              
              
              **45,511**
              
              
              **159,581**
              
              
              **137,362**Foreign
                  currency translation gain (loss)
              
              
              **384,502**
              
              
              **(479,582**
              **)**
              
              **520,277**
              
              
              **(1,057,737**
              **)****1,880,476**
              
              
              **410,398**
              
              
              **7,922,549**
              
              
              **1,223,383**Income
                  (loss) before income taxes
              
              
              **(3,330,009**
              **)**
              
              **267,508**
              
              
              **(12,664,779**
              **)**
              
              **(72,864**
              **)**Income
                  taxes
              
              
              **-**
              
              
              **-**
              
              
              **-**
              
              
              **-**Net
                  income (loss)
              
              
              **(3,330,009**
              **)**
              
              **267,508**
              
              
              **(12,664,779**
              **)**
              
              **(72,864**
              **)**Other
                  comprehensive income (loss):Unrealized
                  gain – available for sale securities
              
              
              **916,649**
              
              
              **-**
              
              
              **-**
              
              
              **-**Foreign
                  currency translation adjustment
              
              
              **327,939**
              
              
              **(305,083**
              **)**
              
              **411,719**
              
              
              **(757,581**
              **)**Comprehensive
                  (loss)
              
              **$**
              **(2,085,421**
              **)**
              **$**
              **(37,575**
              **)**
              **$**
              **(12,253,060**
              **)**
              **$**
              **(830,445**
              **)**Basic
                  weighted-average shares
              
              
              **37,224,926**
              
              
              **33,963,778**
              
              
              **36,834,445**
              
              
              **33,653,259**Diluted
                  weighted-average shares
              
              
              **37,224,926**
              
              
              **40,046,891**
              
              
              **36,834,445**
              
              
              **33.653,259****Basic
                  earnings (loss) per share**
              
              **$**
              **(0.09**
              **)**
              **$**
              **0.01**
              
              **$**
              **(0.34**
              **)**
              **$**
              **(0.00**
              **)****Diluted
                  earnings (loss) per share**
              
              **$**
              **(0.09**
              **)**
              **$**
              **0.01**
              
              **$**
              **(0.34**
              **)**
              **$**
              **(0.00**
              **)**
  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,****2008**
              
              **2007****Operating
                  activities**Net
                  cash provided by (used in) operating activities
              
              **$**
              **(2,352,174**
              **)**
              **$**
              **974,510****Investing
                  activities**Payment
                  for acquisition
              
              
              **(300,000**
              **)**
              
              **-**Proceeds
                  of sales of property and equipment
              
              
              **48,816**
              
              
              **117,276**Proceeds
                  from sales of available for sale securities
              
              
              **5,623,933**
              
              
              **-**Purchase
                  of property and equipment
              
              
              **(1,777,302**
              **)**
              
              **(660,725**
              **)**Net
                  cash provided by (used in) investing activities
              
              
              **3,595,447**
              
              
              **(543,449**
              **)****Financing
                  activities**Proceeds
                  from bank indebtedness
              
              
              **2,267,274**
              
              
              **-**Proceeds
                  from term note
              
              
              **2,500,000**
              
              
              **-**Deferred
                  financing cost
              
              
              **(219,380**
              **)**
              
              **-**Repayment
                  of notes payable
              
              
              **-**
              
              
              **(28,569**
              **)**Due
                  to related parties
              
              
              **(385**
              **)**
              
              **(173**
              **)**Repayment
                  of capital leases
              
              
              **(1,268,128**
              **)**
              
              **(849,395**
              **)**Issuance
                  of common shares
              
              
              **1,260**
              
              
              **-**Restricted
                  cash
              
              
              **52,894**
              
              
              **246,411**Repayment
                  of term notes
              
              
              **(957,371**
              **)**
              
              **(854,148**
              **)**Net
                  cash provided by (used in) financing activities
              
              
              **2,376,164**
              
              
              **(1,485,874**
              **)**Effect
                  of foreign exchange rate changes on cash
              
              
              **45,412**
              
              
              **(108,175**
              **)**Net
                  change in cash and cash equivalents
              
              
              **3,664,849**
              
              
              **(1,162,988**
              **)****Cash
                  and cash equivalents,**beginning of period
              
              
              **1,960,340**
              
              
              **3,560,181****Cash
                  and cash equivalents,**end of period
              
              **$**
              **5,625,189**
              
              **$**
              **2,397,193**
  The
        accompanying notes are an integral part of these financial
        statements
  3
  **Creative
        Vistas, Inc.**
 **Notes
        to Consolidated Condensed Financial Statements**
 **September
        30, 2008 (Unaudited)**
  **1.**
              **Summary
                  of Accounting Policies**
  **Basis
        of presentation**
  The
        accompanying unaudited condensed consolidated balance sheet as at September
        30,
        2008, and the consolidated condensed statements of operations and cash flows
        for
        the periods ended September 30, 2007 and 2008, include the accounts of Creative
        Vistas, Inc. (“CVAS”), Creative Vistas Acquisition Corp. (“AC Acquisition”), AC
        Technical Systems Ltd. (“AC Technical”), Cancable Holding Corp. (“Cancable
        Holding”), Cancable Inc., Cancable, Inc., Cancable XL Inc., XL Digital Services
        Inc. (“XL Digital”), 2141306 Ontario Inc., Iview Holding Corp. (“Iview
        Holding”), and Iview Digital Video Solutions Inc. (“Iview DSI”). Intercompany
        balances and transactions have been eliminated in consolidation. In the opinion
        of management, these condensed consolidated financial statements reflect
        all
        adjustments (consisting of normal recurring adjustments) that are necessary
        for
        a fair presentation of the results for and as of the periods shown. The
        accompanying condensed consolidated financial statements have been prepared
        in
        conformity with accounting principles generally accepted in the United States.
        However, certain information or footnote disclosures normally included in
        financial statements prepared in accordance with generally accepted accounting
        principles have been condensed or omitted pursuant to the rules and regulations
        of the Securities and Exchange Commission. The results of operations for
        such
        periods are not necessarily indicative of the results expected for 2008 or
        for
        any future period. These financial statements should be read in conjunction
        with
        the financial statements and related notes included in our Annual Report
        on Form
        10-K for the fiscal year ended December 31, 2007, filed with the Securities
        and
        Exchange Commission.
  **Reclassifications**
 Certain
        amounts from the September 30, 2007, financial statements have been reclassified
        to conform to the current year’s presentation.
 
 **Liquidity
        and going concern**
  Our
        consolidated condensed financial statements were prepared using accounting
        principles generally accepted in the United States of America applicable
        to a
        going concern, which contemplates the realization of assets and liquidation
        of
        liabilities in the normal course of business. We have incurred losses of
        $12,664,779 for the nine months ended September 30, 2008, and have an
        accumulated deficit of $25,110,246  at
        September 30, 2008. In addition, we have working capital and stockholder
        deficits of $375,063 and $5,494,507, respectively at September 30,
        2008.
  We
        have
        outstanding term loans aggregating $16,168,459, together with common stock
        options and warrants, held by Laurus Master Fund Ltd, a Cayman Islands company,
        and/or its affiliates (“Laurus”). We do not currently have the ability to repay
        the notes in the event of a demand by the holder. Furthermore, we granted
        a
        security interest to Laurus in substantially all of our assets and, accordingly,
        in the event of any default under our agreements with Laurus, they could
        conceivably attempt to foreclose on our assets, which could cause us to
        terminate our operations. Additionally, there were 49 shares of common stock
        of
        Cancable Holding issuable upon the exercise of options and 20 shares of common
        stock of Iview Holding issuable upon the exercise of options to Laurus. (see
        Note 9)
 
