**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-KSB**




**ANNUAL
      REPORT UNDER SECTION 13 or 15 (d) OF**


**THE
      SECURITIES EXCHANGE ACT OF 1934**




For
      the
      fiscal year ended December 31, 2005




*Commission
      file number 00-30585*




**CREATIVE
      VISTAS, INC.**


**(Exact
      name of registrant as specified in its charter)**




Arizona
            3669
            86-0464104(State
                or other jurisdiction of
              incorporation
                or organization
            (Primary
                Standard Industrial
              Classification
                Code Number)
            (I.R.S.
                Employer
              Identification
                No.)






2100
                Forbes Street
              Unit
                8-10
              Whitby,
                Ontario, Canada L1N 9T3
              (905)
                666-8676(Address
                of principal executive offices)Registrant’s
                telephone number, including area code:(905)
                666-8676Securities
                registered pursuant to Section 12 (b) of the Exchange Act:NoneSecurities
                registered pursuant to Section 12 (g) of the Exchange
                Act:Title
                of Class
            
            Number
                of Shares Outstanding as ofApril
                17, 2006Common
                Stock, $.01 par value
            
            32,201,716


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 if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of the registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K. x





Indicate
      by check mark whether the registrant is an accelerated filer (as defined in
      Exchange Act Rule 12B-2) Yes o
      No x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the exchange Act). Yes o No x


1


Issuer’s
      revenues for its most recent fiscal year: $ 8,718,043




The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the Registrant, based on the closing price for such common
      equity on April
      12,
      2006 is
      approximately $2,782,000. The
      number of shares outstanding of the Issuer’s common stock, as of April
      14,
      2006 : 32,201,716 shares










2


*Forward-Looking
      Statements*




*Certain
      statements within this Form 10-KSB constitute “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995.
      Such
      forward-looking statements involve known and unknown risks, uncertainties and
      other factors that may cause the actual results, performance or achievements
      of
      Creative Vistas, Inc. to be materially different from any future results,
      performance or achievements expressed or implied by such forward-looking
      statements. These forward-looking statements are based on our current
      expectations and are subject to a number of risks, uncertainties and assumptions
      relating to our operations, financial condition and results of operations,
      including, among others, rapid technological and other changes in the market
      we
      serve, our numerous competitors and the few barriers to entry for potential
      competitors, the seasonality and quarterly variations we experience in our
      revenue, our uncertain revenue growth, our ability to attract and retain
      qualified personnel, our ability to expand our infrastructure and manage our
      growth, and our ability to identify, finance and integrate acquisitions, among
      others. If any of these risks or uncertainties materializes, or if any of the
      underlying assumptions prove incorrect, actual results may differ significantly
      from results expressed or implied in any forward-looking statements made by
      us.
      These and other risks are detailed in this Annual Report on Form 10-KSB and
      in
      other documents filed by us with the Securities and Exchange Commission.
      Creative Vistas, Inc. undertakes no obligation to update publicly any
      forward-looking statements for any reason, even if new information becomes
      available or other events occur in the future.*




**Item
                1.**
            **Description
                of Business**




**Overview**




We
      are a
      leading provider of advanced security and surveillance products and solutions.
      We also provide the deployment and servicing of broadband technologies to the
      commercial and residential market. We primarily operate through our subsidiaries
      AC Technical Systems Ltd. (“AC Technical Systems”) and Iview Digital Video
      Solutions Inc. (“Iview DVSI”), to provide integrated electronic security and
      surveillance systems and technologies. AC Technical Systems is responsible
      for
      all of the revenues in the security sector for 2005. It provides its systems
      to
      various high profile clients including: Government, School Boards, Retail
      Outlets, Banks, and Hospitals. Iview DVSI is a newly formed subsidiary
      incorporated in 2005 to focus on providing video surveillance products and
      technologies to the market.




In
      2006,
      we acquired Cancable Inc. (“Cancable”) through our wholly owned newly formed
      Delaware subsidiary, Cancable Holding Corp. Cancable is in the business of
      provisioning the deployment and servicing of broadband technologies in both
      residential and commercial markets. Cancable has offices in Ontario, Canada.
      All
      related documents were dated December 31, 2005 as disclosed in the Form 8K/A
      filed on January 6, 2006. Since the whole transaction was considered completed
      on January 1, 2006 as all the funding were received after December 31, 2005,
      the
      Company did not consolidate the financial statements of Cancable into this
      Form
      10KSB.




Today,
      our operations are divided into two distinct operating segments: (a) Security
      and Surveillance Products and Services and (b) Broadband deployment and
      provisioning services. Through our technology integration team of engineers
      we
      integrate various security related products to provide a single source solution
      to our growing customer base. We formed broadband deployment and provisioning
      services after our acquisition of Cancable.




**Business
      - Security and Surveillance Products and Services**




We
      operate through our subsidiary, AC Technical Systems Ltd, located in Ontario,
      Canada. AC Technical Systems is focused on the electronic security segment
      of
      the security industry.




Through
      our technology integration team of engineers, we integrate various security
      related products to provide a single source solution to our growing customer
      base. Our design, engineering and integration facilities are located in Ontario,
      Canada.




**Ind** **u** **stry
      Overview**




We
      believe that the security industry is growing at a steady pace. The industry
      awareness has increased globally due to the tragic events of 9/11. The growth
      is
      spurred by the continuous evolution of new technologies and processes. We
      believe that the industry is growing for the following reasons:




3


·
            Increased
                global awareness due to the increased threats of terrorism


·
            Older
                security devices such as the VCR have become obsolete and new technologies
                have provided much more efficient systems at a better price


·
            Evolution
                of digital technologies has started to replace antiquated analog
                technologies in the market space


·
            Expansion
                of budgets due to increased awareness of the need for
                security


·
            Increase
                in crime rates and shrinkage in the industry


·
            Trend
                for integration of multiple devices has expanded the market for
                technically advanced integrators such as our firm


·
            Growing
                public concern about crime




The
      security industry is highly fragmented with a large number of manufacturers,
      dealers, distributors, integrators and service groups. All of these parties
      are
      important to provide an entire solution to the customer; however each one only
      provides a portion of what is required by the customer. The customer, in most
      cases, would like to see a one-stop shop that can provide the entire solution
      and also be able to design and customize a solution that fits its needs. This
      may include custom design of hardware, software, and highly sophisticated
      integration work. The customer usually has to deal with all the different
      parties mentioned above. In most cases the cost to the customer is higher when
      using a large number of parties as opposed to one efficient integrator. We
      believe that when many parties are involved in providing a solution to the
      customer many needs of the customer may not be addressed. Also, the amount
      of
      time a customer has to devote to build multiple relationships as opposed one
      relationship is substantial. There are also tendencies for different parties
      to
“pass the blame” to the other party when it comes to technical and service
      issues with the project. As a result the customer prefers dealing with one
      source at which can handle all issues and be accountable for the entire project.
      There are a limited number of companies besides the Company that are capable
      of
      providing an entire integrated solution. This requires years of experience,
      infrastructure for performing all six cores functions that AC Technical Systems
      provides, access to technologies, and a significant commitment to maintain
      a
      happy customer.




A
      company
      that is implementing a new security system or enhancing an old system usually
      has to go through the following steps:




·
            Retain
                a consultant to appropriately outline the needs and design a system
                that
                would satisfy/meet their needs.


·
            Once
                the design is complete, a tender is released whereby a number of
                invited
                system integrators bid on the required system.


·
            System
                integrators work with various suppliers of hardware and software
                to meet
                the system requirements. They also engage these suppliers to complete
                subcomponents of the system.


·
            When
                security systems have to be installed in multiple locations, the
                company
                may have to tender the system requirements to different system integrators
                from various regions.


·
            The
                customer, based on price and qualifications of the system integrator,
                will
                award the project to one or more system
                integrators.




The
      process described above usually causes a number of issues. It usually causes
      client frustrations with project delays, cost inefficiencies, incompatible
      systems, and lack of vendor accountability. It also makes it very difficult
      for
      the customer to make changes to the system. In addition, a customer looking
      to
      implement security systems in multiple locations may have to hire multiple
      integrators and suppliers to integrate systems. This usually results in systems
      that are not consistent with each other. These systems may also not communicate
      efficiently with a central system. In addition, we believe that as security
      systems are becoming more technologically advanced an experienced engineering
      team, which is required to understand the needs of the customer and satisfy
      these needs by incorporating the most efficient technologies that are available.
      This may also include some development of hardware and software to customize
      and
      integrate the system. Most system integrators are not capable of development,
      as
      they do not have a research and development department. Also, the manufacturers
      of different subsystems are usually not willing to provide custom solutions
      on a
      project basis. The customers are realizing the sophistication required in order
      to provide a good security system and recognizing that their in-house personnel
      lack the skills and time necessary to coordinate their security
      projects.




AC
      Technical Systems’ Solution:




AC
      Technical Systems can offer a one-stop-shop that provides a fully integrated
      technology based security system to meet the needs of the customer. We
      understand the needs of the customer and provide a custom solution to meet
      their
      needs. We usually expedite project completion, reduce costs to the customer,
      reduce man- power requirements of the customer, improve on consistency of
      systems in multiple locations, and provide a one-stop solution for the entire
      security system.




4


AC
      Technical Systems provides the following services:




·
            Consulting,
                audit, review and planning


·
            Engineering
                and design


·
            Customization,
                software development and interfacing


·
            System
                integration, installation and project
                management,


·
            System
                training, technical support and maintenance


·
            Ongoing
                maintenance, preventative maintenance and service and upgrades




We
      believe that the following key attributes provide us with a sustainable
      competitive advantage:




·
            Experience
                and expertise in the security industry


·
            In-house
                research and development department


·
            Dedicated
                service team


·
            Access
                to and experience in a variety of product mix


·
            Customized
                software and hardware products


·
            Strong
                list of references


·
            Strong
                partnerships with suppliers and integrators




AC
      Technical Systems’ strategy for growth and expansion is to:




·
            Expand
                our network of technology partners


·
            Develop
                and maintain long-term relationships with clients


·
            Open
                regional offices in key areas to expand revenue and service


·
            Capitalize
                on our position as a leading provider of technologically advanced
                security
                systems


·
            Expand
                our marketing and sales program within our key vertical markets




AC
      Technical Systems’ approach to a new customer:




At
      the
      beginning of each new client relationship, we designate our account manager
      as
      the client service contact. This individual is the point person for
      communications between the client and us. This person usually has a number
      of
      years of experience in the industry and has a good understanding of technologies
      and solutions that are available from the Company. This person is also a trained
      sales person who is able to build a long-term relationship with the customer.
      The account manager works with our project department, engineering department,
      marketing department, finance department, and the research and development
      department to provide an effective solution for the customer. Once the customer
      has engaged us to provide a solution the engagement usually goes through one
      or
      more of the stages outlined below:




*Consulting,
      audit, review and planning:*




We
      identify the client’s objectives, security system requirements, audit and review
      the existing system. We provide a complete audit of the existing system
      including inventory counts and evaluate the existing infrastructure. Then we
      provide an audit report to outline current deficiencies and vulnerabilities.
      At
      this point we design a system alternative to meet the needs of the customer.
      The
      alternative system is prioritized based on the needs of the customer. We also
      include an efficient cost model to ensure that the customer understands the
      cost
      of the system. We provide a Return On Investment model (ROI) where applicable.
      We provide a preliminary project implementation plan that contains a graphical
      model of their premises with exact outlines of equipment locations. Our
      comprehensive planning process helps the customer to properly budget for their
      needs on a long-term basis.




*Engineering
      and design:*




The
      engineering and design process involve preparation of detailed project
      specifications and working drawings by a team of our design engineers. These
      drawing will lay out the entire property and provide a detailed lay out of
      all
      security equipment and also provide the methodologies used to integrate the
      system. It will also outline any needs for custom software or hardware design
      service, systems designers and computer-aided design system operators. These
      specifications and drawings detail areas of high sensitivity, layout of the
      main
      control room, placement of cameras, card readers, monitors, switches and other
      equipment including electrical and mechanical requirements.




5


Once
      the
      design of our system has been completed, we also provide a complete list of
      components including various recommendations. We highly recommend off-the-shelf
      non-proprietary components in order to ensure that the customer is not tied
      into
      one supplier. When off-the-shelf components are not available or they are not
      compatible with each other we may choose to design software/hardware to provide
      compatibility.




*Customization,
      software development, interfaces:*




In
      many
      cases the customer’s needs may not be completely satisfied by the equipment that
      is available in the market place. The customer may request features that are
      not
      ready available or even request interfacing between equipment that may not
      be
      available. For example, a financial institution may request us to take
      information from their transaction records, from an Automatic Teller Machine
      (ATM), and integrate it along with a Digital Video Recorder (DVR). This function
      would allow them to review video of an individual who has processed a
      transaction on an ATM. Normally they would have to go through tapes of data
      in
      order find an incident. The bank would have to search for all the transactions
      that occurred during a period of time and then based on that information go
      over
      tapes of video. Sometimes the video may not be available as the tapes are only
      held for a short period of time. The integrated system from our firm would
      make
      the search process instantaneous. The bank can search by a number of criteria
      including time, date, transaction, number, withdrawal amount, etc and have
      the
      video associated with it instantly.




Many
      times we provide an interface to bring multiple technologies together. For
      example, in one project we integrated eleven different products into one system,
      thus allowing for a completely integrated system. This system also has a very
      user-friendly interface that avoids having to deal with multiple monitors and
      Graphical User Interfaces (GUI).




*System
      integration, installation, project management:*




Once
      we
      determine that the project has passed through the Consulting/Audit,
      Design/Engineering and Customization/Software interfacing stage (if required)
      we
      can start the implementation of system. During this stage, we provide the
      following:




·
            Detailed
                schedule of integration


·
            Component
                list and assign labor


·
            Officially
                assign project to one of our project managers


·
            Production
                department starts procurement schedules


·
            Construction
                draw date schedules


·
            Progress
                billings and schedule site visits for quality control


·
            Test
                final terminations and technology components in-house in order to
                avoid
                product failure on site


·
            Hardware/software
                and network integration


·
            Validation
                and testing


·
            Final
                sign off and pass over to service department




During
      this stage the project manager manages the project and the projects are updated
      weekly to ensure that all components are working efficiently. During certain
      projects the project manager may opt to use subcontractors to provide services
      that are not highly advanced technically. These services may include standard
      wiring and cabling. The customer is updated on the status of the project weekly
      and this may include Gantt charts. Also of importance, during this stage many
      customers add on extra equipment as they start to see the need for enhanced
      equipment, which increases the value of the contract to the
      Company.




*System
      training, technical support, maintenance:*




When
      a
      project has been completed through system integration, the customer is provided
      with a complete training program. We train the customer on how to use the system
      and also provide them manuals from manufacturers as well as training guides
      put
      together by us. Once the training is complete the system will go on line and
      there is a transfer process to the service department from the projects
      department. Ongoing technical support and maintenance are provided by our
      dedicated service team.




*Ongoing
      maintenance, preventative maintenance and service, upgrades:*




This
      is
      the final stage of our process and it is an ongoing stage. We provide various
      types of maintenance contracts, which are depending on the level of response
      required by the customer. We also provide a service plan suitable to the
      customer. If the customer does not require a service contract, we provide them
      service on an incident basis.




6


The
      entire six steps process continues for each customer. Once a project is
      complete, there are upgrades that are required and depending on the value of
      the
      upgrades, this may initiate a new project. During the entire stage the account
      manager is updated on the process. The account manager has regular meetings
      with
      the customer after a project is complete in order to work with the customer
      to
      help set budgets for the following years and also educate the customer on new
      products and technologies that may be available in the market.




**Research
      and Development**




We
      have
      our own in-house research and development programs which are supported by the
      National Research Council of Canada. We may receive grants and tax credits
      for
      projects and product development if it qualifies for the program. The department
      develops new products and also enhances existing products. We have the
      capability to build various forms of hardware and software modules. Once a
      product is designed the underlying technologies are used on an ongoing basis
      to
      enhance future projects and also develop new products. This is one of the
      differentiating factors between our competitor and us. Our research and
      development expenses were approximately $302,000 in fiscal year 2005 and
      $220,000 in fiscal year 2004. Expenses include engineering salaries, costs
      of
      development tools and equipment. None of the expenses were borne directly by
      customers.




**Warranties
      and Maintenance**




We
      offer
      maintenance and service on all our products, including parts and labor, which
      range from one year to six years depending upon the type of product concerned
      and the type of contract signed by the customers. In addition, we provide a
      one-year warranty on equipment and 90 days on labor for all installation
      projects completed by the company. We receive the same period of warranty on
      equipment from other suppliers.




On
      non-warranty items, we perform repair services for our products sold at our
      head
      office in Ontario, Canada or at customer locations. For the years ended December
      31, 2005 and 2004, our revenue from service and maintenance were $1,296,000
      and
      $1,011,000 respectively. For the years ended December 31, 2005 and 2004, the
      percentage of our revenues attributable to service and maintenance were 14.9%
      and 12.0%, respectively.




**Marketing**




Our
      marketing activities are conducted on both national and regional levels. We
      obtain engagements through direct negotiation with clients, competitive bid
      processes, referrals and direct sales calls. Our marketing plan is derived
      with
      the input from all our account managers and senior management. Our plan is
      to
      grow vertically within targeted markets where we have a superior level of
      expertise. Our marketing is very target specific. We market within our four
      key
      markets i.e. Government, Education, Healthcare, and Retail. We also find niche
      markets where our technologies can provide effective solutions to the customer.
      Some of our marketing activities include:




·
            Trade
                Shows


·
            Mailers


·
            Direct
                sales calls


·
            Web
                promotions


·
            Seminars


·
            Collaborations
                with manufacturers


·
            Collaborations
                with consultants and architects




We
      also
      collaborate with providers of complementary technologies and products who are
      not competitive to us. For example there is a convergence of IT services and
      the
      Security industry. We are evaluating the possibility of partnering with an
      IT
      services provider in order to provide our existing customers and potential
      customers with an expanded scope of services. We are also doing the same within
      the building automation industry as we see a convergence of building automation
      technologies and services with the security industry.




We
      are
      evaluating several opportunities to expand our operations via joint ventures
      and
      partnerships with regional and international companies that can provide us
      with
      an additional expertise and expanded presence. In addition we are evaluating
      the
      possibility of acquisition of similar businesses and expansion of our
      operations.




**Customers**




We
      provide our products and services to customers in four key markets :




·
            Government




7


·
            Healthcare


·
            Education


·
            Retail




We
      also
      provide our products and services to various other sectors including corporate
      facilities, mining, entertainment and the automobile industry through direct
      sales to end-users and through subcontracting agreements.




The
      table
      below sets forth the approximate percentage of aggregate revenues from each
      of
      our largest customers/end-users for the year ended December 31, 2005 and
      2004.




**Year
                Ended**
              **December
                31, 2005**
            
            **Year
                Ended**
              **December 31,
                2004**BCC
                Interiors Inc.
            8.5%
            
            3.0%Loblaws
                Companies Ltd.
            7.0%
            
            21.5%Cloke-Kirby
            6.5%
            
            3.4%Ameresco
                Canada
            5.3%
            
            0.5%Phazer
                Electric
            5.1%
            
            0.1%SNC
                Profac
            4.2%
            
            2.2%Ellis
                Don Corporation
            4.0%
            
            0.1%World
                Wide Electric
            3.0%
            
            2.3%Ontario
                Realty Corporation
            2.7%
            
            -%







As
      reflected in the above table, from period to period the revenue mix among our
      customers shifts and changes.




**Backlog**




Our
      backlog consists of written purchase orders and contracts, we have received
      for
      product deliveries and engineering services which we expect to deliver or
      complete within 12 months. All of these orders and contracts are subject to
      cancellation at any time. As of December 31, 2005, our backlog was
      approximately $1,000,000.




**Competition**




The
      security industry is highly fragmented and competitive. We compete with a number
      of different companies regionally and nationally. We have various different
      types of competitors including consultants, integrators, and engineering and
      design firms. Our main competitors include Siemens, ADT, Simplex, Intercon,
      and
      Diebold. Many of our competitors may have greater name recognition and financial
      resources than we do, however we believe that we have a well-respected name
      when
      it comes to quality and technical expertise. Our competitors also include
      equipment manufacturers and vendors that also provide security services. We
      may
      face future competition from potential new entrants into the security industry
      and increased competition from existing competitors that may attempt to develop
      the ability to offer the full range of services offered by us. We cannot assure
      that we will be able to compete successfully in the future against existing
      or
      potential competitors.




**Employees**




As
      of
      December 31, 2005, we had 60 full time employees including our officers, of
      whom
      39 were engaged in systems installation and repair services, 12 in
      administration and financial control and 5 in marketing and sales.




None
      of
      our employees are covered by a collective bargaining agreement or are
      represented by a labor union. We consider our relationship with our employees
      to
      be satisfactory.




8


The
      design and implementation of our equipment and the installation of our systems
      require substantial technical capabilities in many different disciplines from
      computer science to electronics with advanced hardware and software development.
      As a company, we encourage and provide training for new and existing technical
      personnel. In addition we conduct training courses and also send our technical
      persons to various technical courses offered by manufacturers of various
      products. We have various incentive programs for our employees to improve their
      skills within all departments. These include reimbursements for training fees
      and raises based on skill sets.




**Business-Broadband
      deployment and provisioning services**





We
      operate through our subsidiary Cancable Inc., located in Ontario, Canada to
      provision the deployment of broadband services. Cancable Inc. was a subsequent
      acquisition.





Cancable
      Inc. (“Cancable”) is
      a
      growing, Canadian based leader in the provisioning the 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.




Cancable
      has a long history as a field services organization. It has been successful
      in
      developing long-term relationships with its clients and is highly regarded in
      the
      industry for quality as evidenced by its status as the largest service provider
      to Rogers Cable Inc. ( www.rogers.com ),
      Canada’s largest cable company and the exclusive supplier to Cogeco Cable Inc.
      in the Windsor, Ontario area. Cancable’s central appeal to its customers is its
      ability to deliver its quality services and at a cost which they cannot match
      internally.




With
      a
      staff of over 300
      employees  Cancable has
      established itself as a growing market leader with an excellent platform for
      growth. Cancable b elieves
      that there is a large and growing market for its services and the demand for
      its
      services is growing as:




·
            The
                increase in popularity of the Internet and in the complexity of Internet
                sites has increased demand for high-speed Internet access from both
                residential and commercial consumers.




·
            Technological
                advances, including the shift from an analog to a digital network
                environment and the ability to leverage existing network infrastructure
                to
                deploy high-speed services such as IP networking technologies, have
                accelerated the availability of advanced services such as digital
                video
                and high-speed Internet access.




·
            Cable
                and telecommunications service providers have made significant investments
                to build and upgrade their wired and wireless networks, creating
                a
                substantial opportunity to deliver advanced services to commercial
                and
                residential consumers.




·
            End-users
                increasingly demand access to integrated video, voice and data services,
                advanced set top boxes, high-speed digital modems, telephone lines,
                voice
                mail, computer networks, video conferencing and other technologies.
                Cancable’s clients must rapidly deploy these technologies in order to
                maximize their revenue per end-user, realize a return on their investments
                and maintain or gain competitive advantages.




·
              The
                  availability of multiple choices for end-users to receive advanced
                  services has led broadband service providers increasingly to focus
                  on
                  end-user satisfaction to control turnover and to rely on technology
                  enabling companies for some of their non-core activities, such
                  as
                  installation, integration, fulfillment, maintenance, warranty and
                  support
                  services.
  9




**Senior
      Management**




Proven
      team with over 70 years of cable TV, contracting/technical deployment and
      support experience.




**Ross
      Jepson, President and CEO,** has
      successfully completed a number of senior executive assignments in the cable
      and
      telecommunications sector since 1985. He was appointed President and CEO in
      January 2003 after serving one year as the EVP, Operations. In addition to
      having led the purchase and sale of numerous companies during his executive
      career, he is also deeply experienced in sales, marketing, operations and new
      business development.




**Mark
      Thompson, MBA (Finance & Human Resources)**  **VP,
      Fin & Admin,** joined
      Cancable in November 2004, bringing over 10 years of Finance and Consulting
      experience in entrepreneurial, high growth and turnaround situations. He has
      held senior roles in the high-tech, distribution and financial services
      industries. Mr. Thompson is responsible for all Finance, Accounting, IS-IT,
      and
      Human Resources functions for Cancable.




**Paul
      Mease, P. Eng., MBA, VP, Operations,** joined
      Cancable in August 2005, bringing nine years of executive and general management
      experience in operations and field service management in the utilities and
      cable
      sectors.




**Cheryl
      Lewis, Director, DependableIT** ***,*** began
      her career at Cancable in 1998 managing the dispatch group and building the
      original team of technicians. Ms. Lewis later assumed responsibility for the
      DependableIT division, a call centre managing all incoming tech support calls
      and sales leads, as well as on-site technicians resolving computer support
      issues.




**Karen
      Van Luven, B. Comm, CHIRP, Director of Human Resources,** 15 years
      of Senior Human Resources management experience.




**Lori
      Porkolab, BA, Controller,** has been
      with Cancable for over six years with responsibility for the Financial
      Statements and General Ledger of the Corporation. In addition, she supervises
      the accounts payable, accounts receivable and payroll functions of Cancable.
      Ms.
      Porkolab is an Accounting graduate and is currently enrolled in the final level
      of the Certified General Accountant program.




**Jordon
      Dankowich, Manager, Business Intelligence,** has been
      with Cancable for over 7 years in Operational, Business Development, and IS/IT
      roles. Mr. Dankowich and his team of Programmers, support the day-to-day
      operations of the business with Cancable’s proprietary operating system. ******




**Don
      Hinds, District Manager (West)** ****** has
      over
      15 years experience with both cable TV contractors and cable TV operators,
      in
      both Canada and the U.S. Mr. Hinds manages a team of 4 Regional Managers and
      approximately 90 field technicians.




**Mansoor
      Khan, District Manager (East),** ****** has
      been
      with Cancable for over six years. He has a strong background in computer and
      other communications technology and his responsibilities have grown along with
      Cancable. He currently manages a team of 4 Regional Managers and approximately
      90 field technicians.




**Key
      Client Relationships**




Cancable
      has two main customer relationships, of which Rogers Cable Inc. is the most
      significant.




**Rogers
      Cable Inc.**




Rogers
      Cable Inc. is
      Cancable’s largest customer employing approximately 185 field technicians
      (Mississauga Primary contractor with 85, Scarborough Primary with 60, Toronto
      Secondary with 40) as of July 2005. In addition to its in-house capability,
      Rogers currently utilizes eight contractors to manage its cable TV activity
      down
      from 22 three years ago. Over the past two years as a result of the vendor
      consolidation and its top rated performance, Cancable has emerged as Rogers’
primary contractor in the Greater Toronto Area with a 33% share of completed
      work orders, a share that exceeds its nearest competitor by a margin of more
      than 2-to-1.




In
      addition to installation and service work, Cancable has finalized a new three
      years agreement that extends the types of services it will be performing. As
      evidence of Rogers growing dependency on Cancable, Rogers has requested that Cancable
      supplement its Tier 2 and Tier 3 customer service programs, something that
      is
      presently handled only by Rogers personnel. In this service a call is hot
      transferred from Rogers customer service department after they have determined
      that it is not a Rogers cable related problem directly to DependableIT,
      Cancable’s branded technical support centre. DependableIT’s remote diagnostic
      tools provide it with a complete situational review of the customer’s site. In
      these instances, the charge is billed to the customer’s credit card before
      assistance is provided. With the Tier 3 service a field service visit is
      required and a Cancable technician is dispatched to the customer’s location with
      rates charged on an hourly basis for residential and commercial customer. Again,
      this service is presently provided by Rogers personnel only.




10


**Cogeco
      Cable Inc.**




Cancable’s
      current field supporting work with Cogeco is limited to the Windsor, Ontario
      area when, in November 2003, Cancable assumed exclusive responsibility for
      all
      Cogeco-related installation activity. Cancable is currently in discussions
      on a
      new two-year contract. Under this contract, Cancable’s 20 technicians will be
      co-located in Cogeco’s facility and the current residential install business is
      being expanded to include commercial work including all Cogeco commercial
      Internet sales and technical calls. DependableIT via a dedicated communications
      network will charge a per call fee for support, and most significantly, earn
      commission on services sold. In addition the service offering is expanding
      into
      Tier 2 service - residential, similar to that currently being provided to
      Rogers.




**The
      Contract Field Technical Support Industry**




**Overview**




In
      2004,
      the cable television industry in Canada served 9.3 million homes of which 2.3
      million were subscribers to digital cable. While Direct to Home satellite
      service providers have penetrated the video market, cable operators continue
      to
      maintain an overall 77% market share.




A
      significant development for both cable and telecom companies has been the
      acceptance of the internet as a mass medium for commerce and communications
      involving both residential and commercial consumers. A recent reported stated
      that as of 2004 44% of Canadian homes were connected to high-speed Internet
      services. Approximately 2.3 million homes connect via cable vs. 1.9 million
      connected via telco providers.




At
      present, Cancable’s management believes that there are approximately 25
      providers of contract field technical support serving the Ontario cable
      television market. Management also believes that this number will be markedly
      reduced in the near future as evidenced by the vendor consolidation initiative
      recently completed by Rogers. Management believes that its cable television
      clients who operate in multiple geographic markets will prefer to align
      themselves with larger technology enablers, like Cancable, who are able to
      deploy consistent service on a wider scale and have the expertise and resources
      to deploy and maintain increasingly complex technologies.




