UNITED STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


________________





FORM
10-K


______________




(Mark
one)




x ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF
1934





For
the fiscal year ended December 31, 2008





or




o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934


For the
transition period from _____ to _____





Commission
File Number:  0 - 16819


_______________________





CREATIVE
VISTAS, INC.


(Exact
name of registrant as specified in its charter)


_______________________




Arizona
              (State
      or Other Jurisdiction of
              Incorporation
      or Organization)
              
              2100
      Forbes Street
              Unit
      8-10
              Whitby,
      Ontario, Canada
              (Address
      of Principal Executive Offices)
            
            86-0464104
              (I.R.S.
      Employer
              Identification
      No.)
              
              L1N
      9T3
              (Zip
      Code)




Registrant’s
Telephone Number, Including Area Code: 905-666-8676






_______________________




Securities
registered pursuant to Section 12(b) of the Exchange Act:


None





Securities
registered pursuant to Section 12(g) of the Exchange Act:


Common
Stock, No Par Value


(Title
of Class)


_______________________





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes o  No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act.


Yes o  No x















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 registrant’s knowledge, in the definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. Yes o  No x




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.  (Check
one):     Yes x  No o




Large
Accelerated Filer  o                                                                 Accelerated
Filer o




Non-Accelerated
Filer  o                                                                Smaller
Reporting Company x




(Do not
check if a smaller reporting company)




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




oYes                       xNo




The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter was approximately $9,783,580 (8,894,168 Shares at
$1.1).







At March
31, 2009, the number of shares outstanding of the registrant’s common stock, no
par value (the only class of common stock), was 37,391,761.












PART
      IItem
      1.
              Business
              1Item
      1A.
              Risk
      Factors
              13Item
      1B.
              Unresolved
      Staff Comments
              18Item
      2.
              Properties
              18Item
      3.
              Legal
      Proceedings
              18Item
      4.
              Submission
      of Matters to Vote of Security Holders
              19PART
      IIItem
      5.
              Market
      for the Registrant's Common Equity Related Stockholder Matters and Issuer
      Purchases of Equity Securities
              19Item
      6.
              Selected
      Financial Data
              19Item
      7.
              Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
              19Item
      7a.
              Quantitative
      and Qualitative Disclosures about Market Risk
              27Item
      8.
              Financial
      Statements and Supplementary Data
              F-1
      - F-29Item
      9.
              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
              29Item
      9a.
              Controls
      and Procedures
              29Item
      9b.
              Other
      Information
              30PART
      IIIItem
      10.
              Directors,
      Executive Officers and Corporate Governance
              30Item
      11.
              Executive
      Compensation
              30Item
      12.
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              32Item
      13.
              Certain
      Relationships and Related Transactions, and Director
      Independence
              35Item
      14.
              Principle
      Accountant Fees and Services
              36Item
      15.
              Exhibits
      and Financial Statement Schedules
              36









Forward-Looking
Statements




Certain
statements within this Form 10-K 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-K 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.




PART
I




ITEM
      1
            BUSINESS




Corporate
Background and Overview




Creative
Vistas, Inc. was incorporated in the state of Arizona on July 18,
1983.  We are a leading provider of security-related technologies and
systems. We also provide the deployment of broadband services 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-related technologies and systems.  AC Technical Systems is
responsible for all of our revenues in the security sector for
2008.  It provides its systems to various high profile clients
including: government, school boards, retail outlets, banks, and
hospitals.  Iview DVSI is responsible for providing video surveillance
products and technologies to the market.




On
December 31, 2005, we acquired Cancable Inc. (“Cancable”) through our wholly
owned Delaware subsidiary, Cancable Holding Corp.  Cancable is in the
business of providing the deployment and servicing of broadband technologies in
both residential and commercial markets.  Cancable has offices in
Ontario, Canada.  All related documents were disclosed in Form 8-K/A
filed on January 6, 2006.  In October 2007, we entered into an
agreement, through our wholly owned newly formed Ontario subsidiary, Cancable XL
Inc. (“Cancable XL”), to acquire all of the issued and outstanding shares of
capital stock and any other equity interests of XL Digital Services Inc. (“XL
Digital”), an Ontario corporation. All related documents were disclosed in Form
8-K filed on October 17, 2007.  We incorporated 2141306 Ontario Inc.
(“OSS-IM”) as a subsidiary of Cancable in 2007. OSS-IM specializes in research
and development of proprietary BI software. The current version of BI software
manages data from over a million multi-faceted transactions fulfilled annually
by Cancable for its large cable-system customers. Wireless and web enabled, the
software provides automated intelligent decision-making for managing customer
transactions, vehicles, technicians, supply chains, HR-related functions and
other activities.




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 AC Technical Systems we provide
integrated security solutions to our commercial customer
base.  Through Cancable, XL Digital and OSS-IM, we provide broadband
deployment and provisioning services to residential, as well as web based
support and business markets.









1







The
current corporate structure is as follows:










2




Security
and Surveillance Products and Services




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 single source solutions
to our growing customer base.  Our design, engineering and integration
facilities are located in Ontario, Canada.  We operate through our
Iview DVSI subsidiary to build out Digital Video Management Systems (DVMS) to
provide PC based video management systems to the surveillance
market.  Iview is a product company and sells to distributors and
integrators in North America.  Iview is in the early stages of
building a strong consistent sales and marketing team to begin contributing
revenues to us.




Industry
Overview




We
believe that the security industry is growing at a steady pace.  There
has been renewed focus on our industry since the events of September 11,
2001.  The growth is spurred by the continuous evolution of new
technologies and processes.  We believe that the industry is growing
for the following reasons:




·
            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;


·
            Evolving
      digital technologies have 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;


·
            Integration
      of multiple devices has expanded the market for technically advanced
      integrators such as our firm; and


·
            Growing
      public concern about crime.


·
            Decreased
      cost of security technology.




The
security industry is highly fragmented with a large number of manufacturers,
dealers, distributors, integrators and service groups.  All of these
parties provide part of the entire solution to the
customer.  Customers prefer a one-stop shop that provides them with
the entire solution and also designs and customizes a solution that fits their
needs.  This solution may include custom design of hardware, software,
along with highly sophisticated integration work.  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.  The amount of time a customer has to devote to
build multiple relationships as opposed to 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 that can handle all issues and be accountable for an entire
project.  There are a limited number of companies besides us that are
capable of providing this entire integrated solution.  Providing such
a solution requires years of experience, infrastructure for performing all six
core functions that we provide, access to technologies and a significant
commitment to maintaining a satisfied 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 its needs and design a system that
      satisfies those 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; and


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




3


The
process described above can cause a number of issues for clients including
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, as security systems become more
technologically advanced, an experienced engineering team is required to
understand the needs of the customer and satisfy those needs by incorporating
the most efficient technologies available into the security
system.  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.  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.




Our
Strategy




We have
identified four key markets to target with our solution described
below.  These are 1) government, 2) education 3) healthcare and 4)
retail.  We 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 expedite project completion,
reduce costs to the customer, reduce manpower requirements of the customer and
improve systems consistency in multiple locations.




We
provide 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;
and


·
            Ongoing
      maintenance, preventative maintenance and service and
      upgrades.




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




·
            Experience
      and expertise in the security
industry;


·
            In-house
      research and development
departments;


·
            Dedicated
      service team;


·
            Access
      to and experience in a variety of product
mix;


·
            Customized
      software and hardware products;


·
            Strong
      references; and


·
            Strong
      partnerships with suppliers and
integrators.




Our
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; and


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




At the
beginning of each new client relationship, we designate an account manager as
the client service contact.  This individual is the point person for
communications between the client and us.  The account manager usually
has a number of years of experience in the industry and a good understanding of
technologies and solutions that we provide.  This person is also a
trained salesperson 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 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:




4


Consulting,
audit, review and planning




We
identify the client’s objectives and security system requirements.  We
then audit and review the client’s existing system.  This audit of the
existing system evaluates inventory counts and 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 (ROI) model where
applicable.  We also provide a preliminary project implementation plan
that contains a graphical model of the client’s premises with exact outlines of
equipment locations.  Our comprehensive planning process helps the
customer to properly budget for its 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 drawings lay out the entire property and provide a
detailed map of all security equipment and the methodologies used to integrate
the system.  The specification and drawings also outline any needs for
custom software or hardware design services, systems designers and
computer-aided design system operators.  These specifications and
drawings detail areas of high sensitivity, the layout of the main control room,
and the placement of cameras, card readers, monitors, switches and other
equipment.




Once our
system design has been completed, we provide a complete list of components and
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 are not
compatible with each other, we design software or hardware to provide
compatibility.




Customization,
software development, interface




In many
cases, the customer’s needs may not be completely satisfied by the equipment
available in the market place.  The customer may request features or
equipment that are not readily available.  For example, a financial
institution may request us to take information from their transaction records
and an Automatic Teller Machine (ATM), and then integrate that information with
a Digital Video Recorder (DVR).  This would allow them to review video
of an individual who has processed a transaction on an ATM.  Normally
a financial institution requiring this information would have to go through
tapes of data in order to find it.  Such a bank would have to search
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 if the tapes are only held for a short period of
time.  Our firm’s integrated system makes this search process
instantaneous.  Our system allows a bank to search by a number of
criteria including time, date, transaction, number and withdrawal
amount.  A bank can also have video associated with such a search
instantly.




Many
times we provide an interface to bring multiple technologies
together.  In one project we integrated eleven different products into
one system, thus allowing for a completely integrated system.  This
integrated 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 a 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


·
            List
      of components and labor assignments


·
            Officially
      assign the 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


·
            Tests
      of 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




5


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.  These updates may include Gantt
charts.  During this stage, many customers see the need for additional
enhanced equipment, which increases the value of the contract to
us.




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 with 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 vary 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 with service on an incident by incident basis.




The
entire six steps process continues for each customer.  Once a project
is complete, there are upgrades that are required.  Depending on the
value of the upgrades, they may initiate a new project.  During every
stage an account manager is updated on the process.  Account managers
have regular meetings with the customers after projects are complete in order to
help set budgets for the following years and also educate customers 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 they qualify for the
program.  Our product development 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 develop new products.  This is one of the
differentiating factors between our competitors and us.  Our research
and development expenses were approximately $530,600 in fiscal year 2008 and
$289,800 in fiscal year 2007.  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 a 90 day warranty all installation
projects completed by us.  We receive the same warranty on equipment
from our other external suppliers.




On
non-warranty items, we perform repair services for our products sold at our main
office in Ontario, Canada or at customer locations.  For the years
ended December 31, 2008 and December 31, 2007, our revenue from service and
maintenance was $1,540,400 and $1,544,400 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 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.  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




6


·
            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 with 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 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
additional expertise and an expanded presence.  In addition we are
evaluating the possibility of acquiring similar businesses and expanding our
operations.




Customers




We
provide our products and services to customers in five markets:




·
            Government


·
            Healthcare


·
            Education


·
            Retail


·
            Commercial
      Property Management




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.




Backlog




Our
backlog consists of written purchase orders and contract, we have received for
product deliveries and engineering services that 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, 2008,
our backlog was approximately $2,500,000.




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.  Our competitors also
include equipment manufacturers and vendors that provide security
services.  Some of our competitors have greater name recognition and
financial resources than we do.  However, we believe that we have a
well-respected name and are known for our quality work and technical
expertise.  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, 2008, Cancable has a staff of over 400 employees and A.C. Technical
Systems has a staff of 49 full time employees including our officers, of whom 32
were engaged in systems installation and repair services, 11 in administration
and financial control and 6 in marketing and sales.




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




7


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.




Broadband
deployment and provisioning services




We
operate through our subsidiaries Cancable Inc., XL Digital Services Inc., OSS-IM
and Cancable, Inc. (together the “Cancable Group”), located in Ontario, Canada
to provide and deploy broadband services. Cancable Inc. and XL Digital Services
Inc. were subsequent acquisitions. Cancable Group has re-branded its doing
business as name to Dependable HomeTech in 2008.





Cancable
Inc. is a growing Canadian based leader in providing and servicing broadband
technologies to 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.  This is evidenced by its status
as the largest service provider to Rogers Cable Inc., 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.




XL
Digital Services Inc. (“XL Digital”), incorporated in 2007, is a Canadian-based
company provisioning the deployment and servicing of broadband technologies in
the residential market for Canada’s largest cable television provider, Rogers
Cable. XL Digital, with over 70 employees, provides its deployment and
provisioning services for Rogers within two territories where the Company
currently did not have a presence. The acquisition enables the Company to
further expand its services into these two growing territories. XL Digital also
brings the Company a number of years of significant management experience within
the cable and telecommunications sector.




Senior
Management




Cancable
Group has a proven team with over 70 years of cable TV contracting/technical
deployment and support experience.




Ross Jepson, President and
CEO, joined Cancable in December, 2001 after many years in the cable
industry; most notably as President of Cablenet, Managing Director of Videotron,
Executive Vice President for Cableworks Communications and Chief Operating
Officer of IT Canada. With over 25 years of local, national and international
management experience in Operations and Business Development, Ross has a keen
ability to capitalize on emerging trends and value-adds to existing services. A
true visionary and engaging leader, Ross is an integral part of the Dependable
HomeTech success story and continues to lead the way as the company grows and
diversifies.


Andy Westcott, Senior Vice President,
Operations, joined Cancable in July, 2008, and brought with him a great
deal of knowledge and expertise in the communications and contracting
industries. As President and CEO of Alentron, Andy provided installation and
service work for both Rogers Cable and Cogeco Cable. Previously a President of
both Entourage Technology Solutions and of Bell Technical Solutions, Andy has
played an integral role in all aspects of the installation, repair field
services, and structured cabling components for both residential and commercial
customers.
  
 8





Mark Thompson, Senior VP OSS-IM,joined Cancable in November 2004,bringing a unique blend
of Finance, Human Resources and Information Technology expertise to the team.
With over 10 years of technology & field service related industry
experience, Mark has held a wide variety of Finance and Operations Support roles
that span large corporations, entrepreneurial/consulting companies, and mid-size
"turn-around" organizations. He has been instrumental in leveraging the
synergies created through the teaming of Finance, HR and IT, to deliver best in
class Operational and Administrative Support services and technologies to the
customer facing teams.


Cheryl Lewis, Vice-President,
Dependable HomeTech Services, leads the Operational and Business
Development for Dependable HomeTech's Technology division. Prior
to joining Cancable  in 1997, Cheryl spent 10 years in the Hospitality
industry, gaining a wealth of knowledge in Sales and Customer Service.
Throughout her career with Dependable HomeTech she has been involved in the
operations of our field services team, as well as Customer Service for both
Ontario and US Operations. Currently she is responsible for all Operations and
growth initiatives for our call center and Dependable Home
initiatives.


Catherine Lewis, P. Eng., MBA, CMA,
Chief Financial Officer,joined Cancable in March 2009 and
brings over 20 years of accounting and finance experience.  She has held
senior finance roles in the IT, telecom and technology sectors
encompassing the full spectra of service, product and
manufacturing. Companies included CompuCom/CCSI, Telus, AT&T Canada and
Nortel. Ms. Lewis is responsible for finance and accounting functions for
Cancable.




Georgina Whitehead, CHRP, Director
Human Resources, joined Cancable in January 2008 with strategic Human
Resources experience at Bell Canada IP Solutions - their VOIP subsidiary as well
as experience in entrepreneurial environments in the IT server based computing
and security businesses. Georgina operates at a business partner level
evaluating the needs of the business and matching them with the needs of the
employees providing recommendations on how to improve the employee experience
more efficiently.




Cancable
believes that there is a large and growing market for its services and the
demand for its services are 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;
      and




·
            The
      availability of multiple choices for end-users to receive advanced
      services has led broadband service providers to focus increasingly 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


Key
Client Relationships




Cancable
has two main customer relationships, Rogers Cable Inc. and Cogeco
Cable.  Rogers Cable Inc. is the most significant.




Rogers
Cable Inc.




Rogers
Cable Inc. is Cancable Group’s largest customer employing more than 250 of our
field technicians as of December 31, 2008.  In addition to its
in-house capability, Rogers currently utilizes eight contractors to manage its
cable TV activity.  This number is down from 22 contractors three
years ago.  Over the past two years, as a result of the vendor
consolidation and its top rated performance, Cancable Group has emerged as
Rogers’ primary contractor in the Greater Toronto Area with approximate 40%
share of completed work orders




In
addition to installation and service work, Cancable has finalized a new three
year 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 transferred from Rogers’ customer service department to DependableIT,
Cancable’s branded technical support center, after Rogers determines that it is
not directly a Rogers cable related problem.  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 customers.  Again, this service is presently provided by
Rogers personnel only.




Cogeco
Cable Inc.




Cancable’s
current field supporting work with Cogeco is limited to the Windsor, Ontario
area.  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 will be expanded to include commercial work
including all Cogeco commercial Internet sales and technical
calls.  DependableIT 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.




Cancable’s
competition within its geographical segment is contained to a minimal number of
firms.  They include Wirecomm, Trinity Cable and J&P Cable among
others.  We believe that our contracted revenue is significantly
higher than any of the other competitors in our geography and thus gain an
advantage due to our size and internally efficient systems.




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 while 1.9 million connect 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:




10


·
            the
      increasingly competitive landscape in the areas of video, internet and
      telecom delivery, which are requiring cable operators to increase their
      commitment to quality customer service and 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
      telephone;




·
            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.




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 requires 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 telephone.  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
      through the 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.




11


Increased
Reliance by BSPs on outsourcing




Technological
advances and deregulation in the cable, telecommunications, satellite 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.




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 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 that:




·
            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 monopolistic industrial
      environment.  Today, these customers are faced with increasing
      competition 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 by personal
      contacts and more by professional qualifications.  Also
      important to industry relationships today 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 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.




12


ITEM
1A.               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.




Competitive
pressure from larger firms




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




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




We are
dependent on large institutional and commercial customers and their budgets. If
there are cut backs in budgets by its customers it will adversely impact our
revenues.




Risks
associated with possible delays of construction schedules




We have
contracted to provide security systems to a number of new
buildings.  Delays in construction of these buildings could
potentially delay revenues being realized.




Supplier
product failures




We do not
currently manufacture our own products and must purchase products from others.
It could adversely impact our relationships with our 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.
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.  No new intellectual
property has been acquired within the last three years.  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 expenses 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.




13


We
may not be able to increase our bonding




Many of
our government contracts require that we obtain 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, depending on 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, but not limited to, 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.




Cancable
Group, one of our major subsidiaries, relies on certain large clients for a
significant portion of our revenues




Cancable
Group currently derives a significant portion of its revenues from a limited
number of clients.  For the fiscal year ended December 31, 2008,
Rogers Cable TV Limited accounted for approximately 54% 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 Group’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.




14


Cancable
will be adversely affected by a 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.




Our
clients may not rely on the Contract Field Technical Support services we
provide




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 themselves, Cancable’s revenues may decline and
its business could be harmed.




Consolidation
of broadband service providers could result in fewer and smaller customers for
us




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.




Cancable
may face 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.
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.




15


Cancable
may not be able to compete on price with our competitors




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 our 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.




Cancable
may face an inability to attract and retain qualified employees




Cancable’s
ability to provide high-quality services on a timely basis requires that it
employ 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 that is subsequently delayed, reduced or terminated, it may
underutilize these additional personnel, which would increase its expenses and
could harm its business.




Cancable
relies on key senior employees and management




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.




Cancable
is a growing business and may require additional financing which may not be
available to us




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.




We
have issued a substantial number of warrants and 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, 2008, there were 13,268,483 shares of common stock issuable upon
the exercise of warrants and 3,068,155 shares issuable upon the exercise of
options. 2,939,000 shares were related to the Employee Stock Options (see Note
13 in the Financial Statements). Also, included in the balance, 12,528,983
shares of common stock issuable upon the exercise of warrants and 129,155 shares
issuable upon the exercise of options were issued to Laurus Master Fund, Ltd and
its related entities, Erato Corporation, Valens Offshore Fund
and  Valens U.S. Fund, LLC and PSource Structured Debt Limited
(“Laurus”).  Additionally, there were 49 shares of common stock of
Cancable issuable upon the exercise of options and 20 shares of common stock of
Iview issuable upon the exercise of options to Laurus. 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 notes 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 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 and options.