 Over
        the
        next twelve months the Company believes that its existing capital will be
        sufficient to sustain its operations. Management plans to seek additional
        capital in the future to fund operations, growth and expansion through
        additional equity, debt financing or credit facilities. The Company has had
        early stage discussions with investors about potential investment in the
        Company
        at a future date. No assurance can be made that such financing would be
        available, and if available it may take either the form of debt or equity.
        In
        either case, the financing could have a negative impact on our financial
        condition and our shareholders. The Company has introduced cost cutting
        initiatives within the Administration, Project and Selling departments to
        improve efficiency within the Company and also improve cash flow. The Company
        also expects to see the benefits of its research and development efforts
        within
        the next 12 months as it starts to introduce its own line of customized products
        to the industry. These products and technologies are expected to improve
        gross
        margins. The Company believes that it will be eligible for research and
        development tax credits at year end for its research and development efforts
        during the year and these are additional sources of cash flow for the Company.
        The Company is also negotiating longer credit terms with its suppliers from
        45
        days to 60 to 75 days. For all the reasons mentioned above, we believe that
        we
        have adequate short term borrowing capability and that we will be able to
        sustain our operations and continue as a going concern for a reasonable period
        of time although there can be no assurance of this.
  4
 
 The
        financial statements do not include any adjustments to reflect the possible
        future effects on the recoverability and classification of assets or the
        amounts
        and classification of liabilities that may result from the possible inability
        of
        the Company to continue as a going concern.
 
 **Inventory**
 
 Inventory
        consists of materials and supplies and is stated at the lower of cost and
        market
        value. Cost is generally determined on the first in, first out basis. The
        inventory is net of estimated obsolescence, and excess inventory based upon
        assumptions about future demand and market conditions. Inventory consists
        principally of parts, materials and supplies
 
 **Earnings
        (loss) per share**
  The
        Company applies Statement of Financial Accounting Standards No. 128, Earnings
        Per Share (FAS 128). Basic loss per share (“LPS”) is computed using the weighted
        average number of common shares outstanding during the period. Diluted LPS
        is
        computed using the weighted average number of common and dilutive potential
        common shares outstanding during the period. Dilutive potential common shares
        consist of common stock issuable upon exercise of stock options and warrants
        using the treasury stock method. Dilutive common share equivalents are not
        considered in periods when their effect is antidilutive.
  **2.**
              **Deferred
                  Financing Costs, Net**
  Deferred
        financing costs, net are associated with the Company’s term notes from Laurus.
        For the period ended September 30, 2008, the amortization of deferred financing
        costs was $159,581 (2007 - $137,362).
  Cost
              
              $
              1,108,262Accumulated
                  amortization
              
              
              (515,078
              )$
              593,184
  The
        estimated amortization expense for each of the next five fiscal years and
        thereafter is as follows:
  **Year**
              
              **Amount**2008
              
              $
              50,1812009
              
              
              172,1352010
              
              
              165,9702011
              
              
              142,7632012
              
              
              42,1932013
              
              
              19,942$
              593,184
  **3.**
              **Other
                  Investments– Available For Sale
                  Securities**
  On
        January 22, 2008, the Company entered into a Stock Purchase Agreement (the
        “Stock Purchase Agreement”) with Erato Corporation (“Erato”) pursuant to which
        the Company purchased and acquired from Erato 2,674,407 shares of common
        stock,
        par value $0.0001 per share (the “Shares”), of 180 Connect Inc., a Delaware
        corporation, for an aggregate purchase price of $5,444,940 paid by the Company
        by delivery to Erato of (i) 2,195,720 duly and validly issued shares of common
        stock of the Company and (ii) a common stock purchase warrant, exercisable
        for
        812,988 shares of common stock of the Company at an exercise price of $0.01
        per
        share.
  5
 
 On
        January 30, 2008, the Company entered into a Warrant Purchase Agreement with
        Laurus, Erato Corporation, Valens U.S. Fund, LLC and Valens Offshore SPV
        I, Ltd.
        (collectively, the “Sellers”) pursuant to which the Company purchased and
        acquired from the Sellers, warrants to purchase 450,000 shares of common
        stock
        at an exercise price of $0.01 per share of 180 Connect Inc. The aggregate
        purchase price paid by the Company in exchange for the 180 Connect Warrants
        was
        $1,001,909 paid by the Company by delivery to the Sellers of common stock
        purchase warrants, exercisable for 506,250 shares of common stock of the
        Company
        at an exercise price of $0.01 per share.
  The
        above
        investment, which is classified as available for sale securities, was sold
        in
        July 2008 for an aggregate of $5,623,933. The realized loss on the disposal
        of
        this investment was $822,916.
 
 **4.**
              **Intangible
                  Assets**
  **Cost**
              
              **Accumulated**
                **amortization**
              
              **Net
                  book value****Customer
                  relationships**
              
              $
              1,632,075
              
              $
              676,415
              
              $
              955,660**Trade
                  name**
              
              
              1,275,472
              
              
              1,125,158
              
              
              150,314$
              2,907,547
              
              $
              1,801,573
              
              $
              1,105,974
  Amortization
        expense for the nine month period ended September 30, 2008, amounted to $568,557
        (2007-$450,000).
  **5.**
              **Bank
                  Indebtedness**
  During
        the period ended March 31, 2008, the Company established credit facilities
        with
        a Canadian chartered bank to provide for borrowings by its subsidiaries,
        AC
        Technical and Cancable Inc. The credit facility for AC Technical and Cancable
        was $500,000 and $3,500,000 respectively. Revolving credit loans bear interest
        at the bank’s domestic prime rate plus 1.5% for Canadian dollar amounts.
        Interest is payable monthly. The facilities are secured by an assignment
        of book
        debts, inventory, certain other assets and life insurance. As at September
        30,
        2008, the interest rate of the Canadian dollar amount was 5.50%. At September
        30, 2008, the borrowings outstanding under this facility were $2,289,479.
        The
        Company banking facility agreements contain financial covenants pertaining
        to
        maintenance of the tangible net worth and debt service coverage ratio. In
        the
        event of default, the bank could at its discretion cancel the facilities
        and
        demand immediate repayment of all outstanding amounts. Both credit facilities
        are due in March 2009.
 
 **6.**
              **Term
                  Notes**
  In
        January 2006, concurrently with the closing of the acquisition of Cancable
        Inc.,
        the Company entered into a series of agreements with Laurus whereby Cancable
        issued to Laurus a secured term note (the “Cancable Note”) in the amount of
        $6,865,000 and Cancable Holding issued to Laurus a related option to purchase
        up
        to 49 shares of common stock of Cancable Holding (up to 49% of the outstanding
        shares of Cancable Holding) at a price of $0.01 per share (the “Option”) (see
        Note 9). The loan is secured by all of the assets of the Company and its
        subsidiaries.
 
 The
        Cancable Note bears interest at the prime rate plus 1.75% with a minimum
        rate of
        7%. Interest accrued on the term note but was not payable until February
        1,
        2006. Interest is calculated on the basis of a 360 day year. The minimum
        monthly
        payment on the term note is $81,726 commencing from October 1, 2006. The
        Company
        is not obligated, except upon an event of default, to pay more than 25% of
        the
        original principal amount prior to December 31, 2011.
  6
  In
        February 2006, the Company and its subsidiaries, Iview Holding and Iview
        DSI
        entered into a series of agreements with Laurus pursuant to a refinancing
        transaction whereby the Company issued to Laurus a secured term note (the
        “Company Note”) in the amount of $8,250,000, Iview DSI issued to Laurus a
        secured term note (the “Iview Note”) in the amount of $2,000,000, the Company
        issued to Laurus a related warrant to purchase up to 2,411,003 shares of
        common
        stock of the Company (up to 7.5% of the outstanding shares of the Company)
        at a
        price of $0.01 per share (the “Warrant”) and Iview Holding issued to Laurus a
        related option to purchase up to 20 shares of common stock of Holding (up
        to 20%
        of the outstanding shares of Holding) at a price of $0.01 per share (the
        “Option”). The loans are secured by all of the assets of the Company and its
        subsidiaries. Simultaneously with the closing of this refinancing transaction,
        the Company paid off the entire outstanding principal amount and all obligations
        due to Laurus under a Secured Convertible Term Note, a Secured Convertible
        Minimum Borrowing Note and a Secured Revolving Note, all dated September
        30,
        2004 (collectively, the “2004 Notes”) and such 2004 Notes were subsequently
        cancelled.
 