Accordingly,
      management believes that its target market presents substantial growth
      opportunities due to:




·
            the
                increasingly competitive landscape in the areas of video, Internet
                and
                telecom delivery which is requiring cable operators to increase their
                commitment to quality customer service and an insistence that providers
                of
                outsourced technical support adhere to strict quality
                standards;




·
            a
                drive for cost reductions on the part of the cable operators, caused
                by
                price competition due to “bundling” strategies by them and their
                competitors;




·
            the
                increasing demand by residential and commercial consumers for advanced
                broadband services such as high-speed Internet access, digital video
                and
                telephony;




·
            the
                need to satisfy the demand for emerging broadband communications
                technologies such as Web-based video
                conferencing;




·
            virtual
                private networks, which are networks run over the Internet that provide
                privacy to the network users;




·
            Voice-over-IP
                (VoIP), which will allow simultaneous two-way voice communication
                with
                high-speed data transmission over broadband;
                and




·
            the
                availability of multiple choices for consumers to receive these advanced
                services, which has led to intensifying competition for subscribers
                and an
                increased focus among BSPs on consumer satisfaction, and the need
                for BSPs
                to rapidly deploy technology and equipment capable of delivering
                advanced
                services to residential and commercial consumers to realize a return
                on
                the significant investments they have made to build and upgrade their
                networks.




11


Over
      the
      next three years Cancable’s management expects to see its industry change
      significantly for the following reasons:




**Increasing
      Technological Complexity**




Each
      of
      Cancable’s target market segments is experiencing rapid changes in technology.
      The convergence of previously separate technologies has produced newer, more
      complex technologies, such as bundled video, voice and data services. Delivering
      these services require more highly trained technicians, cross-trained in several
      technologies, to provide installation, integration, fulfillment, and long-term
      maintenance and support services than in the past. For example:




·
            *Cable
                Internet access.*High-speed
                Internet access requires that cable system operators provide initial
                installation and testing as well as on-going maintenance and support
                of
                new technologies, such as cable modems and network cards.




·
            *VOIP*.
                Cable
                operators are already in the process of utilizing their networks
                for the
                provision of local telephony. This area represents a potentially
                significant source of incremental activity for
                Cancable.




·
            *Convergence
                of video and telecom services****.***Increasingly,
                traditional telecom carriers are entering the field of entertainment
                and
                data delivery, either through strategic investments in alternate
                technologies (see Direct Broadcast Satellite below) or adaptation
                of the
                existing telecom infrastructure.




·
            *Direct
                to home Satellite.*Programming
                services require installation of a satellite receiving antenna or
                dish and
                a digital receiver at the consumer premises. In order to facilitate
                high-speed Internet access, additional coordination is required between
                the satellite technologies and the standard telephone line modem
                connections that handle outbound communications from the consumer.
                Although certain DTH equipment may be installed by the consumer,
                there is
                a growing trend toward professional installation of satellite
                equipment.




·
            *Premise
                networking.*Premise
                networking requires installation, certification and maintenance of
                high-speed data networks, including LANs/WANs, client/server networks,
                and
                video, audio and security networks meeting stringent industry
                requirements. Substantial resources must be committed to train and
                retain
                field technicians in the new technologies. Cancable believes that
                these
                increasing knowledge and training requirements present a significant
                competitive advantage for larger, well-capitalized enabling companies,
                and
                provide additional motivation for BSPs to rely on independent technology
                enablers thereby avoiding costly investments in internal service
                and
                fulfillment infrastructures.




**Increased
      Reliance by BSPs on** **outsourcing**




Technological
      advances and deregulation in the cable, telecommunications, satellite and
      wireless, and premise networking industries have provided residential and
      commercial consumers with multiple choices for receiving advanced services.
      The
      escalating competition for end-users has increased competitive pressures on
      BSPs, which is requiring them to focus more on consumer satisfaction. The
      providers' need to rapidly upgrade and expand existing systems, as a result
      of
      increased competition and growing demand for advanced services, should lead
      to a
      continued increase in the level of reliance on independent technology enablers
      for non-core activities, such as installation, integration, fulfillment, and
      long-term maintenance, warranty and support services. Management anticipates
      that BSPs will increase their reliance on independent technology enablers like
      Cancable to the extent that the enablers provide services that are of a higher
      quality and more cost efficient than existing, in-house infrastructure, in
      the
      same way that providers historically have relied on outside sources for other
      ancillary functions, such as design and manufacture of consumer premise
      equipment. Many emerging BSPs, such as DSL and DTH providers, often enter new
      markets where they have little or no local presence and limited resources to
      meet the growing demand for their advanced video, voice and data services.
      These
      providers typically have no in-house service infrastructure. Cancable believes
      these BSPs will continue to rely on independent technology enablers to meet
      their installation and maintenance needs. Cancable believes there will be an
      increased need for higher value-added services as the broadband industry
      continues to evolve and recurring upgrades and value-added improvements become
      more significant. Historically, large corporations with internal information
      technology departments have been primary users for such applications. However,
      the rapidly growing demand for such applications from small to medium-sized
      businesses and residential end-users, which do not have internal deployment
      and
      maintenance capabilities, presents additional growth opportunities for
      independent technology enablers like Cancable.






12


**Emergence
      of Preferred Providers of Technology Enabling Services** ****




Cancable
      believes that because of the increasing geographic scope of and complexity
      of
      technology deployed by BSPs, there is a growing trend towards a long-term,
      strategic alliances with technology enabling companies in contrast to the
      historic, contractual project-by-project arrangements. Cancable believes that
      its industry is highly fragmented and characterized by smaller, privately held
      companies that offer a limited range of industry-specific services to a small
      number of clients in concentrated geographic areas. In Cancable’s experience,
      BSPs in its target markets who rely on technology enabling companies prefer
      to
      align themselves with larger, better capitalized companies which:




·
            have
                the expertise and resources to deploy and maintain increasingly complex
                technologies over large networks;




·
            consistently
                deliver high quality service;




·
            provide
                regional coverage and have the capacity to work on multiple projects
                simultaneously; and




·
            have
                the ability and willingness to invest in infrastructure to enhance
                the
                deployment and maintenance of the advanced technologies demanded
                by
                residential and commercial customers.




**Industry
      Trends Specific to the Contract Field Technical Support
      Industry**




·
            *Competition
                at the client level.***Some
                of Cancable’s customers are in a monopoly industrial environment. Today,
                these customers are faced with increasing competition in which is
                forcing
                them to adapt the new reality. Part of this adaptation includes taking
                an
                in-depth review of their internal cost structure to determine which
                services must be performed by employees and which should be contracted
                out, at lower cost.




·
            *Consolidation
                at the client level.***The
                cable television industry in particular has been undergoing a trend
                towards consolidation for many years. This trend has resulted in
                changes
                in the manner in which services are contracted for and has changed
                the
                relationship between client and service provider. Relationships today
                are
                driven less determined by personal contacts and more by professional
                qualifications. Also important are the service provider’s ability to
                provide a service level that is uniform across its work force and
                to
                integrate its management and reporting systems with those of the
                client.




·
            *Trend
                towards contracting out.*The
                above two drivers are causing cable television and telecommunications
                service providers to move increasingly towards contracting out services
                that are perceived to be non-core but which are manageable through
                sophisticated systems and a high level of integration between their
                own
                internal systems and those of the support provider. While not a current
                client of Cancable, Bell Canada is leading the trend in this area
                with
                almost all of its field service activities contracted out. Cancable
                believes that its two largest clients, Rogers Cable and Cogeco Cable,
                contract out approximately two-thirds of their field installation
                and
                service call work. Cancable expects that this percentage will continue
                to
                increase and that the outsourcing trend will spread to these clients’
                other field activities that are currently not
                outsourced.




·
            *Consolidation
                among service providers.*As
                an adjunct to consolidation at the client level, larger clients want
                to
                increase efficiency by reducing the number of vendors in each area.
                This
                trend tends to favor those service providers that are able to scale
                up to
                the demands of increased volumes and are able to meet the system
                integration requirements of the
                client.




**RISK
      FACTORS**




Described
      below are the material risks that we face. Our business, operating results
      or
      financial condition could be materially adversely affected by, and the trading
      price of our common stock could decline due to, any of these risks.




**Risk
      factors of the Company**




*Competitive
      pressure from larger firms:*




The
      security industry is highly competitive. The Company competes with a number
      of
      large international firms, which have more extensive resources than the Company
      does. In addition, these competitors may have greater brand recognition,
      proprietary technologies and superior purchasing power as well as other
      competitive advantages.




13


*Risks
      associated with budget constraints and cut back of customer
      spending:*




The
      Company is dependent on large institutional and commercial customers and their
      budgets. If there are cut backs in budgets by its customers it will adversely
      impact the revenues of the Company.




*Risks
      associated with possible delays of construction schedules:*




The
      Company has contracted to provide security systems to a number of new buildings
      and delays in construction of these buildings could potentially delay revenues
      being realized.




*Supplier
      product failures:*




The
      Company does not currently manufacture its own products and it must purchase
      products from others. It could adversely impact the Company’s relationships with
      its customers if there are delays in receiving products from suppliers or if
      there are defects in these products.




*Contracts
      with government agencies may not be renewed or funded:*




Contracts
      with government agencies accounts for some of our revenues. Many of these
      contracts are subject to annual review and renewal by the agencies and may
      be
      terminated at any time or on short notice. Each government contract is only
      valid if the agency appropriates enough funds for such contracts. Accordingly,
      we might fail to derive any revenue from sales to government agencies under
      a
      contract in any given future period. In addition, if government agencies fail
      to
      renew or terminate any of these contracts, it would adversely affect our
      business and results of operations.




We
      have a
      small number of customers from which we receive a large portion of our sales.
      A
      single customer accounted for more than ten percent of total sales for the
      years
      ended December 31, 2003 and 2004. Our experience has been that some of
      these substantial customers will be a source of significant sales in the
      succeeding year and some will not. Consequently, we are often required to
      replace one customer with one or more other customers in order to generate
      the
      same amount of sales. There can be no assurance that we will continue to be
      able
      to do so.




*Key
      personnel losses:*




Competition
      for highly qualified technical personnel is intense and we may not be successful
      in attracting and retaining the necessary personnel, which would limit the
      rate
      at which we can develop products and generate sales. In particular, the
      departure of any of our senior management members or other key personnel could
      harm our business.




*Intellectual
      property protection risks:*




Our
      intellectual property might not be protected. Despite our precautions, it may
      be
      possible for unauthorized third parties to copy our products or obtain and
      use
      information that we regard as proprietary to create products that compete
      against ours. If we fail to protect and preserve our intellectual property,
      we
      may lose an important competitive advantage. In addition, we may from time
      to
      time be served with claims from third parties asserting that our products or
      technologies infringe their intellectual property rights. If, as a result of
      any
      claims, we were precluded from using technologies or intellectual property
      rights, licenses to the disputed third-party technology or intellectual property
      rights might not be available on reasonable commercial terms, or at all. We
      may
      initiate claims or litigation against third parties for infringement of our
      proprietary rights or to establish the validity of our proprietary rights.
      Litigation, either as plaintiff or defendant, could result in significant
      expense or divert the efforts of our technical and management personnel from
      productive tasks, whether or not the litigation is resolved in our favor. A
      successful claim against us, coupled with our failure to develop or license
      a
      substitute technology, could cause our business, financial condition and results
      of operations to be adversely affected.




14


*We
      may not be able to increase our bonding*




We
      may
      not be able to increase our bonding and, therefore, we may not be able to pursue
      larger projects as a primary contractor.




*Fluctuation
      in quarterly results:*




Our
      quarterly results have varied over the past few years and will likely continue
      to do so. The results will vary based on the timing of the projects,
      construction schedules and customer budgets. Such fluctuations may contribute
      to
      volatility in the market price for our stock.




*Lengthy
      sales cycle:*




The
      sale
      of our products and services frequently involves a significant commitment of
      resources to evaluate and propose a project. The approval process for our
      proposals usually involves multiple departments within our clients and may
      take
      several months. Accordingly the length of recording and processing time , a
      sale
      can take a prolonged period of time.




*We
      may not be able to successfully make acquisitions or form partnerships as a
      means of fostering our growth:*




Our
      growth strategy involves successfully acquiring companies that will add value
      to
      our firm and also build partnerships with companies who can complement our
      core
      competencies. We may not be successful in identifying or consummating
      transactions with such companies.




*Continued
      need for additional financing:*




To
      implement our growth plan, we may need additional financing. We will need
      additional financing upon any of the following events:




·
            Changes
                in operating plans


·
            Lower
                than anticipated sales


·
            Increased
                costs of expansion


·
            Increase
                in competition relating to decrease in price


·
            Increased
                operating costs


·
            Potential
                acquisitions




Additional
      financing may not be available on commercially reasonable terms or may not
      be
      available at all.




*We
      have issued a substantial number of warrants, options and other convertible
      securities, which may cause the trading price of our securities to decline
      and
      may limit our ability to raise capital from other sources:*




As
      of
      December 31, 2005, there were 4,302,500 shares of common stock issuable upon
      the
      exercise of warrants. As of that date, there also were 4,500,000 shares of
      common stock issuable upon conversion of a certain $4.5 million convertible
      term
      note, 1,000,000 shares of common stock issuable upon conversion of the currently
      outstanding principal amount of a certain revolving note and 299,997 shares
      issuable upon the exercise of options. While these securities are outstanding,
      the holders will have the opportunity to profit from a rise in the price of
      our
      securities with a resulting dilution (upon exercise or conversion) in the value
      of the interests of our other security holders. Our ability to obtain additional
      financing during the period these convertible securities are outstanding may
      be
      adversely affected and their existence may have a negative effect on the price
      of our securities. We may be obligated to issue additional shares in payment
      of
      accrued interest on our term note or revolving notes and as a result of
      adjustments to the conversion or exercise prices of our convertible securities.
      Additional shares of our common stock may be issued if additional amounts are
      funded under our existing financing arrangements with Laurus, such as under
      the
      Secured Revolving Note, or if we obtain additional financings in the future.
      The
      happening of certain events such as stock splits, reverse stock splits, stock
      dividends or certain additional share issuances at prices below the then
      effective exercise or conversion price would trigger an adjustment in the
      exercise or conversion price (as applicable). The adjustment would be based
      upon
      a weighted average formula in the case of below exercise or conversion price
      issuances. The adjustment will depend on the number of shares issued and the
      difference between the issuance price and the then effective exercise or
      conversion price. Since no such transactions are currently contemplated, it
      is
      not presently possible to quantify possible future adjustments. The holders
      of
      these securities are likely to exercise them at a time when we would, in all
      likelihood, be able to obtain any needed capital by a new offering of securities
      on terms more favorable to us than those of the outstanding warrants, options
      and convertible promissory notes.




15


*Because
      our directors own approximately 87% of our outstanding common shares, they
      could
      make and control corporate decisions that may be disadvantageous to minority
      shareholders:*




Our
      directors own approximately 87% of the outstanding common shares. Accordingly,
      they will have a significant influence in determining the outcome of all
      corporate transactions or other matters, including mergers, consolidations
      and
      the sale of all or substantially all of our assets, and also the power to
      prevent or cause a change in control. The interests of our directors may differ
      from the interests of the other shareholders and thus result in corporate
      decisions that are disadvantageous to other shareholders.




*Exchange
      rate fluctuations may have adverse effects on our revenues:*




A
      portion
      of our revenues and expenses are denominated in Canadian dollars. As a result,
      we will be exposed to currency exchange rate risk. Our reported earnings could
      fluctuate materially as a result of foreign exchange rate fluctuations.




*Our
      substantial debt could adversely affect our financial
      position:*




Our
      substantial indebtedness could have important consequences to you. Our annual
      debt service requirements related to payments of principal on our $4.5 million
      principal amount of convertible notes are approximately $1,100,000, $3,400,000
      in 2006 and 2007, respectively. In addition, since November 1, 2004, interest
      on
      the convertible notes is payable on a monthly basis. Moreover, all customer
      deposits received must be applied to repay our revolving loans from Laurus.
      In
      addition, we have a series of other notes payable totaling $1,672,414 as at
      December 31, 2005. The annual principal repayment is approximately $143,678
      and
      $28,736 in 2006 and 2007, respectively. The $1,500,000 promissory note included
      in other notes payable, which were issued by AC Acquisition to The Burns Trust
      and The Navaratnam Trust in connection with the acquisition of AC Technical,
      have no fixed term of repayment. The convertible notes and revolving loans
      are
      secured by all assets of the Company. Interest on convertible notes and
      revolving loans may be settled in cash or by issuing common stock. However,
      in
      the event we are unable to generate sufficient cash flow from our operations,
      we
      may face difficulties in servicing our substantial debt load. In such event,
      we
      could be forced to seek protection from our creditors, which could cause the
      liquidation of the Company in order to repay the secured debt. In any
      liquidation of the Company, the holders of the Company’s debt (including The
      Burns Trust and The Navaratnam Trust) would be required to be paid in full
      before any payments could be made to the holders of our common stock. In
      addition, our outstanding indebtedness could limit our ability to obtain any
      additional financing.




*There
      is no active trading market in our securities:*




Although
      the Company’s common stock is quoted on the NASD OTC Bulletin Board, there is no
      active trading in the stock. A trading market may not develop and stockholders
      may not be able to liquidate their investment without considerable delay. If
      a
      market should develop, the price of the Company’s stock may be highly
      volatile.




*Penny
      Stock regulations apply to our securities:*




The
      Company’s securities are subject to the “penny” stock regulation of Rule 15g-9
      of the Securities Exchange Act of 1934. Rule 15g-9 of the Exchange Act is
      commonly referred to as the “penny stock” rule and imposes special sales
      practice requirements upon broker-dealers who sell such securities to persons
      other than established customers or accredited investors. A penny stock is
      any
      equity security with a market price less than $5.00 per share, subject to
      certain exceptions. Rule 3a51-1 of the Exchange Act provides that any equity
      security is considered a penny stock unless that security is: registered and
      traded on a national securities exchange and meets specified criteria set forth
      by the SEC; authorized for quotation in the National Association of Securities
      Dealers’ Automated Quotation System; issued by a registered investment company;
      issued with a price of five dollars or more; or issued by an issuer with net
      tangible assets in excess of $2,000,000. This rule may affect the ability of
      broker-dealers to sell the Company’s securities.




16


For
      transactions covered by Rule 15g-9, a broker-dealer must furnish to all
      investors in penny stocks a risk disclosure document, make a special suitability
      determination of the purchaser, and receive the purchaser’s written agreement to
      the transaction prior to the sale. In order to approve a person’s account for
      transactions in penny stocks, the broker-dealer must (i) obtain information
      concerning the person’s financial situation, investment experience, and
      investment objectives; (ii) reasonably determine, based on that information
      that
      transactions in penny stocks are suitable for the person and that the person
      has
      sufficient knowledge and experience in financial matters to reasonably be
      expected to evaluate the transactions in penny stocks; and (iii) deliver to
      the
      person a written statement setting forth the basis on which the broker-dealer
      made the determination of suitability stating that it is unlawful to effect
      a
      transaction in a designated security subject to the provisions of Rule
      15g-9(a)(2) unless the broker-dealer has received a written agreement from
      the
      person prior to the transaction. Such written statement from the broker-dealer
      must also set forth, in highlighted format immediately preceding the customer
      signature line, that the broker-dealer is required to provide the person with
      the written statement and the person should sign and return the written
      statement to the broker-dealer only if it accurately reflects the person’s
      financial situation, investment experience and investment
      objectives.




*Losing
      our status as a Canadian Controlled Private Corporation*  *could
      adversely affect our financial position* :




A
      CCPC is
      a corporation that is not controlled by a non-Canadian entity. If, in the
      future, more than 50% of the voting shares of AC Technical are owned by a
      non-Canadian entity, such as by Laurus exercising its rights under the Share
      Pledge Agreement, the corporation would lose its status as a CCPC. Unless a
      company is a CCPC, it is not eligible for certain Canadian research and
      development tax credits. As a non-CCPC, the maximum Canadian research and
      development tax credits are 20% (for both Federal and Provincial Canadian taxes)
      of total eligible research and development expenditures. At this point, AC
      Technical is entitled to claim the maximum credits available to CCPCs of 41.5%
      (for both Federal and Provincial Canadian taxes) of the total eligible
      expenditures. During fiscal 2005, this extra 21.5% totaled approximately
      $100,000.




**Risk
      factors of Cancable**




*Loss
      of Key Clients*




Cancable
      currently derives a significant portion of its revenues from a limited number
      of
      clients. For the fiscal year ended November 30, 2004, Rogers Cable TV Limited
      accounted for approximately 79% of Cancable’s revenues. The services required by
      any one client can be limited by a number of factors, including industry
      consolidation, technological developments, economic slowdown and internal budget
      constraints. Cancable’s clients are not obligated to purchase additional
      services and most of Cancable’s contracts are cancelable on short notice. As a
      result of these factors, the volume of work performed for specific clients
      is
      likely to vary from period to period and a major client in one period may not
      use Cancable’s services to the same degree in a subsequent period. A temporary
      or permanent loss of any of Cancable’s key clients could seriously harm its
      business. If any cancelled contracts were not replaced with contracts from
      other
      clients, Cancable’s revenues might decrease and its profitability could be
      adversely affected.




*Decline
      in the Growth of the Cable and Telecom Industries*




The
      broadband communications industry has experienced a high rate of growth. If
      the
      rate of growth slows, and broadband service providers reduce their capital
      investments in upgrades or expansion of their systems, Cancable’s clients may
      not require the same volume of services from Cancable and it may not be able
      to
      execute its growth strategy. In that case, Cancable’s profitability and its
      prospects could be adversely affected.




*Decreased
      Reliance by Clients on Independent Contract Field Technical Support
      Suppliers*




Cancable’s
      success is dependent on the continued reliance by BSPs on independent companies
      like Cancable for performance of their installation, integration, fulfillment,
      and long- term maintenance and support services. If these providers elect to
      perform these services by themselves, its revenues may decline and Cancable’s
      business could be harmed.




17


*Consolidation
      of Broadband Service Providers*




The
      cable, telecommunications, satellite and wireless industries could experience
      significant consolidation activity. In addition, the consolidation of Cancable’s
      clients could have the effect of reducing the number of its current or potential
      clients, which could result in Cancable’s dependence on a smaller number of
      clients.




*Reduced
      Customer Demand Due to New Technologies*




Cancable’s
      industry is subject to rapid changes in technology. Existing technologies for
      transmission of video, voice and data are subject to potential displacement
      by
      various new technologies. New technologies may be developed that allow broadband
      service providers to deliver their services to consumers without a significant
      upgrade of their existing systems. Furthermore, new technologies may be
      developed that enable consumers to perform more easily their own installation
      and maintenance of the equipment required for the delivery of these services
      at
      their premises.




*Rapid
      Technological Changes*




Cancable
      will need to be able to enhance its current service offerings to keep pace
      with
      technological developments and to address increasingly sophisticated client
      needs. Cancable may not be successful in developing and marketing service
      offerings that respond to technological advances in a timely manner, and its
      services may not adequately or competitively address the needs of the changing
      marketplace. If Cancable is not successful in responding in a timely manner
      to
      technological changes, market conditions and industry developments, it may
      lose
      current clients or be unable to obtain new clients and its business, prospects,
      operating results and financial condition could suffer.




*Competition*




Cancable’s
      industry is fragmented and highly competitive. Accordingly, it cannot be assured
      of being able to maintain or enhance its competitive position. Historically,
      there have been relatively few barriers to entry into the markets in which
      Cancable operates. As a result, any organization that has adequate financial
      resources and access to technical expertise may become one of its competitors.
      Competition in the industry depends on a number of factors, including price.
      Cancable’s competitors may have lower cost structures and may, therefore, be
      able to provide their services at lower rates than it can. Cancable also faces
      competition from the in-house service organizations of its existing or
      prospective clients, which often employ personnel who perform some of the same
      types of services as it does. If Cancable is unable to maintain or enhance
      its
      competitive position, its business, prospects, operating results and financial
      condition may suffer materially.




*Ability
      To Attract and Retain Qualified Employees*




Cancable’s
      ability to provide high-quality services on a timely basis requires that it
      employs an adequate number of field technicians. Accordingly, its ability to
      meet the demand for its services will be limited by Cancable’s ability to
      attract, train and retain skilled personnel. Cancable’s industry is
      characterized by highly competitive labor markets and, like many of its
      competitors, historically Cancable has experienced high rates of employee
      turnover. Furthermore, its labor expenses may increase as a result of a shortage
      in the supply of skilled personnel and its efforts to improve its employee
      retention, which could adversely impact its profitability. Cancable cannot
      be
      certain that it will be able to improve its employee retention rates or maintain
      an adequate skilled labor force necessary to operate efficiently and to support
      its growth strategy. Failure to do so could impair its ability to operate
      efficiently and maintain its reputation for high quality service. This could
      also impair Cancable’s ability to retain current clients and attract new clients
      that could cause its financial performance to decline.




*Mismatch
      of Staffing Levels and Contract Requirements*




Since
      Cancable’s business is driven by large, and sometimes multi-year contracts,
      Cancable forecasts its personnel needs for future projected business. If
      Cancable increases its staffing levels in anticipation of a project of which
      is
      subsequently delayed, reduced or terminated, it may underutilize these
      additional personnel, which would increase its expenses and could harm its
      business.




*Senior
      Management Team Retention*




Cancable’s
      success is substantially dependent upon the retention of, and the continued
      performance by, its senior management and other key employees, including key
      employees of companies that it may acquire in the future. If any member of
      Cancable’s senior management team becomes unable or unwilling to participate in
      its business and operations and it is not able to replace them in a timely
      manner, its business could suffer. Cancable does not maintain "key man" life
      insurance policies on any member of its senior management or any of its key
      employees.




18


*Capital
      Requirements*




Cancable
      may require additional financing, including access to a bank operating line
      and
      lease financing for vehicles, to fully implement its business strategy in a
      timely manner. Cancable’s future requirements will depend on many factors,
      including continued progress in its client development and expansion programs.
      There can be no assurance that additional funding will be available or, if
      available, that it will be available on acceptable terms. If such funding is
      not
      available, Cancable may be forced to reduce or eliminate expenditures for
      further development of its proposed new initiatives and contemplated
      acquisitions. There can be no assurance that Cancable will be able raise
      additional capital if its capital resources are exhausted. Cancable’s ability to
      arrange such financing in the future will depend in part upon prevailing capital
      market conditions as well as its business performance. Failure to obtain such
      financing could delay implementation of Cancable’s strategy and could have a
      material adverse effect on its ability to successfully develop its business.
      Such financing, if available, could result in dilution to existing
      shareholders.




**Item
                2.**
            **Description
                of Property**




Our
      office is located at 2100 Forbes Street, Units 8-10, Whitby, Ontario, Canada
      L1N
      9T3. The premises, which were purchased in 2002, consist of approximately 5,900
      square feet on the ground floor and 2,200 square feet on the second floor.
      The
      Company believes that these offices are in good condition and are adequate
      for
      its present purposes and planned expansion.




**Item
                3.**
            **Legal
                Proceedings**




On
      August
      10, 2005, a former employee of A.C. Technical Systems Ltd., a subsidiary of
      the Company, filed an action seeking to recover approximately $40,000 in
      commissions for security services and projects sold before he left the
      Company in 2004.




On
      February 8, 2006, a supplier of A.C. Technical Systems Ltd., a subsidiary of
      the
      Company, filed an action seeking to recover approximately $10,000 for goods
      purchased during the year.




On
      February 16, 2006, a supplier of A.C. Technical Systems Ltd., a subsidiary
      of
      the Company, filed an action seeking to recover approximately $70,000 for goods
      purchased during the year.




On
      February 24, 2006, a supplier of A.C. Technical Systems Ltd., a subsidiary
      of
      the Company, filed an action seeking to recover approximately $10,000 for goods
      purchased during the year.




There
      are
      no other legal proceedings.




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




No
      matters were submitted to security holders during the fourth quarter of the
      fiscal year covered by this report.




**Item
                5.**
            **Market
                for the Registrant's Common Equity, Related Stockholder Matters and
                Issuer
                Purchases of Equity
                Securities**




**** The
      Company’s common stock is quoted at the present time on the OTC Bulletin Board
      under the symbol “CVAS”. At December 31, 2005, the bid price was $0.34 per
      share and the ask price was $0.45 per share. The security is subject to Section
      15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, commonly referred
      to as the penny stock rule. See “Risk Factors—Penny Stock.” The following table
      shows the range of bid prices per share of common stock on the OTC Bulletin
      Board, as reported by Pink Sheets LLC, for the periods indicated. These
      quotations represent prices between dealers, do not include retail mark-ups,
      mark-downs or commissions, and do not necessarily represent actual
      transactions.




Quarter
                ended:
            
            Low
                Bid Price
            
            High
                Bid PriceMarch
                31, 2004
            
            $
            .05
            
            $
            .05June
                30, 2004
            
            $
            .05
            
            $
            .05September
                30, 2004
            
            $
            .05
            
            $
            .05December
                31, 2004
            
            $
            .05
            
            $
            0.83March
                31, 2005
            
            $
            1.03
            
            $
            1.56June
                30, 2005
            
            $
            0.70
            
            $
            1.65September
                30, 2005
            
            $
            0.51
            
            $
            1.42December
                31, 2005
            
            $
            0.32
            
            $
            0.93


19


The
      Company’s securities may not qualify for listing on Nasdaq or any other national
      exchange. Even if the Company’s securities do qualify for listing, the Company
      may not be able to maintain the criteria necessary to ensure continued listing.
      The failure of the Company to qualify its securities or to meet the relevant
      maintenance criteria after such qualification may result in the discontinuance
      of the inclusion of the Company’s securities on a national exchange. In such
      event, trading, if any, in the Company’s securities may then continue in the
      non-Nasdaq, over-the-counter market so long as the Company continues to file
      periodic reports with the SEC and there remain sufficient qualified market
      makers in the Company’s securities. As a result, a stockholder may find it more
      difficult to dispose of, or to obtain accurate quotations as to the market
      value
      of, the Company’s securities.