16


Because
our directors own approximately 76.5% of our outstanding common shares, they
could make and control corporate decisions that may be disadvantageous to
minority shareholders




Our
directors own approximately 76.5% 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 $16,940,114
principal amount of term notes are approximately $1,750,000, $5,874,999,
$6,815,115 and $2,500,000 from 2009 to 2013. In addition, interest on the notes
is payable on a monthly basis. We also have a series of other notes payable
totaling $1,745,900 as of December 31, 2008. The $1,500,000 promissory note
included in other notes payable, which were issued by Creative Vistas
Acquisition to The Burns Trust and The Navaratnam Trust in connection with the
acquisition of AC Technical, have no fixed term of repayment. The note payable
was transferred to Malar Trust during Fiscal Year 2006 with the same payment
term.  The remaining balance of other notes payable in the amount of
$245,900 (CAD$300,000) was issued by Cancable Inc. for the acquisition by its
subsidiary, Cancable XL,of XL Digital Services
Inc. The total consideration to be paid by Cancable XL for the shares of XL
Digital was an amount equal to the earnings before interest, taxes, depreciation
and amortization derived from the carrying on of its business by XL
Digital for the twelve month period after the completion of the acquisition
times 2.5. The consideration will be paid in notes, warrants to acquire stock of
the Company and cash, with the total balance due on January 5, 2009. There is a
disagreement with the seller regarding the calculation of the purchase price.
The Company is in the process of determining the final purchase price. The term
notes are secured by all of our assets.  Interest on term notes are
settled in cash. 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 us, the holders of our debt
(including The Malar 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,
our 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 our stock may be highly volatile.




Penny
Stock regulations apply to our securities:




Our
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 our securities.




17


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
Canadian Controlled Private Corporation (“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, we would lose our
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. AC Technical is presently 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 Year 2009, this extra 21.5%
totaled approximately $100,000.




Available
Information




We file
annual, quarterly and current reports, proxy statements and other information
with the U.S. Securities and Exchange Commission ("SEC"). Copies of this Annual
Report on Form 10-K and each of our other periodic and current reports, and
amendments to all such reports, that we file or furnish pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of
charge on our website (http://www.creativevistasinc.com/) as soon as reasonably
practicable after the material is electronically filed with, or furnished to,
the SEC. The information contained on our website is not incorporated by
reference into this Annual Report on Form 10-K and should not be considered part
of this Annual Report on Form 10-K.




In
addition, you may read and copy any document we file with the SEC at the SEC's
Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the Public
Reference Room. Our SEC filings are also available to the public at the SEC's
web site at http://www.sec.gov , which contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC.




ITEM
1B.              UNRESOLVED
STAFF COMMENTS




Not
applicable.




ITEM
2.                 PROPERTIES




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.  Additionally, we have another major office location at
2321 Fairview St. Burlington, Ontario L7R 2E3 which services the Cancable Group.
The premises, which were rented in 2003, consist of approximately 7,600 square
feet.  We believe that these offices are adequate for our present
purposes and planned expansion.  Furthermore, we believe these offices
are in good condition and adequately covered by insurance.




ITEM
3.                 LEGAL
PROCEEDINGS




None.




18


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.
  PART II
  ITEM
5.                 MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
   Our
common stock is quoted at the present time on the OTC Bulletin Board under the
symbol “CVAS.”  At December 31, 2008, the bid price was $0.20 per
share and the ask price was $0.31 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,
      2007
              
              $
              0.29
              
              
              $
              1.25June
      30,
      2007
              
              $
              0.70
              
              
              $
              2.60September
      30,
      2007
              
              $
              1.95
              
              
              $
              3.07December
      31,
      2007
              
              $
              2.05
              
              
              $
              2.88March
      31,
      2008
              
              $
              0.81
              
              
              $
              2.65June
      30,
      2008
              
              $
              0.80
              
              
              $
              2.00September
      30,
      2008
              
              $
              0.55
              
              
              $
              1.50December
      31,
      2008
              
              $
              0.13
              
              
              $
              1.00
 Our
securities may not qualify for listing on Nasdaq or any other national
exchange.  Even if our securities do qualify for listing, we may not
be able to maintain the criteria necessary to ensure continued
listing.  Our failure to qualify our securities or to meet the
relevant maintenance criteria after such qualification may result in the
discontinuance of the inclusion of our securities on a national
exchange.  In such event, trading, if any, in our securities may then
continue in the non-Nasdaq, over-the-counter market so long as we continue to
file periodic reports with the SEC and there remain sufficient qualified market
makers in our 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, our securities.
  As of
March 31, 2009 there were 267 holders of our Common Stock.  We
have 37,391,761 outstanding shares of Common Stock.
  Our
agreements with Laurus prohibit us from declaring or paying any dividends on our
Common Stock.
  For
information regarding securities authorized for issuance under equity
compensation plans (pursuant to Item 201(d) of Regulation S-K), please see the
information provided under Item 12 of this Form, Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters.
  ITEM
      6.
              SELECTED
      FINANCIAL DATA
  Not
      applicable.
  ITEM
7.                 MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS




19


Overview
and Recent Developments




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




On
January 22, 2008 the Company entered into a letter agreement with Erato for
Erato to provide up to Twelve Million Dollars ($12,000,000) in financing to the
Company on such terms and conditions as the Company and Erato shall mutually
agree (the “Bridge Financing”). All proceeds from the Bridge Financing may only
be used by the Company for the purpose of financing a third party. The Company
does not currently have an agreement to provide financing to such third party.
Erato is currently an investor in such third party and, through its parent,
Laurus Master Fund Ltd., a current investor in the Company. In consideration of
the letter agreement, the Company issued to Erato a warrant to purchase up to
1,738,365 shares of common stock of the Company at an exercise price of $0.01
per share.




On
January 30, 2008, the Company entered into a Warrant Purchase Agreement with
Laurus Master Fund, Ltd., Erato Corporation, Valens U.S. Fund, LLC and Valens
Offshore SPV I, Ltd. (collectively, the “Sellers”) pursuant to which the Company
purchased and acquired from the Sellers, warrants to purchase 450,000 shares of
common stock at an exercise price of $0.01 per share of 180 Connect Inc., (the
“180 Connect Warrants”).




Also on
January 30, 2008, the Company entered into a non-binding letter of intent with
Valens U.S. Fund, LLC (the “Letter Agreement”) in which Valens U.S. Fund, LLC
confirmed its current intention to provide up to $4,000,000 in financing to a
subsidiary of the Company. The Letter Agreement is only an expression of the
present intentions of the parties and no binding legal obligation will exist
until the parties sign a definitive agreement. The Company issued a warrant to
purchase 292,500 shares of common stock at an exercise price of $0.01 per
share.




The
aggregate purchase price paid by the Company in exchange for the 180 Connect
Warrants and the Letter Agreement was $1,580,790 paid by the Company by delivery
to the Sellers of common stock purchase warrants, exercisable in the aggregate
into up to 798,750 shares of common stock of the Company at an exercise price of
$0.01 per share. The purchase price was allocated by the Company as follows: (a)
$1,001,909 for the 180 Connect Warrants by delivery to the Sellers of warrants
to purchase 506,250 shares of common stock of the Company at an exercise price
of $0.01 per share and (b) $578,881 for the Letter Agreement warrants to
purchase 292,500 shares of common stock of the Company.





In July
2008, the Company sold all of its shares of 180 Connect Inc. for $1.80 per
share.  Total cash received for the transaction was $5,623,933. The
Company does not own any shares or warrants of 180 Connect Inc. as at December
31, 2008.




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







20




Results
of Operations




Comparison
of Year Ended December 31, 2008


to
Year Ended December 31, 2007




Sales:  Sales
were $48,470,000 for the year ended December 31, 2008, compared to $39,991,100
in 2007, representing an increase of $8,478,900 or 21.2%. The double-digit
percentage growth in revenue was mainly due to our expansion in the United
States in 2008.  Total revenue generated from the United States was
$5,591,800 in Fiscal Year 2008 and there was no such revenue in Fiscal Year
2007.




(a)
Cancable Segment – This segment includes Cancable Inc., Cancable, Inc., XL
Digital and OSS-IM View (collectively, “Cancable Group”).  The
principal activity is provisioning the deployment and servicing of broadband
technologies in both residential and commercial markets.  The Cancable
Group’s service offering, network deployment, IT integration, and support
services, enable the cable television and telecommunications industries to
deliver a high quality broadband experience to their customers.  The
total revenue from the Cancable segment was $40,649,500 in 2008 as compared to
$32,316,400 in 2007. In October 2007, we acquired XL Digital which is
incorporated under the laws of Ontario and has the same principal business
activity as Cancable Inc. XL Digital, with over 70 employees, provides its
deployment and provisioning services for Rogers Cable Inc. within two
territories where the Company did not previously have a presence.Total revenue
of this segment for Fiscal Year 2008 was $5,323,900 as compared to $1,081,700
for Fiscal Year 2007.  The increase reflects continued growth in
revenue, particularly from having Rogers Cable Inc. as a customer. We continued
to allocate resources to support the growth of our business.  We were
awarded three two-year contracts with Cox Communications, Inc. and Time Warner
Inc. to provide installation and repair services to cable customers in Louisiana
and Charlotte. Total revenue generated in the United States for Fiscal Year of
2008 was $5,542,900 and there was no such revenue in Fiscal Year 2007.Rogers
Cable Inc. is Cancable Group’s largest customer and the revenue from this
customer for Fiscal Year 2008 was approximately $26,054,800 or 64.1% of Cancable
Group’s total revenue compared to $24,397,100 or 74.5% for Fiscal Year 2007. The
increase was primarily due to the acquisition of XL Digital. (b) AC Technical
segment - Total revenue of AC Technical segment was $7,541,200 for Fiscal Year
2008 compared to $7,531,300 for Fiscal Year 2007. Contract revenue was
$6,209,600 for Fiscal Year 2008 compared to $6,083,900 for Fiscal Year
2007.  The service revenue was $1,540,400 for Fiscal Year 2008,
compared to $1,544,400 for Fiscal Year 2007.  Service revenue
primarily represents the cumulative effect of the growth in contracts and number
of customers over the past few years. We have experienced a significant increase
in the number of inquiries for systems from the government and retail sector.
This increased interest in security products and services may result in our
achieving increased revenues in future periods if we are successful in
attracting new customers or obtaining additional projects from existing
customers. There is no assurance that the Company will be able to attract new
customers.




Direct Expenses (excluding
depreciation):  Direct expenses were $38,776,000 or 80.0% of
revenues for the year ended December 31, 2008, compared to $28,329,200 or 70.8%
of revenues for same period in  2007. The increase in direct expenses
was driven predominantly by the continued growth of the service revenue from
$33,860,900forFiscal Year2007 to $42,188,900 for Fiscal
Year 2008.  The increase in percentage of the direct cost was
primarily due to the initial training and set up cost of the new development in
the United States. Total revenue generated in the United States in Fiscal Year
2008 was $5,591,800 and there was no such revenue in Fiscal Year 2007. (a)
Cancable segment – Direct expenses of this segment were $34,714,100 for the year
ended December 31, 2008, which is comprised principally of labor expenses
$25,266,900, vehicle expenses $3,240,900 and material cost
$2,527,200.  The increase in direct expenses is primarily due to the
revenue growth discussed above. (b) AC Technical segment – Direct expenses of
this segment were $3,868,900. The material cost was $2,208,900 or 29.3% of the
AC Technical revenue for the year ended December 31, 2008 compared to $2,657,700
or 35.3% of revenues in the same period of fiscal 2007. The decrease in
percentage of material costs was mainly due to some contracts having less
material needs. On the other hand, the labor and subcontractor cost increased to
$1,598,900 or 21.2% of AC Technical revenues for Fiscal Year 2008 and $1,414,900
or 18.8% of AC Technical revenues for fiscal 2007.  The increase in
labor and subcontractor cost was mainly due to the increase in
revenue.




21


Project cost: Project
cost was decreased to $1,084,700 or 2.2% of revenue for the year ended December
31, 2008, compared to $1,311,600 or 3.3% for the same period in 2007. Project
cost was mainly related to the AC Technical segment.  The balance
mainly includes the salaries and benefits of indirect staff amounting to
$654,100 in Fiscal Year 2008 compared to $758,000 for Fiscal Year
2007.  The decrease was mostly due to the decrease in the number of
indirect staff. Automobile and travel expenses decreased to $265,300 for Fiscal
Year 2008 compared to $309,700 for Fiscal Year 2007 due to less travel by our
staff this year.




Selling expense:
Selling expense was $942,700 or 1.9% of revenues for the year ended December 31,
2008 compared to $797,760 or 1.2% of revenues for the same period in 2007.
Selling expenses were mainly related to AC Technical segment.  As at
December 31, 2008, AC Technical segment has the same number of salespersons, 5,
as it did at December 31, 2007. Salaries and commission to salespersons for
Fiscal Year 2008 was $546,100 compared to $504,000 for Fiscal Year 2007 with no
material fluctuation.  The advertising and promotion and trade show
expenses were $98,700 in Fiscal Year 2008 compared to $84,100 for Fiscal Year
2007.




General and administrative
expenses: General and administrative expenses were $10,452,400 or 21.6%
of revenues for the year ended December 31, 2008 compared to $5,639,800 or 14.1%
for the same period in 2007. The balance for the Fiscal Year 2008 is mainly
comprised of $542,100 of professional fees related to preparation of the
quarterly reports and other corporate matters. In addition, investor relations
expenses amounted to $1,272,000 for Fiscal Year 2008 compared to $486,300 for
Fiscal Year 2007.  Included in the balance, there was $1,048,200
relating to non-cash expenses compared to $626,000 for the year ended December
31, 2007. Total salaries and benefits to administrative staff were $5,699,000
for Fiscal Year 2008 compared to $2,553,700 Fiscal Year 2007. The increase in
salaries and benefits was a result of the Company hiring additional employees
who were required for the expansion of the business.




Depreciation: Total
depreciation of property plant and equipment was $2,571,400 for the year ended
December 31, 2008 compared to $1,783,200 for the same period in
2007.  The increase in balance was primarily due to the capital
expenditures incurred during the year in the amount of $3,644,900.




Amortization of Intangible
Assets: Amortization of customer relationships and trade name was
$751,800 compared to $637,500 for Fiscal Year 2007.




Interest and other
Expenses:  Interest and net other expenses for the year ended
December 31, 2008 were $12,803,500 or 26.4% of revenues compared to net expenses
of $2,073,700 or 5.2% of revenues for the same period in  2007. The
balance for the current period is primarily comprised of the amortization of
deferred charges amounting to $234,800 compared to $182,400 for Fiscal Year
2007.  Additionally, net financing expenses increased to $7,041,980 or
14.5% of revenues compared to $2,955,100 or 7.4% of revenues for Fiscal Year
2007.  The interest due with respect to the Company’s credit facility
was $1,481,400 for the year ended December 31, 2008 compared to $1,645,100 for
the same period in 2007.  The increase in the balance reflects the
increase in outstanding balances of the term notes compared to the same period
of the prior year.  During 2008, the Company sold common stock of 180
Connect Inc. for an aggregate of $5,623,900 and the realized loss on the
disposal of this investment was $822,900. In addition, the Company issued
warrants related to proposed financings valued at $3,723,566 which was charged
to financing costs. There was no such balance in the same period of fiscal 2007.
Additionally, the realized foreign currency translation loss for this year was
$1,641,300 compared to foreign currency translation gain of $1,063,900 for
Fiscal Year 2007. The balance was related to the foreign currency translation of
term notes.  During 2008, the Company also recorded an impairment
charge of $3,062,400.




Income
taxes:  No income tax was paid for the year ended December 31,
2008, which was mainly due to the Company’s losses carried forward to offset all
income generated by the Company. All prior taxes have already been accounted for
in the income tax recoverable and therefore, there is no additional provision
for income taxes recoverable and deferred tax asset.




Net
Income/Loss:  Net loss for the the year ended December 31, 2008
was $18,912,500 compared to net loss of $581,700 for the same period in 2007.
The Company’s operating loss was $6,109,000 for the year ended December 31, 2008
compared to operating income of $1,492,100 for the year ended December 31,
2007.  The loss was primarily attributed to the Company’s allocation
of resources to grow the business in the United States and increased
costs.




22


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, 2008, we had $4,770,300 in cash. We believe that cash
from operations and our credit facilities with Laurus will continue to be
adequate to satisfy our ongoing working capital needs.  During Fiscal
Year 2009, 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 by operating activities amounted to
$2,125,500 for Fiscal Year 2008. The changes in operating assets and liabilities
resulted in net cash provided of $1,157,800, which included a $309,600 decrease
in accounts receivable, a $60,800 decrease in inventory, a $527,100 increase in
prepaid expenses, a $1,050,900 increase in accounts payable, a $206,700 decrease
in income taxes recoverable and a $53,000 increase in deferred
revenue.




Comparative balance sheet as
at December 31, 2008 to December 31, 2007




Accounts
Receivable




Our
accounts receivable decreased to $4,571,300 as of December 31, 2008 from
$6,187,600 as of December 31, 2007.  Accounts receivable of Cancable
as at December 31, 2008 was $2,912,200 compared to $3,989,100 as at December 31,
2007.  The decrease was attributable to the timing of payment by our
customers. Accounts receivable of the AC Technical segment was $1,547,500 as at
December 31, 2008 compared to $2,083,200 as of December 31, 2007.  The
decrease was mostly due to the timing of payment by our
customers.




Inventory




Inventory
on hand on December 31, 2008 decreased to $829,300 compared to $1,043,800 as of
December 31, 2007. Inventory of the AC Technical segment was $421,700
compared to $639,000 as of December 31, 2007.  The decreased level of
inventory of the AC Technical segment was associated with less purchases
required for the sales expected in the first quarter of
2009.  Inventory at the Cancable segment was decreased to $319,600 as
at December 31, 2008 from $363,600 as at December 31, 2007.  There was
no material fluctuation of the balances.




Accounts Payable and Accrued
Liabilities




Accounts
payable and accrued liabilities decreased to $5,800,000 compared to $6,074,200
as of December 31, 2007. The balance for the AC Technical segment was $1,274,900
as of December 31, 2008 compared to $2,245,000 as of December 31,
2007.  Accounts payable for Cancable Group was $4,244,928 as at
December 31, 2008 compared to $3,348,000 as at December 31, 2007.  The
increase in balance was mainly due to the increase in purchases of material in
the last three months and the timing of payments to our suppliers.




Deferred
Revenue




Deferred
revenue increased to $118,600 at December 31, 2008 compared to the balance of
$91,900 as at December 31, 2007. This increase was mainly due to the timing of
payments by our customers.  Deferred revenue primarily relates to
payments associated with the contracts where revenue is recognized on a
percentage of completion basis.




Incomes Taxes
Recoverable




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




Net Cash Received in
Investing Activities.  Net cash provided by investing
activities was $2,867,800 for the year ended December 31, 2008, compared to
$719,200 used in investing activities for the year ended December 31, 2007.
As a result of the sale of the 180 Connect
Shares investment in July 2008, the Company received cash in the amount
of $5,623,900. The total purchase of property and equipment of the Company was
$2,507,500 for the twelve months ending December 31, 2008 and $847,900 for the
year ended December 31, 2007.




Net Cash Provided From
Financing Activities.  Net cash provided by financing
activities was $1,653,700 for Fiscal Year 2008 compared to net cash used of
$1,394,800 for Fiscal Year 2007. Last year’s balance mainly reflects the
repayment of capital leases and term notes in the amount of
$1,746,400.  The current year balance represents net proceeds received
from new banking facilities set up with a Canadian financial institution in the
amount of $1,993,100.  The balance was offset with the repayment of
term notes and capital leases in the amount of $2,662,300. Additionally, during fiscal year 2008,the Company has received
a term loan from LV Administrative Services, Inc. in the amount of $2,500,000
with total financing cost of $230,800. Total net proceeds from this term loan
were $2,269,200.