 The
        options held by Laurus to acquire 49% of Cancable and 20% of Iview Holding
        are
        accounted for as minority interests. Because Cancable and Iview Holding have
        incurred losses, no minority interest has been recognized at September 30,
        2008.
 
 The
        Company Note bears interest at the prime rate plus 2% with a minimum rate
        of 7%.
        Interest accrued on the term note but was not payable until April 1, 2006.
        Interest is calculated on the basis of a 360 day year. The minimum monthly
        payment on the term note is $137,500 commencing March 1, 2007 to February
        1,
        2009, with a balance of $4,950,000 payable on the maturity date. Through
        September 30, 2008, the Company has issued warrants to purchase up to 1,728,000
        shares of common stock of the Company at prices from $0.90 to $2.84 per share
        to
        defer until maturity the principal repayments that were due from March 1,
        2007
        to June 1, 2008.
  The
        Iview
        Note bears interest at the prime rate plus 2% with a minimum rate of 7%.
        Interest accrued on the term note but was not payable until April 1, 2006.
        Interest is calculated on the basis of a 360 day year. The minimum monthly
        payment on the term note is $8,333 commencing March 1, 2007 to February 1,
        2011,
        with the balance of $1,600,000 payable on the maturity date. The Company
        is not
        obligated, except upon an event of default, to pay more than 25% of the original
        principal amount prior to December 31, 2011.
 
 In
        June
        2008, the Company and its subsidiary, **** Cancable
        Inc., entered into a financing transaction whereby the Company issued to
        Valens
        Offshore SPV II, Corp. (“Valens Offshore”) and Valens U.S. SPV I, LLC (“Valens
        U.S.”) secured term notes in the amount of $1,700,000 and $800,000, respectively
        (collectively, the “Company Second Notes”). The Company also issued to Valens
        Offshore and Valens U.S. warrants to purchase up to 1,333,333 and 627,451
        shares, respectively, of common stock of the Company at a price of $0.01
        per
        share. The loans are secured by all of the assets of the Company and all
        its
        subsidiaries.
 
 Interest
        on the term notes for the nine month period ended September 30, 2008 was
        $1,052,523 (2007: $1,260,102).
 **Amount**Cancable
                    Note interest at prime plus 1.75% (minimum of 7%), due December
                    31,
                    2011
                
                $
                5,148,754Company
                    Note interest at prime plus 2% (minimum of 7%), due February
                    13,
                    2010
                
                
                7,837,500Iview
                    Note bears interest at prime plus 2% (minimum of 7%), due on
                    February 13,
                    2011
                
                
                1,839,873Company
                    Second Notes. interest at 12%, due on June 24, 2013
                
                
                2,500,000Less:
                    unamortized discount on Company Second Notes
                
                
                (1,157,668
                )16,168,459Less:
                    current portion
                
                
                1,750,000$
                14,418,459
  The
        principal payments for the next five fiscal years are as follows:
  **Amount**2008
              
              $
              437,5002009
              
              
              1,750,0002010
              
              
              5,875,0002011
              
              
              6,763,6272013
              
              
              1,342,332$
              16,168,459
  7
  **7.**
              **Net
                  Financing Expenses**
  **Nine months ended September 30,****2008**
              
              **2007**Capital
                  leases
              
              $
              417,272
              
              $
              275,107Interest
                  on terms and credit facility
              
              
              1,052,523
              
              
              1,260,102Cost
                  of deferred principal repayment on term notes–
                  648,000 warrants
              
              
              628,238
              
              
              570,530Warrants
                  issued for proposed new financing
              
              
              3,723,565
              
              
              -Financing
                  cost for the extension for the warrants issued (Note 9)
              
              
              560,735
              
              
              -Others
              
              
              37,442
              
              
              38,019$
              6,419,775
              
              $
              2,143,758
 
 Included
        in net financing expenses is the fair value of $3,723,565 for 2,030,865 warrants
        to purchase the Company’s common stock issued in January 2008 as
        follows:
 
 (i)
        On
        January 22, 2008 the Company entered into a letter agreement with Erato
        Corporation for Erato to provide up to $12,000,000 in financing to the Company
        on such terms and conditions as the Company and Erato shall mutually agree
        (the
“Bridge Financing”). Any proceeds from the Bridge Financing may only be used by
        the Company for the purpose of financing a third party. The Company does
        not
        currently have an agreement to provide financing to any such third party.
        As
        consideration for the letter agreement, the Company issued to Erato a warrant
        to
        purchase up to 1,738,365 shares of common stock of the Company at an exercise
        price of $0.01 per share. Because the Company does not currently have any
        agreement to provide financing to a third party, the financing has not occurred
        and, as a result, the Company expensed the value of the warrants. The fair
        value
        of the warrants of $3,144,685 was measured using the Black-Scholes option
        pricing model using the following assumptions: risk free interest rate of
        4.23%,
        expected dividend yield of 0%, volatility of 45%, share price of $1.81 and
        the
        expected life of the warrants of 50 years (see Note 9).
  (ii)
        On
        January 30, 2008, the Company entered into a non-binding letter of intent
        with
        Valens U.S. Fund, LLC (the “Letter Agreement”) in which Valens U.S. Fund, LLC
        confirmed its intention to provide up to $4,000,000 in financing to a subsidiary
        of the Company. As consideration for the Letter Agreement, the Company issued
        to
        Laurus, Erato, Valens U.S. Fund, LLC and Valens Offshore SPV I, Ltd. warrants
        to
        purchase 292,500 shares of common stock of the Company at an exercise price
        of
        $0.01 per share. The Letter Agreement was only an expression of the present
        intentions of the parties and no binding legal obligation will exist until
        the
        parties sign a definitive agreement. As a result, the Company expensed the
        value
        of the warrants. The fair value of the warrants of $578,880 was measured
        using
        the Black-Scholes option pricing model using the following assumptions: risk
        free interest rate of 4.44%, expected dividend yield of 0%, volatility of
        45%,
        share price of $1.98 and the life of the warrants of 50 years. (see Note
        9)
  **8.**
              **Note
                  Payable to Related Parties**
 