As
      of
      December 31, 2005 there were 256 beneficial holders of the Company’s Common
      Stock. The Company has 32,101,716 issued and outstanding shares of Common Stock.




Our
      agreements with Laurus prohibit us from declaring or paying any dividends on
      our
      Common Stock.




**Item
                6.**
            **Management’s
                Discussion and Analysis**




**MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**




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




**Overview
      and Recent Developments**




On
      September 22, 2004, we incorporated a new Ontario company, A.C. Technical
      Acquisition Corp., in order to effect the acquisition of A.C. Technical Systems
      Ltd. Creative Vistas, Inc. owns 50 VFV shares (voting fixed value shares) and
      100 NVE shares (non-voting equity shares) of AC Acquisition. Brent Swanick
      owns
      the remaining 50 VFV shares. The total issued share capital was CDN$100 (CDN$1
      for each VFV share). Each VFV share is only entitled to a return of CDN$1 upon
      dissolution of AC Acquisition and has no share in AC Acquisition’s profits; AC
      Acquisition is a direct subsidiary of ours and our 100 NVE shares have the
      entire interest in the profits of AC Acquisition.




On
      September 29, 2004, pursuant to a Stock Purchase Agreement with The Burns Trust
      (our president is one of the beneficiaries of the trust), The Navaratnam Trust
      (our CEO is one of the beneficiaries of the trust) and A.C. Technical Systems
      Ltd., AC Acquisition acquired all of the issued and outstanding shares of AC
      Technical from The Burns Trust and The Navaratnam Trust for consideration
      consisting of promissory notes in the aggregate amount of $3,300,000. AC
      Technical became an indirect subsidiary of the Company and a wholly owned direct
      subsidiary of AC Acquisition.




On
      September 30, 2004 the shareholders (The Burns Trust and The Navaratnam Trust)
      of A.C. Technical Systems Ltd., an Ontario corporation, entered into a series
      of
      transactions to acquire a controlling stock interest in Creative Vistas. On
      September 30, 2004, pursuant to a Common Stock Purchase Agreement with Miller
      Capital Corporation and Tudor Investments LTD Profit Sharing Plan, Sayan
      Navaratnam, Dominic Burns, Randy Stern and Malar Trust, Inc. purchased
      28,500,000 shares of Creative Vistas, Inc.’s common stock from Miller Capital
      Corporation and Tudor Investments LTD Profit Sharing Plan for cash consideration
      of $300,000. Immediately prior to this purchase, there were 1,500,000 shares
      of
      Creative Vistas, Inc. common stock outstanding, which remained outstanding
      and
      were retained by the pre-existing stockholders of Creative Vistas,
      Inc.




20


On
      September 30, 2004, we entered into a series of agreements with Laurus Master
      Fund, Ltd., one of the selling shareholders, whereby we issued to Laurus (i)
      a
      secured convertible term note in the amount of $4.5 million, (ii) secured
      revolving notes in the aggregate maximum amount of $3 million, (iii) a related
      option to purchase up to 1,499,997 shares of our common stock at a price of
      two-thirds of a cent per share, and (iv) a seven year warrant to purchase up
      to
      2,250,000 shares of our common stock at a price of $1.15 per share. The loan
      is
      secured by all of our assets and the assets of our subsidiaries.




The
      Company loaned the proceeds of the term note and the revolving notes to AC
      Acquisition. AC Acquisition used the funds received to repay an aggregate of
      $1.8 million of the principal amount of the promissory notes and to pay
      transaction costs.




After
      the
      completion of the business acquisition and leveraged buyout transactions Sayan
      Navaratnam and Dominic Burns controlled 56% and 37% respectively of the common
      stock of the Company. Consequently, the acquisition of the controlling stock
      interest in the non-operating public shell corporation, Creative Vistas (the
      legal acquirer), by the shareholders of AC Technical, has been accounted for
      in
      accordance with EITF 88-16, “Basis in Leveraged Buyout
      Transactions”.




The
      above
      structure was set up for Canadian tax purposes. This allows AC Technical to
      maintain its status as a Canadian Controlled Private Corporation (“CCPC”), which
      makes it eligible for Canadian research and development tax credits. A CCPC
      is a
      corporation that is not controlled by a non-Canadian entity. Consequently Brent
      Swanick, who is Canadian, holds 50% of the voting shares and the Company holds
      50% of the voting shares and 100% of the non-voting equity shares so as to
      satisfy the requirement for CCPC tax treatment. To provide protection to the
      Company, there is a voting agreement between Mr. Swanick and Creative Vistas,
      Inc. granting Creative Vistas, Inc. the power at any time to cause Mr. Swanick
      to transfer his VFV shares to another person designated by Creative Vistas.
      The
      result is that under the Canadian tax law, control is not with a foreign entity
      and AC Technical Systems Ltd. is considered a CCPC. However, Creative Vistas,
      Inc. by virtue of its ability to cause the transfer at any time of the VFV
      shares, completely controls AC Technical. However, the provisions of the voting
      agreement do not affect AC Technical’s qualification as a CCPC entitled to
      certain tax credits.




On
      September 20, 2005, we incorporated a new Ontario Company, Iview Digital Video
      Solutions Inc. (“Iview DSI”). Iview DSI is to focus on providing video
      surveillance products and technologies to the market.




Subsequent
      to fiscal year ended 2005, the Company entered into an agreement, through its
      wholly owned newly formed Delaware subsidiary, Cancable Holding Corp.
      (“Holding”), to acquire all of the issued and outstanding shares of capital
      stock and any other equity interests of Cancable Inc., an Ontario corporation
      (“Cancable”). To finance the acquisition, also on December 31, 2005,
      subsidiaries of the Company entered into a loan agreement with Laurus Master
      Fund, Ltd. (“Laurus”) to which the Company became a guarantor.




The
      Company, Cancable, Holding, Covington Capital Corporation (“Covington”) and BMO
      Capital Corporation (“BMO”) entered into a Stock Purchase Agreement for the
      purchase by Holding of all the issued and outstanding shares of capital stock
      and any other equity interests of Cancable.




Cancable
      and Holding entered into a series of agreements with Laurus whereby Cancable
      issued to Laurus a secured term note (the “Note”) in the amount of Six Million
      Eight Hundred Sixty Five Thousand Dollars ($6,865,000) and Holding issued to
      Laurus a related option to purchase up to 49 shares of common stock of Holding
      (up to 49% of the outstanding shares of Holding) at a price of $0.01 per share
      (the “Option”). The loan is secured by all of the assets of the Company and its
      subsidiaries. The principal amount of the Note bears interest at the prime
      rate
      plus one and three quarters percent with a minimum rate of seven percent.
      Cancable and Holding have granted Laurus a right of first refusal with respect
      to any debt or equity financings for a period of 180 days after
      closing.




On
      February 13, 2006, the Company and its subsidiaries, Iview Holding Corp., a
      newly formed Delaware corporation and direct subsidiary of the Company
      (“Holding”), and Iview Digital Video Solutions Inc. (“Iview”), entered into a
      series of agreements with Laurus Master Fund Ltd. (“Laurus”) pursuant to a
      refinancing transaction whereby the Company issued to Laurus a secured term
      note
      (the “Company Note”) in the amount of Eight Million Two Hundred Fifty Thousand
      Dollars ($8,250,000), Iview issued to Laurus a secured term note (the “Iview
      Note”) in the amount of Two Million Dollars ($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 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:
      A.C.
      Technical Systems Ltd., Creative Vistas Acquisition Corp., Holding, Iview,
      Cancable Holding Corp., Cancable and Cancable, Inc.




21







The
      current corporate structure is as follows:







**Results
      of Operations**




**Comparison
      of Year Ended December 31, 2005**


**to
      Year Ended December 31, 2004**




No
      financial statements are presented for the shell company, Creative Vistas,
      Inc.,
      prior to the business acquisition and leverage buyout transactions because,
      prior to the September 30, 2004 transaction, its assets and results were
      immaterial. Prior to September 30, 2004 Creative Vistas refers to the shell
      company. Additionally, we did not include any discussion relating to the
      Companies acquired or formed after the fiscal year ended December 31, 2005.
      As a
      result, the financial statements of Cancable Holding Corp., Cancable Inc.,
      Cancable, Inc. and Iview Holding Corp. were not included in the accompany
      consolidated financial statements for the year ended December 31, 2005 and
      2004.




The
      term
“the Company” refers to the post business acquisition and leverage buyout
      consolidated entity.




Since
      our
      business tends to be seasonal, most of the jobs are usually processed by us
      in
      the first or the fourth quarter of the calendar year. For example, the Canadian
      federal government has a March year end, and as a result, we experience an
      increase in government contracts in the first quarter of the calendar year.




For
      purposes of this “Management’s Discussion and Analysis or Plan of Operation” the
      numbers in the financial statements covering the successor period from September
      30, 2004 to December 31, 2004 were combined with the predecessor period from
      January 1, 2004 to September 29, 2004 to reflect the entire fiscal year ended
      December 31, 2004.




Sales :
      Sales
      for fiscal 2005 totaled $8,718,000 representing an increase of 3.1% from the
      2004 fiscal year. The increase represents a 28.2% increase in service revenue
      offset in part by a 0.3% decrease in contract revenue. Our contract revenue
      decreased by 0.3%, which was mainly due to project and constructions delays.
      In
      addition, contract revenue from one of our major customers decreased from
      $1,800,000 in 2004 to $559,000 in 2005. Fiscal 2004’s revenue was higher as this
      customer had a greater number of stores that required security systems and
      the
      numbers of contracts received from this customer were reduced in 2005. The
      decrease in revenue of this customer was offset by the increase in number of
      new
      contracts received during the year. The increase in service revenue primarily
      represents the cumulative effect of the growth in service 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.




22


Cost
      of Goods Sold :
      Cost of
      goods sold as a percentage of revenue for the twelve months ended
      December 31, 2005 decreased to $5,831,600 or 66.9% of revenues from
      $5,883,800 or 69.6% of revenues, for the twelve months ended December 31,
      2004. The decrease was mainly due to the decrease in material cost to $3,897,900
      or 45.7% of revenues in fiscal 2005 from $4,082,900 or 48.5% in fiscal 2004. The
      decrease in the cost of materials was mainly due to a decrease in contract
      revenue for which we required material. The percentage decrease in material
      costs was mainly due to the increase in service revenue for which we required
      less material. As a result, our gross margin increased. On the other hand,
      the
      labor and subcontractor cost decreased to $1,443,600 or 16.6% of revenues for
      fiscal 2005 from $1,756,400 or 20.9% of revenues for fiscal 2004. This reduction
      was attributable to our efficient integration/engineering capabilities,
      different product mix, more efficient labor utilization.




Project,
      Selling, General and Administrative Expenses :
      Projects, selling, general and administrative expenses for the twelve months
      ended December 31, 2005 increased to $4,032,700 or 46.2% of revenues for fiscal
      2004 from $4,065,000 or 48.1% of revenues for fiscal 2004. The increase was
      mainly due to the following:




Project
      cost was $1,228,700 or 14.1% of revenue for fiscal 2005 compared to $1,403,000
      or 16.6% for the same period of fiscal year 2004. Balance mainly includes the
      salaries and benefits of indirect staff and consulting fees amounting to
      $697,100 for fiscal 2005 compared to $771,000 for fiscal 2004. The decrease
      was
      mainly due to the decrease in number of headcount. Leasing cost of the
      automobile was approximately $167,900 for fiscal 2005 compared to $209,300
      for
      fiscal 2004. Automobile insurance was decreased to $54,500 in fiscal 2005 from
      $74,000 in fiscal 2004. The decrease was mainly due to the decrease in number
      of
      vehicles used by the Company. Travel and gas expenses were $239,000 for fiscal
      2005 compared to $199,800 for fiscal 2004. The increase was mainly due to the
      increase in travel by the staff.




Selling
      expenses were $743,000 or 8.5% of revenues for fiscal 2005 compared to
      $1,002,900 or 11.9% of revenues for fiscal 2004. Balance for the twelve months
      period ended December 31, 2005 is mainly comprised of salaries, commission
      and
      consulting fees to salespersons and the president of $589,300 compared to
      $726,300 for fiscal 2004. Decrease in the balance was mainly due to the decrease
      in number of salespersons from 7 as December 31, 2004 to 5 as at December 31,
      2005. The advertising and promotion expenses were $62,900 for fiscal 2005
      compared to $136,700 for fiscal 2004. The decrease was mainly due to a better
      control of the expenses.




General
      and administrative cost was $2,061,000 or 23.6% of revenues for fiscal 2005
      compared to $1,659,600 or 19.6% for fiscal 2004. The balance for fiscal 2005
      is
      comprised mainly of salaries and benefits to administrative staff of $507,600
      compared to $507,200 for fiscal 2004. There was no material fluctuation between
      two fiscal years. Additionally, the research and development expense has
      increased by approximately for $100,000 for the current year. The professional
      fees were $380,000 for fiscal 2005 compared to $287,000 for fiscal 2004. The
      increase in professional fees was mainly due to the registration statements
      and
      other corporate matters. The investor relations fees were $366,000 compared
      to
      $27,000 for fiscal 2004.




Operating
      Income/Loss :
      The
      Company has a higher gross margin of 33% for fiscal 2005 compared to 30% for
      fiscal 2004. Our losses were mainly due to the large professional fees for
      the
      registration statements and the quarterly report and investor relations
      expenses.




Interest
      and Other Expenses or income :
      Net
      interest and other income for fiscal 2005 was $1,973,800 or 22.6% of revenues
      compared to net interest and other expenses $2,673,000 or 31.6% of the revenues
      for the same period of fiscal 2004. Balance is primarily comprised of the
      amortization of deferred charges amounting to $450,500 for fiscal 2005 compared
      to $125,400 for fiscal 2004. In addition,  total cash interest on
      convertible term notes and other notes payable was $668,000 for fiscal 2005
      compared to $133,400 for fiscal 2004. The increase was mainly due to only three
      months interest in 2004 on term loans from Laurus, which started on September
      30, 2004.  Also, there was non-cash interest related to amortization of
      embedded derivatives of approximately $1,600,000 included in interest for fiscal
      2005. In addition, there were penalties in the amount of $137,000 to Laurus
      for failure of the Company to cause its registration statement registering
      the
      shares to be declared effective by the SEC on the required date. Laurus waived
      any liquated damages due and payable to Laurus and the Company issued 313,000
      warrants to Laurus. The warrants were recorded at fair value by using the
      Black-Scholes option pricing model. (see Note 12 and Note 16). Also, there
      was
      net income of the movement of derivative financial instruments of $5,373,200
      for
      fiscal 2005 compared to net expenses of $2,414,700 for fiscal 2004. The Company
      also wrote off the goodwill amounted to $503,900 in the current fiscal
      year.




23


Income
      taxes :
      There
      is no income tax provision for fiscal year 2005 which was mainly due to the
      Company’s losses for the period. 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
      income for fiscal 2005 was $827,600 compared to net loss of $4,014,800 for
      fiscal 2004. The income was mainly due to remeasurement of derivative
      instruments of $5,373,200 for fiscal 2005 and there were net expenses of
      $2,414,700 for fiscal 2004. The increase in income was offset by the
      amortization of deferred charges amounted to $450,500 compared to $125,400
      for
      fiscal 2004. In addition, there were professional and investor relations
      expenses incurred due to public company expenses and also the additional
      interest expenses on long term debts.




**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 December 31, 2005, we had $532,700 in cash. We believe that cash
      from operations and our credit facilities with Laurus Master Funds, Ltd. will
      continue to be adequate to satisfy the ongoing working capital needs of the
      Company. The balance available under credit facilities was $329,000 as at
      December 31, 2005. During fiscal year 2006, our primary objectives in managing
      liquidity and cash flows will be to ensure financial flexibility to support
      growth and entry into new markets and improve inventory management and to
      accelerate the collection of accounts receivable.




Net
      Cash Used in Operating Activities .
      Net
      cash used in operating activities amounted to $1,096,000 for fiscal 2005. The
      changes in operating assets and liabilities resulted in net cash provided of
      $187,300, which included a $25,800 increase in accounts receivable, a $9,500
      increase in inventory, a $8,500 increase in prepaid expenses, a $561,700
      increase in accounts payable, a $157,000 increase in income taxes recoverable
      and a $173,600 decrease in deferred revenue.




Compared
      the balance sheet as at December 31, 2005 to December 31, 2004




Accounts
      Receivable




Our
      accounts receivable decreased to $2,620,000 as at December 31, 2005 from
      $2,641,000 as at December 31, 2004. Approximately 60% of the accounts receivable
      outstanding at December 31, 2005 were less than 90 days old. The Company will
      continue to accelerate the collection of accounts receivable in order to improve
      the cash flow of the Company.




Inventory




Inventory
      on hand at
      December 31, 2005 increased $9,500 compared to the balance as at
      December 31, 2004. The level of inventory remains consistent with the
      balance as at December 31, 2004 which was mainly due to the
      improvement of
      inventory control and keeping minimum levels of inventory.




Accounts
      Payable and Accrued Liabilities




Accounts
      payable and accrued liabilities increased approximately by $561,700 compared
      to
      the balance as at December 31, 2004 which was mainly due to the increase in
      purchases of material, in the last twelve months and the timing of payments
      to
      our suppliers. Total trade payable as at December 31, 2005 increased by
      approximately $361,000 compared to the balance as at December 31, 2004 and
      the
      accrued liabilities increased by approximately $187,000. The increase in accrued
      liabilities was mainly due to the increase in accrual of professional fees,
      interest and payroll with the amount of $50,000, $40,000 and $30,000
      respectively. The increase in accrued liabilities was mainly due to the timing
      of payments.




Deferred
      Revenue




Deferred
      revenue decreased by $173,600 at December 31, 2005 compared to the balance
      as at
      December 31, 2004. This increase was mainly due to the timing of payments by
      our
      customers. Deferred revenue primarily relates to payments associated with the
      contracts where revenue is recognized on a percentage of completion basis.
      (See
      summary of accounting policy in our condensed consolidated financial
      statements).




Incomes
      Taxes Recoverable




The
      income taxes recoverable were mainly due to the expected refund from losses
      carried back to prior years.




24


Net
      Cash Used in Investing Activities .
      Net
      cash used in investing activities was $125,000 for the twelve months ended
      December 31, 2005 compared to $1,800,000 for the twelve months ended December
      31, 2004. The balance for the twelve months ended 2005 was mainly due to the
      note receivable to dataBahn of $125,000. Last year balance was mainly due to
      the
      acquisition of A.C. Technical Systems Ltd. for cash payment of
      $1,800,000.




Net
      Cash Provided From Financing Activities .
      Net
      cash provided from financing activities was $1,486,800 for the twelve months
      ended December 31, 2005 compared to net cash provided of $4,162,700 for the
      twelve months ended December 31, 2005. The balance for the twelve months ended
      December 31, 2005 was mainly due to net cash received from the convertible
      term
      note financed from Laurus. Last year balance was higher as the net cash received
      from the convertible term note financed from Laurus was approximately
      $4,000,000.




We
      plan
      to adopt an incentive stock option plan in the second quarter of fiscal 2005.
      The terms of the inventive stock option plan are not yet known.




Our
      capital req uirements
      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 additional funding through a
      series of agreements entered with Laurus (see details on Note 1 and 8 in the
      condensed consolidated financial statements). If Laurus converts the term note
      and/or the revolving notes into shares of the Company’s common stock, the
      Company may avoid or reduce any cash payment required for principal and interest
      payable. As a result, it will improve our cash flow. However, such conversion
      by
      Laurus will dilute the existing shareholders.




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
      into the 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. The Company has introduced cost
      cutting initiatives within the Administration and Project and Selling
      departments to improve efficiency within the Company and also improve cash
      flow.
      The Company has also increased its rates for service by 20 percent to improve
      gross margins. This is in line with our competitors. The Company also expects
      to
      see the benefits of its research and development efforts within the next 12
      months as it starts to introduce its own line of customized products to the
      industry. These products and technologies are expected to improve gross margins.
      The Company believes that it will be eligible for research and development
      tax
      credits at year end for its research and development efforts during the year
      and
      these are additional sources of cash flow for the Company. The Company is also
      negotiating longer credit terms with its suppliers from 45 days to 60 to 75
      days. Also, if Laurus chooses to convert its term note and interest into common
      stock it would improve the Company’s cash position.




***Recent
      Accounting Pronouncements*** -




In
      November 2004, the Financial Accounting Standards Board issued SFAS No. 151,
      “Inventory Costs-an Amendment of ARB No. 43, Chapter 4”. The standard adopts the
      view related to inventories that abnormal amounts of idle capacity and spoilage
      costs should be excluded from the cost of inventory and expensed when incurred.
      Additionally, the meaning of the term ‘normal capacity’ was clarified. Based on
      management’s evaluation, the adoption is not expected to have a material effect
      on the consolidated financial statements.




In
      December 2004, the Financial Accounting Standard Board issued FASB Statement
      No.
      123R (Revised), “Share-Based Payment which is a revision of FASB Statement No.
      123, Accounting for Stock-Based Compensation”. Statement No. 123(R) supersedes
      APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB
      Statement No. 95, Statement of Cash Flows. Statement No. 123(R ) requires all
      share-based payments to employees, including grants of employee stock options,
      to be recognized in the financial statements based on their fair values and,
      for
      small business issuers, is effective at the beginning of the first annual period
      of the registrant’s first fiscal year that begins after December 15, 2005.
      During the year, the Company has not issued any stock-based awards to
      employees.




In
      September 2004, the Financial Accounting Standard Board issued EITF 04-8, “The
      Effect of Contingently Convertible Instruments on Diluted Earnings per Share”.
      This Issue addresses when contingently convertible instruments should be
      included in diluted earnings per share. The Task Force reached a consensus
      that
      contingently convertible instruments should be included in diluted earnings
      per
      share (if dilutive) regardless of whether the market price trigger has been
      met.
      The Task Force also agreed that the consensus should be applied to instruments
      that have multiple contingencies if one of the contingencies is a market price
      trigger and the instrument is convertible or settleable in shares based on
      meeting a market condition. Based on management’s evaluation of EITF 04-8, the
      adoption did not have a significant effect on the consolidated financial
      statements.




25


In
      December 2004, the FASB issued SFAS 153 "Exchanges of Non monetary Assets -
      an
      amendment of APB Opinion No. 29". This Statement amended APB Opinion 29 to
      eliminate the exception for non-monetary exchanges of similar productive assets
      and replaces it with a general exception for exchanges of non-monetary assets
      that do not have commercial substance. A non- monetary exchange has commercial
      substance if the future cash flows of the entity are expected to change
      significantly as a result of the exchange. The adoption of this Standard is
      not
      expected to have any material impact on the Company's financial position,
      results of operations or cash flows.




In
      March
      2005, the Securities and Exchange Commission (SEC) issued Staff Accounting
      Bulletin No.107 (SAB 107) which provides guidance regarding the interaction
      of
      SFAS 123(R) and certain SEC rules and regulations. The new guidance includes
      the
      SEC's view on the valuation of share-based payment arrangements for public
      companies and may simplify some of SFAS 123(R)’s implementation challenges for
      registrants and enhance the information investors receive.




In
      March
      2005, the FASB issued FIN 47, Accounting for Conditional Asset Retirement
      Obligations, which clarifies that the term 'conditional asset retirement
      obligation’ as used in SFAS 143, Accounting for Asset Retirement Obligations,
      refers to a legal obligation to perform an asset retirement activity in which
      the timing and/or method of settlement are conditional on a future event that
      may or may not be within the control of the entity. FIN 47 requires an entity
      to
      recognize a liability for the fair value of a conditional asset retirement
      obligation if the fair value can be reasonably estimated. FIN 47 is effective
      no
      later than the end of the fiscal year ending after December 15, 2005. The
      Company does not believe that FIN 47 will have a material impact on its
      financial position or results from operations.




In
      August
      2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections. This
      statement applies to all voluntary changes in accounting principle and to
      changes required by an accounting pronouncement if the pronouncement does not
      include specific transition provisions, and it changes the requirements for
      accounting for and reporting them. Unless it is impractical, the statement
      requires retrospective application of the changes to prior periods’ financial
      statements. This statement is effective for accounting changes and correction
      of
      errors made in fiscal years beginning after December 15, 2005.




SFAS
      155
      - ‘Accounting for Certain Hybrid Financial Instruments—an amendment of FASB
      Statements No. 133 and 140’





This
      Statement, issued in February 2006, amends FASB Statements No. 133, Accounting
      for Derivative Instruments and Hedging Activities, and No. 140, Accounting
      for
      Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.
      This Statement resolves issues addressed in Statement 133 Implementation Issue
      No. D1, “Application of Statement 133 to Beneficial Interests in Securitized
      Financial Assets.”





This
      Statement:


a.
            Permits
                fair value remeasurement for any hybrid financial instrument that
                contains
                an embedded derivative that otherwise would require
                bifurcation


b.
            Clarifies
                which interest-only strips and principal-only strips are not subject
                to
                the requirements of Statement 133


c.
            Establishes
                a requirement to evaluate interests in securitized financial assets
                to
                identify interests that are freestanding derivatives or that are
                hybrid
                financial instruments that contain an embedded derivative requiring
                bifurcation


d.
            Clarifies
                that concentrations of credit risk in the form of subordination are
                not
                embedded derivatives


e.
            Amends
                Statement 140 to eliminate the prohibition on a qualifying special-purpose
                entity from holding a derivative financial instrument that pertains
                to a
                beneficial interest other than another derivative financial
                instrument.





This
      Statement is effective for all financial instruments acquired or issued after
      the beginning of our first fiscal year that begins after September 15,
      2006.





26


The
      fair
      value election provided for in paragraph 4(c) of this Statement may also be
      applied upon adoption of this Statement for hybrid financial instruments that
      had been bifurcated under paragraph 12 of Statement 133 prior to the adoption
      of
      this Statement. Earlier adoption is permitted as of the beginning of our fiscal
      year, provided we have not yet issued financial statements, including financial
      statements for any interim period, for that fiscal year. Provisions of this
      Statement may be applied to instruments that we hold at the date of adoption
      on
      an instrument-by-instrument basis.





The
      Company is currently reviewing the effects of adoption of this statement but
      it
      is not expected to have a material impact on our financial
      statements.





SFAS
      156
      - ‘Accounting for Servicing of Financial Assets—an amendment of FASB Statement
      No. 140’


This
      Statement, issued in March 2006, amends FASB Statement No. 140, Accounting
      for
      Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
      with respect to the accounting for separately recognized servicing assets and
      servicing liabilities. This Statement:





1.
            Requires
                an entity to recognize a servicing asset or servicing liability each
                time
                it undertakes an obligation to service a financial asset by entering
                into
                a servicing contract in certain
                situations.


2.
            Requires
                all separately recognized servicing assets and servicing liabilities
                to be
                initially measured at fair value, if
                practicable.


3.
            Permits
                an entity to choose either the amortization method or the fair value
                measurement method for each class of separately recognized servicing
                assets and servicing liabilities.


4.
            At
                its initial adoption, permits a one-time reclassification of
                available-for-sale securities to trading securities by entities with
                recognized servicing rights, without calling into question the treatment
                of other available-for-sale securities under Statement 115, provided
                that
                the available-for-sale securities are identified in some manner as
                offsetting the entity’s exposure to changes in fair value of servicing
                assets or servicing liabilities that a servicer elects to subsequently
                measure at fair value.


5.
            Requires
                separate presentation of servicing assets and servicing liabilities
                subsequently measured at fair value in the statement of financial
                position
                and additional disclosures for all separately recognized servicing
                assets
                and servicing liabilities.





Adoption
      of this Statement is required as of the beginning of the first fiscal year
      that
      begins after September 15, 2006. The adoption of this statement is not expected
      to have a material impact on our financial statements.







**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 instrument.




Accounts
      receivable allowances are determined using a combination of historical
      experience, current information and management judgment. Actual collections
      may
      differ from our estimates. A 10% increase in the accounts receivable allowance
      would increase bad debt expense by $20,000.




Goodwill
      represents the excess of cost over the net tangible and identifiable assets
      acquired in business combinations and are stated at cost. Goodwill and
      intangibles with indefinite lives are not amortized but tested for impairment
      no
      less frequently than annually. Impairment is measured by comparing the carrying
      value to fair value using quoted market prices, a discounted cash flow model,
      or
      a combination of both.




We
      derive
      revenues from contract revenue and services revenue, which include assistance
      in
      implementation, integration, customization, maintenance, training and
      consulting. We recognize revenue for contract and services in accordance with
      Statement of Position (SOP) 81-1, “Accounting for Certain Construction Type and
      Certain Production Type Contracts,” and SEC Staff Accounting Bulletin (SAB) 104,
“Revenue Recognition,” and EITF 00-21 Accounting for Revenue Arrangements with
      Multiple Deliverables. Contract revenue consists of fees generated from
      installation of security systems. Services revenue consists of fees generated
      by
      providing monitoring services, preventive maintenance and technical support,
      product maintenance and upgrades. Monitoring services and preventive maintenance
      and technical support are generally provided under contracts for terms varying
      from one to six years. A customer typically prepays monitoring services,
      preventive maintenance and technical support fees for an initial period. The
      related revenue is deferred and generally recognized over the term of such
      initial period. Rates for product maintenance and upgrades are generally
      provided under time and material contracts. Revenue for these services is
      recognized in the period in which the services are provided.




27


We
      record
      inventory at the lower of cost and net realizable value. Cost is determined
      on a
      first-in, first-out basis. We write down our inventory for obsolescence, and
      excess inventories based on assumptions about future demand and market
      conditions. The business environment in which we operate is subject to customer
      demand. If actual market conditions are less favorable than those estimated,
      additional material inventory write-down may be required. A 10% increase in
      inventory reserve would increase expenses by $0.1 million.