23


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




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




Recent
Accounting Pronouncements




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




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




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




24


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




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




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




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




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




Off
Balance Sheet Arrangements




None




DISCUSSION
OF CRITICAL ACCOUNTING ESTIMATES




Critical
accounting estimates are those that management deems to be most important to the
portrayal of our financial condition and results of operations, and that require
management’s most difficult, subjective or complex judgments, due to the need to
make estimates about the effects of matters that are inherently uncertain. We
have identified six critical accounting estimates: accounts receivable
allowances, goodwill, revenue, inventory, accounting for income taxes and
financial instrument.




25


Accounts
receivable allowances are determined using a combination of historical
experience, current information and management judgment. Actual collections may
differ from our estimates. 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.




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.




We review
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. Generally, where the ability to
physical or net-share settle the conversion option is deemed to be not within
our control, 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. Any
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.




26


Commitments


We have
entered into contracts for certain consulting services providing for monthly
payments and are required to repay the principal of our convertible notes and
promissory notes due to Laurus and other parties.  In addition, we
have also entered into an operating lease for our vehicles, computer and office
equipment. The total minimum annual payments for the next five years are as
follows:




Payments
      due by
                  PeriodTotal
              
              
              2009
              
              
              2010
              
              
              2011
              
              
              2012
              
              
              2013
              
              
              ThereafterTerm  notes
              
              $
              15,812,290
              
              
              $
              1,750,000
              
              
              $
              5,874,999
              
              
              $
              6,815,115
              
              
              $
              -
              
              
              $
              1,372,176
              
              
              $
              -Other
      Notes Payable
              
              
              245,902
              
              
              
              245,902
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Note
      payable to related parties
              
              
              1,500,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,500,000Capital
      leases*
              
              
              7,977,875
              
              
              
              2,715,418
              
              
              
              2,239,300
              
              
              
              1,592,513
              
              
              
              1,430,644
              
              
              
              -
              
              
              
              -Operating
      leases
              
              
              1,834,454
              
              
              
              475,553
              
              
              
              433,166
              
              
              
              330,915
              
              
              
              302,565
              
              
              
              292,255
              
              
              
              -Commitmentsrelated
      toconsultingagreements
              
              
              1,352,227
              
              
              
              669,548
              
              
              
              268,595
              
              
              
              268,595
              
              
              
              145,489
              
              
              
              -
              
              
              
              -$
              28,722,748
              
              
              $
              5,856,421
              
              
              $
              8,816,060
              
              
              $
              9,007,138
              
              
              $
              1,878,698
              
              
              $
              1,664,430
              
              
              $
              1,500,000




* The
balance represents monthly principal and interest payment.




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







ITEM
7A.               QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




Not
applicable.




27


ITEM
      8.
            FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA




INDEX
TO FINANCIAL STATEMENTS




Creative
Vistas, Inc.




Consolidated
Financial Statements




For
the years ended December 31, 2008 and 2007




Report
      of Independent Registered Public Accounting Firm
              F-1Balance
      Sheets
              F-2Statements
      of Operations and Other Comprehensive (Loss)
              F-3Statement
      of Stockholders’ (Deficiency)
              F-4Statements
      of Cash Flows
              F-5Notes
      to Financial Statements
              F-6







28


REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




Stockholders
and Board of Directors




Creative Vistas,
Inc.




We have
audited the accompanying consolidated balance sheets of Creative Vistas, Inc. as
of December 31, 2008 and 2007, and the related consolidated statements of
operations and comprehensive (loss), stockholders’ (deficiency) and cash flows
for the years then ended. 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 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 the audits 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 audits provide
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, 2008 and 2007, and results of its operations and its cash flows for
the years then ended, 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 stockholder 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.









Stark
Winter Schenkein & Co., LLP




Denver,
Colorado




March 31,
2009






F-1




Creative
      Vistas, Inc.Consolidated
      Balance SheetsDecember
      31
                  
                  2008
                  
                  
                  2007AssetsCurrent
      AssetsCash
      and bank balances
                  
                  $
                  4,770,337
                  
                  
                  $
                  1,960,340Accounts receivable, net of
      allowance for doubtful accounts $323,183
      (2007-$405,432)
                  
                  
                  4,571,327
                  
                  
                  
                  6,187,551Income
      tax recoverable
                  
                  
                  188,525
                  
                  
                  
                  448,126Inventory
                  
                  
                  829,318
                  
                  
                  
                  1,043,815Prepaid
      expenses
                  
                  
                  289,638
                  
                  
                  
                  270,930Due
      from related parties
                  
                  
                  2,094
                  
                  
                  
                  2,581Total current
      assets
                  
                  
                  10,651,239
                  
                  
                  
                  9,913,343Property and
      equipment, net of depreciation
                  
                  
                  9,214,623
                  
                  
                  
                  6,352,014Deposits
                  
                  
                  460,376
                  
                  
                  
                  125,498Goodwill
                  
                  
                  -
                  
                  
                  
                  3,101,598Restricted
      cash
                  
                  
                  -
                  
                  
                  
                  53,430Deferred
      financing costs, net
                  
                  
                  483,331
                  
                  
                  
                  551,747Intangible
      assets
                  
                  
                  850,136
                  
                  
                  
                  1,717,003Deferred
      income taxes
                  
                  
                  35,343
                  
                  
                  
                  37,547$
                  21,695,048
                  
                  
                  $
                  21,852,180Liabilities
      and Stockholders’ (Deficiency)Current
      LiabilitiesBank
      Indebtedness
                  
                  $
                  1,581,912
                  
                  
                  $
                  -Accounts
      payable
                  
                  
                  2,611,951
                  
                  
                  
                  3,328,740Accrued salaries and
      benefits
                  
                  
                  1,723,506
                  
                  
                  
                  1,555,981Accrued
      commodity taxes
                  
                  
                  183,614
                  
                  
                  
                  191,204Accrued
      liabilities
                  
                  
                  1,280,990
                  
                  
                  
                  998,287Current portion of obligation
      under capital leases
                  
                  
                  2,125,312
                  
                  
                  
                  1,195,366Deferred
      income
                  
                  
                  118,595
                  
                  
                  
                  91,900Deferred
      income taxes
                  
                  
                  25,858
                  
                  
                  
                  25,858Current portion of term
      notes
                  
                  
                  1,750,000
                  
                  
                  
                  2,240,356Other
      notes payable
                  
                  
                  245,902
                  
                  
                  
                  303,030Due
      to related parties
                  
                  
                  6,292
                  
                  
                  
                  8,143Total current
      liabilities
                  
                  
                  11,653,932
                  
                  
                  
                  9,938,865Term
      notes
                  
                  
                  14,062,290
                  
                  
                  
                  13,565,421Notes payable
      to related parties
                  
                  
                  1,500,000
                  
                  
                  
                  1,500,000Other
      payable
                  
                  
                  -
                  
                  
                  
                  303,030Obligation
      under capital lease
                  
                  
                  4,554,240
                  
                  
                  
                  3,184,103Due to related
      parties
                  
                  
                  189,237
                  
                  
                  
                  233,20331,959,699
                  
                  
                  
                  28,724,622Stockholders'
      (deficiency)Share
      capitalAuthorized50,000,000
      no par value preferred shares undesignated, none issued or
      outstanding100,000,000
      no par value common shares 37,224,926 at December 31, 2008 and
      34,494,623 at
                    December 31, 2007 issued and outstandingCommon
      stock
                  
                  
                  6,488,137
                  
                  
                  
                  1,439,307Additional
      paid-in capital
                  
                  
                  14,005,627
                  
                  
                  
                  4,958,871Accumulated
      (deficit)
                  
                  
                  (31,357,923
                  )
                  
                  
                  (12,445,468
                  )Accumulated
      other comprehensive income (losses)
                  
                  
                  599,508
                  
                  
                  
                  (825,152
                  )(10,264,651
                  )
                  
                  
                  (6,872,442
                  )$
                  21,695,048
                  
                  
                  $
                  21,852,180
 The
accompanying notes are an integral part of these financial
statements.
  F-2







Creative
      Vistas, Inc.Consolidated
      Statement of Operations and Comprehensive (Loss)For
      the years ended December 31
            
            2008
            
            
            2007Contract
      and service revenueContract
            
            $
            6,209,601
            
            
            $
            6,083,768Service
            
            
            42,188,944
            
            
            
            33,860,869Others
            
            
            71,497
            
            
            
            46,43148,470,042
            
            
            
            39,991,068Direct
      Expenses (excluding depreciation)Contract
            
            
            4,061,916
            
            
            
            4,203,159Service
            
            
            34,714,119
            
            
            
            24,126,027Project
      Expenses
            
            
            1,084,688
            
            
            
            1,311,646Selling
      Expenses
            
            
            942,688
            
            
            
            797,759General
      and administrative expenses
            
            
            10,452,417
            
            
            
            5,639,760Depreciation
      expense
            
            
            2,571,426
            
            
            
            1,783,129Amortization
      of intangible assets
            
            
            751,753
            
            
            
            637,53954,579,007
            
            
            
            38,499,019Income
      (loss) from operations
            
            
            (6,108,965
            )
            
            
            1,492,049Interest
      expenses and other expenses (income)Net
      financing expenses
            
            
            7,041,978
            
            
            
            2,955,063Goodwill
      impairment
            
            
            3,062,432
            
            
            
            -Realized
      loss on disposal of available for sale securities
            
            
            822,916
            
            
            
            -Amortization
      of deferred charges
            
            
            234,835
            
            
            
            182,430Foreign
      currency translation (gain) loss
            
            
            1,641,329
            
            
            
            (1,063,838
            )12,803,490
            
            
            
            2,073,655(Loss)
      before income taxes
            
            
            (18,912,455
            )
            
            
            (581,606
            )Income
      taxes
            
            
            -
            
            
            
            -Net
      (loss)
            
            
            (18,912,455
            )
            
            
            (581,606
            )Other
      comprehensive (loss):Foreign
      currency translation adjustment
            
            
            1,424,660
            
            
            
            (707,416
            )Comprehensive
      (loss)
            
            $
            (17,487,795
            )
            
            $
            (1,289,022
            )Basic
      and diluted weighted-average shares
            
            
            36,899,525
            
            
            
            33,847,266Basic
      and diluted earnings (loss) per share
            
            $
            (0.51
            )
            
            $
            (0.02
            )




The
accompanying notes are an integral part of these financial
statements.







F-3




Creative
Vistas, Inc.


Consolidated
Statement of Stockholders’ (Deficiency)


Years Ended
December 31, 2007 and 2008




Shares
              
              
              Amount
              
              
              Additional
      paid-in capital
              
              
              Accumulated
      (deficit)
              
              
              Accumulated
      other comprehensive (losses)
              
              
              Total
      Stockholders’ (deficiency)Balance,
      January 1, 2007
              
              
              33,253,358
              
              
              $
              517,990
              
              
              $
              3,887,706
              
              
              $
              (11,863,862
              )
              
              $
              (117,736
              )
              
              $
              (7,575,902
              )Stock-based
      compensation
              
              
              550,516
              
              
              
              892,624
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              892,624Stock
      issued for the exercise of the options or warrants
              
              
              690,749
              
              
              
              28,693
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              28,693Value
      of Stock Options issued to employees
              
              
              -
              
              
              
              -
              
              
              
              176,123
              
              
              
              -
              
              
              
              -
              
              
              
              176,123Warrants
      issued to financial institution
              
              
              -
              
              
              
              -
              
              
              
              895,042
              
              
              
              -
              
              
              
              -
              
              
              
              895,042Net
      Losses
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (581,606
              )
              
              
              
              
              
              
              (581,606
              )Translation
      adjustment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (707,416
              )
              
              
              (707,416
              )Balance,
      December 31, 2007
              
              
              34,494,623
              
              
              
              1,439,307
              
              
              
              4,958,871
              
              
              
              (12,445,468
              )
              
              
              (825,152
              )
              
              
              (6,872,442
              )Stock-based
      compensation
              
              
              532,583
              
              
              
              1,073,317
              
              
              
              45,054
              
              
              
              -
              
              
              
              -
              
              
              
              1,118,371Stock
      issued for the exercise of the options or warrants
              
              
              2,000
              
              
              
              1,260
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,260Value
      of Stock Options issued to employees
              
              
              -
              
              
              
              -
              
              
              
              405,409
              
              
              
              -
              
              
              
              -
              
              
              
              405,409Warrants
      issued to financial institution for financing and deferred principal
      payment
              
              
              -
              
              
              
              -
              
              
              
              1,839,395
              
              
              
              -
              
              
              
              -
              
              
              
              1,839,395Valuation
      of extension of warrants
              
              
              -
              
              
              
              -
              
              
              
              560,736
              
              
              
              -
              
              
              
              -
              
              
              
              560,736Stock
      and warrants issued for available for sale securities
              
              
              2,195,720
              
              
              
              3,974,253
              
              
              
              6,196,162
              
              
              
              -
              
              
              
              -
              
              
              
              10,170,415Net
      losses
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (18,912,455
              )
              
              
              -
              
              
              
              (18,912,455
              )Translation
      adjustment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,424,660
              
              
              
              1,424,660Balance,
      December 31, 2008
              
              
              37,224,926
              
              
              $
              6,488,137
              
              
              $
              14,005,627
              
              
              $
              (31,357,923
              )
              
              $
              599,508
              
              
              $
              (10,264,651
              )




The
accompanying notes are an integral part of these financial
statements.







F-4




Creative
      Vistas, Inc.Consolidated
      Statements of Cash FlowsFor
      the year ended December 31,
                  
                  
                  2008
                  
                  
                  
                  2007Operating
      activitiesNet
      (loss)
                  
                  $
                  (18,912,455
                  )
                  
                  $
                  (581,606
                  )Adjustments
      to reconcile net (loss) to net cash provided by (used in) operating
      activitiesDepreciation
      of capital assets
                  
                  
                  2,571,426
                  
                  
                  
                  1,783,129Amortization
      of intangible assets
                  
                  
                  751,753
                  
                  
                  
                  637,539Amortization
      of deferred financing cost
                  
                  
                  234,835
                  
                  
                  
                  182,430Goodwill
      impairment
                  
                  
                  3,062,432
                  
                  
                  
                  -Loss
      on disposal of other investment
                  
                  
                  822,916Gain
      on disposal of capital assets
                  
                  
                  16,120
                  
                  
                  
                  (51,014
                  )Bad
      debt expenses
                  
                  
                  47,165
                  
                  
                  
                  186,982Foreign
      exchange
                  
                  
                  1,883,166
                  
                  
                  
                  (1,262,978
                  )Stock-based
      compensation and interest expenses
                  
                  
                  5,837,750
                  
                  
                  
                  1,632,093Amortization
      of employee stock option
                  
                  
                  405,409
                  
                  
                  
                  176,123Changes
      in non-cash working capital balanceAccounts
      receivable
                  
                  
                  309,619
                  
                  
                  
                  (1,668,916
                  )Inventory
                  
                  
                  60,826
                  
                  
                  
                  (184,155
                  )Prepaid
      expenses
                  
                  
                  (527,119
                  )
                  
                  
                  59,667Accounts
      payable and other accrued liabilities
                  
                  
                  1,050,912
                  
                  
                  
                  (322,429
                  )Deferred
      revenue
                  
                  
                  53,011
                  
                  
                  
                  11,043Deferred
      income taxes
                  
                  
                  206,704
                  
                  
                  
                  (33,727
                  )Net
      cash provided by (used in) operating activities
                  
                  
                  (2,125,530
                  )
                  
                  
                  564,181Investing
      activitiesPayment
      for acquisition
                  
                  
                  (300,000
                  )
                  
                  
                  -Proceeds
      from sales of available sales securities
                  
                  
                  5,623,933
                  
                  
                  
                  -Proceeds
      from sales of property and equipment
                  
                  
                  51,359
                  
                  
                  
                  128,729Purchase
      of property and equipment
                  
                  
                  (2,507,469
                  )
                  
                  
                  (847,911
                  )Net
      cash provided by (used in) investing activities
                  
                  
                  2,867,823
                  
                  
                  
                  (719,182
                  )Financing
      activitiesProceeds
      from bank indebtedness
                  
                  
                  1,993,076
                  
                  
                  
                  -Proceeds
      from term loans (a)
                  
                  
                  2,500,000
                  
                  
                  
                  -Deferred
      financing costs (a)
                  
                  
                  (230,776
                  )
                  
                  
                  -Due
      to related parties
                  
                  
                  (385
                  )
                  
                  
                  4,823Proceeds
      from the exercise of options
                  
                  
                  1,260
                  
                  
                  
                  28,693Repayment
      of capital lease
                  
                  
                  (1,317,468
                  )
                  
                  
                  (682,378
                  )Restricted
      cash
                  
                  
                  52,894
                  
                  
                  
                  318,111Repayment
      of term loans
                  
                  
                  (1,344,871
                  )
                  
                  
                  (1,064,045
                  )Net
      cash provided by (used in) financing activities
                  
                  
                  1,653,730
                  
                  
                  
                  (1,394,796
                  )Effect
      of foreign exchange rate changes on cash
                  
                  
                  413,974
                  
                  
                  
                  (50,044
                  )Net
      change in cash and cash equivalents
                  
                  
                  2,809,997
                  
                  
                  
                  (1,559,841
                  )Cash and cash
      equivalents, beginning of period
                  
                  
                  1,960,340
                  
                  
                  
                  3,560,181Cash and cash
      equivalents, end of period
                  
                  $
                  4,770,337
                  
                  
                  $
                  1,960,340Supplemental
      Cash Flow InformationCash
      paid for the interest
                  
                  $
                  2,129,451
                  
                  
                  $
                  2,060,020Cash
      paid for income taxes
                  
                  $
                  -
                  
                  
                  $
                  -Loan
      interest or penalties paid with warrant
                  
                  $
                  -
                  
                  
                  $
                  895,043Capital
      assets purchase through capital leases
                  
                  $
                  4,990,088
                  
                  
                  $
                  2,225,471






(a)
            In June 2008, the Company
      and  its subsidiary,Cancable Inc., entered into a
      financing transaction whereby the Company issued to Valens Offshore SPV
      II, Corp. (“Valens Offshore”) and Valens U.S. SPV I, LLC (“Valens U.S.”)
      secured term notes in the amount of $1,700,000 and $800,000, respectively
      (collectively, the “Company Second Notes”). Total professional fees for
      this transaction were
$230,776.






The
accompanying notes are an integral part of these financial
statements.