 In
        September 2004, the Company issued two promissory notes with an aggregate
        principal amount of $3,300,000. On September 30, 2004, the Company repaid
        an aggregate of $1,800,000 of the principal balance. The outstanding principal
        of $1,500,000 bears interest at 3% per annum with no fixed terms of repayment.
        The notes, each with a face amount of $750,000, are due to The Burns Trust
        (the
        Company’s president is one of the beneficiaries of the trust) and the Navaratnam
        Trust (the Company’s CEO is one of the beneficiaries of the trust),
        respectively. During the period ended June 30, 2006, both the notes were
        transferred to Malar Trust Inc. (the Company’s CEO is the shareholder of Malar
        Trust Inc.).
  Interest
        expense recognized for the nine month period end of September 30, 2008 was
        $37,442 (2007: $38,019).
  8
  **9.**
              **Shareholders’
                  (Deficit)**
  The
        Company has total authorized share capital of 50,000,000 preferred shares,
        no
        par value and 100,000,000 common shares, no par value.
  During
        the period ended March 31, 2008, the Company entered into a consulting agreement
        by issuing 222,414 common shares stock in consideration for investor relations
        services rendered for 2008 with the fair value of $448,200. An expense in
        the
        amount of $330,014 was recorded under general and administrative expenses
        for
        the nine month period ended September 30, 2008. The remaining balance was
        recorded as deferred compensation. Additionally, the Company issued 2,000
        common
        shares to an employee for the exercise of an employee stock option for cash
        aggregating $1,260.
  During
        the period ended June 30, 2008, the Company entered into a consulting agreement
        by issuing 300,000 common shares stock in consideration for investor relations
        services rendered for 2008 with the fair value of $600,000. An expense in
        the
        amount of $400,000 was recorded under general and administrative expenses.
        The
        remaining balance was recorded as deferred compensation. Additionally, the
        Company issued 10,169 common shares for the payment of outstanding legal
        fees in
        the amount of $25,117.
  In
        conjunction with the issuance of the Cancable Note and Iview Note in 2006,
        the
        Company has granted Laurus options to purchase up to 49% of Cancable Holding
        Corp. and 20% of Iview Holding Corp. respectively. The financial statements
        of
        Cancable Holding Corp. and Iview Holding Corp. have negative equity on a
        stand
        alone basis. At such time as these entities have positive equity, the Company
        will account for the options as minority interests.
  **Options**
  The
        Company’s Stock Option Plan is intended to provide incentives for key employees,
        directors, consultants and other individuals providing services to the Company
        by encouraging their ownership of the common stock of the Company and to
        aid the
        Company in retaining such key employees, directors, consultants and other
        individuals upon whose efforts the Company’s success and future growth depends
        and in attracting other such employees, directors, consultants and
        individuals.
  The
        Plan
        is administered by the Board of Directors, or its Compensation Committee.
        Under
        the Plan, options on a total of 4,000,000 shares of common stock may be issued.
        Shares of common stock covered by options which have terminated or expired
        prior
        to exercise are available for further options under the Plan. The maximum
        aggregate number of shares of Stock that may be issued under the Plan as
        “incentive stock options” is 3,500,000 shares. No options may be granted under
        the Plan after June 30, 2011; provided, however, that the Board of Directors
        may
        at any time prior to that date 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 be purchased may not be less than the
                  market
                  value per share of the common stock on the date of grant of the
                  option.
                  The date of the grant of an option shall be the date specified
                  by the
                  Committee in its grant of the option, which date will normally
                  be the date
                  the Committee determines to make such
                  grant.
 
 b.
              Option
                  Period. The period for exercise of an option shall in no event
                  be more
                  than five years from the date of grant. Options may, in the discretion
                  of
                  the Committee, be made exercisable in installments during the option
                  period.
  9
 
 c.
              Exercise
                  of Options. For the purpose of assisting an Optionee to exercise
                  an
                  option, the Company may make loans to the Optionee or guarantee
                  loans made
                  by third parties to the Optionee, on such terms and conditions
                  as the
                  Board of Directors may authorize. In no event shall any option
                  be
                  exercisable more than five years from the date of grant thereof.
 
 d.
              Lock-Up
                  Period. Without the consent of the Company, an Optionee may not
                  sell more
                  than fifty percent of the shares issued under the Plan for a period
                  of two
                  years from the date that the Optionee exercises the option. The
                  Committee
                  may impose such other terms and conditions, not inconsistent with
                  the
                  terms of the Plan, on the grant or exercise of options, as it deems
                  advisable.
 
 The
        fair
        value of each option award is estimated on the date of grant using the
        Black-Scholes option valuation model, using the assumptions noted in the
        following table. Expected volatility is based on the historical volatility
        of
        the Company’s stock, and other factors. The Company uses historical data to
        estimate employee termination within the valuation model. Because the Company
        has not previously granted options to employees, for purposes of the valuation
        model, the Company has assumed that the life of the options will be equal
        to
        one-half of the combined vesting period and contractual life (i.e., that
        employees will exercise the options at the midpoint between the vesting and
        expiry date of the options). The risk-free rates used to value the options
        are
        based on the U.S. Treasury yield curve in effect at the time of
        grant.
 
 On
        June
        30, 2006, the Company granted to employees options to purchase 2,317,000
        shares
        of common stock at $0.63 per share; the options expire on June 30, 2011.
        During
        2007, the Company granted to employees options to purchase 1,226,000 shares
        of
        common stock, at prices ranging from $0.90 to $2.59 per share; the options
        expire in 2012.
  At
        September 30, 2008 options to purchase 2,939,000 shares of common stock were
        outstanding. These options vest ratably in annual installments, over the
        four
        year period from the date of grant. As of September 30, 2008, there was
        $1,147,767 of total unrecognized compensation cost related to non-vested
        share-based compensation arrangements granted under the Plan. That cost is
        expected to be recognized over the four year vesting period. At September
        30,
        2008, 786,500 options were vested. The cost recognized for the nine month
        period
        ended September 30, 2008 was $304,059 (2007:$158,825) which was recorded
        as
        general and administrative expenses.
 
 In
        valuing the options issued, the following assumptions were used;
 
 2008
              
              2007Expected
                  volatility
              45%
              
              45%Expected
                  dividends
              0%
              
              0%Expected
                  term (in years)
              3.0
                  – 4.5
              
              3.0
                  – 4.5Risk-free
                  rate
              4.25%
                  - 5.13%
              
              4.25%
                  - 5.13%
 
 A
        summary
        of option activity under the Plan during the period ended September 30, 2008
        is
        presented below:
 
 Options
              
              Shares
              
              Weighted-Average
                Exercise
                Price
              
              Weighted-Average
                Remaining Contractual
                Term
              
              Intrinsic
                ValueOutstanding at
                  December 31, 2007
              
              
              3,222,000
              
              $
              0.63
              
              
              4.75
              
              
              -Granted
              
              
              -
              
              
              -Exercised
              
              
              (2,000
              )
              $
              0.63Forfeited
                  or expired
              
              
              (281,000
              )
              $
              0.63Outstanding
                  at September 30, 2008
              