Income
      taxes are calculated based on the expected treatment of transactions recorded
      in
      the consolidated financial statements. In determining current and deferred
      components of income taxes, we interpret tax legislation and make assumptions
      about the timing of the reversal of deferred tax assets and liabilities. If
      our
      interpretations differ from those of tax authorities or if the timing of
      reversals is not as anticipated, the provision for income taxes could increase
      or decrease in future periods.




The
      Company reviews the terms of convertible debt and equity instruments we issue
      to
      determine whether there are embedded derivative instruments, including the
      embedded conversion option, that are required to be bifurcated and accounted
      for
      separately as a derivative financial instrument. When the economic
      characteristic and risks of any embedded derivative instrument are not "clearly
      and closely" related to the risks of the host instrument, the embedded
      derivative instrument is generally required to be bifurcated and accounted
      for
      separately. If the convertible instrument is debt, or has debt-like
      characteristics, the risks associated with the embedded conversion option are
      not "clearly and closely" related to that debt host instrument. The conversion
      option embedded has the risks associated with an equity instrument, not a debt
      instrument, because its value is related to the value of our common stock.
      Nonetheless, if the host instrument is considered to be "conventional
      convertible debt", bifurcation of the embedded conversion option is generally
      not required. However, if the instrument is not considered to be conventional
      convertible debt, bifurcation of the embedded conversion option may be required
      in certain circumstances. Generally, where the ability to physical or net-share
      settle the conversion option is deemed to be not within the control of the
      company, the embedded conversion option is required to be bifurcated and
      accounted for as a derivative financial instrument liability.




In
      connection with the sale of convertible debt and equity instruments, we may
      also
      issue freestanding options or warrants. Additionally, we may issue options
      or
      warrants to non-employees in connection with consulting or other services they
      provide. Although the terms of the options and warrants may not provide for
      net-cash settlement, in certain circumstances, physical or net-share settlement
      is deemed to not be within the control of the company and, accordingly, we
      are
      required to account for these freestanding options and warrants as derivative
      financial instrument liabilities, rather than as equity.




Derivative
      financial instruments are initially measured at their fair value. For derivative
      financial instruments that are accounted for as liabilities, the derivative
      instrument is initially recorded at its fair value and is then re-valued at
      each
      reporting date, with changes in the fair value reported as charges or credits
      to
      income. For option-based derivative financial instruments, we use the
      Black-Scholes option pricing model to value the derivative
      instruments.




In
      circumstances where the embedded conversion option in a convertible instrument
      is required to be bifurcated and there are also other embedded derivative
      instruments in the convertible instrument that are required to be bifurcated,
      the bifurcated derivative instruments are accounted for as a single, compound
      derivative instrument.




If
      freestanding options or warrants were issued and will be accounted for as
      derivative instrument liabilities (rather than as equity), the proceeds
      are first allocated to the fair value of those instruments. When the
      embedded derivative instrument is to be bifurcated and accounted for as a
      liability, the remaining proceeds received are then allocated to the fair
      value of the bifurcated derivative instrument. The remaining proceeds, if any,
      are then allocated to the convertible instrument itself, usually resulting
      in
      that instrument being recorded at a discount from its face amount. In
      circumstances where a freestanding derivative instrument is to be accounted
      for
      as an equity instrument, the proceeds are allocated between the convertible
      instrument and the derivative equity instrument, based on their relative fair
      values.




28


The
      discount from the face value of the convertible debt instrument is amortized
      over the life of the instrument through periodic charges to income, using the
      effective interest method.




The
      classification of derivative instruments, including whether such instruments
      should be recorded as liabilities or as equity, is re-assessed at the end of
      each reporting period. Derivative instrument liabilities are classified in
      the
      balance sheet as current or non-current based on whether or not net-cash
      settlement of the derivative instrument is expected within 12 months of the
      balance sheet date.




**Commitments**




The
      Company has entered into contracts for certain consulting ser v ices
      providing for monthly payments and is required to repay the principal of its
      convertible notes and promissory notes due to Laurus and other parties. In
      addition, the Company has also entered into an operating lease for its vehicles,
      computer and office equipment. The total minimum annual payments for the next
      five years are as follows:




**Payments
                due by****Period****Total**
            
            **2006**
            
            **2007**
            
            **2008**
            
            **2009**
            
            **2010**
            
            **Thereafter****Convertible
                notes**
            
            $
            4,500,000
            
            $
            1,100,000
            
            $
            3,400,000
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -**Other
                Notes Payable**
            
            
            172,414
            
            
            143,678
            
            
            28,736
            
            
            -
            
            
            -
            
            
            -
            
            
            -**Note
                payable to related parties**
            
            
            1,500,000
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,500,000**Operating
                leases**
            
            
            88,000
            
            
            75,000
            
            
            13,000
            
            
            -
            
            
            -
            
            
            -
            
            
            -**Commitments
                related to consulting agreements**
            
            
            2,509,600
            
            
            547,900
            
            
            598,600
            
            
            652,200
            
            
            710,900
            
            
            -
            
            
            -$
            8,770,014
            
            $
            1,866,578
            
            $
            4,040,336
            
            $
            652,200
            
            $
            710,900
            
            $
            -
            
            $
            1,500,000




The
      figures in the above table do not include interest costs.


29




**Item
                7.**
            **Financial
                Statements**




**INDEX
      TO FINANCIAL STATEMENTS**




**Creative
      Vistas, Inc.**




**Consolidated
      Financial Statements**




**For
      the years ended December 31, 2005 and 2004**




Report
                of Independent Registered Public Accounting Firm
            F-1Report
                of Independent Registered Public Accounting Firm
            F-2Report
                of Independent Registered Public Accounting Firm
            F-3Balance
                Sheet
            F-4Statement
                of Stockholders’ Equity (Deficiency) and Other Comprehensive Income
                (loss)
            F-6Statements
                of Operations
            F-7Statements
                of Cash Flows
            F-8Notes
                to Financial Statements
            F-10











30










**Report
      of Independent Registered Public Accounting Firm**







**To
      the Board of Directors and Shareholders**


**of
      Creative Vistas, Inc.**







We
      have
      audited the accompanying consolidated balance sheet of Creative Vistas, Inc.
      and
      its subsidiaries (referred to herein as the “Successor” of the “Company”) as of
      December 31, 2004 and the related consolidated statements of operations,
      stockholders’ equity (deficiency) and other comprehensive income and cash flows
      for the period from September 30, 2004 to December 31, 2004. These financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audit.




We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform an audit to obtain reasonable assurance whether the financial
      statements are free of material misstatement. An audit includes consideration
      of
      internal control over financial reporting as a basis for designing audit
      procedures that are appropriate in the circumstances, but not for the purpose
      of
      expressing an opinion on the effectiveness of the Company’s internal control
      over financial reporting. Accordingly, we express no such opinion. An audit
      also
      includes examining on a test basis, evidence supporting the amounts and
      disclosures in the financial statements, assessing the accounting principles
      used and significant estimates made by management, as well as evaluating the
      overall presentation of the financial statements. We believe that our audit
      provides a reasonable basis for our opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Creative Vistas, Inc. and its
      subsidiaries as of December 31, 2004 and the results of their operations and
      their cash flows for the period from September 30, 2004 to December 31, 2004
      in
      conformity with accounting principles generally accepted in the United States
      of
      America.




As
      described in Note 2b to the financial statements, the Company restated its
      consolidated financial statements for the period ended December 31, 2004 to
      reflect a change in the accounting for the convertible term note and warrants
      issued in connection with its financing transaction.




***(signed)
      BDO Dunwoody LLP***




Chartered
      Accountants




Toronto,
      Ontario


March
      9,
      2005 (except
      for the impact of the restatement described in Note 2b which is as at April
      7,
      2006)


F-1








**Report
      of Independent Registered Public Accounting Firm**










**To
      the Board of Directors and Shareholders**


**of
      Creative Vistas, Inc.**






We
      have
      audited the accompanying statement of operations of Creative Vistas, Inc.
      (referred to herein as the “Predecessor”) for the period from January 1, 2004 to
      September 29, 2004 and the related statements of stockholders’ equity
      (deficiency) and other comprehensive income and cash flows. These financial
      statements are the responsibility of the Predecessor’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.




We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform an audit to obtain reasonable assurance whether the financial
      statements are free of material misstatement. An audit includes consideration
      of
      internal control over financial reporting as a basis for designing audit
      procedures that are appropriate in the circumstances, but not for the purpose
      of
      expressing an opinion on the effectiveness of the Predecessor’s internal control
      over financial reporting. Accordingly, we express no such opinion. An audit
      also
      includes examining on a test basis, evidence supporting the amounts and
      disclosures in the financial statements, assessing the accounting principles
      used and significant estimates made by management, as well as evaluating the
      overall presentation of the financial statements. We believe that our audits
      provide a reasonable basis for our opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the results of the Predecessor operations and its cash flows
      for the period from January 1, 2004 to September 29, 2004 in conformity with
      accounting principles generally accepted in the United States of
      America.




As
      discussed in Note 2a to the financial statements, the Predecessor adopted
      Statement of Financial Accounting Standards No. 142, “Goodwill and Other
      Intangible Assets,” effective January 1, 2002.







***(signed)
      BDO Dunwoody LLP***




Chartered
      Accountants




Toronto,
      Ontario


February
      24, 2005




F-2




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




Stockholders
      and Board of Directors




**Creative
      Vistas, Inc**




We
      have
      audited the accompanying consolidated balance sheet of Creative Vistas, Inc.
      as
      of December 31, 2005, and the related statements of operations, stockholders’
deficiency and other comprehensive income (loss) and cash flows for the year
      ended December 31, 2005. These financial statements are the responsibility
      of
      the Company's management. Our responsibility is to express an opinion on these
      financial statements based on our audit.




We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates by management, as well as evaluating the overall financial
      statement presentation. We believe that our audit provides a reasonable basis
      for our opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Creative Vistas, Inc. as of
      December 31, 2005, and results of its operations and its cash flows for the
      year
      ended December 31, 2005, in conformity with accounting principles generally
      accepted in the United States of America.




The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 1 to the financial
      statements, the Company has suffered recurring losses from operations and has
      working capital and shareholder deficiencies. These factors raise substantial
      doubt about the Company’s ability to continue as a going concern. Management’s
      plans in regard to this matter are also discussed in Note 1. The financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.






/s/
      Stark
      Winter Schenkein & Co., LLP




Denver,
      Colorado




March
      31,
      2006


F-3




**Creative
                Vistas, Inc.****Consolidated
                Balance Sheets****December
                31**
            
            **2005**
            
            **2004****Assets****Current
                Assets**Cash
                and bank balances
            
            **$**
            **532,694**
            
            $
            377,677Accounts
                receivable, net of allowancefor
                doubtful accounts $172,414 (2004-$33,333)
            
            
            **2,620,091**
            
            
            2,640,973Income
                tax recoverable
            
            
            **501,966**
            
            
            326,834Inventory
            
            
            **580,350**
            
            
            551,477Prepaid
                expenses
            
            
            **31,354**
            
            
            120,990Note
                receivable
            
            
            **93,744**
            
            
            -Due
                from related parties
            
            
            **2,203**
            
            
            2,129**Total
                current assets**
            
            
            **4,362,402**
            
            
            4,020,080**Property
                and equipment, net of depreciation**
            
            
            **804,907**
            
            
            822,660**Note
                receivable**
            
            
            **31,256**
            
            
            -**Goodwill**
            
            
            **-**
            
            
            503,900**Restricted
                cash**
            
            
            **-**
            
            
            1,250,000**Deferred
                financing costs, net**
            
            
            **600,479**
            
            
            1,050,986**Customer
                list**
            
            
            **3,952**
            
            
            8,334**Deferred
                income taxes**
            
            
            **13,779**
            
            
            34,640**$**
            **5,816,775**
            
            $
            7,690,600**Liabilities
                and Shareholders' Equity (Deficiency)****Current
                Liabilities**Revolving
                credit facilities
            
            **$**
            **2,128,435**
            
            $
            2,459,576Accounts
                payable
            
            
            **1,779,918**
            
            
            1,418,297Accrued
                salaries and benefits
            
            
            **91,518**
            
            
            142,070Accrued
                commodity taxes
            
            
            **172,371**
            
            
            130,217Accrued
                liabilities
            
            
            **457,246**
            
            
            167,104Deferred
                income
            
            
            **15,875**
            
            
            190,388Deferred
                income taxes
            
            
            **3,803**
            
            
            24,997Current
                portion of convertible notes
            
            
            **1,100,000**
            
            
            900,000Current
                portion of other notes payable
            
            
            **143,678**
            
            
            107,823Due
                to related parties
            
            
            **903**
            
            
            4,865**Total
                current liabilities**
            
            
            **5,893,747**
            
            
            5,545,337**Convertible
                notes**
            
            
            **1,171,499**
            
            
            2,320,330**Notes
                payable to related parties**
            
            
            **1,500,000**
            
            
            1,500,000**Other
                notes payable**
            
            
            **28,736**
            
            
            166,668**Due
                to related parties**
            
            
            **199,025**
            
            
            192,391**Derivative
                financial instruments**
            
            
            **328,280**
            
            
            3,672,743**9,121,287**
            
            
            13,397,469**Shareholders'
                (Deficit)**Share
                capitalAuthorized50,000,000
                no par value preferred shares undesignated100,000,000
                no par value common sharesIssued32,101,706
                Common shares (2004-30,135,000)
            
            
            **-**
            
            
            -Deferred
                compensation
            
            ****
            **(164,000**
            **)**
            
            -




F-4




Additional
                paid-in capital
            
            
            **(297,695**
            **)**
            
            (2,087,784
            )Accumulated
                other comprehensive losses
            
            
            **(65,015**
            **)**
            ****
            (13,709
            )Accumulated
                deficit
            
            
            **(2,777,802**
            **)**
            
            (3,605,376
            )**(3,304,512**
            **)**
            
            (5,706,869
            )**$**
            **5,816,775**
            
            $
            7,690,600






The
                accompanying notes are an integral part of these financial
                statements
















F-5


**Creative
      Vistas, Inc.**


**Consolidated
      Statement of Stockholders’ Equity (Deficiency)**


**December
        31, 2003 to December 31,** **2005**





**Shares**
              
              **Amount**
              
              **Additional**
                **paid-in**
                **capital**
              
              **Deferred**
                **Compensation**
              
              **Accumulated**
                **retained
                  earnings**
                **(deficit)**
              
              **Accumulated**
                **other**
                **comprehensive**
                **income
                  (loss)**
              
              **Total
                  Stockholders’ Equity (deficiency)****Predecessor**Balance,
                  December 31, 2003
              
              
              30,000,000
              
              $
              2
              
              $
              -
              
              $
              -
              
              $
              409,380
              
              $
              72,939
              
              $
              482,321Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (765,653
              )
              
              -
              
              
              (765,653
              )Translation
                  adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (27,038
              )
              
              (27,038
              )Balance,
                  September 29, 2004
              
              
              30,000,000
              
              
              2
              
              
              -
              
              
              -
              
              
              (356,273
              )
              
              45,901
              
              
              (310,370
              )**Successor**Continuing
                  shareholders basis adjustment
              
              
              -
              
              
              (2
              )
              
              (2,796,100
              )
              
              -
              
              
              -
              
              
              -
              
              
              (2,796,102
              )Stock-based
                  compensation to non-employees
              
              
              135,000
              
              
              -
              
              
              149,000
              
              
              -
              
              
              -
              
              
              -
              
              
              149,000Warrants
                  related to financing
              
              
              -
              
              
              -
              
              
              559,316
              
              
              -
              
              
              -
              
              
              -
              
              
              559,316Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (3,249,103
              )
              
              -
              
              
              (3,249,103
              )Translation
                  adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (59,610
              )
              
              (59,610
              )Balance,
                  December 31, 2004
              
              
              30,135,000
              
              
              -
              
              
              (2,087,784
              )
              
              -
              
              
              (3,605,376
              )
              
              (13,709
              )
              
              (5,706,869
              )Stock-based
                  compensation to non-employees
              
              
              592,500
              
              
              -
              
              
              374,000
              
              
              (164,000
              )
              
              -
              
              
              -
              
              
              210,000Conversion
                  of options
              
              
              1,200,000
              
              
              -
              
              
              1,268,041
              
              
              -
              
              
              -
              
              
              -
              
              
              1,268,041Conversion
                  of note payable into shares
              
              
              174,216
              
              
              -
              
              
              148,048
              
              
              -
              
              
              -
              
              
              -
              
              
              148,048Net
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              827,574
              
              
              -
              
              
              827,574Translation
                  adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (51,306
              )
              
              (51,306
              )**Balance,
                  December 31, 2005**
              
              
              **32,101,716**
              ****
              **$**
              **-**
              ****
              **$**
              **(297,695**
              **)**
              **$**
              **(164,000**
              **)**
              **$**
              **(2,777,802**
              **)**
              **$**
              **(65,015**
              **)**
              **$**
              **(3,304,512**
              **)**


The
      accompanying notes are an integral part of these financial
      statements




F-6


**Creative
                Vistas, Inc.****Consolidated
                Statement of Operations**




**Successor**
            
            **Successor**
            **Predecessor****Period
                from**
              **January
                1,**
              **2005
                to**
              **December
                31,**
              **2005**
            
            **Period
                from**
              **September****30,**
              **2004
                to**
              **December
                31,**
              **2004**
            
            **Period
                from**
              **January
                1,**
              **2004
                to**
              **September
                29,**
              **2004****Contract
                and service revenue**Contract
            
            **$**
            **7,421,696**
            
            $
            2,177,587
            
            $
            5,268,773Service
            
            
            **1,296,347**
            
            
            228,126
            
            
            783,184**8,718,043**
            
            
            2,405,713
            
            
            6,051,957**Cost
                of sales**Contract
            
            
            **5,231,426**
            
            
            1,669,616
            
            
            3,689,980Service
            
            
            **600,195**
            
            
            105,620
            
            
            418,563**5,831,621**
            
            
            1,775,236
            
            
            4,108,543**Gross
                margin**
            
            
            **2,886,422**
            
            
            630,477
            
            
            1,943,414**Operating
                expense**Project
            
            
            **1,228,657**
            
            
            314,835
            
            
            1,087,741Selling
            
            
            **742,966**
            
            
            269,756
            
            
            733,138General
                and administrative
            
            
            **2,061,066**
            
            
            601,439
            
            
            1,058,142**4,032,689**
            
            
            1,186,030
            
            
            2,879,021**Income
                (loss) from operations**
            
            
            **(1,146,267**
            **)**
            
            (555,553
            )
            
            (935,607
            )**Interest
                expenses and other expenses (income)**Interest
            
            
            **2,307,270**
            
            
            109,869
            
            
            23,550Written
                off goodwill
            
            
            **503,900**
            
            
            -
            
            
            -Liquidated
              damages
            
            
            137,703
            
            
            -
            
            
            -Amortization
                of deferred charges
            
            
            **450,507**
            
            
            125,379
            
            
            -Derivative
                instruments
            
            
            **(5,373,221**
            **)**
            
            2,414,720
            
            
            -**(1,973,841**
            **)**
            
            2,649,968
            
            
            23,550Income
                (loss) before income taxes
            
            
            **827,574**
            
            
            (3,205,521
            )
            
            (959,157
            )Income
                taxes
            
            
            **-**
            
            
            43,582
            
            
            (193,504
            )Net
                income (loss)
            
            
            **827,574**
            
            
            (3,249,103
            )
            
            (765,653
            )Other
                comprehensive income (loss):Foreign
                currency translation adjustment
            
            
            **(51,306**
            **)**
            
            (59,610
            )
            
            (27,038
            )Comprehensive
                income (loss)
            
            **$**
            **776,268**
            
            $
            (3,308,713
            )
            $
            (792,691
            )Basic
                weighted-average shares
            
            
            **30,945,604**
            
            
            30,014,753
            
            
            30,000,000**Basic
                earnings (loss) per share**
            
            **$**
            **0.02**
            
            $
            (0.11
            )
            $
            (0.03
            )**Diluted
                earnings (loss) per share**
            
            **$**
            **(0.06**
            **)**
            $
            (0.11
            )
            $
            (0.03
            )




The
      accompanying notes are an integral part of these financial
      statements




F-7




**Creative
                  Vistas, Inc.****Consolidated
                  Statement of Cash Flows**
  **Successor**
              
              **Successor**
              
              **Predecessor****Period
                  from**
                **January
                  1,**
                **2005
                  to**
                **December
                  31,**
                **2005**
              
              **Period
                  from**
                **September
                  30,**
                **2004
                  to**
                **December
                  31,**
                **2004**
              
              **Period
                  from**
                **January
                  1,**
                **2004
                  to**
                **September
                  29,**
                **2004****Cash
                  provided by (used in)****Operating
                  activities**Net
                  income (loss)
              
              **$**
              **827,574**
              
              $
              (3,249,103
              )
              $
              (765,653
              )Adjustments
                  to reconcile net income (loss) to net cash provided by (used
                  in)
                operating
                  activitiesDepreciation
                  of capital assets
              
              
              **44,215**
              
              
              13,640
              
              
              37,589Amortization
                  of customer lists
              
              
              **4,476**
              
              
              1,025
              
              
              2,823Amortization
                  of deferred financing cost
              
              
              **450,507**
              
              
              125,379
              
              
              -Derivative
                  instruments and discount of embedded derivatives
              
              
              **(3,734,876**
              **)**
              
              2,414,720
              
              
              -Bad
                  debt expenses
              
              
              **132,231**
              
              
              34,830
              
              
              1,055Deferred
                  income taxes
              
              
              **-**
              
              
              74,538
              
              
              (125,740
              )Goodwill
                  written off
              
              
              **503,900**
              
              
              -
              
              
              -Liquidated
                  damages
              
              
              **137,703**
              
              
              
              
              
              -Stock-based
                  compensation expenses
              
              
              **351,038**
              
              
              185,058
              
              
              -Changes
                  in non-cash working capital balanceAccounts
                  receivable
              
              
              **(25,836**
              **)**
              
              (324,289
              )
              
              (60,518
              )Inventory
              
              
              **(9,448**
              **)**
              
              23,192
              
              
              178,160Prepaid
                  expenses
              
              
              **(8,470**
              **)**
              
              4,991
              
              
              (2,891
              )Deferred
                  income taxes
              
              
              **-**
              
              
              75,936
              
              
              -Accounts
                  payable and other accrued liabilities
              
              
              **561,705**
              
              
              (386,102
              )
              
              52,095Deferred
                  revenue
              
              
              **(173,595**
              **)**
              
              (167,798
              )
              
              227,503Income
                  taxes payable
              
              
              **(157,090**
              **)**
              
              (249,642
              )
              
              (105,043
              )**(1,095,966**
              **)**
              
              (1,423,625
              )
              
              (560,620
              )**Investing
                  activities**Due
                  from related parties
              
              
              **-**
              
              
              1,640
              
              
              -Purchase
                  of property and equipment
              
              
              **-**
              
              
              -
              
              
              (967
              )Note
                  receivable
              
              
              **(125,000**
              **)**
              
              -
              
              
              -Investment
                  in subsidiary
              
              
              **-**
              
              
              (1,800,079
              )
              
              -**(125,000**
              **)**
              
              (1,798,439
              )
              
              (967
              )**Financing
                  activities**Increase
                  in revolving credit facilities
              
              
              **232,736**
              
              
              1,334,719
              
              
              394,729Deferred
                  financing costs
              
              
              **-**
              
              
              (751,289
              )
              
              -Due
                  to related parties
              
              
              **(3,960**
              **)**
              
              5,182
              
              
              (67,968
              )Notes
                  payable
              
              
              **-**
              
              
              -
              
              
              248,006Convertible
                  notes
              
              
              **1,250,000**
              
              
              3,250,000
              
              
              -Repayment
                  of mortgage principal
              
              
              **-**
              
              
              (237,463
              )
              
              (13,180
              )Exercise
                  of options
              
              
              **8,041**
              
              
              -
              
              
              -**1,486,817**
              
              
              3,601,149
              
              
              561,587
  F-8
  Effect
                  of foreign exchange rate changes on cash
              
              
              **(110,834**
              **)**
              
              (1,408
              )
              
              -Net
                  change in cash and cash equivalents
              
              
              **155,017**
              
              
              377,677
              
              
              -**Cash
                  and cash equivalents,**beginning of year
              
              
              **377,677**
              
              
              -
              
              
              -**Cash
                  and cash equivalents,**end of year
              
              **$**
              **532,694**
              
              $
              377,677
              
              $
              -**Supplemental
                  Cash Flow Information**Cash
                  paid for interest
              
              **$**
              **370,001**
              
              $
              212,532
              
              $
              236,082Cash
                  paid for income taxes
              
              **$**
              **-**
              
              $
              -
              
              $
              37,278Loan
                  interest paid with warrants
              
              **$**
              **137,703**
              
              $
              -
              
              $
              -Common
                  shares issued for consulting fees and bonus
              
              **$**
              **308,000**
              
              $
              134,239
              
              $
              -Other
                  note payable converted to equity
              
              **$**
              **105,193**
              
              $
              -
              
              $
              -




The
      accompanying notes are an integral part of these financial
      statements












F-9




**Creative
                Vistas, Inc.****Notes
                to Consolidated Financial Statements****For
                the year ended December 31, 2005**


**1.**
            **Nature
                of Business**




On
      September 30, 2004 the ultimate stockholders of AC Technical Systems Ltd. (“AC
      Technical”) entered into a series of transactions to acquire a controlling stock
      interest in Creative Vistas, Inc. (“CVAS”). On September 30, 2004, the CVAS’
stockholders entered into a Common Stock Purchase Agreement (the “Agreement”)
      with Sayan Navaratnam, Dominic Burns, Randy Stern and Malar Trust, Inc. (a
      corporation controlled by Sayan Navaratnam). Pursuant to the Agreement, Miller
      Capital Corporation and Tudor Investments LTD agreed to sell 28,500,000 shares
      of CVAS to Sayan Navaratnam, Dominic Burns, Randy Stern and Malar Trust, Inc.
      for cash consideration of $300,000.




Prior
      to
      the consummation of the Agreement, CVAS completed a series of transactions
      resulting in AC Technical becoming a subsidiary of CVAS. On September 22, 2004,
      CVAS incorporated a new Ontario company, AC Technical Acquisition Corp.(“AC
      Acquisition”) controlled by CVAS through a voting agreement with Brent Swanick.
      CVAS owns 50 VFV shares (voting fixed shares) and 100 NVE shares (non-voting
      equity). Brent Swanick owns the remaining 50 VFV shares. The total issued share
      capital was $100 ($1 for each VFV share). There was no par value for the NVE
      shares; AC Acquisition is a subsidiary of Creative Vistas, Inc. Subsequently,
      on
      September 29, 2004, pursuant to a Stock Purchase Agreement with The Burns Trust,
      The Navaratnam Trust and AC Technical, AC Acquisition acquired all of the issued
      and outstanding shares of AC Technical from The Burns Trust and The Navaratnam
      Trust for consideration consisting of promissory notes in the aggregate amount
      of $3,300,000. AC Technical became a subsidiary of CVAS.




On
      September 30, 2004, concurrent with the consummation of the Agreement, the
      Registrant entered into a number of agreements with Laurus Master Fund, Ltd.
      (“Laurus”) for (i) a secured convertible term note (the “Note”) in the amount of
      $4.5 million and (ii) secured revolving notes (together with the Term Note,
      the
“Notes”) in the aggregate maximum amount of $3 million, (iii) a related options
      to purchase up to 1,499,997 shares of our common stock at a price of two-thirds
      of a cent per share (the “Option”), and (iv) a seven year warrant to purchase up
      to 2,250,000 shares of our common stock at a price of $1.15 per share (the
      “Warrant”). The Notes are secured by all of the assets of CVAS and its
      subsidiaries.




CVAS
      loaned the proceeds of the Notes to AC Acquisition. AC Acquisition used the
      funds received to repay an aggregate of $1.8 million of the principal amount
      of
      the promissory notes and to pay transaction costs. The inter-company balance
      is
      subject to interest at a negotiated interest rate.




After
      the
      completion of the business acquisition and leverage buyout transactions AC
      Technical’s previous ultimate stockholders Sayan Navaratnam and Dominic Burns
      controlled 56% and 37% respectively of the common shares of CVAS. Consequently,
      the acquisition of the controlling stock interest in the non-operating public
      shell corporation, CVAS (the legal acquirer), by the shareholders of AC
      Technical, has been accounted for as a business acquisition and leverage buyout
      under EITF 88-16.




On
      September 30, 2004 the previous management and Directors of CVAS resigned and
      in
      addition to being appointed to the Board of Directors Sayan Navaratnam and
      Dominic Burns were appointed Chief Executive Officer and President respectively.
      Additionally, AC Technical’s Chief Financial Officer, Heung Hung Lee, was
      appointed Chief Financial Officer of CVAS.




A.C.
      Technical Systems Ltd. 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. The Company operates under
      the
      trade name of AC Technical Systems.




F-10


On
      September 20, 2005, CVAS incorporated a new Ontario Company Iview Digital video
      Solutions Inc. (“Iview DSI”) through AC Acquisition, its subsidiary. Iview DSI a
      corporation incorporated under the laws of the Province of Ontario  to
      focus
      on providing video surveillance products and technologies to the
      market.