F-5




Creative
      Vistas, Inc.Notes
      to Consolidated Financial StatementsFor
      the years ended December 31, 2008 and 2007
 1.
              Summary
      of Accounting Policies
  Basis
of presentation
  The
accompanying financial statements as at and for the years ended December 31,
2008 and 2007 have been prepared by management in accordance with United States
generally accepted accounting principles (“GAAP”) applicable to the respective
periods.
  The
consolidated balance sheets as at December 31, 2008 and 2007 and statements of
operations and cash flows for the years end December 31, 2008 and 2007 include
the accounts of Creative Vistas, Inc. (“CVAS”), Creative Vistas Acquisition
Corp. (“AC Acquisition”), AC Technical Systems Ltd. (“AC Technical”), Cancable
Holding Corp. (“Cancable Holding”), Cancable Inc., Cancable, Inc., Cancable XL
Inc., XL Digital Services Inc. (“XL Digital”), 2141306 Ontario Inc., Iview
Holding Corp. (“Iview Holding”), and Iview Digital Solutions Inc. (“Iview
DSI”).  All material inter-company accounts, transactions and profits
have been eliminated.
  Reclassifications
  Certain
amounts from the December 31, 2007 financial statements have been reclassified
to conform to the current year’s presentation.
  Liquidity
and going concern
  Our
consolidated condensed financial statements were prepared using accounting
principles generally accepted in the United States of America applicable to a
going concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. We have incurred a loss of
$18,912,455 for the year ended December 31, 2008 and have an accumulated deficit
of $31,357,923 at December 31, 2008.
  We have
outstanding term loans aggregating $15,812,290, together with common stock
options and warrants, held by Laurus Master Fund, Ltd. (“Laurus”) and its
related entities. We do not currently have the ability to repay the notes in the
event of a demand by the holder. Furthermore, we granted a security interest to
Laurus and its related entities in substantially all of our assets and,
accordingly, in the event of any default under our agreements with Laurus and
its related entities, they could conceivably attempt to foreclose on our assets,
which could cause us to terminate our operations. As of December 31, 2008, there
were 12,528,983 shares of common stock issuable upon the exercise of warrants
and 129,155 shares issuable upon the exercise of options which were issued to
Laurus, Erato Corporation, Valens Offshore Fund, Valens U.S. Fund, LLC and
PSource Structured Debt Limited. Additionally, there were 49 shares of common
stock of Cancable Holding issuable upon the exercise of options and 20 shares of
common stock of Iview Holding issuable upon the exercise of options to Laurus
and its related entities.
  Over the
next twelve months the Company believes that its existing capital will be
sufficient to sustain its operations. Management plans to seek additional
capital in the future to fund operations, growth and expansion through
additional equity, debt financing or credit facilities. The Company has had
early stage discussions with investors about potential investment in the Company
at a future date. No assurance can be made that such financing would be
available, and if available it may take either the form of debt or equity. In
either case, the financing could have a negative impact on our financial
condition and our shareholders. The Company has introduced cost cutting
initiatives within the Administration, Project and Selling departments to
improve efficiency within the Company and also improve cash flow.  The
Company has also increased its rates for service provided by AC Technical to
improve gross margins. This is in line with our competitors. The Company also
expects to see the benefits of its research and development efforts within the
next 12 months as it starts to introduce its own line of customized products to
the industry. These products and technologies are expected to improve gross
margins. The Company believes that it will be eligible for research and
development tax credits at year end for its research and development efforts
during the year and these are additional sources of cash flow for the Company.
The Company is also negotiating longer credit terms with its suppliers from 45
days to 60 to 75 days. For all the reasons mentioned above, we believe that we
have adequate short term borrowing capability and that we will be able to
sustain our operations and continue as a going concern for a reasonable period
of time although there can be no assurance of this.
 
 F-6
  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 $4,770,337 and $1,960,340 as at
December 31, 2008 and 2007 respectively.
  The
Company has deposits at two financial institutions in the amount of $4,279,000
and $1,034,700 as at December 31, 2008 and 2007 respectively.
  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.
  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.
  Advertising
cost
  Advertising
cost are expensed as incurred.  Total advertising cost was
approximately $46,000 and $42,000 for the year ended December 31, 2008 and
2007.
  Inventory
  Inventory
consists of materials and supplies and is stated at the lower of cost and market
value.  Cost is generally determined on the first in, first out
basis.  The inventory is net of estimated obsolescence, and excess
inventory based upon assumptions about future demand and market conditions.
Inventory consists principally of parts, materials and supplies.
  
 F-7
 
 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 basisLeasehold
      improvements
                lesser
      of 5 years or the term of the lease straight-line basisOffice
      equipment
                20%
      declining balance basis or 3 years straight-line methodOffice
      equipment under capital leases
                3
      years straight-line methodFurniture
      and fixtures
                20%
      declining balance basis or 3 years straight-line methodFurniture
      and fixtures under capital leases
                5
      years straight-line methodComputer
      hardware and software
                30%
      declining balance basis or 3 years straight-line methodComputer
      hardware and software under capital leases
                3
      years straight-line methodVehicles
                4
      years straight-line basisVehicles
      under capital leases
                4
      years straight-line basisTools
      and equipment
                3
      years straight-line basis
 
 Customer
Relationships and Trade Name
  Customer
relationships and trade name represents the acquisition cost of acquired
customer relationships and trade name of Cancable and XL Digital are recorded at
cost less accumulated amortization.  Amortization for customer
relationships and trade name is provided on a straight-line basis over the
period of expected benefit of 5 and 3 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.
Amortization charged to operations aggregated $751,753 in 2008 and $637,539 in
2007.
  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 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. During 2008 the Company recorded
an impairment charge of $3,062,432 related to goodwill.
 
 F-8
 
 Deferred
Financing Costs
  Deferred
financing costs represent costs directly related to obtaining
financing.  Deferred financing costs are amortized over the term of
the related indebtedness using the effective interest method.
  Issuance
of Equity Instruments for Services
  In
December 2004, the FASB issued SFAS 123 (revised 2004) “Share-Based
Payment”.  This Statement requires that the cost resulting from all
share-based transactions be recorded in the financial statements.  The
Statement establishes fair value as the measurement objective in accounting for
share-based payment arrangements and requires all entities to apply a
fair-value-based measurement in accounting for share-based payment transactions
with employees.  The Statement also establishes fair value as the
measurement objective for transactions in which an entity acquires goods or
services from non-employees in share-based payment transactions.  The
Statement replaces SFAS 123 “Accounting for Stock-Based Compensation” and
supersedes APB Opinion No. 25 “Accounting for Stock Issued to
Employees”.  The provisions of this Statement were effective for the
Company beginning with its fiscal year ending December 31,
2006.  Stock-based awards to non-employees are accounted for in
accordance with the provisions of the FASB issued SFAS 123 (revised 2004)
“Share-Based Payment” 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 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 is based on the price
charged when it is sold on a standalone basis.
  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.
  F-9
 
 Service
Revenue
  Service
revenue consists of fees generated by providing monitoring services, preventive
maintenance and technical support, product maintenance and upgrades and regional
broadband and cable service. 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 SFAS No. 128, “Earnings Per Share”. 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, 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 term notes
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 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. 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.
  Any
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.
  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 generally
short payment terms.
 
 F-10
 
 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.
  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 May
2008, the FASB issued FAS 163 (“FAS 163”), “Accounting for Financial Guarantee
Insurance Contracts—an interpretation of FASB Statement No. 60”.This Statement
interprets Statement 60 and amends existing accounting pronouncements to clarify
their application to the financial guarantee insurance contracts included within
the scope of this Statement.  FAS 163 is not expected to have a
material impact on the Company’s consolidated financial statements.
  In May
2008, the FASB issued FAS 162 (“FAS 162”), “The Hierarchy of Generally Accepted
Accounting Principles.” This statement identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with GAAP. Although this statement formalizes the
sources and hierarchy of GAAP within the authoritative accounting literature, it
does not change the accounting principles that are already in place. This
statement will be effective 60 days following the SEC’s approval of the Public
Company Accounting Oversight Board amendments to AU Section 411, “The
Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles.” FAS 162 is not expected to have a material impact on the Company’s
consolidated financial statements.
  In April
2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of
Intangible Assets (“FSP FAS 142-3”). FSP FAS No. 142-3 amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under FAS 142, Goodwill and Other Intangible
Assets (“FAS 142”). The intent of FSP FAS 142-3 is to improve the
consistency between the useful life of a recognized intangible asset under FAS
142 and the period of expected cash flows used to measure the fair value of the
asset under FAS 141(R) and other applicable accounting literature. FSP FAS 142-3
is effective for financial statements issued for fiscal years beginning after
December 15, 2008 and must be applied prospectively to intangible assets
acquired after the effective date. The Company has not determined the impact, if
any, of the adoption of FSP FAS 142-3.
  F-11
 
 Effective
January 1, 2008, we adopted the provisions of FAS 157, Fair Value Measurements,
except as it applies to those nonfinancial assets and nonfinancial liabilities
as noted in proposed FSP FAS 157-b.  The partial adoption of FAS 157
did not have a material impact on our consolidated financial position, results
of operations or cash flows.  FAS No. 157 defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements.
This statement does not require any new fair value measurements, but provides
guidance on how to measure fair value by providing a fair value hierarchy used
to classify the source of the information. In February 2008, the FASB issued
FASB Staff Position (“FSP”) 157-2,Effective Date of FASB
Statement No. 157,  which delays the effective date of FAS
157 for all nonfinancial assets and nonfinancial liabilities, except for items
that are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually).
   In March
2008, the FASB issued FAS No. 161,Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement
No. 133,  which requires additional disclosures about the
objectives of the derivative instruments and hedging activities, the method of
accounting for such instruments under FAS 133 and its related interpretations,
and a tabular disclosure of the effects of such instruments and related hedged
items on our financial position, financial performance, and cash flows. FAS 161
is effective for us beginning January 1, 2009. We are currently assessing
the potential impact that adoption of FAS 161 may have on our financial
statements.
   Effective
January 1, 2008, we adopted the provisions of FAS 159, The Fair Value Option for Financial
Assets and Financial Liabilities.  The adoption did not have a
material impact on our consolidated financial position, results of operations or
cash flows.  FAS 159 gives us the irrevocable option to carry many
financial assets and liabilities at fair values, with changes in fair value
recognized in earnings.
  In
December 2007, the FASB issued FAS 141R,Business Combinations, which
replaces FAS 141. The statement retains the purchase method of accounting for
acquisitions, but requires a number of changes, including changes in the way
assets and liabilities are recognized in the purchase accounting. It also
changes the recognition of assets acquired and liabilities assumed arising from
contingencies, requires the capitalization of in-process research and
development at fair value, and requires the expensing of acquisition-related
costs as incurred. FAS 141R is effective for us beginning January 1, 2009
and will apply prospectively to business combinations completed on or after that
date.
  In
December 2007, the FASB issued FAS 160,Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51, which
changes the accounting and reporting for minority interests. Minority interests
will be re-characterized as non-controlling interests and will be reported as a
component of equity separate from the parent’s equity, and purchases or sales of
equity interests that do not result in a change in control will be accounted for
as equity transactions. In addition, net income attributable to the
non-controlling interest will be included in consolidated net income on the face
of the income statement and, upon a loss of control, the interest sold, as well
as any interest retained, will be recorded at fair value with any gain or loss
recognized in earnings. FAS 160 is effective for us beginning January 1, 2009
and will apply prospectively, except for the presentation and disclosure
requirements, which will apply retrospectively. We are currently assessing the
potential impact that adoption of FAS 160 may have on our financial
statements.
  F-12
 
 2.
              Acquisitions
 
 In
October 2007, the Company entered into an agreement, through our wholly owned
newly formed Ontario subsidiary, Cancable XL Inc. (“Cancable XL”), to acquire
all of the issued and outstanding shares of capital stock and any other equity
interests of XL Digital Services Inc. (“XL Digital”), an Ontario corporation.
The total consideration to be paid by Cancable XL for the shares of XL Digital
will be an amount equal to the earnings before interest, taxes, depreciation and
amortization derived from the carrying on of its business by XL
Digital for the twelve month period after the completion of the acquisition
times 2.5. The consideration will be paid in notes, warrants to acquire stock of
the Company and cash, with the total balance accrued as of the purchase date of
$249,500 due on January 5, 2009. A portion of the purchase price $303,030 was
paid in January, 2008. There is currently a disagreement with the seller
regarding the calculation of the purchase price. The Company is in the process
of determining the final purchase price.
  The
Transaction described above relating to the acquisition of XL Digital was
accounted for as a business combination in accordance with SFAS No.
141.  A summary of the Transaction is presented below:
  Fair
value of net tangible assets acquired
  Common
      stock issued
                                                            
                                                            $
                                                            -Cash
                                                            
                                                            
                                                            606,060Transaction
      costs
                                                            
                                                            
                                                            17,171Equity
      purchase price
                                                            
                                                            
                                                            623,231Assumed
      debt and capital lease obligations
                                                            
                                                            
                                                            486,041Equity
      purchase price
                                                            
                                                            
                                                            1,109,272Fair
      value of net tangible assetsAccounts
      receivable
                                                            
                                                            $
                                                            947,666Inventory
      and supplies
                                                            
                                                            
                                                            105,089Prepaid
      expenses
                                                            
                                                            
                                                            60,438Property
      and equipment
                                                            
                                                            
                                                            636,855Aggregate
      tangible assets
                                                            
                                                            
                                                            1,750,048Accounts
      payable and accrued liabilities
                                                            
                                                            
                                                            (1,576,247
                                                            )Other
      liabilities
                                                            
                                                            
                                                            (29,858
                                                            )143,943Intangible
      assets
                                                            
                                                            
                                                            757,576Goodwill
      $
                                                            
                                                            $
                                                            207,753
 
  The
results of operations of XL Digital have been included in the results of
operations of the Company for the period from October 1, 2007 to December 31,
2007, had the acquisition of XL Digital taken place on January 1, 2007, the
consolidated unaudited results of operations would have been as
follows:
  Revenue
                      
                      $
                      42,457,900Net
      loss
                      
                      $
                      898,127Net
      loss per share
                      
                      $
                      (0.03
                      )
  F-13
 3.
                Other
      Investments– Available For Sale
Securities
   On
January 22, 2008, the Company entered into a Stock Purchase Agreement (the
“Stock Purchase Agreement”) with Erato Corporation (“Erato”) pursuant to which
the Company purchased and acquired from Erato 2,674,407 shares of common stock,
par value $0.0001 per share (the “Shares”), of 180 Connect Inc., a Delaware
corporation, for an aggregate purchase price of $5,444,940 paid by the Company
by delivery to Erato of (i) 2,195,720 duly and validly issued shares of common
stock of the Company and (ii) a common stock purchase warrant, exercisable for
812,988 shares of common stock of the Company at an exercise price of $0.01 per
share.
  On
January 30, 2008, the Company entered into a Warrant Purchase Agreement with
Laurus, Erato Corporation, Valens U.S. Fund, LLC and Valens Offshore SPV I, Ltd.
(collectively, the “Sellers”) pursuant to which the Company purchased and
acquired from the Sellers, warrants to purchase 450,000 shares of common stock
at an exercise price of $0.01 per share of 180 Connect Inc. The aggregate
purchase price paid by the Company in exchange for the 180 Connect Warrants was
$1,001,909 paid by the Company by delivery to the Sellers of common stock
purchase warrants, exercisable for 506,250 shares of common stock of the Company
at an exercise price of $0.01 per share.
  The above
investment, which is classified as available for sale securities, was sold in
July 2008 for an aggregate of $5,623,933.  The realized loss on the
disposal of this investment was $822,916.
 
 In
conjunction with this investment and pursuant to proposed financings of an
aggregate of $16,000,000, the Company also issued an aggregate of 2,030,865
warrants to purchase its common stock at $.01 per share which had a fair value
of $3,723,565. Because the proposed financings have no definitive terms and
there is no guarantee that the Company will receive any proceeds the fair value
of these options has been charged to financing expense during 2008.
 4.
                Prepaid
      Expenses
  The
      balance consists of the following:
 
 2008
                                              
                                              
                                              2007Prepaid
      insurance
                                              
                                              $
                                              9,426
                                              
                                              
                                              $
                                              55,469Prepaid
      rent
                                              
                                              
                                              33,628
                                              
                                              
                                              
                                              45,468Prepaid
      leases
                                              
                                              
                                              26,319
                                              
                                              
                                              
                                              21,976Prepaid
      salaries and benefits
                                              
                                              
                                              55,922
                                              
                                              
                                              
                                              -Others
                                              
                                              
                                              164,343
                                              
                                              
                                              
                                              148,017$
                                              289,638
                                              
                                              
                                              $
                                              270,930
  5.
                Related
      Party Transactions
  Balances
      due from related parties are as follows:
                                                      
                                                      2008
                                                      
                                                      
                                                      2007Balance
      due from a company controlled by the president, non-interest bearing and
      due on demand
                                                      
                                                      $
                                                      2,094
                                                      
                                                      
                                                      $
                                                      2,581Balances
      due to related parties are as follows:Advances
      from the Chairman of the Company, non-interest bearing with no fixed terms
      of repayment. The loan is subordinated to the Laurus loans
                                                      
                                                      $
                                                      53,169
                                                      
                                                      
                                                      $
                                                      68,773Subordinated
      loan - advances from the Chairman 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 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 was
      $Nil.
                                                      
                                                      
                                                      55,806
                                                      
                                                      
                                                      
                                                      65,521Loan
      payable to a company controlled by the president's spouse, non-interest
      bearing and due on demand
                                                      
                                                      
                                                      6,292
                                                      
                                                      
                                                      
                                                      8,143Loan
      payable to the president of the Company, non-interest bearing with no
      fixed terms of repayment. The loan is subordinated to Laurus
      loans
                                                      
                                                      
                                                      80,262
                                                      
                                                      
                                                      
                                                      98,909195,529
                                                      
                                                      
                                                      
                                                      241,346Less
      current portion
                                                      
                                                      
                                                      6,292
                                                      
                                                      
                                                      
                                                      8,143$
                                                      189,237
                                                      
                                                      
                                                      $
                                                      233,203Note
      payable to related parties are as follows:Note
      payable to the Malar Trust (the Chairman 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 $50,151 (2006:  $48,674)
                                                      
                                                      $
                                                      1,500,000
                                                      
                                                      
                                                      $
                                                      1,500,000
  F-14
  During
the year, $308,211 (2007 - $166,495) in consulting fees were paid to Companies
controlled by the Chairman of the Board. In addition, $213,910 (2007 - $149,921)
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 chairman is one of the
beneficiaries of the trust), respectively. During the period ended June 30,
2006, the above two notes payable have been transferred to Malar Trust Inc. (the
Company’s chairman is the shareholder of Malar Trust Inc.).
 6.
                  Property
      and Equipment
 
 
 2008
                                            
                                            
                                            
                                            
                                            
                                            2007Accumulated
                                            
                                            
                                            
                                            
                                            
                                            AccumulatedCost
                                            
                                            
                                            Depreciation
                                            
                                            
                                            Cost
                                            
                                            
                                            DepreciationLand
                                            
                                            $
                                            81,357
                                            
                                            
                                            
                                            -
                                            
                                            
                                            $
                                            100,258
                                            
                                            
                                            
                                            -Industrial
      condominium
                                            
                                            
                                            701,634
                                            
                                            
                                            
                                            162,186
                                            
                                            
                                            
                                            864,640
                                            
                                            
                                            
                                            172,690Leasehold
      improvement
                                            
                                            
                                            405,772
                                            
                                            
                                            
                                            186,604
                                            
                                            
                                            
                                            336,896
                                            
                                            
                                            
                                            93,051Office
      equipment
                                            
                                            
                                            382,605
                                            
                                            
                                            
                                            254,039
                                            
                                            
                                            
                                            416,724
                                            
                                            
                                            
                                            197,445Office
      equipment under capital leases
                                            
                                            
                                            46,415
                                            
                                            
                                            
                                            40,415
                                            
                                            
                                            
                                            49,804
                                            
                                            
                                            
                                            34,586Furniture
      and fixtures
                                            
                                            
                                            359,288
                                            
                                            
                                            
                                            171,070
                                            
                                            
                                            
                                            277,114
                                            
                                            
                                            
                                            128,071Furniture
      and fixtures under capital leases
                                            
                                            
                                            18,289
                                            
                                            
                                            
                                            18,289
                                            
                                            
                                            
                                            22,538
                                            
                                            
                                            
                                            22,538Computer
      hardware and software
                                            
                                            
                                            1,271,672
                                            
                                            
                                            
                                            710,083
                                            
                                            
                                            
                                            1,040,574
                                            
                                            
                                            
                                            716,126Computer
      hardware and software under capital leases
                                            
                                            
                                            77,084
                                            
                                            
                                            
                                            77,084
                                            
                                            
                                            
                                            102,610
                                            
                                            
                                            
                                            102,610Vehicles
                                            
                                            
                                            607,242
                                            
                                            
                                            
                                            457,651
                                            
                                            
                                            
                                            667,091
                                            
                                            
                                            
                                            460,511Vehicles
      under capital leases
                                            
                                            
                                            9,526,118
                                            
                                            
                                            
                                            2,769,853
                                            
                                            
                                            
                                            5,821,390
                                            
                                            
                                            
                                            1,773,654Tools
      & Equipment
                                            
                                            
                                            1,407,600
                                            
                                            
                                            
                                            823,179
                                            
                                            
                                            
                                            1,054,817
                                            
                                            
                                            
                                            701,160$
                                            14,885,076
                                            
                                            
                                            
                                            5,670,453
                                            
                                            
                                            $
                                            10,754,456
                                            
                                            
                                            
                                            4,402,442Net
      book value
                                            
                                            
                                            
                                            
                                            
                                            $
                                            9,214,623
                                            
                                            
                                            