              
              2,939,000
              
              $
              1.22
              
              
              3.75
              
              $
              0.67Exercisable
                  at September 30, 2008
              
              
              786,500
              
              $
              0.63
              
              
              -
              
              
              -
  10




**Warrants**




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




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




Issue Date
            
            Expiry Date
            
            Number of
              warrants
            
            Exercise Price
              Per share
            
            
            Value-issue
              date
            
            Issued for01–05-2004
            
            01-05-2009
            
            540,000
            
            $0.33
            
            $
            447,463
            
            Consulting
                and investment banking fees09–30-2004
            
            09-30-2009
            
            199,500
            
            $1.00
            
            $
            111,853
            
            Consulting
                and investment banking fees09-30-2004
            
            09-30-2016
            
            2,250,000
            
            $1.15
            
            $
            1,370,000
            
            Financing*03-31-2005
            
            03-31-2012
            
            100,000
            
            $1.20
            
            $
            60,291
            
            Financing04-30-2005
            
            04-30-2017
            
            100,000
            
            $1.01
            
            $
            44,309
            
            Financing*05-31-2005
            
            05-31-2012
            
            100,000
            
            $1.01
            
            $
            56,614
            
            Financing06-22-2005
            
            06-22-2017
            
            313,000
            
            $1.00
            
            $
            137,703
            
            Financing*06-30-2005
            
            06-30-2017
            
            100,000
            
            $0.90
            
            $
            50,431
            
            Financing*07-31-2005
            
            07-31-2012
            
            100,000
            
            $1.05
            
            $
            56,244
            
            Financing08-31-2005
            
            08-31-2012
            
            100,000
            
            $1.05
            
            $
            22,979
            
            Financing09-30-2005
            
            09-30-2012
            
            100,000
            
            $0.80
            
            $
            36,599
            
            Financing10-31-2005
            
            10-31-2012
            
            100,000
            
            $0.80
            
            $
            27,367
            
            Financing11-30-2005
            
            11-30-2012
            
            100,000
            
            $0.80
            
            $
            16,392
            
            Financing12-31-2005
            
            12-31-2012
            
            100,000
            
            $0.80
            
            $
            10,270
            
            Financing02-13-2006
            
            02-13-2016
            
            1,927,096
            
            $0.01
            
            $
            1,529,502
            
            Financing03-01-2007
            
            03-01-2016
            
            108,000
            
            $0.90
            
            $
            39,519
            
            Financing*04-01-2007
            
            04-01-2016
            
            108,000
            
            $1.15
            
            $
            50,529
            
            Financing*05-01-2007
            
            05-01-2011
            
            108,000
            
            $1.25
            
            $
            54,941
            
            Financing06-01-2007
            
            06-01-2011
            
            108,000
            
            $2.28
            
            $
            101,470
            
            Financing07-01-2007
            
            07-01-2011
            
            108,000
            
            $2.10
            
            $
            93,307
            
            Financing08-01-2007
            
            08-01-2011
            
            108,000
            
            $2.55
            
            $
            112,117
            
            Financing09-01-2007
            
            09-01-2011
            
            108,000
            
            $2.73
            
            $
            118,647
            
            Financing10-01-2007
            
            10-01-2011
            
            108,000
            
            $2.43
            
            $
            105,362
            
            Financing11-01-2007
            
            11-01-2011
            
            108,000
            
            $2.60
            
            $
            111,868
            
            Financing




11




12-01-2007
            
            12-01-2011
            
            108,000
            
            $2.55
            
            $
            107,284
            
            Financing01-01-2008
            
            01-01-2012
            
            108,000
            
            $2.84
            
            $
            108,331
            
            Financing01-22-2008
            
            01-22-2058
            
            812,988
            
            $0.01
            
            $
            1,470,687
            
            Acquisition01-22-2008
            
            01-22-2058
            
            1,738,365
            
            $0.01
            
            $
            3,144,685
            
            Financing01-30-2008
            
            01-30-2058
            
            2,350
            
            $0.01
            
            $
            4,650
            
            Financing01-30-2008
            
            01-30-2058
            
            582,367
            
            $0.01
            
            $
            1,152,551
            
            Financing01-30-2008
            
            01-30-2058
            
            214,033
            
            $0.01
            
            $
            423,588
            
            Financing02-01-2008
            
            02-01-2012
            
            108,000
            
            $2.09
            
            $
            85,612
            
            Financing03-01-2008
            
            03-01-2012
            
            108,000
            
            $2.04
            
            $
            80,253
            
            Financing04-01-2008
            
            04-01-2012
            
            108,000
            
            $1.09
            
            $
            162,748
            
            Financing05-01-2008
            
            05-01-2012
            
            108,000
            
            $1.19
            
            $
            103,180
            
            Financing06-01-2008
            
            06-01-2012
            
            108,000
            
            $1.02
            
            $
            88,114
            
            Financing06-23-2008
            
            06-23-2018
            
            627,451
            
            $0.01
            
            $
            669,756
            
            Financing06-23-2008
            
            06-23-2018
            
            1,333,333
            
            $0.01
            
            $
            1,423,232
            
            Financing13,268,483




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




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




During
      the nine months ended September 30, 2008 the Company derived 55.9 % (2007:59.8%)
      of its revenue from a single customer. The accounts receivable from this
      customers comprises 31.7% (2007: 36.0%) of the total trade
      receivable **.**




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




We
      determine and disclose our segments in accordance with SFAS No. 131 “Disclosures
      about Segments of an Enterprise and Related Information”, which uses a
“management” approach for determining segments. The management approach
      designates the internal organization that is used by management for making
      operating decisions and assessing performance as the source of the reportable
      segments. Our management reporting structure provides for the following
      segments:




Cancable




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


12


AC
      Technical




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




Iview
      DSI




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




**September 30, 2008**
            
            **September 30, 2007****Sales:**Cancable
            
            $
            31,073,071
            
            $
            22,784,559AC
                Technical
            
            
            6,052,378
            
            
            5,632,174Iview
            
            
            214,929
            
            
            102,826Creative
                Vistas, Inc.
            
            
            30,419
            
            
            4,103**Consolidated
                Total**
            
            $
            37,370,797
            
            $
            28,523,662**Depreciation
                and amortization:**Cancable
            
            $
            1,802,743
            
            $
            1,179,606AC
                Technical
            
            
            30,399
            
            
            30,705Iview
            
            
            14,112
            
            
            -**Consolidated
                Total**
            
            $
            1,847,254
            
            $
            1,210,311**INTEREST
                EXPENSES:**Cancable
            
            $
            901,751
            
            
            746,128AC
                Technical
            
            
            -
            
            
            1,650Iview
            
            
            104,423
            
            
            149,290AC
                Acquisition
            
            
            37,443
            
            
            36,369Creative
                Vistas, Inc.
            
            
            5,376,158
            
            
            1,210,321**CONSOLIDATED
                TOTAL**
            
            $
            6,419,775
            
            
            2,143,758**Net
                (Loss):**Cancable
            
            $
            (4,886,837
            )
            $
            2,235,371AC
                Technical
            
            
            576,359
            
            
            6,638Iview
            
            
            (275,428
            )
            
            (72,322
            )AC
                Acquisition
            
            
            (37,443
            )
            
            (38,019
            )Corporate
                (1)
            
            
            (8,041,430
            )
            
            (2,204,492
            )**Consolidated
                Total**
            
            $
            (12,664,779
            )
            $
            (72,824
            )**TOTAL
                ASSETS**Cancable
            
            $
            16,709,205
            
            $
            11,534,613AC
                Technical
            
            
            3,350,045
            
            
            4,413,974Iview
            
            
            1,280,234
            
            
            1,479,376AC
                Acquisition
            
            
            -
            
            
            -Creative
                Vistas, Inc.
            
            
            7,960,273
            
            
            3,924,026Consolidated
                Total
            
            $
            29,299,757
            
            $
            21,351,989**CAPITAL
                ASSETS**Cancable
            
            $
            9,345,536
            
            $
            5,156,776AC
                Technical
            
            
            783,252
            
            
            868,151Iview
            
            
            97,542
            
            
            -**Consolidated
                Total**
            
            $
            10,226,330
            
            $
            6,024,927**CAPITAL
                EXPENDITURES**Cancable
            
            $
            6,369,888
            
            $
            2,774,887AC
                Technical
            
            
            14,350
            
            
            3,917Iview
            
            
            113,534
            
            
            -**CONSOLIDATED
                TOTAL**
            
            $
            6,497,772
            
            $
            2,778,804


13




(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, 2008**
            
            **September 30, 2007**Contract
            
            $
            5,022,254
            
            $
            4,576,497Service
            
            
            32,299,736
            
            
            23,904,590Others
            
            
            48,808
            
            
            42,575Total
                sales to external customers
            
            $
            37,370,797
            
            $
            28,523,662





Revenue
      generated by the Company in Canada and the United States was $33,910,653
      (2007:$28,523,662) and $3,460,144 (2007: $Nil), respectively.





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




The
      following discussion of the financial condition and results of operations should
      be read in conjunction with the consolidated financial statements and related
      notes thereto. The following discussion contains certain forward-looking
      statements that involve risks and uncertainties. Our actual results could differ
      materially from those discussed therein. Factors that could cause or contribute
      to such differences include, but are not limited to, risks and uncertainties
      related to the need for additional funds, the rapid growth of the operations
      and
      our ability to operate a number of new projects profitably. 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, 2008** **to Period Ended September 30, 2007**




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




Sales :
      Sales
      for the three month period ended 2008 increased 25.4% to $13,994,600 from
      $11,153,500 for the three month period ended 2007. The double-digit growth
      in
      revenue was mainly due to the increase in service revenue of the Cancable
      Segment to $11,805,300 for the three month period ended 2008 from $8,968,200
      for
      the same period in 2007.