**Acquisition**




The
      Transaction described in above1 was accounted for as a business combination
      in
      accordance with SFAS No. 141 with the step up in the basis of assets acquired
      and liabilities assumed limited by the requirements of EITF 88-16.  A
      summary of the Transaction is presented below:




Proceeds
                from borrowings
            
            $
            3,300,000Assumption
                of bank indebtedness
            
            
            63,746Aggregate
                purchase price
            
            
            3,363,746Continuing
                shareholders’ basis adjustment
            
            
            (2,796,100
            )Purchase
                price allocated
            
            $
            567,646Fair
                value of net tangible assets acquiredAccounts
                receivable
            
            $
            287,160Income
                taxes recoverable
            
            
            9,030Inventory
            
            
            71,107Prepaid
                expenses
            
            
            3,448Other
                current assets
            
            
            3,740Property
                and equipment
            
            
            103,439Deferred
                income taxes
            
            
            20,109Accounts
                payable and accrued liabilities
            
            
            (268,683
            )Deferred
                income
            
            
            (44,636
            )Notes
                payable
            
            
            (33,941
            )Mortgage
                payable
            
            
            (29,852
            )Loans
                payable
            
            
            (23,740
            )Net
                tangible assets acquired
            
            
            97,181470,465Capitalized
                transaction costs
            
            
            33,435Goodwill
            
            $
            503,900







**2a.**
            **Summary
                of Significant Accounting
                Polices**




**Basis
      of Presentation**




The
      accompanying financial statements as of and for fiscal periods ended December
      31, 2005 and 2004 have been prepared by management in accordance with United
      States generally accepted accounting principles (“GAAP”) applicable to the
      respective periods.




The
      consolidated balance sheet as at December 31, 2005 and statement of operations
      and cash flows for the year end December 31, 2005 include the accounts of CVAS,
      AC Acquisition, AC Technical and IVIEW DSI.




The
      consolidated balance sheets as at December 31, 2004 and statement of operations
      and cash flows for the period from September 30, 2004 to December 31, 2004
      include the accounts of CVAS, AC Acquisition and AC Technical. The Company’s
      statement of operations and cash flows for the period ended September 29, 2004
      include the accounts of AC Technical. No financial statements are presented
      for
      the shell company, Creative Vistas, Inc., prior to the business acquisition
      and
      leverage buyout transactions because, prior to the September 30, 2004
      transaction, its assets and results were immaterial. All material inter-company
      accounts, transactions and profits have been eliminated.




F-11


**Liquidity
      and Going Concern**




Our
      consolidated 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
      $2,907,302 exclusive of income and charges related to derivative instruments
      and
      have working capital and shareholder deficiencies of $1,531,345 and $3,304,512
      at December 31, 2005.




We
      have
      outstanding convertible debt, together with a common stock option and warrants,
      held by 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.




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
      into the 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. The Company has introduced cost
      cutting initiatives within the Administration and Project and Selling
      departments to improve efficiency within the Company and also improve cash
      flow.
      The Company has also increased its rates for service by 20 percent to improve
      gross margins. This is in line with our competitors. The Company also expects
      to
      see the benefits of its research and development efforts within the next 12
      months as it starts to introduce its own line of customized products to the
      industry. These products and technologies are expected to improve gross margins.
      The Company believes that it will be eligible for research and development
      tax
      credits at year end for its research and development efforts during the year
      and
      these are additional sources of cash flow for the Company. The Company is also
      negotiating longer credit terms with its suppliers from 45 days to 60 to 75
      days. Also, if Laurus chooses to convert its term note and interest into common
      stock it would improve the Company’s cash position.




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.




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.




**Cash
      and Cash Equivalents**




The
      Company considers all cash and highly liquid investments purchased with an
      initial maturity of three months or less to be cash and cash
      equivalents.




The
      Company maintains its cash in bank deposit accounts that, at times, may exceed
      federally insured limits. The Company has not experienced any losses in such
      accounts and believes it is not exposed to any significant credit risks on
      cash
      and cash equivalents.




The
      Company’s cash and cash equivalents were $532,694 and $377,677 as at December
      31, 2005 and 2004. During fiscal periods ended December 31, 2005 and 2004 the
      Company experience net cash outflows from the operating activities. During
      these
      fiscal periods the Company financed its operations through borrowings with
      a
      financial institution and loans from related and third parties. All incoming
      cash is deposited into the bank account with the operating line facility in
      order to reduce interest payments.




**Accounts
      Receivable**




The
      Company extends credit to its customers based upon a written credit policy.
      Accounts receivable are recorded at the invoiced amount and do not bear
      interest. The allowance for doubtful accounts is the Company’s best estimate for
      the amount of probable credit losses in the Company’s existing accounts
      receivable. The Company establishes an allowance for doubtful accounts based
      upon factors surrounding the credit risk of specific customers, historical
      trends, and other information. Receivable balances are reviewed on an aged
      basis
      and account balances are charged off against the allowance after all means
      of
      collection have been exhausted and the potential for recovery is considered
      remote.




F-12


**Investment
      Tax Credits**




Investment
      tax credits are accrued when qualifying expenditures are made and there is
      reasonable assurance that the credits will be realized. Investment tax credits
      earned with respect to current expenditures for qualified research and
      development activities are included in the statement of operations as a
      reduction of expenses. Tax credits earned with respect to capital expenditures
      are applied to reduce the cost of the related capital assets.




**Research
      and Development Expenditures**




Research
      and development costs (other than capital expenditures) are expensed as
      incurred. Expenditures are reduced by any related investment tax
      credits.




**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.




**Property
      and Equipment**




Property
      and equipment is stated at original cost. Expenditures for improvements that
      significantly add to productive capacity or extend the useful life of an asset
      are capitalized. Expenditures for maintenance and repairs are expensed when
      incurred. Depreciation per annum is computed over the estimated useful life
      as
      follows:


Industrial
                  condominium
              4%
                  declining balance basisEquipment
              20%
                  declining balance basisFurniture
                  and fixtures
              20%
                  declining balance basisComputer
                  equipment
              30%
                  declining balance basis




**Customer
      List**




Customer
      list represents the acquisition cost of an acquired customer list and is
      recorded at cost less accumulated amortization. Amortization is provided on
      a
      straight-line basis over the period of expected benefit of 5 years. The Company
      reviews the revenues from the customer list at each balance sheet date to
      determine whether circumstances indicate that the carrying amount of the asset
      should be assessed.




**Long-Lived
      Assets**




The
      Company reviews its long-lived assets for impairment at each balance sheet
      date
      and whenever events or changes in circumstances indicate that the carrying
      amount of an asset should be assessed. To determine if an impairment exists,
      the
      Company estimates the future undiscounted cash flows expected to result from
      the
      use of the asset being reviewed for impairment. If the sum of these expected
      future cash flows is less than the carrying amount of the asset, the Company
      recognizes an impairment loss in accordance with SFAS No. 144, Accounting for
      the Impairment or Disposal of Long-Lived Assets. The amount of the impairment
      recognized is determined by estimating the fair value of the assets and
      recording a loss for the excess of the carrying value over the fair
      value.




**Goodwill**




Goodwill
      is evaluated for potential impairment on an annual basis or whenever events
      or
      circumstances indicate that an impairment may have occurred. Statement of
      Accounting Standards No. 142, “Goodwill and Other Intangible Assets”, (“SFAS No.
      142”) requires that goodwill be tested for impairment using a two-step process.
      The first step of the goodwill impairment test, used to identify potential
      impairment, compares the estimated fair value of the reporting unit containing
      goodwill with the related carrying amount. If the estimated fair value of the
      reporting unit exceeds its carrying amount, the reporting unit’s goodwill is not
      considered to be impaired and the second step of the impairment test is
      unnecessary. If the reporting unit’s carrying amount exceeds its estimated fair
      value, the second step test must be performed to measure the amount of the
      goodwill impairment loss, if any. The second step test compares the implied
      fair
      value of the reporting unit’s goodwill, determined in the same manner as the
      amount of goodwill recognized in a business combination, with the carrying
      amount of such goodwill. If the carrying amount of the reporting unit’s goodwill
      exceeds the implied fair value of the goodwill so calculated, an impairment
      loss
      is recognized in an amount equal to the excess. We recorded an impairment charge
      of $503,900 at December 31, 2005.




F-13


**Deferred
      Financing Costs**




Deferred
      financing costs represent costs directly related to obtaining of financing.
      Deferred financing costs are amortized over the term of the related indebtedness
      using the effective interest method.




**Continuing
      Shareholders’ Basis Adjustment**




AC
      Technical was acquired by AC Acquisition on September 30, 2004 as described
      in
      Note 1. This transaction was accounted for as a purchase in accordance with
      Standards of Financial Accounting Standards No. 141 “Business Combinations”. As
      a result of a 87% continuing ownership interest in the Company by certain
      shareholders (“Continuing Shareholders”), 13% of the purchase price was
      allocated to the assets and liabilities acquired at their respective fair values
      with the remaining 87% ownership interest recorded at the Continuing
      Shareholders’ historical book values as of the date of acquisition in accordance
      with Issue No. 88−16 of the Emerging Issues Task Force “EITF” of the Financial
      Accounting Standards Board “Basis in Leveraged Buyout Transactions” (“EITF
      88−16”). As a result of the carryover of the Continuing Shareholders’ historical
      basis, shareholders’ equity of the Company has been reduced by $2,796,102 with a
      corresponding reduction in the amount assigned to goodwill. The balance of
      continuing shareholders basis adjustments was equal to 87% of the total
      consideration and net of carrying value and any required transaction costs
      of AC
      Technical. It represents the lower of the residual interest in the old company
      and the new company.




**Issuance
      of Equity Instruments for Services**




Stock-based
      awards to non-employees are accounted for based on the fair value of the goods
      and services or the fair value of the equity instrument at the time of issuance,
      whichever is more reliably measurable in accordance with the provisions of
      Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for
      Stock-Based Compensation, and Emerging Issues Task Force (“EITF”) Issue No.
      96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees
      for Acquiring, or in Conjunction with Selling, Goods and Services.




**Revenue
      Recognition**




Contract
      Revenue




Software
      Related Services - Software related services include services to customize
      or
      enhance the software so that the software performs in accordance with specific
      customer requirements. As these services are essential to provide the required
      functionality, revenue from these arrangements is recognized in accordance
      Statement of Position (SOP) 81-1, “Accounting for Certain Construction Type and
      Certain Production Type Contracts, using either the percentage-of-completion
      method or the completed contract method. The percentage-of-completion method
      is
      used when the required services are quantifiable, based on the estimated number
      of labor hours necessary to complete the project, and under that method revenues
      are recognized using labor hours incurred as the measure of progress towards
      completion but is limited to revenue that has been earned by the attainment
      of
      any milestones included in the contract. The completed contract method is used
      when the required services are not quantifiable, and under that method revenues
      are recognized only when we have satisfied all of our product and/or service
      delivery obligations to the customer.




Security
      Systems - Security systems revenue consists of fees generated from consulting,
      audit, review, planning, engineering and design, supply of hardware systems
      installation and project management. Revenue from contracts where performance
      extends beyond one or more accounting periods is recognized in accordance with
      SOP 81-1, SEC Staff Accounting Bulletin “SAB” 104, “Update of Codification of
      Staff Accounting Bulletins” and EITF 00-21, “Revenue Arrangements with Multiple
      Deliverables”. The recognition of revenue reflects the degree of completeness
      based upon project drawings, project schedules, progress of actual installation
      and are further validated by visual observations by product managers, quality
      inspectors and construction advisors, if applicable. When the current estimated
      costs to complete indicate a loss, such losses are immediately recognized for
      accounting purposes. Some projects have the equipment and installation as
      separate elements specified in the contracts. The revenue is recognized when
      each element has been satisfied in accordance with SOP81-1 and SEC Staff
      Accounting Bulletin 104, which are the delivery of the equipment and completion
      of installation process. The fair value of each element was based on the price
      charged when it is sold on a standalone basis.




F-14


For
      contracts of shorter duration, revenue is generally recognized when services
      are
      performed. Contractual terms may include the following payment arrangements:
      fixed fee, full-time equivalent, milestone, and time and material. In order
      to
      recognize revenue, the following criteria must be met:




·
            Signed
                agreement — The agreement must be signed by the
                customer.




·
            Fixed
                Fee — The signed agreement must specify the fees to be received for the
                services.




·
            Delivery
                has occurred — Delivery is substantiated by time cards and where
                applicable, supplemented by an acceptance from the customer that
                milestones as agreed in the statement have been
                met.




·
            Collectibility
                is probable — The Company conducts a credit review for significant
                transactions at the time of the engagement to determine the
                credit-worthiness of the customer. Collections are monitored over
                the term
                of each project, and if a customer becomes delinquent, the revenue
                may be
                deferred.




Service
      Revenue




Service
      revenue consists of fees generated by providing monitoring services, preventive
      maintenance and technical support, product maintenance and upgrades. Monitoring
      services and preventive maintenance and technical support are generally provided
      under contracts for terms varying from one to six years. A customer typically
      prepays monitoring services and preventive maintenance and technical support
      fees for an initial period, and the related revenue is deferred and generally
      recognized over the term of such initial period. Rates for product maintenance
      and upgrades are generally provided under time and material contracts. Revenue
      for these services is recognized in the period in which the services are
      provided




**Warranty**




The
      Company carries a reserve based upon historical warranty claims experience.
      Additionally, warranty accruals are established on the basis of anticipated
      future expenditures as specific warranty obligations are identified and they
      are
      charged against the accrual. Expenditures exceeding such accruals are expensed
      direct to cost of sales.




**Earning
      (Loss) Per Share**




The
      Company applies Statement of Financial Accounting Standards No. 128, “Earnings
      Per Share” (FAS 128). Basic earning (loss) per share (“EPS”) is computed using
      the weighted average number of common shares outstanding during the period.
      Diluted EPS is computed using the weighted average number of common and dilutive
      potential common shares outstanding during the period. Dilutive potential common
      shares consist of common stock issuable upon exercise of stock options and
      warrants and conversion of debt using the treasury stock method. Adjustments
      to
      earnings per share calculation include reversing interest related to the
      convertible debts and changes in derivative instruments.




**Financial
      Instruments**




The
      carrying value of the Company’s financial instruments, including cash and cash
      equivalents, accounts receivable, note receivable, accounts payable and accrued
      liabilities approximate fair value because of the short maturities of those
      instruments. Based on borrowing rates currently available to the Company for
      loans with similar terms, the carrying value of convertible notes and notes
      payable are also approximate fair value except notes payable due to The Burns
      Trust and the Navaratnam Trust and related party balances for which the fair
      value is not determinable.




We
      review
      the terms of convertible debt and equity instruments we issued to determine
      whether there are embedded derivative instruments, including the embedded
      conversion option, that are required to be bifurcated and accounted for
      separately as a derivative financial instrument. Generally, where the ability
      to
      physical or net-share settle the conversion option is deemed to be not within
      the control of the company, the embedded conversion option is required to be
      bifurcated and accounted for as a derivative financial instrument
      liability.




In
      connection with the sale of convertible debt and equity instruments, we may
      also
      issue freestanding options or warrants. Additionally, we may issue options
      or
      warrants to non-employees in connection with consulting or other services they
      provide. Although the terms of the options and warrants may not provide for
      net-cash settlement, in certain circumstances, physical or net-share settlement
      is deemed to not be within the control of the company and, accordingly, we
      are
      required to account for these freestanding options and warrants as derivative
      financial instrument liabilities, rather than as equity.




F-15


Derivative
      financial instruments are initially measured at their fair value. For derivative
      financial instruments that are accounted for as liabilities, the derivative
      instrument is initially recorded at its fair value and is then re-valued at
      each
      reporting date, with changes in the fair value reported as charges or credits
      to
      income. For option-based derivative financial instruments, we use the
      Black-Scholes option pricing model to value the derivative
      instruments.




In
      circumstances where the embedded conversion option in a convertible instrument
      is required to be bifurcated and there are also other embedded derivative
      instruments in the convertible instrument that are required to be bifurcated,
      the bifurcated derivative instruments are accounted for as a single, compound
      derivative instrument.




If
      freestanding options or warrants were issued and will be accounted for as
      derivative instrument liabilities (rather than as equity), the proceeds are
      first allocated to the fair value of those instruments. When the embedded
      derivative instrument is to be bifurcated and accounted for as a liability,
      the
      remaining proceeds received are then allocated to the fair value of the
      bifurcated derivative instrument. The remaining proceeds, if any, are then
      allocated to the convertible instrument itself, usually resulting in that
      instrument being recorded at a discount from its face amount. In circumstances
      where a freestanding derivative instrument is to be accounted for as an equity
      instrument, the proceeds are allocated between the convertible instrument and
      the derivative equity instrument, based on their relative fair
      values.




The
      discount from the face value of the convertible debt instrument resulting from
      the allocation of part of the proceeds to embedded derivative instruments and/or
      freestanding options or warrants is amortized over the life of the instrument
      through periodic charges to income, using the effective interest method.




The
      classification of derivative instruments, including whether such instruments
      should be recorded as liabilities or as equity, is re-assessed at the end of
      each reporting period. Derivative instrument liabilities are classified in
      the
      balance sheet as current or non-current based on whether or not net-cash
      settlement of the derivative instrument is expected within 12 months of the
      balance sheet date.




**Credit
      Risk**




The
      Company’s financial assets that are exposed to credit risk consist primarily of
      cash and equivalents and accounts receivable. Concentrations of credit risk
      with
      respect to accounts receivable are limited due to the large number of customers
      serviced by the Company and their generally short payment terms.




**Foreign
      Currency Translation**




The
      Company maintains its accounts in United States dollars and in Canadian dollars
      for Canadian-based subsidiaries. The financial statements have been translated
      into United States dollars in accordance with SFAS No. 52, Foreign Currency
      Translation.




All
      balance sheet accounts have been translated using the exchange rates in effect
      at the balance sheet date. Statement of operations amounts has been translated
      using the average exchange rate for the year. The gains and losses resulting
      from the changes in exchange rates from year to year have been reported
      separately as a component of comprehensive income. The gain and losses resulting
      from any inter-company balances with different functional currencies would
      be
      recognized in statement of operations.




**Income
      Taxes**




The
      Company accounts for income taxes using the asset and liability approach in
      accordance with SFAS No. 109, “Accounting for Income Taxes”. The asset and
      liability approach requires the recognition of deferred tax liabilities and
      assets for the expected future tax consequences of temporary differences between
      the carrying amounts and the tax basis of assets and liabilities. A valuation
      allowance is provided when it is more likely than not that some portion or
      all
      of the deferred tax assets will not be realized.




The
      provision for income taxes consists of an amount for the taxes currently payable
      and a provision for the tax consequences deferred to future
      periods.




**Comprehensive
      Income**




Comprehensive
      income equals net income plus other comprehensive income. Other comprehensive
      income refers to foreign currency translation adjustments.




F-16


**Accounting
      Estimates**




The
      Company prepares its financial statements in accordance with accounting
      principles generally accepted in the United States of America, which require
      management to make estimates and assumptions that affect the reported amounts
      of
      assets, liabilities, revenues and expenses and disclosure of contingent assets
      and liabilities. The estimates and assumptions used in the accompanying
      financial statements are based upon management’s evaluation of the relevant
      facts and circumstances as of the date of the financial statements. Actual
      results may differ from the estimates and assumptions used in preparing the
      accompanying financial statements.




**Recent
      Accounting Pronouncements**




In
      November 2004, the Financial Accounting Standards Board issued SFAS No. 151,
      “Inventory Costs-an Amendment of ARB No. 43, Chapter 4”. The standard adopts the
      view related to inventories that abnormal amounts of idle capacity and spoilage
      costs should be excluded from the cost of inventory and expensed when incurred.
      Additionally, the meaning of the term ‘normal capacity’ was clarified. Based on
      management’s evaluation, the adoption is not expected to have a material effect
      on the consolidated financial statements.




In
      December 2004, the Financial Accounting Standard Board issued FASB Statement
      No.
      123R (Revised), “Share-Based Payment which is a revision of FASB Statement No.
      123, Accounting for Stock-Based Compensation”. Statement No. 123(R) supersedes
      APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and amends FASB
      Statement No. 95, “Statement of Cash Flows”. Statement No. 123(R) requires all
      share-based payments to employees, including grants of employee stock options,
      to be recognized in the financial statements based on their fair values and,
      for
      small business issuers, is effective at the beginning of the first annual period
      of the registrant’s first fiscal year that begins after December 15, 2005.
      During the year, the Company has not issued any stock-based awards to
      employees.




In
      September 2004, the Financial Accounting Standard Board issued EITF 04-8, “The
      Effect of Contingently Convertible Instruments on Diluted Earnings per Share”.
      This Issue addresses when contingently convertible instruments should be
      included in diluted earnings per share. The Task Force reached a consensus
      that
      contingently convertible instruments should be included in diluted earnings
      per
      share (if dilutive) regardless of whether the market price trigger has been
      met.
      The Task Force also agreed that the consensus should be applied to instruments
      that have multiple contingencies if one of the contingencies is a market price
      trigger and the instrument is convertible or settleable in shares based on
      meeting a market condition. Based on management’s evaluation of EITF 04-8, the
      adoption did not have a significant effect on the consolidated financial
      statements.




In
      December 2004, the FASB issued SFAS 153 "Exchanges of Non monetary Assets -
      an
      amendment of APB Opinion No. 29". This Statement amended APB Opinion 29 to
      eliminate the exception for non-monetary exchanges of similar productive assets
      and replaces it with a general exception for exchanges of non-monetary assets
      that do not have commercial substance. A non- monetary exchange has commercial
      substance if the future cash flows of the entity are expected to change
      significantly as a result of the exchange. The adoption of this statement is
      not
      expected to have any material impact on the Company's financial position,
      results of operations or cash flows.




In
      March
      2005, the Securities and Exchange Commission (SEC) issued Staff Accounting
      Bulletin No.107 (SAB 107) “Share-based Payment” which provides guidance
      regarding the interaction of SFAS 123(R) and certain SEC rules and regulations.
      The new guidance includes the SEC's view on the valuation of share-based payment
      arrangements for public companies and may simplify some of SFAS 123(R)’s
      implementation challenges for registrants and enhance the information investors
      receive.




In
      March
      2005, the FASB issued FIN 47, “Accounting for Conditional Asset Retirement
      Obligations”, which clarifies that the term 'conditional asset retirement
      obligation’ as used in SFAS 143, Accounting for Asset Retirement Obligations,
      refers to a legal obligation to perform an asset retirement activity in which
      the timing and/or method of settlement are conditional on a future event that
      may or may not be within the control of the entity. FIN 47 requires an entity
      to
      recognize a liability for the fair value of a conditional asset retirement
      obligation if the fair value can be reasonably estimated. FIN 47 is effective
      no
      later than the end of the fiscal year ending after December 15, 2005. The
      Company does not believe that FIN 47 will have a material impact on its
      financial position or results from operations.




In
      August
      2005, the FASB issued SFAS 154, “Accounting Changes and Error Corrections”. This
      statement applies to all voluntary changes in accounting principle and to
      changes required by an accounting pronouncement if the pronouncement does not
      include specific transition provisions, and it changes the requirements for
      accounting for and reporting them. Unless it is impractical, the statement
      requires retrospective application of the changes to prior periods’ financial
      statements. This statement is effective for accounting changes and correction
      of
      errors made in fiscal years beginning after December 15, 2005.




F-17


SFAS
      155
      - “Accounting for Certain Hybrid Financial Instruments—an amendment of FASB
      Statements No. 133 and 140”





This
      Statement, issued in February 2006, amends FASB Statements No. 133, Accounting
      for Derivative Instruments and Hedging Activities, and No. 140, Accounting
      for
      Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.
      This Statement resolves issues addressed in Statement 133 Implementation Issue
      No. D1, “Application of Statement 133 to Beneficial Interests in Securitized
      Financial Assets.”





This
      Statement:


a.
            Permits
                fair value remeasurement for any hybrid financial instrument that
                contains
                an embedded derivative that otherwise would require
                bifurcation


b.
            Clarifies
                which interest-only strips and principal-only strips are not subject
                to
                the requirements of Statement 133


c.
            Establishes
                a requirement to evaluate interests in securitized financial assets
                to
                identify interests that are freestanding derivatives or that are
                hybrid
                financial instruments that contain an embedded derivative requiring
                bifurcation


d.
            Clarifies
                that concentrations of credit risk in the form of subordination are
                not
                embedded derivatives


e.
            Amends
                Statement 140 to eliminate the prohibition on a qualifying special-purpose
                entity from holding a derivative financial instrument that pertains
                to a
                beneficial interest other than another derivative financial
                instrument.





This
      Statement is effective for all financial instruments acquired or issued after
      the beginning of our first fiscal year that begins after September 15,
      2006.





The
      fair
      value election provided for in paragraph 4(c) of this Statement may also be
      applied upon adoption of this Statement for hybrid financial instruments that
      had been bifurcated under paragraph 12 of Statement 133 prior to the adoption
      of
      this Statement. Earlier adoption is permitted as of the beginning of our fiscal
      year, provided we have not yet issued financial statements, including financial
      statements for any interim period, for that fiscal year. Provisions of this
      Statement may be applied to instruments that we hold at the date of adoption
      on
      an instrument-by-instrument basis.





The
      Company is currently reviewing the effects of adoption of this statement but
      it
      is not expected to have a material impact on our financial
      statements.


SFAS
      156
      - “Accounting for Servicing of Financial Assets—an amendment of FASB Statement
      No. 140”


This
      Statement, issued in March 2006, amends FASB Statement No. 140, “Accounting for
      Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”,
      with respect to the accounting for separately recognized servicing assets and
      servicing liabilities. This Statement:





1.
            Requires
                an entity to recognize a servicing asset or servicing liability each
                time
                it undertakes an obligation to service a financial asset by entering
                into
                a servicing contract in certain
                situations.


2.
            Requires
                all separately recognized servicing assets and servicing liabilities
                to be
                initially measured at fair value, if
                practicable.


3.
            Permits
                an entity to choose either the amortization method or the fair value
                measurement method for each class of separately recognized servicing
                assets and servicing liabilities.


4.
            At
                its initial adoption, permits a one-time reclassification of
                available-for-sale securities to trading securities by entities with
                recognized servicing rights, without calling into question the treatment
                of other available-for-sale securities under Statement 115, provided
                that
                the available-for-sale securities are identified in some manner as
                offsetting the entity’s exposure to changes in fair value of servicing
                assets or servicing liabilities that a servicer elects to subsequently
                measure at fair value.


F-18


5.
            Requires
                separate presentation of servicing assets and servicing liabilities
                subsequently measured at fair value in the statement of financial
                position
                and additional disclosures for all separately recognized servicing
                assets
                and servicing liabilities.





Adoption
      of this Statement is required as of the beginning of the first fiscal year
      that
      begins after September 15, 2006. The adoption of this statement is not expected
      to have a material impact on our financial statements.





**2b.**
            **Restatement**





We
      have
      amended the annual reports for the year ended December 31, 2004 and quarterly
      reports of the quarters ended September 30, 2004, March 31, 2005 and
      June
      30, 2005 to revise the accounting for the convertible term note, warrants and
      options and related registration rights in connection with our financing
      transaction entered into with Laurus Master Funds, Ltd. on September 30, 2004.





As
      a
      result of the restatement, warrants and options have been reclassified as
      derivative liabilities. The warrants and options had previously been measured
      based on a relative fair method and are now measured at their full fair value
      and will be marked to market on each balance sheet date.





Embedded
      derivatives contained in the convertible debenture and the secured line of
      credit are now bifurcated from the host debt and measured at fair value and
      classified as derivative liabilities. These embedded derivatives will also
      be
      marked to market on each balance sheet date.





The
      resulting debt discount will be amortized over the period of the convertible
      debt and the secured line of credit as interest and other expenses in our
      accompanying consolidated statements of operations.





The
      effect on our accompanying consolidated balance sheet as of December 31, 2004
      was an increase in liabilities by $5,564,912 and corresponding increase in
      stockholders' deficiency of $5,564,912. The effect on our consolidated
      statements of operations for the year ended December 31, 2004 was an increase
      in
      our net loss of $1,991,561. Basic and diluted earning per share for the year
      ended December 31, 2004 changed from loss per share $0.04 to $0.11.




**3.**
              **Prepaid
                  Expenses**


The
      balance consists of the following:




**2005**
            
            **2004**Consulting
                and professional fees
            
            **$**
            **25,000**
            
            $
            98,182Refundable
                deposit
            
            
            **6,354**
            
            
            22,808**$**
            **31,354**
            
            $
            120,990








**4.**
            **Note
                Receivables**




On
      January 12, 2005, the Company announced that AC Technical entered into a letter
      of intent to acquire the privately-held dataBahn, Inc. (“dataBahn”). dataBahn is
      based in Farmers Branch, Texas, and provides solutions to connect consumers
      and
      commercial users by providing satellite-based internet, voice and data services
      to the emerging broadband mobile communications markets. The acquisition is
      subject, among other things, to due diligence and the negotiation of definitive
      documentation. In furtherance of this acquisition, the Company entered into
      a
      Security Agreement and Secured Promissory Note Purchase Agreement with dataBahn,
      Inc. on March 9, 2005. Pursuant to these agreements, the Company is negotiating
      the terms of a transaction with dataBahn to acquire all its outstanding capital
      stock or substantially all of its assets. In order to meet certain financial
      obligations of dataBahn, the Company purchased a Secured Promissory Note
      amounting to $125,000 from dataBahn. The secured two-year promissory note bears
      interest at 10% and matures on March 9, 2007. dataBahn pays interest on a
      monthly basis from April 8, 2005 and the monthly principal amount of $10,416
      will start to be paid from April 8, 2006. The Company has not received the
      payment on April 17, 2006.