                                            
                                            
                                            
                                            $
                                            6,352,014
  F-15
 
 7.
              Intangible
      Assets
  2008
                                            
                                            
                                            2007Cost
                                            
                                            
                                            Accumulated
      amortization
                                            
                                            
                                            Net
      book
                                              value
                                            
                                            
                                            Net
      book
                                              valueCustomer
      relationships
                                            
                                            $
                                            1,549,180
                                            
                                            
                                            $
                                            737,295
                                            
                                            
                                            
                                            811,885
                                            
                                            
                                            $
                                            1,242,930Trade
      name
                                            
                                            $
                                            1,265,574
                                            
                                            
                                            $
                                            1,227,323
                                            
                                            
                                            
                                            38,251
                                            
                                            
                                            $
                                            474,0732,814,754
                                            
                                            
                                            $
                                            1,964,618
                                            
                                            
                                            
                                            850,136
                                            
                                            
                                            $
                                            1,717,003
  For the
year ended December 31, 2008, the amortization of intangible assets was $
751,753 (2007 - $637,539). The amortizations for the next four years are as
follows:
  Year
                        
                        Amount2009
                        
                        $
                        331,6932010
                        
                        
                        326,2302011
                        
                        
                        109,8362012
                        
                        
                        82,377$
                        850,136
  8.
              Deferred
      Financing Costs, Net
  Deferred
financing costs are associated with the Company’s term notes. For the year ended
December 31, 2008, the amortization of deferred financing cost was $234,835
(2007 - $182,430).
  2008
                                    
                                    
                                    2007Cost
                                    
                                    $
                                    988,790
                                    
                                    
                                    $
                                    953,295Accumulated
      amortization
                                    
                                    
                                    505,459
                                    
                                    
                                    
                                    401,548$
                                    $483,331
                                    
                                    
                                    $
                                    551,747
  Year
                    
                    Amount2009
                    
                    $
                    152,5632010
                    
                    
                    146,5962011
                    
                    
                    126,4842012
                    
                    
                    39,0342013
                    
                    
                    18,654$
                    483,331
  F-16
 9.
                Bank
      Indebtedness
 During
the period ended March 31, 2008, the Company established credit facilities with
a Canadian chartered bank to provide for borrowings by its subsidiaries, AC
Technical and Cancable Inc.  The credit facility for AC Technical and
Cancable was $500,000 and $3,500,000 respectively. Revolving credit loans bear
interest at the bank’s domestic prime rate plus 1.5% for Canadian dollar
amounts.  Interest is payable monthly. The facilities are secured by
an assignment of book debts, inventory, certain other assets and life insurance.
As at December 31, 2008, the interest rate of the Canadian dollar amount was
5.0%. At December 31, 2008, the borrowings outstanding under both facilities was
$1,581,912.  The Company banking facility agreements contain financial
covenants pertaining to maintenance of the tangible net worth and debt service
coverage ratio. In the event of default, the bank could at its discretion cancel
the facilities and demand immediate repayment of all outstanding amounts. Both
credit facilities are due in March 2009 and the Company is in the
process of renewing these banking facilities.
  10.
                  Term
      Notes
  In
January 2006, concurrently with the closing of the acquisition of Cancable Inc.,
the Company entered into a series of agreements with Laurus whereby Cancable
issued to Laurus a secured term note (the “Cancable Note”) in the amount of
$6,865,000 and Cancable Holding issued to Laurus a related option to purchase up
to 49 shares of common stock of Cancable Holding (up to 49% of the outstanding
shares of Cancable Holding) at a price of $0.01 per share (the “Option”). The
loan is secured by all of the assets of the Company and its
subsidiaries.
  The
Cancable Note bears interest at the prime rate plus 1.75% with a minimum rate of
7%. Interest accrued on the term note but was not payable until February 1,
2006.  Interest is calculated on the basis of a 360 day
year.  The minimum monthly payment on the term note is $81,726
commencing from October 1, 2006.  The Company is not obligated, except
upon an event of default, to pay more than 25% of the original principal amount
prior to December 31, 2011.
  In
February 2006, the Company and its subsidiaries, Iview Holding and Iview DSI
entered into a series of agreements with Laurus pursuant to a refinancing
transaction whereby the Company issued to Laurus a secured term note (the
“Company Note”) in the amount of $8,250,000, Iview DSI issued to Laurus a
secured term note (the “Iview Note”) in the amount of $2,000,000, the Company
issued to Laurus a related warrant to purchase up to 2,411,003 shares of common
stock of the Company (up to 7.5% of the outstanding shares of the Company) at a
price of $0.01 per share (the “Warrant”) and Iview Holding issued to Laurus a
related option to purchase up to 20 shares of common stock of Holding (up to 20%
of the outstanding shares of Holding) at a price of $0.01 per share (the
“Option”). The loans are secured by all of the assets of the Company and its
subsidiaries. Simultaneously with the closing of this refinancing transaction,
the Company paid off the entire outstanding principal amount and all obligations
due to Laurus under a Secured Convertible Term Note, a Secured Convertible
Minimum Borrowing Note and a Secured Revolving Note, all dated September 30,
2004 (collectively, the “2004 Notes”) and such 2004 Notes were subsequently
cancelled.
  The
options held by Laurus to acquire 49% of Cancable and 20% of Iview Holding are
accounted for as minority interests.  Because Cancable and Iview
Holding have incurred losses, no minority interest has been recognized at
December 31, 2008.
  The
Company Note bears interest at the prime rate plus 2% with a minimum rate of 7%.
Interest accrued on the term note but was not payable until April 1,
2006.  Interest is calculated on the basis of a 360 day
year.  The minimum monthly payment on the term note is $137,500
commencing March 1, 2007 to February 1, 2009, with a balance of $4,950,000
payable on the maturity date. Through December 31, 2008, the Company has issued
warrants to purchase up to 648,000 shares of common stock of the Company at
prices from $1.09 to $2.84 per share to defer until maturity the principal
repayments that were due from March 1, 2007 to June 1, 2008.
 
 F-17
 
 The Iview
Note bears interest at the prime rate plus 2% with a minimum rate of 7%.
Interest accrued on the term note but was not payable until April 1,
2006.  Interest is calculated on the basis of a 360 day
year.  The minimum monthly payment on the term note is $8,333
commencing March 1, 2007 to February 1, 2011, with the balance
of  $1,600,000 payable on the maturity date. The Company is not
obligated, except upon an event of default, to pay more than 25% of the original
principal amount prior to December 31, 2011.
  In June
2008, the Company and  its subsidiary,Cancable Inc., entered
into a financing transaction whereby the Company issued to Valens Offshore SPV
II, Corp. (“Valens Offshore”) and Valens U.S. SPV I, LLC (“Valens U.S.”) secured
term notes in the amount of $1,700,000 and $800,000, respectively (collectively,
the “Company Second Notes”). The Company also issued to Valens Offshore and
Valens U.S. warrants to purchase up to 1,333,333 and 627,451 shares,
respectively, of common stock of the Company at a price of $0.01 per share. The
loans are secured by all of the assets of the Company and all its
subsidiaries.
  Interest
on the term notes for the year ended December 31, 2008 was $1,481,421 (2007:
$1,645,138).
  2008
                                              
                                              
                                              2007Cancable
      Note interest at prime plus 1.75% (minimum of  7%), due December
      31, 2011
                                              
                                              $
                                              5,200,243
                                              
                                              
                                              $
                                              5,639,110Company
      Note interest at prime plus 2% (minimum of  7%), due February
      13, 2010
                                              
                                              
                                              7,424,999
                                              
                                              
                                              
                                              8,250,000Iview
      Note bears interest at prime plus 2% (minimum of 7%), due on February 13,
      2011
                                              
                                              
                                              1,814,873
                                              
                                              
                                              
                                              1,916,667Company
      Second Notes. interest at 12%, due on June 24, 2013
                                              
                                              
                                              2,500,000
                                              
                                              
                                              
                                              -Less:
      unamortized discount
                                              
                                              
                                              (1,127,825
                                              )
                                              
                                              
                                              -15,812,290
                                              
                                              
                                              
                                              15,805,777Less:
      current portion
                                              
                                              
                                              1,750,000
                                              
                                              
                                              
                                              2,240,356$
                                              14,062,290
                                              
                                              
                                              $
                                              13,565,421
  The
principal payments for the next five fiscal years are as follows:
  Amount2009
                            
                            $
                            1,750,0002010
                            
                            
                            5,874,9992011
                            
                            
                            6,815,1152012
                            
                            
                            -2013
                            
                            
                            1,372,1756$
                            15,812,290
 11.
                  Net
      Financing Expenses
 2008
                                
                                
                                2007Capital
      leases
                                
                                $
                                597,897
                                
                                
                                $
                                364,408Interest
      of credit facility
                                
                                
                                1,481,421
                                
                                
                                
                                1,645,138Interest
      on  deferred principal repayment on term notes
      –warrants
                                
                                
                                628,227
                                
                                
                                
                                895,043Warrants
      issued for proposed new financing
                                
                                
                                3,723,565
                                
                                
                                
                                -Financing
      cost for the extension of warrants
                                
                                
                                560,735Other
                                
                                
                                50,133
                                
                                
                                
                                50,474$
                                7,041,978
                                
                                
                                $
                                2,955,063




Included
in net financing expenses is the fair value of $3,723,565 for 2,030,865 warrants
to purchase the Company’s common stock issued in January 2008 as
follows:
 
 (i) On
January 22, 2008 the Company entered into a letter agreement with Erato
Corporation for Erato to provide up to $12,000,000 in financing to the Company
on such terms and conditions as the Company and Erato shall mutually agree (the
“Bridge Financing”). Any proceeds from the Bridge Financing may only be used by
the Company for the purpose of financing a third party. The Company does not
currently have an agreement to provide financing to any such third party. As
consideration for the letter agreement, the Company issued to Erato a warrant to
purchase up to 1,738,365 shares of common stock of the Company at an exercise
price of $0.01 per share. Because the Company does not currently have any
agreement to provide financing to a third party, the financing has not occurred
and, as a result, the Company expensed the value of the warrants. The fair value
of the warrants of $3,144,685 was measured using the Black-Scholes option
pricing model using the following assumptions: risk free interest rate of 4.23%,
expected dividend yield of 0%, volatility of 45%, share price of $1.81 and the
expected life of the warrants of 50 years.
  (ii) On
January 30, 2008, the Company entered into a non-binding letter of intent with
Valens U.S. Fund, LLC (the “Letter Agreement”) in which Valens U.S. Fund, LLC
confirmed its intention to provide up to $4,000,000 in financing to a subsidiary
of the Company. As consideration for the Letter Agreement, the Company issued to
Laurus, Erato, Valens U.S. Fund, LLC and Valens Offshore SPV I, Ltd. warrants to
purchase 292,500 shares of common stock of the Company at an exercise price of
$0.01 per share. The Letter Agreement was only an expression of the present
intentions of the parties and no binding legal obligation will exist until the
parties sign a definitive agreement. As a result, the Company expensed the value
of the warrants. The fair value of the warrants of $578,880 was measured using
the Black-Scholes option pricing model using the following assumptions: risk
free interest rate of 4.44%, expected dividend yield of 0%, volatility of 45%,
share price of $1.98 and the life of the warrants of 50
years.


F-18
  12.
              Obligation Under Capital
      Leases
  2008
                      
                      
                      
                      2007Obligation
      under capital lease – 10.9%, due January 2009,
                        repayable
      $451 principal and interest monthly, secured by
                        certain
      office equipment
                      
                      $
                      -
                      
                      
                      $
                      4,223Obligation
      under capital lease – 8.2%, due May 2009,
                        repayable
      $406 per vehicle principal and interest monthly, secured by
                        11
      vehicles
                      
                      
                      84,776
                      
                      
                      
                      159,862Obligation
      under capital lease – 8.4%, due July 2009,
                        repayable
      $403 per vehicle principal and interest monthly, secured by
                        10
      vehicles
                      
                      
                      76,828
                      
                      
                      
                      144,531Obligation
      under capital lease – 8.2%, due August  2009,
                        repayable
      $395 per vehicle principal and interest monthly, secured by
                        14
      vehicles
                      
                      
                      111,734
                      
                      
                      
                      205,584Obligation
      under capital lease – 8.3%, due September  2009,
                        repayable
      $395 per vehicle principal and interest monthly, secured by
                        22
      vehicles
                      
                      
                      183,030
                      
                      
                      
                      331,543Obligation
      under capital lease – 8.2%, due October  2009,
                        repayable
      $395 per vehicle principal and interest monthly, secured by
                        5
      vehicles
                      
                      
                      43,287
                      
                      
                      
                      77,295Obligation
      under capital lease – 14.9%, due March 2010,
                        repayable
      $296 per vehicle principal and interest monthly, secured by
                        25
      vehicles
                      
                      
                      106,457
                      
                      
                      
                      215,771Obligation
      under capital lease – 19.3%, due March 2010,
                        repayable
      $234 per vehicle principal and interest monthly, secured
      by
                        5
      vehicles
                      
                      
                      14,114
                      
                      
                      
                      30,345Obligation
      under capital lease – 10.9%, due June 2010,
                        repayable
      $464 per vehicle principal and interest monthly, secured by
                        7
      vehicles
                      
                      
                      79,539
                      
                      
                      
                      133,885Obligation
      under capital lease – 10.9%, due July 2010,
                        repayable
      $464 per vehicle principal and interest monthly, secured by
                        20
      vehicles
                      
                      
                      234,579
                      
                      
                      
                      390,644Obligation
      under capital lease – 12.4%, due August 2010,
                        repayable
      $304 per vehicle principal and interest monthly, secured by
                        5
      vehicles
                      
                      
                      27,473
                      
                      
                      
                      51,217Obligation
      under capital lease – 13.4%, due August 2010,
                        repayable
      $304 per vehicle principal and interest monthly, secured by
                        4
      vehicles
                      
                      
                      21,814
                      
                      
                      
                      40,498Obligation
      under capital lease – 13.31%, due August 2010,
                        repayable
      $304 per vehicle principal and interest monthly, secured by
                        6
      vehicles
                      
                      
                      32,743
                      
                      
                      
                      60,818Obligation
      under capital lease – 10.9%, due August 2010,
                        repayable
      $464 per vehicle principal and interest monthly, secured by
                        6
      vehicles
                      
                      
                      72,533
                      
                      
                      
                      119,593Obligation
      under capital lease – 10.9%, due September 2010,
                        repayable
      $469 per vehicle principal and interest monthly, secured by
                        7
      vehicles
                      
                      
                      87,736
                      
                      
                      
                      143,413Obligation
      under capital lease – 8.9%, due November 2010,
                        repayable
      $462 per vehicle principal and interest monthly, secured by
                        5
      vehicles
                      
                      
                      66,564
                      
                      
                      
                      107,642Obligation
      under capital lease – 8.9%, due December 2010,
                        repayable
      $467 per vehicle principal and interest monthly, secured by 7
      vehicles
                      
                      
                      97,212
                      
                      
                      
                      156,263  F-19
 Obligation
      under capital lease – 9%, due February 2011,
                            repayable
      $480 per vehicle principal and interest monthly, secured by 6
      vehicles
                          
                          
                          89,260
                          
                          
                          
                          141,194Obligation
      under capital lease – 10.7%, due March 2011,
                            repayable
      $395 per vehicle principal and interest monthly, secured by
                            20
      vehicles
                          
                          
                          189,769
                          
                          
                          
                          338,726Obligation
      under capital lease – 10.9%, due March 2011,
                            repayable
      $416 per vehicle principal and interest monthly, secured by
                            20
      vehicles
                          
                          
                          189,907
                          
                          
                          
                          321,352Obligation
      under capital lease – 9.3%, due January 2011,
                            repayable
      $467 per vehicle principal and interest monthly, secured by
                            4
      vehicles
                          
                          
                          56,716
                          
                          
                          
                          90,291Obligation
      under capital lease – 7.5%, due April 2011,
                            repayable
      $442 per vehicle principal and interest monthly, secured by
                            22
      vehicles
                          
                          
                          336,360
                          
                          
                          
                          524,040Obligation
      under capital lease – 16.3%, due April 2011,
                            repayable
      $505 per vehicle principal and interest monthly, secured by
                            certain
      office equipment
                          
                          
                          11,820
                          
                          
                          
                          19,223Obligation
      under capital lease – 16.2%, due April 2011,
                            repayable
      $390 per vehicle principal and interest monthly, secured by
                            certain
      office equipment
                          
                          
                          7,137
                          
                          
                          
                          12,618Obligation
      under capital lease – 6.5%, due April 2011,
                            repayable
      $448 per vehicle principal and interest monthly, secured by
                            10
      vehicles
                          
                          
                          145,978
                          
                          
                          
                          232,897Obligation
      under capital lease – 8.5%, due June 2011,
                            repayable
      $391 per vehicle principal and interest monthly, secured by
                            1
      vehicle
                          
                          
                          12,719
                          
                          
                          
                          19,979Obligation
      under capital lease – 14%, due September 2011,
                            repayable
      $465 per vehicle principal and interest monthly, secured by
                            22
      vehicles
                          
                          
                          184,742
                          
                          
                          
                          306,022Obligation
      under capital lease – 7.7%, due July 2012,
                            repayable
      $445 per vehicle principal and interest monthly, secured by
                            10  vehicles
                          
                          
                          40,952
                          
                          
                          
                          -Obligation
      under capital lease – 7.9%, due March 2012,
                            repayable
      $440 to $445 per vehicle principal and interest monthly, secured
      by
                            20  vehicles
                          
                          
                          381,744
                          
                          
                          
                          -Obligation
      under capital lease – 9.5%, due July 2012,
                            repayable
      $348 per vehicle principal and interest monthly, secured by
                            12  vehicles
                          
                          
                          179,928
                          
                          
                          
                          -Obligation
      under capital lease – 7.8%, due July 2012,
                            repayable
      $445 per vehicle principal and interest monthly, secured by
                            6
      vehicles
                          
                          
                          122,856
                          
                          
                          
                          -Obligation
      under capital lease – 9.4%, due October 2012,
                            repayable
      $471 per vehicle principal and interest monthly, secured by
                            20
      vehicles
                          
                          
                          420,511
                          
                          
                          
                          -Obligation
      under capital lease – 15.6%, due January 2012,
                            repayable
      $477 to $482 per vehicle principal and interest monthly,
      secured
                            by
      8 vehicles
                          
                          
                          98,625
                          
                          
                          
                          -Obligation
      under capital lease – 15.7%, due February 2012,
                            repayable
      $462 to $479 per vehicle principal and interest monthly,
      secured
                            by
      21 vehicles
                          
                          
                          341,277
                          
                          
                          
                          -Obligation
      under capital lease – 15.6%, due March 2012,
                            repayable
      $463 to $482 per vehicle principal and interest monthly,
      secured
                            by
      23 vehicles
                          
                          
                          415,203
                          
                          
                          
                          -
  F-20
 Obligation
      under capital lease – 15.0%, due March 2012,
                      repayable
      $493 per vehicle principal and interest monthly, secured by
                      6
      vehicles
                    
                    
                    123,059
                    
                    
                    
                    -Obligation
      under capital lease – 15.6%, due April 2012,
                      repayable
      $437 to $468 per vehicle principal and interest monthly, secured
      by
                      23
      vehicles
                    
                    
                    415,637
                    
                    
                    
                    -Obligation
      under capital lease – 15.8% to 15.9%, due May 2012,
                      repayable
      $372 to $433 per vehicle principal and interest monthly, secured
      by
                      2
      vehicles
                    
                    
                    35,013
                    
                    
                    
                    -Obligation
      under capital lease – 7.6% to 8.4%, due May 2012,
                      repayable
      $499 to $512 per vehicle principal and interest monthly, secured
      by
                      8
      vehicles
                    
                    
                    148,407
                    
                    
                    
                    -Obligation
      under capital lease – 9.7%, due July 2012,
                      repayable
      $394 per vehicle principal and interest monthly, secured by
                      18
      vehicles
                    
                    
                    307,488
                    
                    
                    
                    -Obligation
      under capital lease – 7.9% to 10.3%, due July 2012,
                      repayable
      $407 to $422 per vehicle principal and interest monthly, secured
      by
                      8
      vehicles
                    
                    
                    121,803
                    
                    
                    
                    -Obligation
      under capital lease – 9.5% to 10.2%, due August 2012,
                      repayable
      $455 to $468 per vehicle principal and interest monthly, secured
      by
                      4
      vehicles
                    
                    
                    80,882
                    
                    
                    
                    -Obligation
      under capital lease – 8.3% to 9.3%, due August 2012,
                      repayable
      $463 to $477 per vehicle principal and interest monthly, secured
      by
                      4
      vehicles
                    
                    
                    278,644
                    
                    
                    
                    -Obligation
      under capital lease – 8.9% to 10.2%, due September 2012,
                      repayable
      $437 to $468 per vehicle principal and interest monthly, secured
      by
                      31
      vehicles
                    
                    
                    602,696
                    
                    
                    
                    -6,679,552
                    
                    
                    
                    4,379,469Less
      amount due within one year included in current liabilities
                    
                    
                    2,125,312
                    
                    
                    
                    1,195,366$
                    4,554,240
                    
                    
                    $
                    3,184,103
  The
future minimum lease payments are as follows:
  2009
                      
                      $
                      2,715,4182010
                      
                      
                      2,239,3002011
                      
                      
                      1,592,5132012
                      
                      
                      1,430,6447,977,874Less
      imputed interest
                      
                      
                      1,298,3226,679,552
  Interest
expense for the year related to capital assets was $597,897 (2007 -
$364,408).
  F-21
  
 13.
                Incomes
      Taxes
 The
      Company's provision for (recovery of) income taxes is comprised as
      follows:2008
                    
                    
                    2007U.S.
                    