14


(a)
      Cancable Segment - This segment includes Cancable Inc., Cancable, Inc., XL
      Digital and OSS-IM View (collectively, “Cancable Group”). The principal activity
      is provisioning the deployment and servicing of broadband technologies in both
      residential and commercial markets. The Cancable Group’s service offering,
      network deployment, IT integration, and support services, enable the cable
      television and telecommunications industries to deliver a high quality broadband
      experience to their customers. In October 2007, we acquired XL Digital which
      is
      incorporated under the laws of Ontario and with the same principal business
      activity of Cancable Inc. XL Digital, with over 70 employees, provides its
      deployment and provisioning services for Rogers Cable Inc. within two
      territories where the Company did not previously have a presence.  Total
      revenue of this segment for the third quarter of fiscal 2008 was $11,805,300
      from $8,968,200 for the same period in fiscal 2007. The increase reflects
      continued growth in revenue, particularly from having Rogers Cable Inc. as
      a
      customer. We continued to allocate resources to support the growth of our
      business. Total revenue generated in the United States in the third quarter
      of
      fiscal 2008 was $2,242,500 and there was no such revenue in the same period
      of
      fiscal 2007.  Rogers
      Cable Inc. is Cancable Group’s largest customer and the revenue from this
      customer for the third quarter of fiscal 2008 was approximately $7,338,600
      or
      62.2% of Cancable Group’s total revenue compared to $6,860,000 or 76.5% for the
      three months ended September 30, 2007. The increase was primarily due to the
      acquisition of XL Digital. (b) AC Technical segment - Total revenue of AC
      Technical segment was $2,047,900 for the third quarter of fiscal year 2008
      compared to $2,140,000 for the third quarter of fiscal year 2007. Contract
      revenue was $1,648,500 for the three months ended September 30, 2008 compared
      to
      $1,681,100 for the same period of fiscal 2007. The service revenue was $399,400
      for the three months ended September 30, 2008, compared to $458,900 for the
      same
      period of fiscal 2007. Service revenue primarily represents the cumulative
      effect of the growth in contracts and number of customers over the past few
      years. We have experienced a significant increase in the number of inquiries
      for
      systems from the government and retail sector. This increased interest in
      security products and services may result in our achieving increased revenues
      in
      future periods if we are successful in attracting new customers or obtaining
      additional projects from existing customers. There is no assurance that the
      Company will be able to attract new customers.




Direct
      Expenses (excluding depreciation) :
      Direct
      expenses as a percentage of revenue for three months ended September 30, 2008
      was $11,252,800 or 80.4% of revenues compared to $7,895,900 or 70.8% of revenues
      for the three month period ended September 30, 2007. The increase in direct
      expenses was driven predominantly by the continued growth of the
      service revenue from $6,711,500 for the three month period ended September
      30,
      2007 to $10,082,900 for the
      three month period ended September 30, 2008. The increase in percentage of
      the
      direct cost was primarily due to the initial training and set up cost of the
      new
      development in the United States. Total revenue generated in the United States
      in the third quarter of fiscal 2008 was $2,242,500 and there was no such revenue
      in the same period of fiscal 2007. (a) Cancable segment – Direct expenses
      of this segment were $10,082,900 for the three months ended September 30, 2008,
      which is comprised principally of labor expenses $7,452,900, vehicle expenses
      $950,400 and material cost $714,600. The increase in direct expenses is
      primarily due to the revenue growth discussed above. (b) AC Technical
      segment – Direct expenses of this segment was $1,098,600. The material cost
      was $626,200 or 30.6% of the AC Technical revenue for the three months ended
      September 30, 2008 compared to $788,900 or 36.9% of revenues in the same period
      of fiscal 2007. The decrease in percentage of material costs was mainly due
      to
      some contracts having less material needs. On the other hand, the labor and
      subcontractor cost increased to $457,800 or 22.3% of AC Technical revenues
      for
      the three months ended September 30, 2008 and $504,500 or 23.6% of AC Technical
      revenues for fiscal 2007. The increase in labor and subcontractor cost was
      mainly due to the increase in revenue.




Project
      cost :
      Project
      cost was decreased to $269,300 or 1.9% of revenue for the three months ended
      September 30, 2008, compared to $328,300 or 2.9% for the same period of fiscal
      year 2007. Project cost was mainly related to the AC Technical segment. The
      balance mainly includes the salaries and benefits of indirect staff amounting
      to
      $156,600 in the third quarter of fiscal 2008 compared to $202,500 for the same
      period of fiscal 2007. The decrease was mainly due to the decrease in the number
      of indirect staff. Automobile and travel expenses increased to $78,500 for
      the
      three months ended September 30, 2008 compared to $74,600 for the same period
      of
      fiscal 2007due to more travel by our staff this year.




Selling
      expense :
      Selling
      expense was $259,400 or 1.9% of revenues for the third quarter of 2008 compared
      to $193,200 or 1.7% of revenues for the first quarter of fiscal 2007. Selling
      expenses were mainly related to AC Technical segment. As at September 30, 2008,
      AC Technical segment has the same number of salespersons, 5, as it did at
      September 30, 2007. Salaries and commission to salespersons for the three months
      ended September 30, 2008 was $141,800 compared to $141,600 for the same period
      of fiscal 2007 amount to no material fluctuation. The advertising and promotion
      and trade show expenses were $23,600 in the third quarter of fiscal 2008
      compared to $23,700 for the same period of fiscal 2007.


15


General
      and administrative expenses :
      General
      and administrative expenses were $2,745,500 or 19.6% of revenues for the three
      month period ended September 30, 2008 compared to $1,448,700 or 13.0% for the
      same period of fiscal 2007. The balance for the three months ended September
      30,
      2008 is mainly comprised of $114,500 of professional fees related to preparation
      of the quarterly reports and other corporate matters. In addition, investor
      relations expenses amounted to $413,200 for the three month period ended
      September 30, 2008 compared to $289,500 for the same period last year. Total
      salaries and benefits to administrative staff were $2,409,200 for the third
      quarter of 2008 compared to $622,200 for the same period last year. The increase
      in salaries and benefits was a result of the Company hiring additional employees
      who were required for the expansion of the business.




Depreciation :
      Total
      depreciation of property plant and equipment was $728,500 for the third quarter
      of fiscal 2008 compared to $459,400 for the same period of last year. The
      increase in balance was primarily due to the addition of Company vehicles in
      the
      amount of $1,769,000.




Amortization
      of Intangible Assets :
      Amortization of customer relationships and trade name was $188,700 compared
      to
      $150,000 for the same period last year.




Interest
      and other Expenses :
      Interest and net other expenses for the three months ended September 30, 2008,
      was $1,880,500 or 13.4% of revenues compared to net expenses of $410,400 or
      3.7%
      of revenues for the same period of fiscal 2007. The balance for the current
      period is primarily comprised of the amortization of deferred charges amounting
      to $69,700 compared to $45,500 for the same period of fiscal 2007. Additionally,
      net financing expenses decreased to $603,400 or 4.3% of revenues compared to
      $844,500 or 7.6% of revenues for the same period of fiscal 2007. The interest
      due with respect to the Company’s credit facility was $421,100 for the three
      months ended September 30, 2008 compared to $413,600 in the same period of
      2007.
      The increase in the balance reflects the increase in outstanding payables of
      the
      term notes compared to the same period of the prior year. During this quarter,
      the Company sold common stock of 180 Connect Inc. (see Note 3) for an aggregate
      of $5,623,900 and the realized loss on the disposal of this investment was
      $822,900. There was no such balance in the same period of fiscal 2007.
      Additionally, the realized foreign currency translation loss for this quarter
      was $384,500 compared to foreign currency translation gain of $479,600 for
      the
      same quarter of fiscal 2007. The balance was related to the foreign currency
      translation of term notes (see Note 6).




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




Net
      Income/Loss :
      Net
      loss for the three months ended September 30, 2008 was $3,330,000 compared
      to
      net income of $267,500 for the three month period ended September 30, 2007.
      The
      Company’s operating loss was $1,449,600 for the third quarter of fiscal 2008
      compared to operating income of $677,900 for the same period of fiscal 2007.
      The
      loss was primarily attributed to the Company’s allocation of resources to grow
      the business in the United States and increased costs.