F-19




**2005**
            
            **2004**Note
                receivables
            
            **$**
            **125,000**
            
            $
            -Less:
                current portion
            
            
            **93,744**
            
            
            -**$**
            **31,256**
            
            $
            -







**5.**
            **Related
                Party Transactions**




Balances
      due from related parties are as follows:




**2005**
                
                **2004**Balance
                    due from a company controlled by the president, non-interest
                    bearing and
                    due on demand
                
                $
                2,203
                
                $
                2,129Balances
                    due to related parties are as follows:Advances
                    from the Chief Executive Officer (CEO) of the Company, non-interest
                    bearing with no fixed terms of repayment. The loan is subordinated
                    to the
                    Laurus loan
                
                $
                58,693
                
                $
                56,736Subordinated
                    loan - advances from the CEO and is secured by a promissory note,
                    a third
                    ranking general security agreement, assignment of insurance policy,
                    a
                    second mortgage on the industrial condominium up to $269,955,
                    personal
                    guarantee of the president and his spouse up to $539,910 and
                    a collateral
                    second mortgage on the president's principal residence up to
                    $77,130,
                    bearing interest at 6% per annum, repayable in blended monthly
                    payments of
                    $10,155. The loan should be matured on February 14, 2005. However,
                    the
                    loan is subordinated to Laurus with no fixed terms of repayment
                    and no
                    interest will be charged from September 30, 2004. Total interest
                    for the
                    year was $Nil (2004: $4,328).
                
                
                55,919
                
                
                54,055Loan
                    payable to a company controlled by the president's spouse, non-interest
                    bearing and due on demand
                
                
                903
                
                
                4,865Loan
                    payable to the president of the Company, non-interest bearing
                    with no
                    fixed terms of repayment. The loan is subordinated to
                    Laurus
                
                
                84,413
                
                
                81,600199,928
                
                
                197,256Less
                    current portion
                
                
                903
                
                
                4,865$
                199,025
                
                $
                192,391
  F-20
  **2005**
                
                **2004**Note
                    payable to related parties are as follows:Note
                    payable to the Navaratnam Trust (the CEO is one of the beneficiaries
                    of
                    the trust), bearing interest at 3% per annum with no fixed terms
                    of
                    repayment. The loan is subordinated to the Laurus loan. Total
                    interest for
                    the year was $22,500 (2004: $5,625)
                
                $
                750,000
                
                $
                750,000Note
                    payable to the Burns Trust (the president is one of the beneficiaries
                    of
                    the trust), bearing interest at 3% per annum with no fixed terms
                    of
                    repayment. The loan is subordinated to the Laurus loan Total
                    interest for
                    the year was $22,500 (2004: $5,625)
                
                
                750,000
                
                
                750,000$
                1,500,000
                
                $
                1,500,000


During
        the year, $250,000 (2004 - $243,000) in consulting fees and $Nil (2004 -
        $4,328)
        in interest related to the subordinated loan were paid to the Companies
        controlled by the CEO. In addition, $126,000 (2004 - $81,000) in consulting
        fees
        was paid to the Company controlled by the president’s spouse.
  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
        bears interest at 3% per annum with no fixed terms of repayment and payable
        on
        demand. However, pursuant to the Laurus Financing, these notes have been
        subordinated to the Company’s obligations to Laurus. The notes each with an
        amount of $750,000 are due to The Burns Trust (the president is one of the
        beneficiaries of the trust) and the Navaratnam Trust (the CEO is one of the
        beneficiaries of the trust), respectively. Total interest payable for the
        year
        to The Burns Trust and The Navaratnam Trust was $45,000.
  
 **6.**
              **Property
                  and Equipment**
 **2005**
                  
                  
                  
                  **2004****Accumulated**
                  
                  
                  
                  **Accumulated****Cost**
                  
                  **Depreciation**
                  
                  **Cost**
                  
                  **Depreciation**Land
                  
                  $
                  **85,565**
                  
                  $
                  **-**
                  
                  $
                  82,713
                  
                  $
                  -Industrial
                      condominium
                  
                  
                  **737,926**
                  
                  
                  **99,761**
                  
                  
                  713,328
                  
                  
                  69,070Equipment
                  
                  
                  **68,969**
                  
                  
                  **37,345**
                  
                  
                  66,670
                  
                  
                  28,635Furniture
                      and fixtures
                  
                  
                  **55,478**
                  
                  
                  **30,512**
                  
                  
                  53,628
                  
                  
                  23,601Computer
                      equipment
                  
                  
                  **83,509**
                  
                  
                  **58,922**
                  
                  
                  75,524
                  
                  
                  47,897$
                  **1,031,447**
                  
                  $
                  **226,540**
                  
                  $
                  991,863
                  
                  $
                  169,203
  Net
                      book value
                  
                  **$**
                  **804,907**
                  
                  $
                  822,660
  F-21




**7.**
                  **Deferred
                      Financing Costs, Net**


Deferred
      financing costs, net are associated with the Company’s revolving line of credit
      and term note from a financial institution. (see Notes 9 and 12). For the year
      ended December 31, 2005, the amortization of deferred financing cost aggregated
      $450,507 (2004:$125,379).




**2005**
            
            **2004**Cost
            
            **$**
            **1,176,365**
            
            $
            1,176,365Accumulated
                amortization
            
            
            **575,886**
            
            
            125,379**$**
            **600,479**
            
            $
            1,050.986




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




**Year**
            
            **Amount**2006
            
            $
            385,1352007
            
            
            215,344$
            600,479









**8.**
            **Customer
                List**




**2005**
            
            
            
            **2004****Accumulated**
            
            
            
            **Accumulated****Cost**
            
            **Depreciation**
            
            **Cost**
            
            **Depreciation**Customer
                list
            
            **$**
            **16,667**
            ****
            $
            **12,715**
            ****
            **$**
            **16,667**
            ****
            $
            **8,334****$**
            **3,952**
            
            
            
            
            $
            8,334




Amortization
      expense for the year ended December 31, 2005 amounted to
      $4,381 (2004-$3,848). The customer list will be fully amortized in
      2006.









**9.**
            **Revolving
                Credit Facilities**




**2005**
            
            **2004**Borrowings
                under revolving line of credit
            
            **$**
            **2,670,666**
            
            $
            2,437,929Less:
                Unamortized discount on notes, related to convertible options, common
                stock options and warrants.
            
            
            **(802,238**
            **)**
            
            (1,392,352
            )**1,868,428**
            
            
            1,045,577Add:
                Bifurcated embedded compound instrument (Note 12b)
            
            
            **260,007**
            
            
            1,413,999**$**
            **2,128,435**
            
            $
            2,459,576




F-22


The
      Company has a $3,000,000 secured revolving line of credit, including a secured
      convertible minimum borrowing note in the amount of $1,000,000 (see Note 12),
      with Laurus, which is renewable in September 30, 2007. Advances under this
      facility of $2,670,666 at December 31, 2005 (2004: $2,437,929) are
      collateralized by the assets of the Company. Interest on these borrowings is
      payable monthly at a minimum of 6% interest rate on the outstanding balance
      or
      an agreed upon formula of prime plus 2%. The Company will irrevocably remit
      all
      of its present and future Account Debtors directly to a bank account and repay
      the revolving credit facilities.




Laurus
      may require us to convert into common stock all or a portion of the amount
      outstanding under the revolving credit facilities, together with interest,
      at
      any time at a conversion price of $1.00 per common share, subject to adjustment
      in certain circumstances. Laurus has contractually agreed not to convert any
      portion of the credit facility if exercising the conversion option results
      in
      Laurus holding in excess of 4.99% of our outstanding shares of common stock.
      (also see Note 12)




**10.**
            **Incomes
                Taxes**


The
        Company's provision for (recovery of) income taxes is comprised as
        follows:




**2005**
            
            **2004**U.S.
            
            $
            -
            
            $
            -CanadianCurrent
            
            
            -
            
            
            (98,719
            )Deferred
            
            
            -
            
            
            (51,203
            )$
            -
            
            $
            (149,922
            )Reconciliation
                to statutory rates is as follows:**2005**
            
            
            **2004**Income
                (loss) before income taxesIncome
                (loss) from U.S. sales
            
            $
            1,636,089
            
            $
            (2,868,432
            )Income
                (loss) from Canadian sales
            
            
            (808,515
            )
            
            (1,296,246
            )827,574
            
            
            (4,164,678
            )Statutory
                tax rates for U.S.
            
            
            41.00
            %
            
            41.00
            %Statutory
                tax rates for Canadian Federal
            
            
            43.12
            %
            
            43.62
            %




The
      Company has unutilized taxable losses in the United States available for carry
      forward to reduce income taxes of approximately $573,000 otherwise payable
      in
      future years. In addition, the Company has unutilized taxable losses in the
      Canadian taxes available for carry forward to reduce income taxes of
      approximately $373,000 otherwise payable in future years.




**2005**
            **2004**Expected
                income tax expense (recovery)
            
            $
            321,641
            
            
            38.9
            %
            $
            (1,740,536
            )
            
            (41.8
            %)Increase
                (decrease) in taxes resulting from:Valuation
                allowances
            
            
            777,672
            
            
            94.0
            %
            
            426,133
            
            
            10.2
            %Permanent
                differences
            
            
            (1,177,392
            )
            
            (142.3
            %)
            
            1,089,503
            
            
            26.2
            %Small
                business and other tax rate reductions
            
            
            46,353
            
            
            5.6
            %
            
            55,558
            
            
            1.3
            %Other
            
            
            31,726
            
            
            3.8
            %
            
            19,420
            
            
            0.5
            %Income
                tax expenses (recovery)
            
            $
            -
            
            
            -
            
            $
            (149,922
            )
            
            (3.6
            %)





F-23




The
      tax
      effects of temporary differences that give rise to significant portions of
      the
      deferred tax assets and deferred tax liabilities as of December 31, 2005 and
      2004 are presented below:




**2005**
            
            **2004****Assets**Investment
                tax credits
            
            $
            -
            
            $
            1,090Tax
                benefits on losses carried forward under U.S. tax rate
            
            
            517,773
            
            
            135,339Tax
                benefits on losses carried forward under Canadian tax rate
            
            
            256,536
            
            
            290,795Accounting
                depreciation in excess of tax depreciation
            
            
            9,591
            
            
            -Other
            
            
            4,909
            
            
            50,920788,809
            
            
            478,144Less:
                valuation allowance
            
            
            (774,309
            )
            
            (426,133
            )14,500
            
            
            52,011Less:
                current portion
            
            
            (721
            )
            
            (16,071
            )$
            13,779
            
            $
            35,940**Liabilities**Income
                tax depreciation in excess of accounting depreciation
            
            $
            -
            
            $
            1,300Investment
                tax credits taxable in the future
            
            
            4,524
            
            
            8,219Other
            
            
            -
            
            
            32,8494,524
            
            
            42,368Less:
                current portion
            
            
            (4,524
            )
            
            (41,068
            )$
            -
            
            $
            1,300




Net
                deferred income taxes**2005**
            
            **2004****Current**Assets
            
            $
            721
            
            $
            16,071Liabilities
            
            
            (4,524
            )
            
            (41,068
            )$
            (3,803
            )
            $
            (24,997
            )**Long-term**Assets
            
            
            13,779
            
            
            35,940Liabilities
            
            
            -
            
            
            (1,300
            )$
            13,779
            
            $
            34,640Total
            
            $
            9,976
            
            $
            9,643







**11.**
            **Warranty**




As
      part
      of the installation, the Company has provided its customers with warranties.
      The
      warranties generally extend ninety days labor and one year on equipment from
      the
      date of project completion.




**2005**
            
            **2004**Balance,
                beginning of year
            
            **$**
            **9,228**
            
            $
            -Expenses
                incurred
            
            
            **(17,636**
            **)**
            
            (10,556
            )Provision
                made
            
            
            **42,890**
            
            
            19,784Balance,
                end of year
            
            **$**
            **34,482**
            
            $
            9,228




F-24







**12.**
            **Convertible
                Notes**




a)
            Private
                Placement - Laurus Master Fund,
                Ltd.




On
      September 30, 2004, the Company entered into a series of agreements with Laurus
      Master Fund, Ltd., a Cayman Islands company, pursuant to which the Company
      issued a Secured Convertible Term Note in the principal amount of $4,500,000
      due
      September 30, 2007, secured revolving note and secured convertible minimum
      borrowing note (the “revolving note”) of up to a maximum aggregate amount of
      $2,000,000 and $1,000,000 due September 30, 2007 (see Note 9), a common stock
      purchase warrant and a stock purchase option.




Pursuant
      to the Secured Convertible Term Note, Laurus provided the Company with a
      $4,500,000 asset based credit facility in the form of a three-year Convertible
      Note secured by all the assets of the Company and its subsidiaries including
      accounts receivable, inventory and real property. The term note is convertible
      into shares of the Company’s common stock at an initial fixed conversion rate of
      $1.00 per share.




At
      the
      closing of the transaction, Laurus funded $3,250,000 to the Company under the
      Convertible Note. Pursuant to the Securities Purchase Agreement between Laurus
      and the Company and a restricted account agreement entered into by the Company,
      Laurus and a US bank, the remaining $1,250,000 was deposited into a restricted
      account for the benefit of Laurus as additional security for the obligations
      of
      the Company under the purchase agreement and the related agreements. The
      restricted account is to be maintained at the US bank to be released upon the
      effectiveness of the registration statement covering the shares of common stock
      acquirable by Laurus, provided that there is no default by the Company under
      the
      Laurus financing and the Company meets certain financial milestones. Subsequent
      to the period ended September 30, 2004, Laurus has waived the requirements
      and
      released $125,000 from the restricted account to the Company to fund the
      Company’s loan to dataBahn on March 9, 2005 (also see Note 4) and the remaining
      $1,125,000 was released on June 27, 2005. The $1,250,000 restricted account
      amount as of December 31, 2004 is included on the Balance Sheet under the
      caption "Restricted Cash".




Laurus
      has the option to convert the entire principal amount of the term note and
      revolving notes, together with interest thereon into shares of the Company’s
      common stock at a conversion price of $1 per common share. The amount
      convertible into the Company’s common stock is subject to a conversion cap that
      Laurus beneficially own no more than 4.99% of the Company’s outstanding common
      stock immediately after conversion. The balance of the secured revolving notes
      was $2,670,666 as at December 31, 2005 (2004:$2,437,929).




Pursuant
      to the Secured Convertible Term Note, subject to certain volume limitations
      and
      other conditions, including registration of the common stock, all or a portion
      of the monthly payment due on the Convertible Term Note will be converted into
      the common stock of the Company. The term note sets forth criteria primarily
      relating to share price and trading volume pursuant to which the Company is
      1)
      required to pay Laurus in cash, 2) required to pay Laurus in stock or 3)
      required to pay Laurus in a combination of cash and stock. If the share price
      and trading volume criteria are met, the Company is required to pay principal
      and interest in stock. If the share price, but not the trading volume, criteria
      are met, the Company will be required to pay in a combination of stock and
      cash.
      Otherwise, the Company will be required to pay Laurus in cash. Neither Laurus
      nor the Company has the option of choosing in which form the Company makes
      its
      payments if these criteria are met.




The
      Company must pay Laurus in stock if




(i)
            the
                average closing price of its common stock as reported by Bloomberg,
                L.P.
                on the principal market for the 5 consecutive trading days immediately
                preceding the date that Laurus gives the Company a Repayment Notice
                is
                greater than or equal to 110% of the fixed conversion price of $1.00
                after
                the 3-for-1 stock split (i.e. if the stock price is greater than
                $1.10 per
                share) and




F-25


(ii)
            the
                amount of such conversion does not exceed 25% of the aggregate dollar
                trading volume of the common stock for the 22 day trading period
                immediately preceding delivery of a Repayment Notice.




Any
      portion of the monthly amount due that is not payable in shares of common stock
      because the trading volume conversion criteria described above are not met
      must
      be paid in cash. Accordingly, if the average closing price described above
      is
      over $1.10 per share but the number of shares due would exceed 25% of the
      aggregate dollar trading volume described above, the Company would be required
      to pay Laurus in a combination of cash and stock.




When
      the
      average closing price of the common stock is less than 110% of the fixed
      conversion price of $1.00, the Company must pay all or a portion of the monthly
      amount subject to the following conditions. If the average closing price of
      the
      common stock on the principal market is less than 110% of the fixed conversion
      price (i.e. less than $1.10) for the 5 trading days immediately preceding a
      repayment date, then Laurus shall provide CVAS with a Repayment Notice requiring
      the conversion of the monthly amount, as of the date of the repayment notice,
      at
      a fixed conversion price equal to the lesser of:




(i)
            85%
                of the average of the closing prices of the common stock during the
                20
                trading days immediately prior to the date of the delivery of such
                respective repayment notice or




(ii)
            85%
                of the average of the 3 closing prices of the common stock for the
                3
                trading days immediately prior to the date of the delivery of such
                respective repayment notice;




provided
      that such conversion of the monthly amount due on each repayment date does
      not
      exceed 25% of the aggregate dollar trading volume of the common stock for the
      22
      day trading period immediately preceding delivery of a repayment notice. The
      fixed conversion price should not be less than $0.73 in any event.




The
      Repayment Date is the date that monthly interest is payable, the date that
      the
      cash portion of each Monthly Amount is payable, and the date that shares, if
      any, are to be issued in lieu of the Monthly Amount. The first Repayment Date
      was November 1, 2004 and the Repayment Dates continue on the first day of each
      consecutive calendar month thereafter.




The
      Repayment Notice is the notice delivered by Laurus to the Company prior to
      the
      Repayment Date that sets out what portion of the Monthly Amount payable will
      be
      settled in shares.




Laurus
      does not have the option of choosing in which form the Company makes its monthly
      principal payments. If the conversion criteria described above are met, Laurus
      has voluntarily agreed to provide a Repayment Notice to indicate to the Company
      what portion of the Monthly Amount must be made in cash or stock. If Laurus
      does
      not provide the Repayment Notice, it has no legal consequences, but would make
      the determination of the requisite payments difficult. The Company is required
      to pay cash for any part of the monthly amount due on a Repayment Date, which
      Laurus was not able to convert into shares of common stock due to failure to
      meet the conversion criteria.




Subject
      only to the conversion cap of the term note, Laurus is required to convert
      the
      then outstanding principal amount of the note plus all accrued, but unpaid
      interest thereon when all of the following conditions are met: 1) the closing
      price for any 10 consecutive trading days exceeds 135% of the then effective
      Fixed Conversion Price, 2) there is an effective registration statement pursuant
      to which Laurus is permitted to utilize the prospectus thereunder to resell
      all
      of the conversion shares issued to Laurus (or such conversion shares are
      eligible for sale under Rule 144 of the Securities Act), 3) there is a
      sufficient number of authorized but unissued and otherwise unreserved shares
      of
      common stock for Laurus to convert all the shares issuable to Laurus under
      the
      term note pursuant to Section 3.6, and 4) the amount of the term note to be
      so
      converted pursuant to Section 3.6 (when combined with the amount of the secured
      convertible minimum borrowing note issued by the Company to Laurus to be so
      converted pursuant to Section 3.6 of the minimum borrowing note and the amount
      of any other promissory note issued by the Company to Laurus required to be
      similarly mandatory converted) does not exceed 10% of the aggregate dollar
      trading volume of the common stock during such 10 consecutive trading days.
      If
      all of these criteria were not met, Laurus would have no obligation to
      convert.




F-26


We
      may
      prepay the amortizing principal portion of the Convertible Term Note at any
      time
      by paying 125% of the outstanding amortizing principal amount, together with
      accrued but unpaid interest on the outstanding amortizing principal amount.
      We
      may also prepay the non-amortizing principal portion of the Convertible Term
      Note at any time by paying 120% of the outstanding non-amortizing principal
      amount, together with accrued but unpaid interest on the outstanding
      non-amortizing principal amount. Upon an event of default under the Convertible
      Term Note, Laurus may demand repayment at a rate of 120% of the outstanding
      principal and interest amount of the Convertible Term Note. If the Convertible
      Term Note remains outstanding after an event of default that is not cured,
      the
      additional interest rate on the outstanding principal amount payable on a
      monthly basis will be equal to 18% per annum. Events of default include:




·
            a
                failure to make payments under the Convertible Term Note when
                due;




·
            a
                material breach of the transaction documents by
                us;




·
            bankruptcy
                related events;




·
            a
                change of control transaction without prior approval;




·
            a
                SEC stop trade order or Principal Market trading suspension of the
                Common
                Stock; and




·
            events
                of default under other indebtedness agreements to which we are a
                party.




Pursuant
      to the Secured Convertible Minimum Borrowing Note, subject to certain volume
      limitations and other conditions, if after the date a registration statement
      covering the resale of the conversion shares is declared effective, the closing
      price for any 10 consecutive trading days exceeds 135% of the then effective
      Fixed Conversion Price, Laurus will within 10 trading days convert all or part
      of the then outstanding amount of the secured convertible minimum borrowing
      note
      plus all accrued but unpaid interest into shares of the Company’s common stock.
      No amount can be converted until (a) either (i) there is an effective
      registration statement covering the shares of the common stock to be issued
      in
      satisfaction of such obligations, or (ii) an exemption from registration of
      the common stock is available pursuant to Rule 144 of the Securities Act, and
      (b) no event of default exists under the transaction documents unless cured
      or waived.




The
      principal amounts of the term note and the revolving notes bear interest at
      the
      prime rate plus two percent with a minimum rate of six percent. Interest accrued
      on the term note but was not payable until November 1, 2004. Interest on the
      revolving note accrues on a monthly basis. Interest is calculated on the basis
      of a 360 day year. The minimum monthly payment on the term note is $100,000,
      plus the monthly interest payment, and may be paid in cash, the common stock
      of
      the Company or a combination of cash and stock, dependant upon the occurrence
      of
      certain criteria.




Interest
      on the term note for the year ended December 31, 2005 was 1,784,121 which
      included cash payment $377,199 and amortization of embedded derivatives
      $1,406,922. The minimum fixed monthly principal repayment of $100,000
      commence on April 1, 2005 (see below), and continues through the September
      30,
      2007 maturity date.




On
      a
      month-by-month basis, if we register the shares of common stock issuable upon
      conversion of the note and upon exercise of the warrant and options on a
      registration statement declared effective by the SEC, the interest rate on
      the
      Note is subject to a 0.25% reduction for every 25% increase in the market price
      of our common stock above the conversion price of the Note, but in no event
      shall the interest rate be less than zero percent.




Laurus
      also has the option to convert all or a portion of the Convertible Term Note
      into shares of our common stock at any time, subject to the limitation described
      below, at an initial fixed conversion price of $1.00 per share, subject to
      adjustment as described below. The Convertible Term Note is currently
      convertible into 4,500,000 shares of our common stock, excluding the conversion
      of any accrued interest. The conversion price is adjustable on a weighted
      average basis upon certain future issuances of securities by us at a price
      less
      than the conversion price then in effect. The limitation on Laurus’ ability to
      convert the Note and exercise the warrant and options includes:




•
            Laurus
                may not convert the Note or exercise the Warrant for a number of
                shares
                that would cause all shares then held by Laurus to exceed 4.99% of
                our
                outstanding shares of common stock unless there has been an event
                of
                default or Laurus provides us with 75 days prior notice.




F-27




During
      the year ended December 31, 2005, the Company entered into ten Amendments (“the
      Amendment”) with Laurus
      amending the following agreements previously entered into by the Company and
      Laurus on September 30, 2004: (a) the Securities Purchase Agreement; (b) the
      Secured Convertible Term Note; and (c) the Registration Rights
      Agreement.




Pursuant
      to each Amendment, Laurus agreed to postpone a scheduled principal payment
      in
      respect of the Term Note and in consideration of the postponement until
      September 30, 2007, the Company agreed to issue additional
      warrants.




Pursuant
      to Amendment No. 1 on March 31, 2005, the Company issued to Laurus a warrant
      to
      purchase 100,000 shares of the common stock of the Company at an exercise price
      of $1.20 per share.




Pursuant
      to Amendment No. 2 on April 30, 2005, the Company issued to Laurus a warrant
      to
      purchase 100,000 shares of the common stock of the Company at an exercise price
      of $1.01 per share.




Pursuant
      to Amendment No. 3 on May 31, 2005, the Company issued to Laurus a warrant
      to
      purchase 100,000 shares of the common stock of the Company at an exercise price
      of $1.01 per share.




Pursuant
      to Amendment No. 4 on June 30, 2005, the Company issued to Laurus a warrant
      to
      purchase 100,000 shares of the common stock of the Company at an exercise price
      of $0.90 per share.




Pursuant
      to Amendment No. 5 on July 31, 2005, the Company issued to Laurus a warrant
      to
      purchase 100,000 shares of the common stock of the Company at an exercise price
      of $1.05 per share.




Pursuant
      to Amendment No. 6 on August 31, 2005, the Company issued to Laurus a warrant
      to
      purchase 100,000 shares of the common stock of the Company at an exercise price
      of $1.05 per share.




Pursuant
      to Amendment No. 7 on September 30, 2005, the Company issued to Laurus a warrant
      to purchase 100,000 shares of the common stock of the Company at an exercise
      price of $0.80 per share.




Pursuant
      to Amendment No. 8 on October 31, 2005, the Company issued to Laurus a warrant
      to purchase 100,000 shares of the common stock of the Company at an exercise
      price of $0.80 per share.




Pursuant
      to Amendment No. 9 on November 30, 2005, the Company issued to Laurus a warrant
      to purchase 100,000 shares of the common stock of the Company at an exercise
      price of $0.80 per share.




Pursuant
      to Amendment No. 10 on December 31, 2005, the Company issued to Laurus a warrant
      to purchase 100,000 shares of the common stock of the Company at an exercise
      price of $0.80 per share.




In
      total,
      1,000,000 warrants were issued in exchange for the postponement by Laurus of
      scheduled principal payments under the Term Note. In accordance with EITF 96-19
      the Company reviewed the effect of these changes to the Laurus term note and
      concluded they should be accounted for as a modification of terms Accordingly,
      the initial fair value of the warrants is being recognized as additional
      interest expense over the remaining term of the notes using the effective
      interest method.




The
      principal payments for the next two years are as follows:




**Year**
            
            **Amount**2006
            
            $
            1,100,0002007
            
            
            3,400,000$
            4,500,000







We
      were
      obligated to file a registration statement registering the resale of shares
      of
      our common stock issuable upon conversion of the note and exercise of the
      warrants and options by November 15, 2004 and to have such registration
      statement declared effective by the SEC by no later than March 31, 2005. If
      the
      registration statement is suspended other than as permitted in the Registration
      Rights Agreement, or if our common stock is not listed for three consecutive
      trading days, we are obligated to pay Laurus additional fees. The fees are
      2.0%
      of the original principal amount of the term note and secured minimum borrowing
      note for each 30 day period in which we fail to take these actions. Under the
      Registration Rights Agreement between Laurus and the Company, if




F-28


(i)
            the
                Registration Statement is not filed on or prior to the applicable
                filing
                date;


(ii)
            the
                respective Registration Statement is not declared effective by the
                effectiveness date;


(iii)
            after
                the respective Registration Statement is filed with the SEC and declared
                effective, such Registration Statement ceases to be effective due
                to
                certain conditions;


(iv)
            the
                Common Stock is not listed or quoted, or is suspended from trading
                on any
                Trading Market for a period of five consecutive Trading Days,




The
      Company shall pay Laurus an amount in cash, as liquidated damages and not as
      a
      penalty, equal to 2.0% for each thirty day period (prorated for partial period)
      on a daily basis of the sum of the original principal amount of the Note (as
      defined in the Securities Purchase Agreement) plus the original principal amount
      of each applicable Minimum Borrowing Note (as defined in the Security
      Agreement).




In
      addition, on June 22, 2005, the Company entered into an Amendment and Waiver
      with Laurus amending the Securities Purchase Agreement and Registration Rights
      Agreement. Pursuant to the Amendment, Laurus waived liquidated damages due
      and
      payable to Laurus by the Company of approximately $138,000 incurred by the
      Company for failing to cause its registration statement registering the shares
      to be declared effective by the SEC on the required date. The Company issued
      to
      Laurus a warrant to purchase 313,000 shares of the common stock of the Company
      at an exercise price of $1.00 per share. The warrants were recorded at fair
      value by using the Black-Scholes option pricing model under other expenses.
      The
      fair value of the warrants issued was $137,703. The fair value of the above
      warrants were measured using the Black-Scholes option pricing model with the
      following weighted average assumptions: risk free interest rate of 3.8%,
      expected dividend yield of 0%, volatility of 50%, share price of $0.90 and
      contractual lives of 7 years. (also see Note 15).




The
      Company entered into another Amendment and Waiver with Laurus as of December
      31,
      2005 pursuant to which Laurus waived liquidated damages due and payable by
      the
      Company for failing to cause its registration statement to be declared effective
      by the SEC on the extended required date. The effectiveness date has been
      extended to March 31, 2006. The Company has not issued additional warrants
      to
      Laurus in connection with this waiver. Subsequent to year end, Laurus has
      extended 120 days from the date of the new Registraion Rights Agreement signed
      on February 13, 2006.




Convertible
      notes, net of current portions are comprised of:




**2005**
            
            **2004**7%
                convertible term note due to Laurus, collateralized by all assets
                of the
                Company with interest at Prime plus 2%
            
            **$**
            **4,500,000**
            
            $
            4,500,000Less:Unamortized
                discount on notes, related to common stock options and
                warrants.
            
            
            **(3,233,501**
            **)**
            
            (3,889,670
            )**1,266,499**
            
            
            610,330Add:
                Bifurcated embedded compound derivative instrument (Note
                12b)
            
            
            **1,005,000**
            
            
            2,610,000**2,271,499**
            
            
            3,220,330Less:
                current portion
            
            
            **(1,100,000**
            **)**
            
            (900,000
            )**$**
            **1,171,499**
            
            $
            2,320,330




b)
      Derivative Financial Instruments




We
      also
      issued to Laurus warrants and options to purchase up to 3,250,000 shares and
      1,499,997 shares of our common stock at an exercise price of $1.15 to $0.01
      per
      share with a term of seven to ten years. The warrants and options were recorded
      at fair value and classified as liability (with a corresponding entry as debt
      discount of the note). The fair value of the warrants and options at the time
      of
      issue was $3,344,500. (computed using a Black-Scholes model with an interest
      rate of 3.5% to 4.33%, volatility from 45% to 55%, expected dividend yield
      of
      0%, share price of $0.34 to $1.07 and expected term of seven to ten years
      respectively).