                    $
                    -
                    
                    
                    $
                    -CanadianCurrent
                    
                    
                    -
                    
                    
                    
                    -Deferred
                    
                    
                    -
                    
                    
                    
                    -$
                    -
                    
                    
                    $
                    -Reconciliation
      to statutory rates is as follows:2008
                    
                    
                    2007Income
      (loss) before income taxesIncome
      (loss) from U.S. sales
                    
                    $
                    (15,205,419
                    )
                    
                    $
                    (3,240,620
                    )Income
      (loss) from Canadian sales
                    
                    
                    (3,707,036
                    )
                    
                    
                    2,659,014(18,912,455
                    )
                    
                    
                    (581,606
                    )Statutory
      tax rates for U.S.
                    
                    
                    41.00
                    %
                    
                    
                    41.00
                    %Statutory
      tax rates for Canadian Federal
                    
                    
                    36.12
                    %
                    
                    
                    36.12
                    %
  The
Company has unutilized taxable losses in the United States available for carry
forward to reduce net income of approximately $23,214,000 otherwise payable in
future years.  In addition, the Company has unutilized taxable losses
in the Canadian taxes available for carry forward to reduce net
income  of approximately $1,990,400 otherwise payable in future
years.
  F-22
  2008
                                  
                                  
                                  
                                  
                                  
                                  2007Expected
      income tax expense (recovery)
                                  
                                  $
                                  (7,569,647
                                  )
                                  
                                  
                                  (38.5
                                  )%
                                  
                                  $
                                  (469,136
                                  )
                                  
                                  
                                  (59.5
                                  )%Increase
      (decrease) in taxes resulting from:Valuation
      allowances
                                  
                                  
                                  5,933,020
                                  
                                  
                                  
                                  30.1
                                  %
                                  
                                  
                                  1,357,946
                                  
                                  
                                  
                                  172.3
                                  %Permanent
      differences
                                  
                                  
                                  1,677,803
                                  
                                  
                                  
                                  8.5
                                  %
                                  
                                  
                                  274,089
                                  
                                  
                                  
                                  34.7
                                  %Small
      business and other tax rate reductions
                                  
                                  
                                  (41,176
                                  )
                                  
                                  
                                  (0.1
                                  %)
                                  
                                  
                                  (1,162,899
                                  )
                                  
                                  
                                  (147.5
                                  %)Income
      tax expenses (recovery)
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  -
  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, 2008 and
2007 are presented below:
  2008
                    
                    
                    2007AssetsTax
      benefits on losses carried forward under U.S. tax rate
                    
                    
                    9,510,415
                    
                    
                    
                    5,015,000Tax
      benefits on losses carried forward under Canadian tax rate
                    
                    
                    718,944
                    
                    
                    
                    226,800Accounting
      depreciation in excess of tax depreciation
                    
                    
                    35,343
                    
                    
                    
                    37,547Other
                    
                    
                    746
                    
                    
                    
                    91910,265,448
                    
                    
                    
                    5,280,266Less:
      valuation allowance
                    
                    
                    (10,229,359
                    )
                    
                    
                    (5,241,800
                    )36,089
                    
                    
                    
                    38,466Less:
      current portion
                    
                    
                    (746
                    )
                    
                    
                    (919
                    )$
                    35,343
                    
                    
                    $
                    37,547LiabilitiesIncome
      tax depreciation in excess of accounting depreciation
                    
                    $
                    -
                    
                    
                    $
                    -Other
                    
                    
                    26,604
                    
                    
                    
                    26,77726,604
                    
                    
                    
                    26,777Less:
      current portion
                    
                    
                    (26,604
                    )
                    
                    
                    (26,777
                    )$
                    -
                    
                    
                    $
                    -
  F-23
  Net
      deferred income taxes2008
                      
                      
                      2007CurrentAssets
                      
                      $
                      746
                      
                      
                      $
                      919Liabilities
                      
                      
                      (26,604
                      )
                      
                      
                      (26,777
                      )$
                      (25,858
                      )
                      
                      $
                      (25,858
                      )Long-termAssets
                      
                      $
                      35,343
                      
                      
                      $
                      37,547Liabilities
                      
                      
                      -
                      
                      
                      
                      -$
                      35,343
                      
                      
                      $
                      37,547$
                      9,485
                      
                      
                      $
                      11,689
  14.
                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.  The provision
for warranty liabilities which is included in accrued expenses is as
follows:
  2008
                                
                                
                                2007Balance,
      beginning of year
                                
                                $
                                40,404
                                
                                
                                $
                                34,482Expenses
      incurred
                                
                                
                                (16,393
                                )
                                
                                
                                (20,000
                                )Provision
      made
                                
                                
                                8,776
                                
                                
                                
                                25,922Balance,
      end of year
                                
                                $
                                32,787
                                
                                
                                $
                                40,404
 
 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.
  During
the period ended March 31, 2008, the Company entered into a consulting agreement
by issuing 222,414 shares of common stock in consideration for investor
relations services rendered with a fair value of $448,200. Additionally, the
Company issued 2,000 common shares to an employee for the exercise of an
employee stock option for cash aggregating $1,260.
  During
the period ended June 30, 2008, the Company entered into a consulting agreement
by issuing 300,000 shares of common stock in consideration for investor
relations services rendered for 2008 with the fair value of $600,000.
Additionally, the Company issued 10,169 common shares for the payment of
outstanding legal fees in the amount of $25,117.
  During
the period ended December 31, 2008, the Company agreed to issue 166,835 common
shares for legal fees with the fair value of $45,056.
  In
conjunction with the issuance of the Cancable Note and Iview Note in 2006, the
Company has granted Laurus options to purchase up to 49% of Cancable Holding
Corp. and 20% of Iview Holding Corp. respectively. The financial statements of
Cancable Holding Corp. and Iview Holding Corp. have negative equity on a stand
alone basis.  At such time as these entities have positive equity and
generate net income, the Company will account for the options as minority
interests.
  F-24
  Options
  The
Company’s Stock Option Plan is intended to provide incentives for key employees,
directors, consultants and other individuals providing services to the Company
by encouraging their ownership of the common stock of the Company and to aid the
Company in retaining such key employees, directors, consultants and other
individuals upon whose efforts the Company’s success and future growth depends
and in attracting other such employees, directors, consultants and
individuals.
  The Plan
is administered by the Board of Directors, or its Compensation
Committee.  Under the Plan, options on a total of 4,000,000 shares of
common stock may be issued.  Shares of common stock covered by options
which have terminated or expired prior to exercise are available for further
options under the Plan.    The maximum aggregate number of
shares of Stock that may be issued under the Plan as “incentive stock options”
is 3,500,000 shares.  No options may be granted under the Plan after
June 30, 2011; provided, however, that the Board of Directors may at any time
prior to that date amend the Plan.
  Options
under the Plan may be granted to key employees of the Company, including
officers or directors of the Company, and to consultants and other individuals
providing services to the Company.  Options may be granted to eligible
individuals whether or not they hold or have held options previously granted
under the Plan or otherwise granted or assumed by the Company.  In
selecting individuals for options, the Committee may take into consideration any
factors it may deem relevant, including its estimate of the individual’s present
and potential contributions to the success of the Company.
  The
Committee may, in its discretion, prescribe the terms and conditions of the
options to be granted under the Plan, which terms and conditions need not be the
same in each case, subject to the following:
  a.
                Option
      Price.  The price at which each share of common stock covered by
      an option granted under the Plan may be purchased may not be less than the
      market value per share of the common stock on the date of grant of the
      option.  The date of the grant of an option shall be the date
      specified by the Committee in its grant of the option, which date will
      normally be the date the Committee determines to make such
      grant.
  b.
                Option
      Period.  The period for exercise of an option shall in no event
      be more than five years from the date of grant.  Options may, in
      the discretion of the Committee, be made exercisable in installments
      during the option period.
  c.
                Exercise
      of Options.  For the purpose of assisting an Optionee to
      exercise an option, the Company may make loans to the Optionee or
      guarantee loans made by third parties to the Optionee, on such terms and
      conditions as the Board of Directors may authorize. In no event shall any
      option be exercisable more than five years from the date of grant
      thereof.
 
 d.
                Lock-Up
      Period.  Without the consent of the Company, an Optionee may not
      sell more than fifty percent of the shares issued under the Plan for a
      period of two years from the date that the Optionee exercises the option.
      The Committee may impose such other terms and conditions, not inconsistent
      with the terms of the Plan, on the grant or exercise of options, as it
      deems advisable.
  The fair
value of each option award is estimated on the date of grant using the
Black-Scholes option valuation model, using the assumptions noted in the
following table. Expected volatility is based on the historical volatility of
the Company’s stock, and other factors. The Company uses historical data to
estimate employee termination within the valuation model. Because the Company
has not previously granted options to employees, for purposes of the valuation
model, the Company has assumed that the life of the options will be equal to
one-half of the combined vesting period and contractual life (i.e., that
employees will exercise the options at the midpoint between the vesting and
expiry date of the options). The risk-free rates used to value the options are
based on the U.S. Treasury yield curve in effect at the time of
grant.
  F-25
  During
2007, the Company granted to employees options to purchase 1,226,000 shares of
common stock, at prices ranging from $0.90 to $2.59 per share; the options
expire in 2012.
  At
December 31, 2008 options to purchase 2,939,000 shares of common stock were
outstanding.  These options vest ratably in annual installments, over
the four year period from the date of grant.  As of December 31, 2008,
there was $1,147,767 of total unrecognized compensation cost related to
non-vested share-based compensation arrangements granted under the Plan. That
cost is expected to be recognized over the four year vesting period. At December
31, 2008, 786,500 options were vested. The cost recognized for the year ended
December 31, 2008 was $405,409 (2007:$176,123) which was recorded as general and
administrative expenses.
  In
valuing the options issued, the following assumptions were used;
  2007Expected
      volatility
                            
                            
                            45%Expected
      dividends
                            
                            
                            0%Expected
      term (in years)
                            
                            
                            3.0
      – 4.5Risk-free
      rate
                            
                            
                            4.25%
      - 5.13%
  A summary
of option activity under the Plan during the year ended December 31, 2008
is presented below:
  Options
                        
                        Shares
                        
                        
                        Weighted-Average
                          Exercise
                          Price
                        
                        
                        Weighted-Average
                          Remaining
      Contractual
                          Term
                        
                        
                        Intrinsic
                          ValueOutstanding
      at December 31, 2006
                        
                        
                        2,317,000
                        
                        
                        $
                        0.63
                        
                        
                        
                        4.0Granted
                        
                        
                        1,226,000
                        
                        
                        $
                        2.32Exercised
                        
                        
                        (36,000
                        )
                        
                        $
                        0.63Forfeited
      or expired
                        
                        
                        (285,000
                        )
                        
                        $
                        0.63Outstanding
      at December 31, 2007
                        
                        
                        3,222,000
                        
                        
                        $
                        1.27
                        
                        
                        
                        4.75
                        
                        
                        $
                        1.57Granted
                        
                        
                        -
                        
                        
                        
                        -Exercised
                        
                        
                        (2,000
                        )
                        
                        $
                        0.63Forfeited
      or expired
                        
                        
                        (281,000
                        )
                        
                        $
                        0.63Outstanding
      at December 31, 2008
                        
                        
                        2,939,000Exercisable
      at December 31, 2008
                        
                        
                        786,500
                        
                        
                        $
                        0.63
                        
                        
                        
                        -
                        
                        
                        $
                        0.00
  F-26
  Warrants
  The
Company uses the Black-Scholes option pricing model to value warrants issued to
non-employees, based on the market price of our common stock at the time the
warrants are issued. All outstanding warrants may be exercised by the holder at
any time.   During the period ended March 31, 2008, in connection
with financing and the acquisition of available for sale securities, the Company
issued warrants to purchase 3,674,103 shares of common stock.  The
fair value of the warrants of $6,470,357 was measured using the Black-Scholes
option pricing model using the following assumptions: risk free interest rate of
2.18% to 4.44%, expected dividend yield of 0%, volatility of 45%, exercise
prices of $0.01 to $2.84 and the life of warrants of 4 to 50
years.  During the period ended June 30, 2008, in connection with
financing arrangements, the Company issued warrants to purchase 2,284,784 shares
of common stock.  The fair value of the warrants of $2,125,946 was
measured using the Black-Scholes option pricing model using the following
assumptions: risk free interest rate of 4.19%, expected dividend yield of 0%,
volatility of 120% to 125%, exercise prices of $1.07 to $1.90 and the life of
the warrants 4 to 10 years.
  As of
December 31, 2008, we had the following common stocks warrants
outstanding:
  Issue
      Date
                          Expiry
      Date
                          Number
      of warrants
                          Exercise
      Price Per share
                          Value-issue
      date
                          
                          Issued
      for01–05-2004
                          01-05-2009
                          540,000
                          $0.33
                          $447,463
                          
                          Consulting
      and investment banking fees09–30-2004
                          09-30-2009
                          199,500
                          $1.00
                          $111,853
                          
                          Consulting
      and investment banking fees09-30-2004
                          09-30-2016
                          2,250,000
                          $1.15
                          $1,370,000
                          
                          Financing*03-31-2005
                          03-31-2012
                          100,000
                          $1.20
                          $60,291
                          
                          Financing04-30-2005
                          04-30-2017
                          100,000
                          $1.01
                          $44,309
                          
                          Financing*05-31-2005
                          05-31-2012
                          100,000
                          $1.01
                          $56,614
                          
                          Financing06-22-2005
                          06-22-2017
                          313,000
                          $1.00
                          $137,703
                          
                          Financing*06-30-2005
                          06-30-2017
                          100,000
                          $0.90
                          $50,431
                          
                          Financing*07-31-2005
                          07-31-2012
                          100,000
                          $1.05
                          $56,244
                          
                          Financing08-31-2005
                          08-31-2012
                          100,000
                          $1.05
                          $22,979
                          
                          Financing09-30-2005
                          09-30-2012
                          100,000
                          $0.80
                          $36,599
                          
                          Financing10-31-2005
                          10-31-2012
                          100,000
                          $0.80
                          $27,367
                          
                          Financing11-30-2005
                          11-30-2012
                          100,000
                          $0.80
                          $16,392
                          
                          Financing12-31-2005
                          12-31-2012
                          100,000
                          $0.80
                          $10,270
                          
                          Financing02-13-2006
                          02-13-2016
                          1,927,096
                          $0.01
                          $1,529,502
                          
                          Financing03-01-2007
                          03-01-2016
                          108,000
                          $0.90
                          $39,519
                          
                          Financing*04-01-2007
                          04-01-2016
                          108,000
                          $1.15
                          $50,529
                          
                          Financing*05-01-2007
                          05-01-2011
                          108,000
                          $1.25
                          $54,941
                          
                          Financing06-01-2007
                          06-01-2011
                          108,000
                          $2.28
                          $101,470
                          
                          Financing07-01-2007
                          07-01-2011
                          108,000
                          $2.10
                          $93,307
                          
                          Financing08-01-2007
                          08-01-2011
                          108,000
                          $2.55
                          $112,117
                          
                          Financing09-01-2007
                          09-01-2011
                          108,000
                          $2.73
                          $118,647
                          
                          Financing10-01-2007
                          10-01-2011
                          108,000
                          $2.43
                          $105,362
                          
                          Financing11-01-2007
                          11-01-2011
                          108,000
                          $2.60
                          $111,868
                          
                          Financing12-01-2007
                          12-01-2011
                          108,000
                          $2.55
                          $107,284
                          
                          Financing01-01-2008
                          01-01-2012
                          108,000
                          $2.84
                          $108,331
                          
                          Financing01-22-2008
                          01-22-2058
                          812,988
                          $0.01
                          $1,470,687
                          
                          Acquisition01-22-2008
                          01-22-2058
                          1,738,365
                          $0.01
                          $3,144,685
                          
                          Financing01-30-2008
                          01-30-2058
                          506,250
                          $0.01
                          $1,001,909
                          
                          Acquisition01-30-2008
                          01-30-2058
                          292,500
                          $0.01
                          $578,880
                          
                          Financing02-01-2008
                          02-01-2012
                          108,000
                          $2.09
                          $85,612
                          
                          Financing03-01-2008
                          03-01-2012
                          108,000
                          $2.04
                          $80,253
                          
                          Financing04-01-2008
                          04-01-2012
                          108,000
                          $1.09
                          $162,748
                          
                          Financing05-01-2008
                          05-01-2012
                          108,000
                          $1.19
                          $103,180
                          
                          Financing06-01-2008
                          06-01-2012
                          108,000
                          $1.02
                          $88,114
                          
                          Financing06-23-2008
                          06-23-2018
                          627,451
                          $0.01
                          $560,736
                          
                          Financing06-23-2008
                          06-23-2018
                          1,333,333
                          $0.01
                          $1,211,168
                          
                          Financing13,268,483
  F-27
  16.
                Major
      Customers
  During
the year ended December 31, 2008, the Company derived 53.8% (2007 – 71.8%) of
its revenue from a single customer. The accounts receivable from this customers
comprises 26.4% (2007: 33.0%) of the total trade receivable.
  17.
                Segment
      Information
  We
determine and disclose our segments in accordance with SFAS No. 131 “Disclosures
about Segments of an Enterprise and Related Information”, which uses a
“management” approach for determining segments. The management approach
designates the internal organization that is used by management for making
operating decisions and assessing performance as the source of the reportable
segments. Our management reporting structure provides for the following
segments:
  Cancable
  Cancable
Inc. and its wholly owned subsidiaries XL Digital Services, Inc. and 2141306
Ontario Inc are Canadian based entities. Cancable, Inc. is a US cased entity
which is also the wholly owned subsidiary of Cancable Inc. (collectively,
“Cancable”). Cancable is in the business of providing deployment and servicing
of broadband technologies in both residential and commercial markets. The
Cancable service offering, network deployment, IT integration, and support
services, enable the cable television and telecommunications industries to
deliver a high quality broadband experience to their customers. Cancable’s
clients rely on Cancable’s knowledge and expertise to rapidly deploy the latest
technologies to support advanced cable services, cable broadband Internet access
and DSL. Services provisioned include new installations, reconnections,
disconnections, service upgrades and downgrades, inbound technical call center
sales and trouble resolution for cable Internet subscribers, and network
servicing for broadband video, data, and voice services for residential,
business, and commercial marketplaces.
  AC
Technical
  A.C.
Technical Systems Ltd. (“AC Technical”), a corporation incorporated under the
laws of the Province of Ontario, is engaged in the engineering, design,
installation, integration and servicing of various types of security
systems.
  Iview
DSI
  Iview
Digital Video Solutions Inc. (“Iview DSI”), a corporation incorporated under the
laws of the Province of Ontario, is a newly formed subsidiary incorporated in
late 2005 to focus on providing video surveillance products and technologies to
the market.
  F-28
  December
      31, 2008
                                                                                                