**Results
      of Operations**


**Comparison
      of Nine Month Period Ended September 30, 2008** **to
      Period Ended September 30, 2007**




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




Sales :
      Sales
      for the nine month period ended 2008 increased 31.0% to $37,370,800 from
      $28,523,700 for the nine month period ended 2007. The increase in revenue was
      mainly due to the increase in service revenue of Cancable Segment to $31,073,100
      for the nine month period ended 2008 from $22,784,600 for the same period in
      2007.


16


(a)
      Cancable Segment - This segment includes Cancable Inc., Cancable, Inc., XL
      Digital and OSS-IM View (collectively, “Cancable Group”). Total revenue of this
      segment for the nine month period ended 2008 was $31,073,100 from $22,784,600
      for the same period in fiscal 2007. The increase reflects continued growth
      in
      revenue, particularly from Cancable Group’s largest customer, Rogers Cable Inc.
      We continued to allocate resources to support the growth of our business. Total
      revenue generated in the United States for the nine month period ended September
      30, 2008 was $3,460,100 and there was no such revenue for the same period of
      last year.  Revenue
      from Rogers Capble Inc. for the nine month period ended September 30, 2008
      was
      approximately $20,685,200 or 66.6% of Cancable Group’s total revenue compared to
      $17,078,800 or 75.0% for the nine months ended September 30, 2007. (b) AC
      Technical segment - Total revenue of AC Technical segment was $6,052,400 for
      the
      nine months ended September 30, 2008 compared to $5,632,200 for the nine months
      ended September 30, 2007. Contract revenue increased to $4,825,700 for the
      nine
      months ended September 30, 2008 compared to $4,505,000 for the same period
      of
      fiscal 2007. This increase was mainly due to an increase in the number of
      subcontracts for the provision of services to government and commercial
      contracts. The service revenue has increased to $1,226,700 for the nine months
      ended September 30, 2008 from $1,120,000 for the same period of fiscal 2007.
      Service revenue primarily represents the cumulative effect of the growth in
      contracts and number of customers over the past few years. We have experienced
      a
      significant increase in the number of inquiries for systems from the government
      and retail sector. This increased interest in security products and services
      may
      result in our achieving increased revenues in future periods if we are
      successful in attracting new customers or obtaining additional projects from
      existing customers. There is no assurance that the Company will be able to
      attract new customers.




Direct
      Expenses (excluding depreciation) :
      Direct
      expenses sold as a percentage of revenue for the nine months ended September
      30,
      2008 was $29,313,100 or 77.9% of revenues compared to $20,053,000 or 70.3%
      of
      revenues for the nine month period ended September 30, 2007. (a) Cancable
      segment – Direct expenses of this segment was $26,159,500 for the nine
      months ended September 30, 2008 which is mainly comprised of labor expenses
      $19,397,500, vehicle expenses $2,567,600 and material cost $1,943,300 (b) AC
      Technical segment – Direct expenses of this segment was $3,017,928. The
      material cost was $1,753,873 or 31.7% of the AC Technical revenue for the nine
      months ended September 30, 2008 compared to $2,015,900 or 35.8% of revenues
      in
      the same period of fiscal 2007. The decrease in percentage of the material
      cost
      was mainly due to some contracts requiring less material. On the other hand,
      the
      labor and subcontractor cost increased to $1,212,900 or 20.0% of AC Technical
      revenues for the nine months ended September 30, 2008, from $1,161,900 or 20.7%
      of AC Technical revenues for the nine month ended September 30, 2007 indicating
      no material fluctuation.




Project
      cost :
      Project
      cost was $861,400 or 2.3% of revenue for the nine months ended September 30,
      2008, compared to $933,700 or 3.3% for the same period of fiscal year 2007.
      Project cost was mainly related to the AC Technical segment. The balance mainly
      includes the salaries and benefits of indirect staff amounting to $514,500
      for
      the nine months ended September 30, 2008, compared to $542,000 for the same
      period of fiscal 2007. The decrease in expenses was mainly due to the decrease
      in indirect staff. The automobile and travel expenses were approximately
      $203,100 for the nine month period ended September 30, 2008 compared to $220,900
      for the same period of fiscal 2007. The decrease in balance was mainly due
      to
      the decrease in number of vehicles and less travel for the nine months ended
      September 30, 2008.




Selling
      expenses: Selling
      expenses were $739,400 or 2.0% of revenues for the nine month period ended
      2008
      compared to $580,800 or 2.0% of revenues for the same period of fiscal 2007.
      Selling expenses were mainly related to the AC Technical segment. The balance
      for the nine months ended September 30, 2008 is mainly comprised of
      salaries and commission to salespersons of $399,800 compared to $361,100 for
      the
      same period of fiscal 2007. The increase was mainly due to the increase in
      commission for the increase in revenue and the hiring of additional employees.
      The advertising, promotion and trade show expenses were $91,300 for the nine
      months ended September 30, 2008, and $74,200 for the same period of fiscal
      2006.
      There was no material fluctuation between the two periods.




General
      and administrative costs: General
      and administrative costs were $8,783,300 or 23.5% of revenues for the nine
      month
      period ended September 30, 2008 compared to $4,145,400 or 14.5% for same period
      of fiscal 2007. The balance for the nine month period ended September 30,
      2008, is comprised of $466,900 of professional fees related to the preparation
      of the quarterly reports and other corporate matters. The investor relations
      expenses increased to $908,700 for the nine month period ended September 30,
      2008, compared to $577,500 for the same period last year. Total salaries and
      benefits to administrative staff increased to $4,668,900 for the nine month
      period ended September 30, 2008 compared to $1,765,200 for the same period
      last
      year. The increase was mainly due to the increase in headcounts.


17


Depreciation :
      Total
      depreciation of property plant and equipment was $1,847,300 for the nine months
      ended September 30, 2008, compared to $1,210,300 for the same period of last
      year. The increase was mainly due to the addition of vehicles.




Amortization
      of Intangible Assets :
      Amortization of customer relationships and trade name was $568,600 compared
      to
      $450,000 for the same period last year.




Interest
      and other Expenses (Income) :
      Interest and net other expenses for the nine months ended September 30, 2008,
      of
      $7,922,500 or 21.2% of revenues compared to net expenses of $1,223,400 or 4.3%
      of the revenues for the same period of fiscal 2007. The balance for the current
      period is primarily comprised of the amortization of deferred charges amounting
      to $159,600 compared to $137,400 for the same period of fiscal 2007.
      Additionally, net financing expenses increased to $6,419,800 or 17.2% of
      revenues compared to $2,143,800 or 7.5% of revenues for the same period of
      fiscal 2007. During the three months ended March 31, 2008, the Company entered
      into two financing arrangements in which the Company has issued 2,030,865
      warrants with a value of $3,723,600. The interest due with respect to the
      Company’s credit facility was $1,052,500 for the nine months ended September 30,
      2008 compared to $1,260,102 in the same period of 2007. The decrease in the
      balance was due to the decrease in interest rate and outstanding payables of
      the
      term notes. During the third quarter of fiscal 2008, the Company sold common
      stock of 180 Connect Inc. (see Note 3) for an aggregate of $5,623,900 and the
      realized loss on the disposal of this investment was $822,900. There was no
      such
      balance in the same period of fiscal 2007. Additionally, the realized foreign
      currency translation loss for nine months ended September 30, 2008 was $520,300
      compared to foreign currency translation gain of $1,057,800 for the nine months
      ended September 30, 2007. The balance was related to the foreign currency
      translation of term notes (see Note 6).