The
      discount attributable to the above warrants and options are recorded as a
      reduction to the carrying value of the Revolving Credit facilities (Note 9)
      and
      Convertible Note (Note 12) in the accompanying consolidated balance sheet as
      of
      December 31, 2005. The debt discount is being amortized over the term of the
      Convertible Note and Revolving Credit facilities using the effective interest
      method. Discount on the convertible notes and revolving credit facilities for
      the year ended December 31, 2005 was $3,233,501 (2004: $3,889,670) and $802,238
      (2004:$1,392,352) respectively.




F-29


Additionally,
      we recorded $1,176,365 for debt issue cost, including investment banking fees
      and legal and professional fees which included $751,289 payable in cash and
      $425,076 payable through warrants issued to the investment bankers. The debt
      issue costs are included in deferred financing costs (Note 7) in the
      accompanying consolidated balance sheet as of December 31, 2005. The debt issue
      costs are being amortized over the term of the Convertible Note using the
      effective interest method. Amortization of the debt issuance costs for the
      year
      ended December 31, 2005 was $450,507 (2004-$125,379).




EITF
      Issue No. 00-19, *“Accounting
      for Derivative Financial Instruments Indexed to, and Potentially Settled in,
      a
      Company’s Own Stock,”* or EITF
      00-19, addresses accounting for equity derivative contracts indexed to, and
      potentially settled in, a company’s own stock, or equity derivatives, by
      providing guidance for distinguishing between permanent equity, temporary equity
      and assets and liabilities. EITF 00-19 addresses and clarifies whether specific
      contract provisions or other circumstances cause a net-share or physical
      settlement alternative to be within or outside the control of the issuer.




Under
      EITF 00-19, to qualify as permanent equity, all of the following criteria must
      be met: the equity derivative contract must permit the company to settle in
      unregistered shares, the company must have sufficient authorized but unissued
      shares available to settle the contract, the contract must contain an explicit
      limit on the number of shares to be delivered in a share settlement, there
      can
      be no requirement in the contract to post collateral, there can be no “make
      whole” provisions in the contract, there can be no provisions that could require
      a net cash settlement to the holder of the contract and there can be no
      provisions in the contract that indicate the counterparty has rights that rank
      higher than those of a common stockholder. Equity derivative contracts accounted
      for as permanent equity are recorded at their initial fair value and subsequent
      changes in fair value are not recognized unless a change in the contracts’
classification occurs. Equity derivative contracts not qualifying for permanent
      equity accounting are recorded at fair value as an asset or liability with
      subsequent changes in fair value recognized through the statement of operations.




The
      registration rights are not treated as freestanding derivative instruments
      and
      penalties will be recorded as expenses when they are incurred.





In
      connection with the provisions of EITF 00-19 the Company acknowledges that
      obtaining a declaration of a registration statement’s effectiveness and
      maintaining such effectiveness is beyond its control. Therefore, the potential
      liquidated damages we may be required to pay pursuant to the registration rights
      agreements described in Note 14(a) if we fail to keep our registration
      statements effective are a potential net cash settlement under EITF 00-19.
      The
      warrants and options issued in connection with the financing should be
      classified as liabilities. The fair value of the warrant and option liability
      is
      adjusted at each balance sheet date, with the non-cash change in fair value
      reported in the consolidated statement of operations as other income or
      expense.





At
      December 31, 2005, the following derivative liabilities related to common stock
      options and warrants were outstanding:


F-30


**Issue
                  Date**
              **Expiry
                  Date**
              
              **Number**
                **of
                  options**
                **or**
                **warrants**
              **Exercise**
                **Price
                  Per**
                **Share**
              **Value
                  -**
                **issue
                  date**
              **Value
                  -**
                **December**
                **31,
                  2004**
              **Value
                  -**
                **December**
                **31,
                  2005**09-30-2004
              09-30-2014
              Option
                  issued Laurus in connection with financing
              **299,997
              $0.01
              $318,597
              $2,018,417
              $100,57409-30-2004
              09-30-2011
              Warrants
                  issued Laurus in connection with financing
              2,250,000
              1.15
              1,370,000
              1,654,326
              123,90803-31-2005
              03-31-2012
              Warrants
                  issued to Laurus in connection with financing
              100,000
              1.20
              60,291
              -
              5,95904-30-2005
              04-30-2012
              Warrants
                  issued to Laurus in connection with financing
              100,000
              1.01
              44,309
              -
              7,31105-31-2005
              05-31-2012
              Warrants
                  issued to Laurus in connection with financing
              100,000
              1.01
              56,614
              -
              7,44606-22-2005
              06-22-2012
              Warrants
                  issued to Laurus in connection with financing
              313,000
              1.00
              137,703
              -
              23,86606-30-2005
              06-30-2012
              Warrants
                  issued to Laurus in connection with financing
              100,000
              0.90
              50,431
              -
              8,48707-31-2005
              07-31-2012
              Warrants
                  issued to Laurus in connection with financing
              100,000
              1.05
              56,244
              -
              7,38108-31-2005
              08-31-2012
              Warrants
                  issued to Laurus in connection with financing
              100,000
              1.05
              22,979
              -
              7,51609-30-2005
              09-30-2012
              Warrants
                  issued to Laurus in connection with financing
              100,000
              0.80
              36,599
              -
              7,64510-31-2005
              10-31-2012
              Warrants
                  issued to Laurus in connection with financing
              100,000
              0.80
              27,367
              -
              7,77811-30-2005
              11-30-2012
              Warrants
                  issued to Laurus in connection with financing
              100,000
              0.80
              16,392
              -
              10,13912-31-2005
              12-31-2012
              Warrants
                  issued to Laurus in connection with financing
              100,000
              0.80
              10,270
              -
              10,270$3,672,743
              $328,280




At
      December 31, 2005, the bifurcated embedded derivative liabilities related to
      Laurus notes were as follows:


09-30-2004
              09-30-2007
              Laurus
                  convertible note
              1,000,000
              $1.00
              $2,070,000
              $2,610,000
              $1,005,00009-30-2004
              09-30-2007
              Laurus
                  revolving credit facilities
              3,000,000
              $1.00
              $1,035,000
              $1,413,999
              $260,007$4,023,999
              $1,265,007$7,696,742
              $1,593,287




**
      Total
      number of options issued was 1,499,997. During the quarter ended September
      30,
      2005, Laurus exercised 1,200,000 options. The remaining number of options was
      299,997 as at December 31, 2005.




F-31







**13.**
            **Other
                Notes Payable**




As
      at
      December 31, 2005 and 2004 , balance comprises:




**2005**
            
            **2004**10.5%
                promissory notes
            
            **$**
            **172,414**
            
            $
            166,6688%
                convertible promissory note
            
            
            **-**
            
            
            107,823**172,414**
            
            
            274,491Less:
                current portion
            
            
            **143,678**
            
            
            107,823**$**
            **28,736**
            
            $
            166,668




In
      February 2004, the Company issued four promissory notes each with principal
      amounts of $43,104 and payable at 100% of the face or principal amount in the
      denomination of CAD $50,000. The notes mature on February 26, 2007. Interest
      is
      payable monthly and accrues at the rate of 10.5% per annum on the outstanding
      principal amount on the 26 th day of
      each month. The principal amount of the notes is repayable in twelve consecutive
      monthly payments commencing on March 26, 2006.




In
      September 2004, the Company issued a convertible promissory note payable at
      100%
      of the face or principal amount of $100,000. The note matures on October 15,
      2005. Interest on the note accrues at the rate of 8% per annum, payable monthly.
      The holder converted the principal into shares (also see Note 15)




Interest
      expense recognized for the year was $57,898 (2004:$ 30,821).




The
      principal payments for the next two years and thereafter are as
      follows:




**Year**
            
            **Amount**2006
            
            $
            143,6782007
            
            
            28,736$
            172,414









**14.**
            **Major
                Customers**




Sales
      to
      one (2004-one) major customer for the year comprise 7% (2004 - 22%) of total
      sales. No other customers with sales for more than 10%.




Accounts
      receivable from the top three customers (2004 - three) comprises 19% (2004
      -
      33%) of the total trade receivable balance as at December 31, 2005.




F-32







**15.**
            **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. On December 23, 2004,
      the
      Company declared a three-for-one stock split on the shares of the Company’s
      common stock. All references in the financial statements to the number of shares
      outstanding, per share amounts, and stock option data of the Company's common
      stock have been reflected the effect of the stock split for all periods
      presented.




During
      fiscal year 2004, the Company entered into a consulting agreement by issuing
      60,000 shares of common stock in consideration of investor relation services
      rendered. In addition, the Company entered into an engagement letter and issued
      75,000 shares of common stock for legal services rendered, which includes
      certain SEC filings, and routine U.S. corporate and securities law advice.
      Total
      recognized consulting and legal expenses for the year ended December 31, 2004
      relating to the above shares are $48,000 and $50,182.




In
      June
      2005, the Company entered into another consulting agreement by issuing 200,000
      shares stock in consideration for investor relations services rendered with
      the
      fair value of $150,000. Total recognized consulting expenses for the year ended
      December 31, 2005 relating to the above shares are $81,250. The remaining
      balance was recorded under deferred compensation of $68,750.




On
      June
      30, 2005, all the outstanding principal of a convertible promissory note in
      the
      amount of $105,193 was converted into 174,216 shares of the Company’s common
      stock. The difference amounted to $42,900 of the conversion price $0.574 per
      share and the fair market value of $0.82 per share was recorded as additional
      interest.




In
      July
      2005, Laurus converted 1,200,000 options into 1,200,000 common stock of the
      Company.




In
      August
      2005, the Company entered into another consulting agreement by issuing 100,000
      shares stock in consideration for investor relations services rendered with
      the
      fair value of $75,000. Total recognized consulting expenses for the year ended
      December 31, 2005 relating to the above shares are $37,500. The remaining
      balance was recorded under deferred compensation of $37,500. Additionally,
      the
      Company issued to Torys LLP an additional 7,500 shares in consideration for
      legal fees rendered with the fair value of $7,500. The expense was recorded
      under general and administration expenses.




In
      November 2005, the Company entered into another consulting agreement by issuing
      105,000 shares stock in consideration for investor relations services rendered
      with the fair value of $69,300. Total recognized consulting expenses for the
      year ended December 31, 2005 relating to the above shares are $11,500. The
      remaining balance was recorded under deferred compensation of $57,750.
      Additionally, the Company entered into another consulting agreement by issuing
      100,000 shares in consideration for advisory service rendered with the fair
      value of $45,000. The expense was recorded under general and administration
      expenses.




In
      December 2005, the Company issued 80,000 common shares to the officer of A.C.
      Technical and the chief financial officer with the fair value of $27,200.The
      expense was recorded under general and administration expenses.




**Options**




During
      fiscal year 2004, the Company granted 1,499,997 options to purchase a maximum
      of
      1,499,997 shares of common stock. All the options granted are pursuant to
      issuance of debt. These options allow the holders to buy the Company’s common
      stock at a price of two-thirds of a cent per share and expire on September
      30,
      2014. The options related to the debt were recorded at fair value by using
      the
      Black-Scholes option pricing model as discount on notes of the convertible
      notes
      (see Note 12 for the conditions). The fair value of options issued was
      $1,593,400. 1,200,000 options were exercised during the year ended December
      31,
      2005.




**Warrants**




During
      fiscal year 2004, the Company granted 2,989,500 warrants to purchase a maximum
      of 2,989,500 shares of common stock. Of the warrants granted, 2,250,000 warrants
      were issued pursuant to issuance of debt with the balance of 739,500 warrants
      issued pursuant to consulting and investment banking fees. The warrants related
      to the debt were recorded at fair value by using the Black-Scholes option
      pricing model as discounts on notes of the convertible debt (see Note 9 and
      12
      for the conditions). The fair value of the warrants issued was $1,370,000.
      In
      addition, the warrants issued pursuant to consulting and investment banking
      fees
      were recorded at fair value by using the Black-Scholes option pricing model
      and
      part of the costs were recorded as deferred financing costs (also see Note
      7).
      The fair value of the warrants issued was $425,000. The fair value of the above
      warrants were measured using the Black-Scholes option pricing model with the
      following weighted average assumptions: risk free interest rate of 3.5%,
      expected dividend yield of 0%, volatility of 55%, share price of $1.07 and
      contractual lives of 5 to 7 years.




F-33


During
      the year ended December 31, 2005, the Company additionally granted 1,313,000
      warrants to purchase a maximum 1,313,000 shares of common stock. Of the warrants
      granted, 1,000,000 warrants were issued to postpone scheduled principal payments
      in respect of Term Note with the balance of 313,000 warrants issued pursuant
      to
      Laurus waiving the payment of penalties for failure to have an effective
      registration statement (also see Note 12). The warrants related to the debt
      were
      recorded at fair value by using the Black-Scholes option pricing model as
      discounts on notes of the convertible debt (see Note 9 and 12 for the
      conditions). The fair value of warrants issued was $381,496. In addition, the
      warrants issued pursuant to waiver of the payment of the penalties were recorded
      at fair value by using the Black-Scholes option pricing model under the general
      and administration expenses. The fair value of the warrants issued was $137,703.
      The fair value of the above warrants were measured using the Black-Scholes
      option pricing model with the following weighted average assumptions: risk
      free
      interest rate of 3.8% to 4.33%, expected dividend yield of 0%, volatility of
      45%
      to 50%, share price of $0.80 to $1.10 and contractual lives of 7
      years.




These
      warrants allow the holders to buy the Company’s common stock at prices ranging
      from $0.33 to $1.20 per share and expire at various dates between September
      30,
      2009 and December 31, 2012. No warrants were exercised during the
      period.







**16.**
            **Diluted
                Loss Per Share**




Total
      number of common stock equivalent that would be issued upon warrants, options
      or
      equivalent of debts excluded from the calculation of diluted loss per share
      for
      the year ended December 31, 2004 was 11,427,426 because they are
      anti-dilutive.





The
      following reconciles the numerator and denominator of diluted loss per share
      in
      2005.





Basis
                weighted average shares outstanding
            
            
            30,945,604Convertible
                debt assumed conversion
            
            
            8,087,768Warrants
            
            
            1,112,24440,145,615Net
                income
            
            $
            827,574Interest
                on convertible debt
            
            
            427,327Derivative
                income
            
            
            (3,734,876
            )Income
                available for diluted EPS
            
            $
            (
                2,470,065
            )








**17.**
              **Commitments**


The
      Company has entered into contracts for certain consulting services providing
      for
      monthly payments with the Companies controlled by the CEO and the president’s
      spouse. In addition, the Company has also entered into an operating lease for
      its vehicles, computers and office equipment. The total minimum annual payments
      for the next five years are as follows:


**Total**
              
              **2006**
              
              **2007**
              
              **2008**
              
              **2009**Operating
                  leases
              
              $
              88,000
              
              $
              75,000
              
              $
              13,000
              
              $
              -
              
              $
              -Commitments
                  related to consulting agreements
              
              $
              2,509,600
              
              $
              547,900
              
              $
              598,600
              
              $
              652,200
              
              $
              710,900$
              2,597,600
              
              $
              622,900
              
              $
              611,600
              
              $
              652,200
              
              $
              710,900


F-34







**18.**
            **Subsequent
                Events**




The
      Company entered into an agreement, through its wholly owned newly formed
      Delaware subsidiary, Cancable Holding Corp. (“Holding”), to acquire all of the
      issued and outstanding shares of capital stock and any other equity interests
      of
      Cancable Inc., an Ontario corporation (“Cancable”). To finance the acquisition,
      subsidiaries of the Company entered into a loan agreement with Laurus Master
      Fund, Ltd. (“Laurus”) to which the Company became a guarantor.




The
      Company, Cancable, Holding, Covington Capital Corporation (“Covington”) and BMO
      Capital Corporation (“BMO”) entered into a Stock Purchase Agreement for the
      purchase by Holding of all the issued and outstanding shares of capital stock
      and any other equity interests of Cancable.




Cancable
      and Holding entered into a series of agreements with Laurus whereby Cancable
      issued to Laurus a secured term note (the “Note”) in the amount of $6,865,000
      and Holding issued to Laurus a related option to purchase up to 49 shares of
      common stock of Holding (up to 49% of the outstanding shares of Holding) at
      a
      price of $0.01 per share (the “Option”). The Note is secured by all of the
      assets of the Company and its subsidiaries. The principal amount of the Note
      bears interest at prime rate plus one and three quarters percent with a minimum
      rate of seven percent. Cancable and Holding have granted Laurus a right of
      first
      refusal with respect to any debt or equity financings for a period of 180 days
      after closing.




The
      Company and its subsidiaries, Iview Holding Corp., a newly formed Delaware
      corporation and direct subsidiary of the Company (“Holding”), and Iview Digital
      Video Solutions Inc. (“Iview”), entered into a series of agreements with Laurus
      Master Fund Ltd. (“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 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 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: A.C. Technical Systems
      Ltd., Creative Vistas Acquisition Corp., Holding, Iview, Cancable Holding Corp.,
      Cancable and Cancable, Inc.




Simultaneously
      with the closing of this refinancing transaction, the Company 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.




The
      principal amounts of the Company Note and the Iview Note bear interest at the
      prime rate plus two percent with a minimum rate of seven percent.




The
      Registrant, Iview and Holding have granted Laurus a right of first refusal
      with
      respect to any debt or equity financings for a period of 180 days after
      closing.




F-35





**19.**
            **Contingencies**




The
      Company is potentially liable for $40,000 relating to a claim by a former
      employee and approximately $100,000 relating to claims by a few suppliers.
      In
      the opinion of management resolution of these claims is not expected to have
      any
      material effect on the Company’s financial position or results of
      operations.









F-36


**Item
                8.**
            **Changes
                In and Disagreements With Accountants on Accounting and Financial
                Disclosure**




Our
      prior
      auditors, BDO Dunwoody, LLP, resigned on February 28, 2006 and will be no longer
      associated with our financial statements. On or about the same time, we engaged
      Stark Winter Schenkein & Co., LLP, as our principal independent accountant.
      The decision to change accountants was made with the approval of our board
      of
      directors.




During
      the most recent two fiscal years and prior to the resignation of our prior
      auditors on February 28, 2006, the Company had not consulted with Stark Winter
      Schenkein & Co., LLP on any issue including the application of accounting
      principles to a specified transaction, either completed or proposed, or the
      type
      of audit opinion that might be rendered on the Company’s financial statements,
      and neither a written report was provided to the Company nor oral advice was
      provided that was an important factor considered by the Company in reaching
      a
      decision as to its accounting, auditing or financial reporting
      issues.





No
      report
      of BDO Dunwoody, LLP on our financial statements for either of the past two
      fiscal years contained an adverse opinion, a disclaimer of opinion or a
      qualification or was modified as to uncertainty, audit, scope or accounting
      principles.




We
      believe and we have been advised by BDO Dunwoody, LLP that it concurs in such
      belief that, during our two most recent fiscal years and any subsequent interim
      period through the date of their resignation on February 28, 2006, we did not
      have any disagreement on any matter of accounting principles or practices,
      financial statement disclosure or auditing scope or procedure, which
      disagreement, if not resolved to the satisfaction of BDO Dunwoody, LLP, would
      have caused it to make reference in connection with its report on our financial
      statements to the subject matter of this disagreement.





No
      report
      of BDO Dunwoody, LLP on our financial statements for the years ended December
      31, 2004 contained an adverse opinion, a disclaimer of opinion or a
      qualification or was modified as to uncertainty, audit, scope or accounting
      principles. During the years ended December 31, 2004 and any subsequent interim
      period the former accountant’s resignation, February 28, 2006, there were no
“reportable events” within the meaning of Item 304(a)(1) of Regulation S-B
      promulgated under the Securities Act.




**Item
                8A.**
            **Controls
                and Procedures**




**Evaluation
      of Disclosure Controls and Procedures** Our management, including our Chief Executive Officer and Chief Financial
      Officer assessed the effectiveness of our disclosure controls and procedures,
      as
      such terms are defined under rules 13a-15(e) and 15d-15(e) promulgated
      under Securities Exchange Act of 1934, as amended. Based on this assessment,
      our
      management concluded that our disclosure controls and procedures were effective
      as of the end period covered by this annual report.




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




**Item
                8B.**
            **Other
                Information**




None




**Item
                9.**
            **Directors,
                Executive Officers, Promoters and Control Persons; Compliance With
                Section
                16(a) of the Exchange Act**




**Directors
      and Executive Officers**




**Name**
            **Age**
            **Position**Sayan
                Navaratnam
            32
            Chairman,
                Chief Executive Officer and DirectorDominic
                Burns
            46
            President
                and DirectorHeung
                Hung Lee
            37
            Chief
                Financial Officer and Secretary




31


Sayan
      Navaratnam-Director, Chairman and Chief Executive Officer :
      Mr.
      Navaratnam is the visionary who plays a key role for the growth strategy of
      Creative Vistas, Inc. He is responsible for creating a platform for growth
      and
      management of the overall vision and growth of the Company and its subsidiaries.
      He is also responsible for managing the relationship between the Company and
      its
      key funding partner. Mr. Navaratnam’s mandate is to develop and enhance the
      Company’s portfolio of subsidiaries and technologies. Mr. Navaratnam graduated
      from University of Toronto with a Double Specialist degree in Economics and
      Political Science. He has seven years of experience in technology development
      and integration specific to the security industry. He also has three years
      of
      experience in telecommunications with Bell Canada. He was the CEO of Satellite
      Communications Inc., and its research arm Satellite Advanced Technologies,
      during 1997-2000. Mr. Navaratnam was responsible for coordinating and financing
      research and development projects and played a key role in strategic
      partnerships, mergers, and licensing technologies. Mr. Navaratnam was the Chief
      Operating Officer in ASPRO Technologies Ltd. from 2000-2003. He also proposed
      and implemented a strategic marketing campaign to license and distribute a
      new
      line of “wavelet” products from ASPRO. Mr. Navaratnam joined AC Technical as CEO
      in 2003. He has in-depth knowledge of key vertical markets and technology
      demands of security integration. He has served as a member of advisory
      committees for technology related schools and companies and was a key member
      of
      the Alliance of Exporters and Manufacturers of Ontario. Mr. Navaratnam was
      also
      a member of Innovator’s Alliance of Ontario and was recognized as one of the
      best executives in Canada in 1999-2000. Mr. Navaratnam and AC Technical were
      also recently recognized with an award for one of the Top 100 fastest growing
      companies in Canada, from 1999 through 2003, by Profit 100. Mr. Navaratnam
      has
      also worked with a number of investment banking firms to raise financing and
      has
      been involved in advisory roles with private equity funds as well as investment
      banking firms and public companies. Mr. Navaratnam has been a director of our
      company since September 30, 2004.




Dominic
      Burns-Director and President :
      Mr.
      Burns was the founder of AC Technical in 1991. He completed his Electrical
      Apprenticeship program at one of the premier firms in Northern Ireland. He
      graduated from Belfast College of Technology with honors in City and Guilds
      Electrical Theory and Regulations. Mr. Burns also holds a diploma in radio
      and
      navigation systems. He has an extensive understanding of quality controls in
      the
      avionics industry and has been a pioneer in transferring some of the high
      standards and controls set in the avionics industry to the security integration
      market. He has been the President of AC Technical since its inception. He has
      been primarily responsible for expanding the firm’s presence in Canada. Mr.
      Burns has also designed a number of internal technical and marketing programs
      to
      expand AC Technical’s sales and technical capabilities. Mr. Burns has over 20
      years of experience in the security integration industry. Mr. Burns has been
      a
      director of our company since September 30, 2004.




Heung
      Hung Lee-Chief Financial Officer and Secretary :
      Ms. Lee
      joined AC Technical in July 2004 and she has more than 10 years experience
      in
      international public accounting primarily with the world’s largest international
      accounting firms. She has advanced knowledge in financial statements disclosure
      and audit issues and has extensive international business experience in
      countries such as the United States, Hong Kong SAR and the Peoples’ Republic of
      China. She was a manager at BDO Dunwoody LLP from 1999 to 2004. Ms. Lee holds
      a
      Bachelor of Business degree from Monash University in Australia. She is a
      Chartered Accountant in Canada and qualified CPA in Australia. Ms. Lee has
      been
      the Chief Financial Officer of our company since September 30, 2004. Ms Lee
      is
      responsible for review of financials of the Company and subsidiaries and
      creating and implementing strong financial systems within the group of
      companies. Ms. Lee is also an important member in Company’s growth strategy as
      she is highly involved in creating a platform for growth within Creative Vistas,
      Inc.




Significant
      Employees




Christopher
      Pay-Vice President, Corporate Development :
      Mr. Pay
      joined the Company in January 2005. As a member of the executive management
      team
      with responsibility for corporate strategy, Mr. Pay’s mandate is to develop the
      Company’s technology and product portfolio, and to expand its geographic scope
      through a combination of M & A, partnerships and alliances, and key customer
      relationships. Prior to joining the Company, Mr. Pay was a senior Director
      at a
      $400 million venture capital company where he specialized in early stage
      technology investing. During his eight years as a venture capitalist, Mr. Pay
      was instrumental in the creation of investment clusters in the digital media
      and
      enterprise content management sectors. His particular focus was on digital
      image
      capture devices and video processing technologies. Prior to this Mr. Pay spent
      three years in corporate banking for a Schedule I bank where he was involved
      in
      the structuring of large, complex credit and financing transactions for the
      corporate and institutional marketplace. Mr. Pay received his MBA from the
      Rotman School of Business at the University of Toronto.




32


Andrew
      Berenyi-V.P. of Technology .
      Andrew
      Berenyi joined AC Technical in February 2004 and currently serves as the V.P.
      of
      Technology. He received his BApSc degree from the University of Toronto in
      Electrical Engineering (Biomedical option) in 1997 and has extensive experience
      in the security industry. From 1997 to 1999 he was employed at Satellite
      Communications Inc. His duties ranged from integration of security systems
      to
      software testing and development. From 2000 to 2003 he was a software developer
      and team leader at ASPRO Technologies Ltd., a Toronto area company producing
      DVR
      cards and systems for government, financial, and private industry sectors.
      Mr.
      Berenyi leads the engineering group responsible for developing and evaluation
      highly advanced digital video management systems. Gaetano
      DiGiorgio-VP of Operations .
      Gaetano
      DiGiorgio is the VP of Operations with AC Technical Systems Ltd. He is
      responsible for delivering highly advanced security and surveillance systems
      to
      a wide range of customers consisting of large national retail organizations,
      government, entertainment facilities and commercial properties. Mr.Gaetano
      joined AC Technical Systems in 1992 and has been involved in all aspects of
      the
      business over this time period. His education consists of numerous electronic
      and electrical programs and he is a member of the Canadian Sales Professional
      organization. Mr. Gaetano has over 12 years of experience in the
      industry.




**Item
                10.**
            **Executive
                Compensation**




The
      following summary compensation table set forth all compensation paid or accrued
      by the Company’s subsidiary, AC Technical, during the three years ended December
      31, 2005 for services rendered in all capacities by the Chief Executive Officer
      of the Company and the only other executive officer who received total salary
      and bonus exceeding $100,000 in any of such years. Prior to the business
      acquisition and leverage buyout transactions, the Company did not pay any
      compensation to any of its directors and officers, including Rudy R. Miller,
      its
      former chief executive officer. There was no such compensation payable to the
      directors of AC Technical Systems Ltd. for their services.


**Annual
                    Compensation****Name
                    and Principal**
                  **Company****/Subsidiary
                    Position**
                
                **Year**
                
                **Salary
                    ($)**
                
                **Other
                    Annual**
                  **Compensation
                    ($)**
                
                **Bonus
                    ($)**Sayan
                    Navaratnam – Chairman
                
                2005
                
                250,0001
                
                –
                
                –and
                    Chief Executive Officer
                
                2004
                
                243,0002
                
                –
                
                –2003
                
                134,0003
                
                –
                
                –Dominic
                    Burns – President
                
                2005
                
                126,0004
                
                –
                
                –2004
                
                177,9005
                
                –
                
                –2003
                
                125,0976
                
                –
                
                –




1 Including
      $250,000 to Nationwide Solutions Inc. for consulting fees.


2 Including
      $90,000 to Encapsulated Intersoft Systems and $153,000 to Nationwide Solutions
      Inc. for consulting fees.


3 Including
      $68,700 from Encapsulated Intersoft Systems and $65,000 from Nationwide
      Solutions Inc. for consulting fees.


4 Including
      $126,000 from 1608913 Ontario Inc. for consulting fees for 2005.


5 Including
      $81,000 from 1608913 Ontario Inc. for consulting fees and $96,900 for
      salary.


6 Including
      salaries of $125,097.




33


Employment
      Agreements




On
      June
      1, 2004, AC Technical entered into a consulting agreement with 1608913 Ontario
      Inc. and Dominic Burns. Pursuant to this agreement, 1608913 Ontario is to
      provide the exclusive services of Mr. Burns to the Company for the following
      compensation:




·
            From
                October 1, 2004 until December 31, 2004 compensation at the rate
                of
                $210,900 (CAD$250,000);


·
            From
                January 1, 2005 until December 31, 2005 the sum of $232,000
                (CAD$275,000);


·
            From
                January 1, 2006 until December 31, 2006 the sum of $253,100
                (CAD$300,000);


·
            From
                January 1, 2007 until December 31, 2007 the sum of $274,200
                (CAD$325,000);


·
            From
                January 1, 2008 until December 31, 2008 the sum of $295,300 (CAD$350,000);
                and


·
            From
                January 1, 2009 until December 31, 2009 the sum of $316,400
                (CAD$375,000).