                                                                                                
                                                                                                December
      31, 2007SALES:Cancable
                                                                                                
                                                                                                $
                                                                                                40,648,542
                                                                                                
                                                                                                
                                                                                                $
                                                                                                32,316,434AC
      Technical
                                                                                                
                                                                                                
                                                                                                7,541,211
                                                                                                
                                                                                                
                                                                                                
                                                                                                7,531,322Iview
                                                                                                
                                                                                                
                                                                                                231,433
                                                                                                
                                                                                                
                                                                                                
                                                                                                139,208Creative
      Vistas, Inc.
                                                                                                
                                                                                                
                                                                                                48,856
                                                                                                
                                                                                                
                                                                                                
                                                                                                4,104Consolidated
      Total
                                                                                                
                                                                                                $
                                                                                                48,470,042
                                                                                                
                                                                                                
                                                                                                $
                                                                                                39,991,068DEPRECIATION
      AND AMORTIZATION:Cancable
                                                                                                
                                                                                                $
                                                                                                2,510,294
                                                                                                
                                                                                                
                                                                                                $
                                                                                                1,739,657AC
      Technical
                                                                                                
                                                                                                
                                                                                                39,118
                                                                                                
                                                                                                
                                                                                                
                                                                                                43,472Iview
                                                                                                
                                                                                                
                                                                                                22,014
                                                                                                
                                                                                                
                                                                                                
                                                                                                -Consolidated
      Total
                                                                                                
                                                                                                $
                                                                                                2,571,426
                                                                                                
                                                                                                
                                                                                                $
                                                                                                1,783,129INTEREST
      EXPENSES:Cancable
                                                                                                
                                                                                                $
                                                                                                1,340,976
                                                                                                
                                                                                                
                                                                                                $
                                                                                                973,623Iview
                                                                                                
                                                                                                
                                                                                                138,622
                                                                                                
                                                                                                
                                                                                                
                                                                                                196,298AC
      Technical
                                                                                                
                                                                                                
                                                                                                -
                                                                                                
                                                                                                
                                                                                                
                                                                                                1,800AC
      Acquisition
                                                                                                
                                                                                                
                                                                                                50,121
                                                                                                
                                                                                                
                                                                                                
                                                                                                48,674Creative
      Vistas, Inc.
                                                                                                
                                                                                                
                                                                                                5,512,259
                                                                                                
                                                                                                
                                                                                                
                                                                                                1,734,668Consolidated
      Total
                                                                                                
                                                                                                $
                                                                                                7,041,978
                                                                                                
                                                                                                
                                                                                                $
                                                                                                2,955,063NET
      INCOME (LOSS):Cancable
                                                                                                
                                                                                                $
                                                                                                (6,860,559
                                                                                                )
                                                                                                
                                                                                                $
                                                                                                2,501,048AC
      Technical
                                                                                                
                                                                                                
                                                                                                557,665
                                                                                                
                                                                                                
                                                                                                
                                                                                                333,607Iview
                                                                                                
                                                                                                
                                                                                                (489,778
                                                                                                )
                                                                                                
                                                                                                
                                                                                                (117,629
                                                                                                )AC
      Acquisition
                                                                                                
                                                                                                
                                                                                                (50,122
                                                                                                )
                                                                                                
                                                                                                
                                                                                                (48,674
                                                                                                )Corporate
      (1)
                                                                                                
                                                                                                
                                                                                                (12,069,661
                                                                                                )
                                                                                                
                                                                                                
                                                                                                (3,249,958
                                                                                                )Consolidated
      Total
                                                                                                
                                                                                                $
                                                                                                (18,912,455
                                                                                                )
                                                                                                
                                                                                                $
                                                                                                (581,606
                                                                                                )TOTAL
      ASSETSCancable
                                                                                                
                                                                                                $
                                                                                                13,937,302
                                                                                                
                                                                                                
                                                                                                $
                                                                                                12,406,859AC
      Technical
                                                                                                
                                                                                                
                                                                                                2,868,364
                                                                                                
                                                                                                
                                                                                                
                                                                                                4,103,026Iview
                                                                                                
                                                                                                
                                                                                                1,161,488
                                                                                                
                                                                                                
                                                                                                
                                                                                                1,404,822Creative
      Vistas, Inc.
                                                                                                
                                                                                                
                                                                                                3,727,894
                                                                                                
                                                                                                
                                                                                                
                                                                                                3,937,473Consolidated
      Total
                                                                                                
                                                                                                $
                                                                                                21,695,048
                                                                                                
                                                                                                
                                                                                                $
                                                                                                21,852,180CAPITAL
      ASSETSCancable
                                                                                                
                                                                                                $
                                                                                                8,456,111
                                                                                                
                                                                                                
                                                                                                $
                                                                                                5,496,800AC
      Technical
                                                                                                
                                                                                                
                                                                                                676,752
                                                                                                
                                                                                                
                                                                                                
                                                                                                855,214Iview
                                                                                                
                                                                                                
                                                                                                81,760
                                                                                                
                                                                                                
                                                                                                
                                                                                                -CONSOLIDATED
      TOTAL
                                                                                                
                                                                                                $
                                                                                                9,214,623
                                                                                                
                                                                                                
                                                                                                $
                                                                                                6,352,014Capital
      ExpendituresCancable
                                                                                                
                                                                                                $
                                                                                                7,359,954
                                                                                                
                                                                                                
                                                                                                $
                                                                                                3,069,145AC
      Technical
                                                                                                
                                                                                                
                                                                                                19,181
                                                                                                
                                                                                                
                                                                                                
                                                                                                4,237Iview
                                                                                                
                                                                                                
                                                                                                118,422
                                                                                                
                                                                                                
                                                                                                
                                                                                                -AC
      Acquisition
                                                                                                
                                                                                                
                                                                                                -
                                                                                                
                                                                                                
                                                                                                
                                                                                                -Consolidated
      Total
                                                                                                
                                                                                                $
                                                                                                7,497,557
                                                                                                
                                                                                                
                                                                                                $
                                                                                                3,073,382
  (1)
                Corporate
      expenses primarily include certain stock-based compensation for consulting
      and advisory services, which we do not internally allocate to our segments
      because they are related to our common stock and are non-cash in
      nature.
  Revenues
by geographic destination and product group were as follows:
 
 December
      31, 2008
                          
                          
                          December
      31, 2007Contract
                          
                          $
                          6,209,601
                          
                          
                          $
                          6,083,768Service
                          
                          
                          42,188,944
                          
                          
                          
                          33,860,869Others
                          
                          
                          71,497
                          
                          
                          
                          46,431Total
      sales to external customers
                          
                          $
                          48,470,042
                          
                          
                          $
                          39,991,068
  Revenue
generated by the Company in Canada and the United States was $42,878,244 (2007:
39,991, 068) and $5,591,798 (2007: $Nil), respectively.
 18.
                  Commitments
      and Contingencies
  The
Company has entered into contracts for certain consulting services providing for
monthly payments with the Companies controlled by the chairman and the
president’s spouse.  In addition, the Company has also entered into an
operating lease for its premises, vehicles, computers and office equipment. The
total minimum annual payments for the next five years are as
follows:
 Total
                      
                      
                      2009
                      
                      
                      2010
                      
                      
                      2011
                      
                      
                      2012
                      
                      
                      2013Operating
      leases
                      
                      $
                      1,834,454
                      
                      
                      $
                      475,553
                      
                      
                      $
                      433,166
                      
                      
                      $
                      330,915
                      
                      
                      $
                      302,565
                      
                      
                      $
                      292,255Commitments
      related to consulting agreements
                      
                      
                      1,352,227
                      
                      
                      
                      669,548
                      
                      
                      
                      268,595
                      
                      
                      
                      268,595
                      
                      
                      
                      145,489
                      
                      
                      
                      -$
                      3,186,681
                      
                      
                      $
                      1,145,101
                      
                      
                      $
                      701,761
                      
                      
                      $
                      599,510
                      
                      
                      $
                      448,054
                      
                      
                      $
                      292,255
    19.
                    Subsequent
      Events
 Subsequent
to year end, the Company issued 216,000 warrants to Laurus to defer the monthly
principal repayment from February to March 2009. The Company has issued 166,835
common shares for the legal fees (see Note 15).
 F-29
 ITEM
      9.
                  CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
 
 None.
  ITEM
      9A.
                CONTROLS
      AND PROCEDURES
  Evaluation of Disclosure Controls and
Procedures   We maintain disclosure controls and procedures
that are designed to ensure that information required to be disclosed in our
filings under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the SEC.  This information is accumulated to allow timely
decisions regarding required disclosure.  As of December 31, 2008, the
end of the period covered by this annual report on Form 10K, our management,
including our Chief Executive Officer and Chief Financial Officer, assessed the
effectiveness of our disclosure controls and procedures, as such terms are
defined under rules 13a-15(e) and 15d-15(e) promulgated under the
Securities Exchange Act of 1934, as amended. Based on this assessment, our
management concluded that our disclosure controls and procedures were effective
as of the end period covered by this annual report.
  Management’s Annual Report on
Internal Control over Financial ReportingOur management is
responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange
Act of 1934, as amended).  Our management assessed the effectiveness
over internal control over financial reporting as of December 31,
2007.  In making this assessment, our management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”) in Internal Control -
Integrated Frameworkissued in 1992, to evaluate the effectiveness of our
internal control over financial reporting.  Based upon that framework
management has determined that our internal control over financial reporting is
effective.
  29
  This
annual report does not include an attestation report of the company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the company to provide only
management’s report in 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
      9B.
                OTHER
      INFORMATION
  None
  ITEM
      10.
                DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE
  GOVERNANCE
  Directors and Executive
Officers
  Name
                    Age
                    PositionSayan
      Navaratnam
                    34
                    Chairman
      of the Board, and DirectorDominic
      Burns
                    49
                    Chief
      Executive Officer, President and DirectorHeung
      Hung Lee
                    40
                    Chief
      Financial Officer, Secretary and
Director
 
 Sayan Navaratnam–Director
and Chairman of the Board: Mr. Navaratnam serves as our Chairman of the
Board and Director.  He has been a Director of our company since
2004.  He served as Chief Executive Officer of our company from 2004
until he resigned from the position on May 5, 2008, remaining Chairman and
Director.  Mr. Navaratnam joined AC Technical Systems in 2003 as Chief
Executive Officer.  He has eight 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.  From 1997 to 2000, he was the Chief Executive Officer of
Satellite Communications Inc., and its research arm Satellite Advanced
Technologies.  Mr. Navaratnam was responsible for coordinating and
financing research and development projects and played a key role in strategic
partnerships, mergers, and licensing technologies.  From 2000 to 2003,
Mr. Navaratnam was the Chief Operating Officer in ASPRO Technologies
Ltd..  Since March 1, 2009, Mr. Navaratnam has been a Senior Managing
Director of Laurus Capital Management, LLC and a Senior Managing Director of
Valens Capital Management, LLC, entities affiliated with our principal
lender.  Mr. Navaratnam currently serves on the board of a number of
privately-held companies including our subsidiaries, AC Technical Systems and
Iview Digital Video Solutions, and Cygnal Technologies, White Radio, and
Thinkpath.  Mr. Navaratnam graduated from the University of Toronto
with an Honors Double Specialist degree in economics and political
science.
 
 Dominic Burns–Director,
President and Chief Executive Officer:  Mr. Burns is our CEO
and Director.  He founded 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 and
President of our company since September 30, 2004. He was appointed Chief
Executive Officer on May 5, 2008.
  Heung Hung Lee–Director,
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 large 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 was appointed a director of
our company on November 1, 2008. Ms. Lee is responsible for review of financials
of subsidiaries and creating and implementing strong financial systems within
the group of companies.  Ms. Lee is also an important member in our
growth strategy as she is highly involved in creating a platform for growth
within Creative Vistas, Inc.
  30
  Board
of Directors and Officers
  Each
director is elected until the next annual meeting of the registrant and until
his or her successor is duly elected and qualified.  Officers are
elected by, and serve at the discretion of, the board of directors. The board of
directors may also appoint additional directors up to the maximum number
permitted under our by-laws. A director so chosen or appointed will hold office
until the next annual meeting of stockholders.
  Each
executive officer serves at the discretion of the board of directors and holds
office until his or her successor is elected or until his or her earlier
resignation or removal in accordance with our certificate of incorporation and
by-laws.
  Committees
of the Board of Directors
  We do not
have standing audit, nominating or compensation committees, or committees
performing similar functions. Our board of directors believes that it is not
necessary to have standing audit, nominating or compensation committees at this
time because the functions of such committees are adequately performed by our
board of directors.
  Code
of Ethics
  The
Company has adopted a code of ethics for officers and employees, which applies
to, among others, the Company’s principal executive officer, principal financial
officer, and controller, and which is known as the code of
ethics.   The Company has also adopted certain ethical
principles and policies for its directors, which are set forth in the code of ethics. The Company will
provide copies of the code of ethics without charge upon request made to
Creative Vistas, 2100 Forbes Street, Unit 8-10 Whitby, Ontario, Canada L1N 9T3
or by calling (905) 666-8676.
 
  ITEM
      11.
                EXECUTIVE
      COMPENSATION
  The
following summary compensation table set forth all compensation paid by us
during the three years ended December 31, 2008 for services rendered in all
capacities by the Chief Executive Officer and Chief Financial Officers of the
Company and the only other executive officer who received total salary and bonus
exceeding $100,000 in any of such years.
  Annual
      CompensationName
      and Principal
                    Company/Subsidiary
      Position
                Year
                Salary
      ($)
                Other
      Annual Compensation ($)
                Bonus
      ($)Sayan
      Navaratnam – Chairman
                2008
                308,2111
                –
                –2007
                166,4951
                –
                –2006
                202,5001
                –
                –Dominic
      Burns – Chief Executive Officer
                2008
                213,9102
                –
                –2007
                149,9212
                –
                –2006
                188,7002
                –
                –Heung
      Hung Lee – Chief Financial Officer
                2008
                126,700
                –
                –2007
                112,200
                –
                –2006
                88,500
                –
                –1Balance was payable to Nationwide Solutions Inc. for consulting
      fees.2Balance
      was payable to 1608913 Ontario Inc. for consulting
  fees.
 
  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 us for the following
compensation:
  ·
                From
      October 1, 2004 until December 31, 2004 compensation at the rate of
      $204,900 (CAD$250,000);
 ·
                From
      January 1, 2005 until December 31, 2005 the sum of $225,400
      (CAD$275,000);
 ·
                From
      January 1, 2006 until December 31, 2006 the sum of $245,900
      (CAD$300,000);
 ·
                From
      January 1, 2007 until December 31, 2007 the sum of $266,400
      (CAD$325,000);
 ·
                From
      January 1, 2008 until December 31, 2008 the sum of $286,900 (CAD$350,000);
      and
 ·
                From
      January 1, 2009 until December 31, 2009 the sum of $307,400
      (CAD$375,000).
  In addition, 1608913 Ontario is
entitled to a bonus payable upon our 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 $409,800 (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 July
16, 2008, the Company entered into a Consulting Agreement (the “Consulting
Agreement”) with Nationwide Solutions Inc. (“Nationwide”) pursuant to which
Nationwide will provide general business consulting services including business
development, formalizing reports and negotiating or preparing sales agreements,
vendor agreements, business plans, budgets, business presentations, finance
agreements and equity agreements. The Consulting Agreement will terminate on
July 16, 2012 unless extended or earlier terminated pursuant to the terms of the
Consulting Agreement. The Registrant will pay to Nationwide an annual consulting
fee of CAD$325,000 for each calendar year during the term of the Consulting
Agreement. The chairman of the board of Nationwide, Sayan Navaratnam, is also
the chairman of the board of the Registrant.
 
 On July
16, 2008, a subsidiary of the Company, AC Technical Systems Ltd., Nationwide and
Sayan Navaratnam entered into a Termination and Release Agreement (the
“Termination Agreement”) terminating the consulting agreement between AC
Technical Systems Ltd., Nationwide and Sayan Navaratnam dated January 1, 2004
(the “2004 Agreement”). Pursuant to the 2004 Agreement, Nationwide provided
business consulting services to AC Technical Systems Ltd. Pursuant to the
Termination Agreement, Nationwide waives the right to payment of any amounts
presently due or due in the future to Nationwide and AC Technical Ltd. agrees
that all requirements of the Consultant and Sayan Navaratnam under the 2004
Agreement are extinguished and terminated in full. The chairman of the board of
Nationwide, Sayan Navaratnam, is also the chairman of the board of the
Registrant. In connection with Sayan Navaratnam’s resignation as Chief Executive
Officer of the Registrant effective May 5, 2008 and because the 2004 Agreement
provided business consulting only to the Registrant’s subsidiary, AC Technical
Systems, Ltd., the Consulting Agreement described in  in the preceding
paragraph was necessary to provide such business consulting services to the
Registrant and replaces the 2004 Agreement. The 2004 Agreement is also
terminated because the consulting fee paid to Nationwide under the Consulting
Agreement is reduced from the fees required under the 2004 Agreement and
pursuant to the terms of the Termination Agreement all amounts due under the
2004 Agreement have been waived.
 