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




Net
      Income/Loss :
      Net
      loss for the nine months ended September 30, 2008 was $12,664,800 compared
      to net loss of $72,900 for the nine month period ended September 30, 2007.
      The
      Company’s operating loss was $4,742,200 for the nine months ended 2008 compared
      to operating income of $1,150,500 for the same period of fiscal 2007. The loss
      was primarily attributed to the financing transactions in January 2008 and
      the
      Company’s allocation of resources to grow the business in the United States.




**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, 2008, we had $5,625,200 in cash. We believe that
      cash
      from operations and our credit facilities with our banks will continue to be
      adequate to satisfy the ongoing working capital needs of the Company. During
      fiscal year 2008, our primary objectives in managing liquidity and cash flows
      will be to ensure financial flexibility to support growth and entry into new
      markets, improve inventory management and accelerate the collection of accounts
      receivable.




Net
      Cash Used in Operating Activities :
      Net
      cash used in operating activities amounted to $2,352,200 for the nine months
      ended September 30, 2008. The changes in operating assets and liabilities
      resulted in net cash of $302,980, which included a $735,400 increase in accounts
      receivable, a $7,900 increase in inventory, a $547,000 increase in prepaid
      expenses, a $1,372,600 increase in accounts payable, a $177,800 increase in
      income tax recoverable and a $43,000 increase in deferred revenue.


18


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




Accounts
      Receivable




Our
      accounts receivable increased to $6,453,900 as at September 30, 2008 from
      $6,187,600 as at December 31, 2007. Accounts receivable of the Cancable
      segment was $4,523,400 as at September 30, 2008 compared to $3,989,100 as at
      December 31, 2007. The increase in balance was mainly driven by the increase
      in
      revenue. Accounts
      receivable of the AC Technical segment was $1,746,800 as at September 30, 2008
      compared to $2,083,200 as at December 31, 2007. The
      decrease in balance was mainly due to the timing of payments from our customers.




Inventory




Inventory
      on hand at
      September 30, 2008 was $1,032,900 compared to $1,043,800 as at December 31,
      2007. The inventory of the Cancable segment as at September 30, 2008 was
      $398,400 compared to $363,600 as at December 31, 2007. There was no material
      fluctuation from the fiscal year ended December 31, 2007. The inventory of
      AC
      Technical segment as at September 30, 2008 was $541,500 compared to $638,900
      as
      at December 31, 2007. The level of inventory was higher as at December 31,
      2007
      as we had purchased inventory close to year end required for work to be started
      during the first quarter of 2008.




Accounts
      Payable and Accrued Liabilities




Accounts
      payable increased to approximately $6,879,700 as at September 30, 2008 from
      $6,074,200 as at December 31, 2007. The increase was mainly due to the timing
      of
      payments to our suppliers and also the increase in our direct and indirect
      expenses during the nine month period ended September 30, 2008.




Deferred
      Revenue




Deferred
      revenue increased to $125,000 as at September 30, 2008 compared to a balance
      of
      $91,900 as at December 31, 2007. This increase was mainly due to the timing
      of
      payments by our customers. Deferred revenue primarily relates to payments
      associated with contracts in which revenue is recognized on a percentage of
      completion basis.




Incomes
      Taxes Recoverable




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




Net
      Cash Used in Investing Activities .
      Net
      cash used in by investing activities was $3,595,500 for the nine months ended
      September 30, 2008, compared to $543,500 used for the nine months ended
      September 30, 2007. As a result of the sale of the investment in July 2008,
      the
      Company received cash in the amount of $5,623,900. The total purchase of
      property and equipment of the Company was $1,777,300 for the period ended September
      30, 2008 and
      $660,700-for the period ended September
      30, 2007 .




Net
      Cash Provided From Financing Activities .
      Net
      cash provided by financing activities was $2,376,200 for the nine months ended
      September 30, 2008 compared to net cash used of $1,485,900 for the nine months
      ended September 30, 2007. Last year’s balance mainly represents the repayment of
      capital leases and term notes in the amount of $1,703,500. The current year
      balance represents net proceeds received from new banking facilities set up
      with
      a Canadian financial institution in the amount of $2,267,300. The balance was
      offset with the repayment of term notes and capital leases in the amount of
      $2,225,500. Additionally, the Company has issued a term loan to LV
      Administrative Services, Inc. in the amount of $2,500,000 with total financing
      cost of $167,380. Total net proceeds from this term loan were
      $2,332,620.


19


Our
      capital requirements have grown since our inception with the growth of our
      operations and staffing. We expect our capital requirements to continue to
      increase in the future as we seek to expand our operations. On September 30,
      2004, we obtained funding through a series of agreements with Laurus. In 2006,
      through our wholly owned subsidiary, we acquired all of the issued and
      outstanding shares of capital stock and any other equity interests of Cancable.
      Simultaneously, Cancable entered into a series of agreements with Laurus whereby
      Cancable issued to Laurus a secured term note (the “Cancable Note”) in the
      amount of $6,865,000. We completed a refinancing transaction with Laurus in
      February 2006; we issued to Laurus a secured term note (the “Company Note”) in
      the amount of $8,250,000 and Iview DSI issued to Laurus a secured term note
      (the
“Iview Note”) in the amount of $2,000,000. Simultaneously with the closing of
      this refinancing transaction, we paid off the entire outstanding principal
      amount and all obligations due to Laurus under the Secured Convertible Term
      Note
      dated September 30, 2004, the Secured Convertible Minimum Borrowing Note dated
      September 30, 2004 and the Secured Revolving Note dated September 30, 2004
      (collectively, the “2004 Notes”) and such 2004 Notes were subsequently
      cancelled.  In
      September 2008, the Company and its subsidiary, **** Cancable
      Inc., entered into a financing transaction whereby the Company issued to Valens
      Offshore SPV II, Corp. (“Valens Offshore”) and Valens U.S. SPV I, LLC (“Valens
      U.S.”) secured term notes in the amount of $1,700,000 and $800,000, respectively
      (collectively, the “Company Second Notes”). The Company also issued to Valens
      Offshore and Valens U.S. warrants to purchase up to 1,333,333 and 627,451 shares
      of common stock, respectively, of the Company with an exercise price of $0.01
      per share. The loans are secured by all of the assets of the Company and all
      its
      subsidiaries.





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





***Recent
      Accounting Pronouncements***




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




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





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





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


20




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




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





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





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




**Off
      Balance Sheet Arrangements**




None ****




**DISCUSSION
      OF CRITICAL ACCOUNTING ESTIMATES**




Critical
      accounting estimates are those that management deems to be most important to
      the
      portrayal of our financial condition and results of operations, and that require
      management’s most difficult, subjective or complex judgments, due to the need to
      make estimates about the effects of matters that are inherently uncertain.
      We
      have identified six critical accounting estimates: accounts receivable
      allowances, goodwill, revenue, inventory, accounting for income taxes and
      financial instruments. See our Form 10-K for the year ended December 31, 2007,
      for a discussion of our critical accounting estimates.


21


**CAUTIONARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**




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




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




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




You
      should not place undue reliance on any forward-looking statements. Except as
      otherwise required by federal securities laws, we undertake no obligation to
      publicly update or revise any forward-looking statements or risk factors,
      whether as a result of new information, future events, changed circumstances
      or
      any other reason after the date of this quarterly report.




**Item
      3.****Quantitative
      and Qualitative Disclosures about Market Risk**




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




**Item
      4.**  **Controls
      and Procedures**




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




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




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





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




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




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




Not
      applicable.


22


**Item
      1A.**  **Risk
      Factors**




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




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




Not
      applicable.




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




Not
      applicable.




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




Not
      applicable.




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




Not
      applicable.




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




(a)  Exhibits




31.1
            
            Certification
                of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200231.2
            
            Certification
                of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200232.1
            
            Chief
                Executive Officer certification pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                200232.2
            
            Chief
                Financial Officer certification pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002




SIGNATURES




In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




CREATIVE
                VISTAS, INC.By:
            /s/
                Dominic BurnsDominic
                Burns, President and Chief
              Executive
                OfficerDated:
                November 14, 2008


23