In
      addition, 1608913 Ontario is entitled to a bonus payable upon the Company
      attaining the annual gross revenue targets specified in the agreement for the
      calendar years 2004 through 2009. The bonus is 0.5% of the annual gross revenue
      targets for 2004 and 1% of the annual gross revenue target for 2005 through
      2009. An additional bonus of 2% will be paid for each additional increment
      of
      $421,800 (CAD$500,000) annual gross revenue beyond the revenue target in any
      given year. Mr. Burns’ spouse is the only beneficial owner of 1608913
      Ontario.




On
      June
      1, 2004, AC Technical entered into a consulting agreement with Nationwide
      Solutions Inc. and Sayan Navaratnam. Pursuant to this agreement, Nationwide
      is
      to provide the exclusive services of Mr. Navaratnam to the Company for the
      following compensation:




·
            From
                October 1, 2004 until December 31, 2004 compensation at the rate
                of
                $253,100 (CAD$300,000) per annum;


·
            From
                January 1, 2005 until December 31, 2005 the sum of $278,400
                (CAD$330,000);


·
            From
                January 1, 2006 until December 31, 2006 the sum of $306,300
                (CAD$363,000);


·
            From
                January 1, 2007 until December 31, 2007 the sum of $336,900
                (CAD$399,300);


·
            From
                January 1, 2008 until December 31, 2008 the sum of $370,600 (CAD$439,230);
                and


·
            From
                January 1, 2009 until December 31, 2009 the sum of $409,300
                (CAD$485,153).





In
      addition, Nationwide is entitled to a bonus payable upon the Company attaining
      the annual gross revenue targets specified in the agreement for the calendar
      years 2004 through 2009. The bonus is 0.5% of the annual gross revenue targets
      for 2004 and 1% of the annual gross revenue target for 2005 through 2009. An
      additional bonus of 2% will be paid for each additional increment of $421,800
      (CAD$500,000) annual gross revenue beyond the revenue target in any given year.
      Mr. Navaratnam is the only beneficial owner of Nationwide.




1608913
      Ontario Inc. and Nationwide Solutions Inc. were structured for the personal
      tax
      benefit of Mr. Burns and Mr. Navaratnam, respectively. Under Canadian tax law,
      there are potential income tax benefits to Mr. Burns and Mr. Navaratnam from
      structuring their relationship to the Company as Consulting Agreements between
      the Company and each of 1608913 Ontario Inc. and Nationwide Solutions Inc.
      instead of them being employed directly by the Company. This structure does
      not
      have any effect on Creative Vistas.




The
      payments to Encapsulated Intersoft Systems and Nationwide Solutions Inc. were
      related to the services provided by Sayan Navaratnam, the chief executive
      officer of A.C. Technical Systems Ltd.




The
      consulting services provided by Encapsulated Intersoft Systems were on a monthly
      basis and were not pursuant to a written agreement. No amounts have become
      due
      to Encapsulated Intersoft Systems after the business acquisition and leveraged
      buyout transactions.




The
      consulting services provided to the Company by Mr. Navaratnam and Mr. Burns
      related to the management of the Company including sales and marketing, project
      management, technology development, finance, operations, mergers and
      acquisitions, engineering design and other management services required by
      the
      Company.




34


We
      have a
      standard employment contract with our employees that is reviewed on an annual
      basis. Of the persons who currently are parties to this employment agreement,
      only Ms. Lee currently falls under the category of executive staff. There are
      no
      employment contracts with the CEO and the President. In each standard employment
      contract, we have included the terms of employment, remuneration, fringe
      benefits, vacation, confidentiality, non—solicitation and termination of
      employment.




The
      Company has no stock option plan although it intends to adopt one in
      2006.




**Item
                11.**
            **Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters**




The
      following table sets forth information with respect to the beneficial ownership
      of the Company’s common stock as of April 14, 2006 of each executive officer,
      each director, and each shareholder in addition to the selling shareholders
      known to be the beneficial owner of 5% or more of the Company’s Common Stock and
      all officers and directors as a group. As of December 31, 2005, Laurus Master
      Fund, Ltd. beneficially owned 1,200,000 shares of the Company’s Common Stock.
      The securities owned by Laurus Master Fund, Ltd. contain a provision that Laurus
      may not, subject to certain exceptions, at any time beneficially own more than
      4.99% of our outstanding common stock. The Company and Laurus have agreed that,
      other than on 75 days’ notice or upon the occurrence of an event of default,
      this provision may not be waived. Absent this limitation, Laurus would
      beneficially own 8,049,997 shares of our common stock, which is comprised of
      4,500,000 shares under the term note, 1,000,000 shares under the revolving
      notes, 299,997 shares under the option and 2,250,000 shares under the warrant.




Name
                and Address of Beneficial Owner
            
            Shares
                of Common
              Stock
                Beneficially
              Owned
            
            Percentage
                of Common
              Stock
                Beneficially
              OwnedSayan
                Navaratnam
              735-125
                Omni Drive
              Toronto,
                Ontario, Canada M1P 5A9
            
            16,885,959
            
            52.6%Dominic
                Burns
              15
                Westlake Street
              Hampton,
                Ontario, Canada L0B 1J0
            
            11,082,102
            
            34.5%Heung
                Hung Lee
              36
                Madison Heights Boulevard
              Markham,
                Ontario, Canada L6C 2E2
            
            50,000
            
            0.2%All
                officers and directors as a group (3 persons)
            
            28,018,061
            
            87.3%




**Item
                12.**
            **Certain
                Relationships and Related
                Transactions**




On
      September 22, 2004, we incorporated a new Ontario company, A.C. Technical
      Acquisition Corp., in order to effect the acquisition of A.C. Technical Systems
      Ltd. Creative Vistas, Inc. owns 50 VFV shares (voting fixed value shares) and
      100 NVE shares (non-voting equity shares) of AC Acquisition. Brent Swanick,
      an
      unrelated party, owns the remaining 50 VFV shares for which he paid a total
      consideration of CDN$50. The total issued share capital was CDN$100 (CDN$1
      for
      each VFV share). Each VFV share is only entitled to a return of CDN$1 upon
      dissolution of AC Acquisition and has no share in AC Acquisition’s profits; AC
      Acquisition is a direct subsidiary of ours and our 100 NVE shares have the
      entire interest in the profits of AC Acquisition.




On
      September 29, 2004, pursuant to a Stock Purchase Agreement with The Burns Trust
      (our president is one of the beneficiaries of the trust) and The Navaratnam
      Trust (our CEO is one of the beneficiaries of the trust), as sellers, A.C.
      Technical Systems Ltd. and A.C. Technical Acquisition Corp., as purchasers,
      AC
      Acquisition acquired all of the issued and outstanding shares of AC Technical
      from The Burns Trust and The Navaratnam Trust for consideration consisting
      of
      promissory notes in the aggregate amount of $3,300,000. AC Technical became
      an
      indirect subsidiary of the Company and a wholly owned direct subsidiary of
      AC
      Acquisition. $1,800,000 has been paid to The Burns Trust and The Navaratnam
      Trust through part of the funding from Laurus. As at December 31, 2004, the
      aggregate outstanding payables to The Burns Trust and The Navaratnam Trust
      were
      $1,500,000 in the form of 3% promissory notes with no fixed repayment date
      and
      these notes are payable upon demand. However, pursuant to the Laurus financing,
      these notes have been subordinated to the Company’s obligations to Laurus. The
      notes each with an amount of $750,000 are due to The Burns Trust (our president
      is one of the beneficiaries of the trust) and The Navaratnam Trust (our CEO
      is
      one of the beneficiaries of the trust), respectively. Interest expense for
      both
      of these notes payable recognized for the year was $45,000 (2004:$11,250).
      See
      Note 5 of the Financial Statements for the year ended December 31,
      2005.




35


The
      above
      structure was set up for Canadian tax purposes. This allows AC Technical to
      maintain its status as a Canadian Controlled Private Corporation (“CCPC”), which
      makes it eligible for Canadian research and development tax credits. A CCPC
      is a
      corporation that is not controlled by a non-Canadian entity. Consequently Brent
      Swanick, who is Canadian, holds 50% of the voting shares and the Company holds
      50% of the voting shares and 100% of the non-voting equity shares so as to
      satisfy the requirement for CCPC tax treatment. To provide protection to the
      Company, there is a voting agreement between Mr. Swanick and Creative Vistas,
      Inc. granting Creative Vistas, Inc. the power at any time to cause Mr. Swanick
      to transfer his VFV shares to another person designated by Creative Vistas.
      The
      result is that under the Canadian tax law, control is not with a foreign entity
      and A.C. Technical Systems Ltd. is considered a CCPC. However, Creative Vistas,
      Inc. by virtue of its ability to cause the transfer at any time of the VFV
      shares, completely controls AC Technical. However, the provisions of the voting
      agreement do not affect AC Technical’s qualification as a CCPC entitled to
      certain tax credits.




On
      September 30, 2004, pursuant to a Common Stock Purchase Agreement with Miller
      Capital Corporation and Tudor Investments LTD Profit Sharing Plan, Sayan
      Navaratnam, Dominic Burns, Randy Stern and Malar Trust, Inc., Sayan Navaratnam,
      Dominic Burns, Randy Stern and Malar Trust, Inc. purchased 28,500,000 shares
      of
      our common stock from Miller Capital Corporation and Tudor Investments LTD
      Profit Sharing Plan for cash consideration of $300,000.




On
      September 30, 2004, we entered into a series of agreements with Laurus Master
      Fund, Ltd. whereby we issued to Laurus (i) a secured convertible term note
      in
      the amount of $4.5 million, (ii) secured revolving notes in the aggregate
      maximum amount of $3 million, (iii) a related option to purchase up to 1,499,997
      shares of our common stock at a price of two-thirds of a cent per share, and
      (iv) a seven year warrant to purchase up to 2,250,000 shares of our common
      stock
      at a price of $1.15 per share. The loan is secured by all of our assets and
      the
      assets of our subsidiaries.




$1,250,000
      of the term note issued to Laurus was placed in a restricted account. The amount
      was not to be released until an effective registration statement and until
      the
      Company met certain revenue targets. Waiving the restricted account
      restrictions, on March 9, 2005, Laurus released $125,000 to the Company for
      the Company to fund its loan to dataBahn. On June 22, 2005, Laurus waived the
      restrictions again and released the remaining restricted account
      amount.




On
      January 31, 2003, we entered into a Subordinated Loan Agreement by which we
      borrowed $208,000 from Mr. Navaratnam. The currently outstanding amount of
      this
      loan, as at December 31, 2005 is $55,919 bearing interest at 6% per annum.
      We pay monthly payments including interest of $10,155. The loan has been
      subordinated to the Laurus loans. No interest has been charged since September
      30, 2004, see Note 5 of the financial statements as at December 31, 2005. In
      2004, we paid Mr. Navaratnam $4,328 in interest on this loan. No interest was
      paid for the twelve months ended December 31, 2005. There is no additional
      amount received since January 31, 2003. Total repayment up to date was $152,081.




In
      addition, we also have received advances from Mr. Navaratnam since December
      24,
      2003. The balance as at December 31, 2005, December 31, 2004 and 2003 was
      $58,700, $56,700 and $34,700. The advances have been subordinated to the Laurus
      loans since September 30, 2004, as non-interest bearing loans with no fixed
      term
      of repayment. Total amount advanced from December 24, 2003 up to date was
      $64,000 and total repayment during the same period was $43,300.


36


We
      also
      have balances due to Mr. Burns in the amount of $74,600, $81,600 and $84,400
      as
      of December 31, 2003, December 31, 2004 and December 31, 2005, respectively.
      The
      original advance was made in 1999 and Mr. Burns has made additional advances
      from time to time. The last such advance was made September 30, 2004. This
      loan
      is subordinated to Laurus Master Funds, non-interest bearing and has no fixed
      terms of repayment. Total amount advanced from December 31, 1999 up to date
      was
      $7,000 and total repayment during the same period was $2,000.




The
      advances provided by Mr. Navaratnam and Mr. Burns were for working capital
      for
      the Company.




We
      received an advance from a company controlled by the president’s spouse, which
      existed since December 31, 2003. The advance was non-interest bearing and due
      on
      demand. An unrelated third party has been paying amounts it owes to the company
      controlled by the president’s spouse into our bank account instead of to the
      president’s spouse’s company. To date we have not sent the president’s spouse’s
      company such amounts. The balance of the advances plus the money due to the
      president’s spouse’s company from the unrelated third party payments was $900,
      $4,865 and $938 as at December 31, 2005, December 31, 2004 and December 31,
      2003, respectively. Total amount received for the period from December 31,
      2003
      to December 31, 2005 was $4,400 and repayment $7,500 was made during the
      period.




As
      at
      December 31, 2005, we have an immaterial balance due from a company controlled
      by the president amounting to $2,200 (2004: $2,100) for expenses we paid for
      this company. This balance is outstanding since 2002 and was non-interest
      bearing and due on demand. See Note 5 of the Financial Statements for the year
      ended December 31, 2005.





**Item
                  13.**
              **Exhibits**2.1
              Stock
                  Purchase Agreement dated September 29, 2004, by and among Creative
                  Vistas,
                  Inc., The Burns Trust, The Navaratnam Trust and A.C. Technical
                  Acquisition
                  Corp., and AC Technical Systems Ltd.(2)2.2
              Common
                  Stock Purchase Agreement, dated September 30, 2004, by and among
                  Creative
                  Vistas, Inc., Miller Capital Corporation, Tudor Investments LTD
                  Profit
                  Sharing Plan and Sayan Navaratnam, Dominic Burns, Randy Stern and
                  Malar
                  Trust, Inc.(2)3.1
              Articles
                  of Incorporation, as amended to date(2)3.2
              By-laws(1)10.1
              Security
                  Agreement, dated September 30, 2004, by and among Laurus Master
                  Fund,
                  Ltd., Creative Vistas, Inc., A.C. Technical Acquisition Corp.,
                  and A.C.
                  Technical Systems Ltd.(2)10.2
              Securities
                  Purchase Agreement, dated September 30, 2004 by and between Creative
                  Vistas, Inc. and Laurus Master Fund, Ltd.(2)10.3
              Secured
                  Convertible Term Note, dated September 30, 2004, issued by Creative
                  Vistas, Inc. to Laurus Master Fund, Ltd.(2)10.4
              Secured
                  Convertible Minimum Borrowing Note, dated September 30, 2004 issued
                  by
                  Creative Vistas, Inc. to Laurus Master Fund, Ltd.(2)10.5
              Secured
                  Revolving Note, dated September 30, 2004, issued by Creative Vistas,
                  Inc.
                  to Laurus Master Fund, Ltd.(2)10.6
              Common
                  Stock Purchase Warrant, dated September 30, 2004, issued by Creative
                  Vistas, Inc. to Laurus Master Fund, Ltd.(2)10.7
              Common
                  Stock Option, dated September 30, 2004, issued by Creative Vistas,
                  Inc. to
                  Laurus Master Fund, Ltd.(2)10.8
              Registration
                  Rights Agreement, dated September 30, 2004 by and between Creative
                  Vistas,
                  Inc. and Laurus Master Fund, Ltd.(2)10.9
              Master
                  Security Agreement, dated September 30, 2004, by and among Creative
                  Vistas, Inc., certain of its subsidiaries and Laurus Master Fund,
                  Ltd.(2)10.10
              Stock
                  Pledge Agreement, dated September 30, 2004, by and among Laurus
                  Master
                  Fund, ltd., Creative Vistas, Inc., and each of the undersigned
                  Pledgors(2)10.11
              Funds
                  Escrow Agreement, dated September 30, 2004, by and among Creative
                  Vistas,
                  Inc., Laurus Master Fund, Ltd., and Loeb & Loeb LLP(2)10.12
              Restricted
                  Account Agreement, dated September 30, 2004 by and among North
                  Fork Bank,
                  Creative Vistas, Inc. and Laurus Master Fund, Ltd.(2)
  37
  10.13
              Letter
                  Agreement, dated September 30, 2004 by and between Creative Vistas,
                  Inc.
                  and Laurus Master Fund, Ltd. relating to the Restricted Account
                  Agreement(2)10.14
              Consulting
                  agreement dated June 1, 2004, by and among AC Technical Systems
                  Ltd.,
                  1608913 Ontario Inc. and Dominic Burns(3)10.15
              Consulting
                  agreement dated June 1, 2004, by and among AC Technical Systems
                  Ltd.,
                  Nationwide Solutions Inc. and Sayan Navaratnam(3)10.16
              Credit
                  facilities letter dated May 25, 2004, by and between AC Technical
                  Systems
                  Ltd., and Royal Bank of Canada(3)10.17
              Employment
                  agreements with the Company’s executive staff(3)10.18
              Voting
                  Agreement, datedSeptember
                  30, 2004by
                  and between Creative Vistas, Inc. and Brent Swanick(4)10.19
              By-laws
                  of AC Technical Acquisition Corp.(4)10.20
              Promissory
                  Note issued to The Burns Trust(4)10.21
              Promissory
                  Note issued to The Navaratnam Trust(4)10.22
              Secured
                  Promissory Note Purchase Agreement, dated March 9, 2005 by and
                  between
                  Creative Vistas, Inc. and dataBahn, Inc.(4)10.23
              Form
                  of Standard Employment Agreement(4)10.24
              Articles
                  of Incorporation of A.C. Technical Acquisition Corp.(5)10.25
              Share
                  Pledge Agreement dated September 30, 2004 among Laurus Master Fund,
                  Ltd., A.C. Technical Acquisition Corp. and Brent W. Swanick(5)10.26
              Subsidiary
                  Guaranty dated September 30, 2004 of A.C. Technical Systems Ltd. and
                  A.C. Technical Acquisition Corp.(5)10.27
              Subordination
                  and Postponement Agreement among A.C. Technical Acquisition Corp.,
                  The
                  Navaratnam Trust, The Burns Trust, Sayan Navaratnam and Dominic
                  Burns(5)10.28
              Amendment
                  and Waiver dated June 22, 2005 between Creative Vistas, Inc. and
                  Laurus
                  Master Fund, Ltd.(6)10.29
              Amendment
                  and Waiver dated June 22, 2005 between Creative Vistas, Inc. and
                  Laurus
                  Master Fund, Ltd.(6)10.30
              Amendment
                  and Warrants issued on August 31, 2005 and September 30, 2005 between
                  Creative Vistas, Inc. and Laurus Master Fund, Ltd.(7)10.31
              Amendment
                  and Waiver issued on September 1, 2005 between Creative Vistas,
                  Inc. and
                  Laurus Master Fund, Ltd.(7)10.32
              Stock
                      Purchase Agreement dated December 31, 2005, by and among Creative
                      Vistas,
                      Inc., Cancable, Inc. and the Stockholders Party thereto(8)10.33
              Escrow
                    Agreement dated December 31, 2005, among Cancable Holding Corp.,
                    Covington Fund II Inc. and BMO Capital Corporation and Gowling
                    Lafleur
                    Henderson LLP, as Escrow Agent(8)10.34
              Securities
                    Purchase Agreement, dated December 31, 2005, by and among Laurus
                    Master
                    Fund, Ltd., Cancable Inc. and Cancable Holding Corp.(8)10.35
              Secured
                    Term Note, dated December 31, 2005, issued by Cancable Inc. to
                    Laurus
                    Master Fund, Ltd.(8)10.36
              Option,
                    dated December 31, 2005, issued by Cancable Holding Corp. to
                    Laurus Master
                    Fund, Ltd.(8)10.37
              Guarantee,
                    dated December 31, 2005 by and among Creative Vistas, Inc. Cancable
                    Inc.,
                    Cancable Holding Corp., Cancable, Inc., A.C. Technical Systems
                    Ltd.,
                    Creative Vistas Acquisition Corp., and Iview Digital Video Solutions
                    Inc.(8)10.38
              Side
                    Agreement, dated December 31, 2005 between Cancable Inc., Cancable
                    Holding
                    Corp., Cancable, Inc. and Creative Vistas, Inc.(8)10.39
              Joinder
                    and Confirmation of Security Interest, dated December 31, 2005
                    among
                    Cancable Inc., Cancable Holding Corp., Cancable, Inc., A.C. Technical
                    Systems Ltd., Creative Vistas Acquisition Corp., Iview Digital
                    Video
                    Solutions Inc., Brent Swanick and Creative Vistas, Inc. and Laurus
                    Master
                    Fund, Ltd.(8)10.40
              Master
                    Security Agreement, dated December 31, 2005, by and among Creative
                    Vistas,
                    Inc., certain of its subsidiaries and Laurus Master Fund, Ltd(8)10.41
              Share
                    Pledge Agreement, dated December 31, 2005, by and among Laurus
                    Master
                    Fund, Ltd., Creative Vistas, Inc., and each of the undersigned
                    Pledgors(8)10.42
              Funds
                    Escrow Agreement, dated December 31, 2005, by and among Creative
                    Vistas,
                    Inc., Laurus Master Fund, Ltd., and Loeb & Loeb LLP(8)
  38
  10.43
              Amendment,
                    dated December 31, 2005, by and among Creative Vistas, Inc.,
                    Creative
                    Vistas Acquisition Corp., A.C. Technical Systems Ltd. and Laurus
                    Master Fund, Ltd.(8)10.44
              Amendment
                    and Waiver, dated as of December 31, 2005, by and between Creative
                    Vistas,
                    Inc. and Laurus Master Fund, Ltd., for the purpose of amending
                    the terms
                    of that certain Registration Rights Agreement by and between
                    the
                    Registrant and Laurus, dated as of September 30, 2004(8)10.45
              Amendment,
                    dated as of December 31, 2005 between Creative Vistas, Inc. and
                    Laurus
                    Master Fund, Ltd. for the purpose of amending the Securities
                    Purchase
                    Agreement, dated as of September 30, 2004, the Secured Convertible
                    Term
                    Note, dated as of September 30, 2004 and the Registration Rights
                    Agreement
                    dated as of September 30, 2004(8)10.46
              Securities
                  Purchase Agreement, dated February 13, 2006, by and among Laurus
                  Master
                  Fund, Ltd., Creative Vistas, Inc., Iview Holding Corp. and Iview
                  Digital
                  Video Solutions Inc.(9)10.47
              Secured
                  Term Note, dated February 13, 2006, issued by Creative Vistas,
                  Inc. to
                  Laurus Master Fund, Ltd.(9)10.48
              Secured
                  Term Note, dated February 13, 2006, issued by Iview Digital Video
                  Solutions Inc. to Laurus Master Fund, Ltd.(9)10.49
              Option,
                  dated February 13, 2006, issued by Iview Holding Corp. to Laurus
                  Master
                  Fund, Ltd.(9)10.50
              Warrant,
                  dated February 13, 2006, issued by Creative Vistas, Inc. to Laurus
                  Master
                  Fund, Ltd.(9)10.51
              Amended
                  and Restated Guaranty, dated February 13, 2006 by and among Creative
                  Vistas, Inc., Cancable Inc., Cancable Holding Corp., Cancable,
                  Inc., A.C.
                  Technical Systems Ltd., Creative Vistas Acquisition Corp., Iview
                  Holding
                  Corp. and Iview Digital Video Solutions Inc.(9)10.52
              Amended
                  and Restated Guaranty, dated February 13, 2006 between Brent W.
                  Swanick
                  and Laurus Master Fund, Ltd.(9)10.53
              Side
                  Agreement, dated February 13, 2006 between Iview Digital Video
                  Solutions,
                  Inc., Iview Holding Corp., Creative Vistas Acquisition Corp. and
                  Laurus
                  Master Fund, Ltd.(9)10.54
              Joinder
                  and Confirmation of Security Agreement, dated February 13, 2006
                  among
                  Iview Holding Corp., Cancable Inc., Cancable Holding Corp., Cancable,
                  Inc., A.C. Technical Systems Ltd., Creative Vistas Acquisition
                  Corp.,
                  Iview Digital Video Solutions Inc., and Creative Vistas, Inc. delivered
                  to
                  Laurus Master Fund, Ltd.(9)10.55
              Joinder
                  and Confirmation of Security Agreement, dated February 13, 2006,
                  by Brent
                  W. Swanick delivered to Laurus Master Fund, Ltd.(9)10.56
              Funds
                  Escrow Agreement, dated February 13, 2006, by and among Creative
                  Vistas,
                  Inc., Laurus Master Fund, Ltd., and Loeb & Loeb LLP(9)10.57
              First
                  Amendment to Securities Purchase Agreement, dated February 13,
                  2006, by
                  and among Cancable Inc., Cancable Holding Corp.****and
                  Laurus Master Fund, Ltd. for the purpose of amending the terms
                  of that
                  certain Securities Purchase Agreement by and among Cancable Inc.,
                  Cancable
                  Holding Corp. and Laurus, dated as of December 31, 200510.58
              Registration
                  Rights Agreement, dated as of February 13, 2006, by and between
                  Creative
                  Vistas, Inc. and Laurus Master Fund, Ltd.(9)10.59
              Cash
                  Collateral Deposit Letter, dated as of February 13, 2006 by and
                  among
                  Cancable Holding Corp., Iview Digital Video Solutions Inc., Cancable
                  Inc.,
                  Cancable, Inc., Creative Vistas, Inc., Creative Vistas Acquisition
                  Corp.,
                  A.C. Technical Systems Ltd., and Iview Holding Corp.(9)
  39
  16.1
              Letter
                  from Semple & Cooper, LLP pursuant to Item 304 of Regulation
                  S-B21.1
              List
                  of all subsidiaries(3)


31.1
            Certification
                of Principal Executive Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200231.2
            Certification
                of Principal 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


_______________




(1)
            Incorporated
                by reference to the Form 10-SB of the Company dated May 10,
                2000.




(2)
            Incorporated
                by reference to the Form 8-K/A of the Company dated February 2,
                2005.




(3)
            Filed
                with the First Amended Form SB-2 on February 4, 2005 and incorporated
                herein by reference.




(4)
            Incorporated
                by reference to the Form 10-KSB of the Company dated April 15,
                2005.




(5)
            Filed
                with the Third Amended Form SB-2 on August 2, 2005 and incorporated
                herein
                by reference.




(6)
            Filed
                with the Fourth Amended Form SB-2 on August 31, 2005 and incorporated
                herein by reference.




(7)
            Filed
                with the Fifth Amended Form SB-2 on October 17, 2005 and incorporated
                herein by reference.




(8)
            Incorporated
                by reference to the Form 8-K of the Company dated January 6,
                2006.




(9)
            Incorporated
                by reference to the Form 8-K of the Company dated February 17,
                2006.




**Item
                14.**
            **Principal
                Accountant Fees and
                Services**




The
      following table sets forth the aggregate fees for professional services rendered
      to the Company for the years ended December 31, 2005 and 2004 by the Company’s
      principal accounting firms, Stark Winter Schenkein & Co., LLP, BDO Dunwoody
      LLP and Semple & Cooper, LLP:




2005
            
            2004Audit
                Fees (a)
            
            $
            65,000
            
            $
            74,200Audit
                Related Fees (b)
            
            
            60,000
            
            
            24,500Tax
                Fees (c)
            
            
            5,000
            
            
            7,400All
                Other Fees (d)
            
            
            -
            
            
            -Total
            
            $
            123,000
            
            $
            86,100




(a)
            *Audit
                Fees.*Fees
                for audit services billed in 2005 consisted of the audit of our annual
                consolidated financial statements, reviews of our quarterly consolidated
                financial statements, statutory audits, consents and services that
                are
                normally provided in connection with statutory and regulatory filing
                or
                engagement. Approximately $45,000 in auditing fees was payable to
                Stark
                Winter Schenkein & Co., LLP for the fiscal year 2005. There was
                approximately $20,000 related to and March 31, 2005, June 20, 2005
                and
                September 30, 2005 quarterly reports payable to BDO Dunwoody LLP.




40


Fees
      for
      audit services billed in 2004 consisted of the audit of our annual consolidated
      financial statements, reviews of our quarterly consolidated financial
      statements, statutory audits, consents and services that are normally provided
      in connection with statutory and regulatory filing or engagement. Approximately
      $50,000 in auditing fees was paid to BDO Dunwoody LLP and $5,000 in auditing
      fees was paid to Semple & Cooper, LLP. Additionally, there was approximately
      $20,000 relating to the fees of the restatements of September 30, 2004 quarterly
      report and annual audited consolidated financial statements for the fiscal
      year
      2004,. The fees was incurred in 2006 but was included under the column of 2004.
      The number included in 2004 was revised which was mainly due to the restatement
      of the September 30, 2004 quarterly report and 2004 annual consolidated
      financial statements were incurred in 2006.




(b)
            *Audit-Related
                Fees.*Fees
                for audit-related services billed in 2005 in preparation of Form
                8-K and
                Form SB-2 which were paid to BDO Dunwoody,
                LLP.




(c)
            *Tax
                Fees.*Fees
                for tax services billed in 2005 and 2004 consisting of assistance
                with our
                federal, state, local and foreign jurisdiction income tax returns.
                We have
                additionally sought consultation and advice related to various tax
                compliance planning projects. All tax fees were paid to BDO Dunwoody,
                LLP
                and Paul Chan & Associate.




(d)
            *All
                Other Fees.*No
                material other fees were billed in 2004 and
                2005.




The
      Company does not have an audit committee; however, our board of directors is
      required to provide advance approval of any non-audit services, other than
      those
      of a de minimus nature, to be performed by our auditors, provided that such
      services are not otherwise prohibited by law. We do not have a formal
      pre-approval policy.




All
      the
      fees for 2005 and 2004 were pre-approved by the board of directors prior to
      the
      auditors’ engagement for these services.




41


**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




**CREATIVE
              VISTAS, INC.**By:
            /s/ Sayan
              NavaratnamSayan
              NavaratnamChief
                Executive Officer










42