 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 us as Consulting Agreements between us and
each of 1608913 Ontario Inc. and Nationwide Solutions Inc. instead of them being
employed directly by us. This structure does not have any effect on Creative
Vistas.
  31
  The
consulting services provided to us by Mr. Navaratnam and Mr. Burns relate 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 us.
  We have a
standard employment contract with our employee 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.
  We have a
stock option plan which was adopted during the second quarter of
2006.
  ITEM
      12.
                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 our common stock as of December 31, 2008 of each executive officer, each
director, and each shareholder in addition to any shareholders known to be the
beneficial owner of 5% or more of our Common Stock and all officers and
directors as a group.  As of December 31, 2008, Laurus Master Fund,
Ltd. beneficially owned 1,298,449 shares of our Common Stock and Erato
Corporation beneficially owned 2,195,720. 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.  We 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 and its related companies
would beneficially own an additional 12,658,138 shares of our common stock,
comprised of 129,155 shares under the option and 12,528,983 shares under
the warrant.
  Name
      and Address of Beneficial Owner
                
                Shares
      of Common Stock Beneficially Owned
                
                Percentage
      of Common Stock Beneficially OwnedSayan
      Navaratnam
                  Toronto,
      Ontario
                
                21,410,986
                
                57.5%Dominic
      Burns
                  Hampton,
      Ontario
                
                7,036,607
                
                18.9%Heung
      Hung Lee
                  Markham,
      Ontario
                
                50,000
                
                0.1%All
      officers and directors as a group (3 persons)
                
                28,497,593
                
                76.5%
  The
address of the above listed persons is c/o Creative Vistas, 2100 Forbes Street,
Unit 8-10 Whitby, Ontario, Canada L1N 9T3.
  Securities
Authorized For Issuance Under Equity Compensation Plans
  The
following table sets forth certain information relating to our option plans as
of December 31, 2008:
 
 Plan
      Category
                  Nam
      of Plan
                  Number
      of Common Shares to be Issued upon Exercise of Outstanding
      Options
                  Weighted-Average
      Exercise Price of Outstanding Options
                  Number
      of Securities Remaining Available for Future Issuance under Stock Option
      PlanOption
      Plans approved by our Shareholders
                  Stock
      Option Plan
                  4,000,000
                  $0.63
      to 2.73
                  778,000Total
                  
                  4,000,000
                  $0.63
      to 2.73
                  778,000
 32
 
 
  Share
Option and Other Compensation Plans
  Stock
Option Plan
  OurStock Optionplan(“the Plan”)was adopted by our Board and approved
by our shareholdersonJune 30, 2006. Our Stock Option
Planprovides for the
grant of options tokey
employees of the Company, including officers or directors of the Company, and to
consultants and other individuals providing services to the Company.
 Share Reserve.  A
total of 4,000,000 shares of common stock, no par value, of the Company
(the “Stock”) are authorized for issuance under the Stock Option plan as of
December 31, 2007. Shares of Stock used for purposes of the Plan may be either
authorized and unissued shares, or previously issued shares held in the treasury
of the Company, or both. Shares of Stock covered by options which have
terminated or expired prior to exercise shall be available for further options
hereunder. The maximum aggregate number of shares of Stock that may be issued
under the Plan under “incentive stock options” is 3,500,000 shares.
 Administration of Awards.The
Plan shall be administered by the Board of Directors, or Compensation Committee
of the Board of Directors or a subcommittee of the Compensation Committee
appointed by the Compensation Committee, or by any other committee designated by
the Board of Directors to administer the Plan (the committee or subcommittee
administering the Plan is hereinafter referred to as the “Committee”). For
purposes of administration, the Committee, subject to the terms of the Plan,
shall have plenary authority to establish such rules and regulations, to make
such determinations and interpretations, and to take such other administrative
actions as it deems necessary or advisable. All determinations and
interpretations made by the Committee shall be final, conclusive and binding on
all persons, including all Optionees, any other holders of options and their
legal representatives and beneficiaries.
 Options
may be granted to eligible individuals whether or not they hold or have held
options previously granted under the Plan or otherwise granted or assumed by the
Company. In selecting individuals for options, the Committee may take into
consideration any factors it may deem relevant, including its estimate of the
individual’s present and potential contributions to the success of the Company.
Service as an employee, director, officer or consultant of or to the Company
shall be considered employment for purposes of the Plan (and the period of such
service shall be considered the period of employment for purposes of Section
5(d) of this Plan); provided, however, that incentive stock options may be
granted under the Plan only to an individual who is an “employee” (as such term
is used in Section 422 of the Code) of the Company.
 Stock options.The Committee
shall, in its discretion, prescribe the terms and conditions of the options to
be granted hereunder, which terms and conditions need not be the same in each
case, subject to the following:
 (a)Option Price. The price
at which each share of Stock covered by an option granted under the Plan may be
purchased shall not be less than the Market Value (as defined in Section (c)
hereof) per share of Stock on the date of grant of the option. The date of the
grant of an option shall be the date specified by the Committee in its grant of
the option.
 (b)Option Period.The period
for exercise of an option shall in no event be more than five years from the
date of grant. Options may, in the discretion of the Committee, be made
exercisable in installments during the option period. Any shares not purchased
on any applicable installment date may be purchased thereafter at any time
before the expiration of the option period.
 (c)Exercise of Options.In
order to exercise an option, the Optionee shall deliver to the Company written
notice specifying the number of shares of Stock to be purchased, together with
cash or a certified or bank cashier’s check payable to the order of the Company
in the full amount of the purchase price therefore; provided that, for the
purpose of assisting an Optionee to exercise an option, the Company may make
loans to the Optionee or guarantee loans made by third parties to the Optionee,
on such terms and conditions as the Board of Directors may authorize. For
purposes of the Plan, the Market Value per share of Stock shall be the last sale
price on the date of reference, or, if no sale takes place on such date, the
average of the closing high bid and low asked prices, in either case on the
principal national securities exchange on which the Stock is listed or admitted
to trading, or if the Stock is not listed or admitted to trading on any national
securities exchange, the last sale price reported on the National Market System
of the National Association of Securities Dealers Automated Quotation System
(“NASDAQ”) on such date, or the last sale price reported on the NASDAQ SmallCap
Market on such date, or the average of the closing high bid and low asked prices
in the over-the-counter market on such date, whichever is applicable, or if
there are no such prices reported on NASDAQ or in the over-the-counter market on
such date, as furnished to the Committee by any New York Stock Exchange member
selected from time to time by the Committee for such purpose. If there is no bid
or asked price reported on any such date, the Market Value shall be determined
by the Committee in accordance with the regulations promulgated under Section
2031 of the Code, or by any other appropriate method selected by the Committee.
If the Optionee so requests, shares of Stock purchased upon exercise of an
option may be issued in the name of the Optionee or another person. An Optionee
shall have none of the rights of a stockholder until the shares of Stock are
issued to him.
  
 33
 (d) Effect of Termination of
Employment.An option may not be exercised after the Optionee has ceased
to be in the employ of the Company, except in the following
circumstances:
 (i) If
the Optionee’s employment is terminated by action of the Company, or by reason
of disability or retirement under any retirement plan maintained by the Company,
the option may be exercised by the Optionee within three months after such
termination, but only as to any shares exercisable on the date the Optionee’s
employment so terminates;
  (ii) In
the event of the death of the Optionee during the three month period after
termination of employment covered by (i) above, the person or persons to whom
his rights are transferred by will or the laws of descent and distribution shall
have a period of one year from the date of his death to exercise any options
which were exercisable by the Optionee at the time of his death;
and
  (iii) In
the event of the death of the Optionee while employed, the option shall
thereupon become exercisable in full, and the person or persons to whom the
Optionee’s rights are transferred by will or the laws of descent and
distribution shall have a period of one year from the date of the Optionee’s
death to exercise such option. In no event shall any option be exercisable more
than five years from the date of grant thereof. Nothing in the Plan or in any
option granted pursuant to the Plan (in the absence of an express provision to
the contrary) shall confer on any individual any right to continue in the employ
of the Company or continue as a consultant or interfere in any way with the
right of the Company to terminate his employment or consulting arrangement at
any time.
  (e) Limitation on Transferability of
Options. Except as provided in this Section (e), during the lifetime of
an Optionee, options held by such Optionee shall be exercisable only by him and
no option shall be transferable other than by will or the laws of descent and
distribution. The Committee may, in its discretion, provide that options held by
an Optionee, other than incentive stock options, may be transferred to or for
the benefit of a member of his immediate family. For purposes hereof, the term
“immediate family” shall mean an Optionee’s spouse and children (both natural
and adoptive), and the direct lineal descendants of his children.
  (f) Adjustments for Change in Stock
Subject to Plan. In the event of a reorganization, recapitalization,
stock split, stock dividend, combination of shares, merger, consolidation,
rights offering, or any other change in the corporate structure or shares of the
Company, the Committee shall make such adjustments, if any, as it deems
appropriate in the number and kind of shares subject to the Plan, in the number
and kind of shares covered by outstanding options, or in the option price per
share, or both, and, in the case of a merger, consolidation or other transaction
pursuant to which the Company is not the surviving corporation or pursuant to
which the holders of outstanding Stock shall receive in exchange therefore
shares of capital stock of the surviving corporation or another corporation, the
Committee may require an Optionee to exchange options granted under the Plan for
options issued by the surviving corporation or such other
corporation.
  (g )Treatment of Options Upon
Occurrence of Certain Events. The Committee may, in its discretion,
provide in the case of any option granted under the Plan that, in connection
with any merger or consolidation which results in the holders of the outstanding
voting securities of the Company (determined immediately prior to such merger or
consolidation) owning, directly or indirectly, less than a majority of the
outstanding voting securities of the surviving corporation (determined
immediately following such merger or consolidation), or any sale or transfer by
the Company of all or substantially all its assets or any tender offer or
exchange offer for or the acquisition, directly or indirectly, by any person or
group of all or a majority of the then outstanding voting securities of the
Company, such option shall terminate within a specified number of days after
notice to the Optionee thereunder, and each such Optionee shall receive, with
respect to each share of Stock subject to such option, an amount equal to the
excess, if any, of the Market Value of such shares immediately prior to such
merger, consolidation, sale, transfer or exchange over the exercise price per
share of such option; and that such amount shall be payable in cash, in one or
more kinds of property (including the property, if any, payable in the
transaction) or a combination thereof, as the Committee shall determine in its
sole discretion.
  34
 (h) Registration, Listing and
Qualification of Shares of Stock. Each option shall be subject to the
requirement that if at any time the Board of Directors shall determine that the
registration, listing or qualification of the shares of Stock covered thereby
upon any securities exchange or under any federal or state law, or the consent
or approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the granting of such option or the purchase
of shares of Stock thereunder, no such option may be exercised unless and until
such registration, listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors. The Company may require that any person exercising an option shall
make such representations and agreements and furnish such information as it
deems appropriate to assure compliance with the foregoing or any other
applicable legal requirement.
  (i) Lock-Up Period- Without
the consent of the Company an Optionee may not sell more than fifty percent of
the shares issued under the Plan for a period of two years from the date that
the optionee exercises the option. The Committee may impose such other terms and
conditions, not inconsistent with the terms hereof, on the grant or exercise of
options, as it deems advisable.
  Additional Provisions Applicable to
Stock Option Plan. The Committee may, in its discretion, grant options
under the Plan to eligible employees which constitute “incentive stock options”
within the meaning of Section 422 of the Code; provided, however, that (a) the
aggregate Market Value of the Stock with respect to which incentive stock
options are exercisable for the first time by the Optionee during any calendar
year shall not exceed the limitation set forth in Section 422(d) of the Code;
and (b) notwithstanding anything to the contrary in Section 5, if the Optionee
owns on the date of grant securities possessing more than 10% of the total
combined voting power of all classes of securities of the Company or of any
parent or subsidiary of the Company, the price per share shall not be less than
110% of the Market Value per share on the date of grant and the period of
exercise shall not be longer than five years from the date of
grant.
  Amendment and Termination. No
option shall be granted hereunder after June 30, 2011; provided, however, that
the Board of Directors may at any times prior to that date terminate the Plan.
The Board of Directors may at any time amend the Plan or any outstanding
options. No termination or amendment of the Plan may, without the consent of an
Optionee, adversely affect the rights of such Optionee under any option held by
such Optionee.
 ITEM
      13.
                CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
  On
September 29, 2004, pursuant to a Stock Purchase Agreement with The Burns Trust
(our president and CEO is one of the beneficiaries of the trust) and The
Navaratnam Trust (our chairman 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 and CEO is one of the beneficiaries of the trust) and
the Navaratnam Trust (our Chairman is one of the beneficiaries of the trust),
respectively.  During the period ended June 30, 2006, the above two
notes payable have been transferred to Malar Trust Inc. (the Company’s Chairman
is one of the beneficiaries of Malar Trust Inc.). See Note 5 of the Financial
Statements for the year ended December 31, 2008. Interest expense for both of
these notes payable recognized for the year was $50,151
(2007:$48,674).
  35
 ITEM
      14.
                PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
  The
following table sets forth the aggregate fees for professional services rendered
to us for the years ended December 31, 2008 and 2007 by our principal accounting
firms, Stark Winter Schenkein & Co., LLP and MDS LLP:
 2008
                
                
                2007Audit
      Fees (a)
                
                $
                132,500
                
                
                $
                120,000Audit
      Related Fees (b)
                
                
                -
                
                
                
                -Tax
      Fees (c)
                
                
                20,000
                
                
                
                23,000All
      Other Fees (d)
                
                
                -
                
                
                
                -Total
                
                $
                152,500
                
                
                $
                143,000
 
  (a)
                Audit
    Fees.
                Fees
      for audit services billed in 2008 and 2007 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.  All fees were payable to Stark Winter
      Schenkein & Co., LLP for both fiscal
years.
  (b)
                Audit-Related
      Fees.
                There
      are no material audit-related fees in 2008 and
  2007.
  (c)
                Tax
    Fees.
                Fees
      for tax services billed in 2008 and 2007 consisting of assistance with our
      federal, state, local and foreign jurisdiction income tax
      returns.  We have additionally sought consultation and advice
      related to various taxes compliance planning projects.  All tax
      fees were payable to MDS LLP.
  (d)
                All Other
      Fees.
                No
      material other fees were billed in 2008 and
  2007.
  We do 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 2008 and 2007 were pre-approved by the board of directors
      prior to the auditors’ engagement for these
  services.
  ITEM
      15.
                        EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES3.1*
                        Articles
      of Incorporation, as amended to date, incorporated by reference to the
      Registrant’s Form 8-K/A filed February 2, 20053.2*
                        By-laws
      of the Registrant incorporated by reference to the Registrant’s Form 10-SB
      filed May 10, 20004.1*
                        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. incorporated by reference to the Registrant’s Form
      8-K filed February 17, 2006.4.2*
                        Secured
      Term Note, dated February 13, 2006, issued by Creative Vistas, Inc. to
      Laurus Master Fund, Ltd. incorporated by reference to the Registrant’s
      Form 8-K filed February 17, 2006.4.3*
                        Secured
      Term Note, dated February 13, 2006, issued by Iview Digital Video
      Solutions Inc. to Laurus Master Fund, Ltd. incorporated by reference to
      the Registrant’s Form 8-K filed February 17, 2006.4.4*
                        Option,
      dated February 13, 2006, issued by Iview Holding Corp. to Laurus Master
      Fund, Ltd. incorporated by reference to the Registrant’s Form 8-K filed
      February 17, 2006.4.5*
                        Warrant,
      dated February 13, 2006, issued by Creative Vistas, Inc. to Laurus Master
      Fund, Ltd. incorporated by reference to the Registrant’s Form 8-K filed
      February 17, 2006.4.6*
                        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. incorporated by reference to
      the Registrant’s Form 8-K filed February 17,
  2006.
  36
  4.7*
                        Amended
      and Restated Guaranty, dated February 13, 2006 between Brent W. Swanick
      and Laurus Master Fund, Ltd. incorporated by reference to the Registrant’s
      Form 8-K filed February 17, 2006.4.8*
                        Side
      Agreement, dated February 13, 2006 between Iview Digital Video Solutions,
      Inc., Iview Holding Corp., Creative Vistas Acquisition Corp. and Laurus
      Master Fund, Ltd incorporated by reference to the Registrant’s Form 8-K
      filed February 17, 2006.4.9*
                        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. incorporated by reference to the Registrant’s
      Form 8-K filed February 17, 2006.4.10*
                        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, 2005 incorporated by reference
      to the Registrant’s Form 8-K filed February 17, 2006.4.11*
                        Registration
      Rights Agreement, dated as of February 13, 2006, by and between Creative
      Vistas, Inc. and Laurus Master Fund, Ltd. incorporated by reference to the
      Registrant’s Form 8-K filed February 17,
2006.             4.12*
                                Securities
      Purchase Agreement, dated June 24, 2008, by and among LV Administrative
      Services, Inc., the purchasers from time to time a party thereto, Creative
      Vistas, Inc., and Cancable Inc. incorporated by reference to the
      Registrant's Form 8-K filed July 1, 20084.13*
                                Secured
      Term Note, dated June 24, 2008, issued by Creative Vistas, Inc. and
      Cancable Inc. to Valens Offshore SPV II, Corp. incorporated by reference
      to the Registrant's Form 8-K filed July 1, 20084.14*
                                Secured
      Term Note, dated June 24, 2008, issued by Creative Vistas, Inc. and
      Cancable Inc. to Valens U.S. SPV I, LLC incorporated by reference to the
      Registrant's Form 8-K filed July 1, 20084.15*
                                Warrant,
      dated June 24, 2008, issued by Creative Vistas, Inc. to Valens U.S. SPV I,
      LLC incorporated by reference to the Registrant's Form 8-K filed July 1,
      20084.16*
                                Warrant,
      dated June 24, 2008, issued by Creative Vistas, Inc. to Valens Offshore
      SPV II, Corp. incorporated by reference to the Registrant's Form 8-K filed
      July 1, 20084.17*
                                Guaranty,
      dated June 24, 2008, by and among Creative Vistas, Inc., Cancable Inc.,
      A.C. Technical Systems Ltd., Creative Vistas Acquisition Corp., Cancable
      Holding Corp., Iview Holding Corp., Iview Digital Video Solutions Inc.,
      Cancable, Inc., 2141306 Ontario Inc., Cancable XL Inc., and XL Digital
      Services Inc. incorporated by reference to the Registrant's Form 8-K filed
      July 1, 20084.18*
                                Master
      Security Agreement, dated June 24, 2008, by and among Creative Vistas,
      Inc., Cancable Inc., A.C. Technical Systems Ltd., Creative Vistas
      Acquisition Corp., Cancable Holding Corp., Iview Holding Corp., Iview
      Digital Video Solutions Inc., Cancable, Inc., 2141306 Ontario Inc.,
      Cancable XL Inc., and XL Digital Services Inc. incorporated by reference
      to the Registrant's Form 8-K filed July 1, 20084.19*
                                Pledge
      Agreement, dated June 24, 2008, by and among LV Administrative Services,
      Inc., the purchasers from time to time a party thereto, Cancable Inc.,
      Creative Vistas, Inc., Cancable Holding Corp., Creative Vistas Acquisition
      Corp., Cancable XL Inc., Iview Holding Corp., and Brent Swanick
      incorporated by reference to the Registrant's Form 8-K filed July 1,
      20084.20*
                                Guaranty,
      dated June 24, 2008, of Brent Swanickincorporated by reference
      to the Registrant's Form 8-K filed July 1,
  2008
 10.1*
                              Stock
      Option Plan, incorporated by reference to the Registrant’s Form S-8 filed
      October 6, 200610.2*
                              Master
      Installation and Service Agreement Rogers Cable Communications Inc. and
      Cancable Inc. for the provision of installation activities and service
      activities, incorporated by reference to the Registration's Form 10-KSB
      filed April 16, 200710.3+
                              Amendment
      #1 to Master Installation and Service Agreement between Rogers Cable
      Communications Inc. and Calcable Inc. dated June 20, 200710.4+
                              Amendment
      #2 to Master Installation and Service Agreement between Rogers Cable
      Communications Inc. and Calcable Inc. dated September 1,
    200810.5*
                              Common
      Stock Purchase Warrant, dated January 22, 2008, issued by Creative Vistas,
      Inc. to Erato Corporation for the Right to Purchase 812,988 Shares of
      Common Stock of Creative Vistas, Inc. incorporated by reference to the
      Registrant’s Form 8-K filed February 28, 2008.10.6*
                              Stock
      Purchase Agreement, dated January 22, 2008, between Creative Vistas, Inc.
      and Erato Corporation. incorporated by reference to the Registrant’s Form
      8-K filed February 28, 2008.10.7*
                              Common
      Stock Purchase Warrant, dated January 22, 2008, issued by Creative Vistas,
      Inc. to Erato Corporation for the Right to Purchase 1,738,365 Shares of
      Common Stock of Creative Vistas, Inc. incorporated by reference to the
      Registrant’s Form 8-K filed February 28, 2008.10.8*
                              Letter
      Agreement dated January 22, 2008 between Creative Vistas, Inc. and Erato
      Corporation incorporated by reference to the Registrant's Form 10-K filed
      March 31, 200810.9*
                              Warrant
      Purchase Agreement, dated January 30, 2008 between Creative Vistas, Inc.,
      Laurus Master Fund, Ltd., Erato Corporation, Valens U.S. Fund, LLC and
      Valens Offshore SPV I, Ltd. incorporated by reference to the Registrant's
      Form 8-K filed February 8, 200810.10*
                              Amended
      and Restated Common Stock Purchase Warrant dated July 2, 2007 issued to
      Laurus Master Fund, Ltd. by 180 Connect Inc. incorporated by reference to
      the Schedule 13 D filed by the Registrant with respect to 180 Connect Inc.
      dated February 1, 2008.10.11*
                              Common
      Stock Purchase Warrant, dated January 30, 2008, issued by Creative Vistas,
      Inc. to Erato Corporation for the Right to Purchase 2,350 Shares of Common
      Stock of Creative Vistas, Inc. incorporated by reference to the Schedule
      13 D filed by the Registrant with respect to 180 Connect Inc. dated
      February 1, 2008.10.12*
                              Common
      Stock Purchase Warrant, dated January 30, 2008, issued by Creative Vistas,
      Inc. to Valens U.S. SPV I, LLC for the Right to Purchase 214,033 Shares of
      Common Stock of Creative Vistas, Inc. incorporated by reference to the
      Schedule 13 D filed by the Registrant with respect to 180 Connect Inc.
      dated February 1, 2008.10.13*
                              Common
      Stock Purchase Warrant, dated January 30, 2008, issued by Creative Vistas,
      Inc. to Valens Offshore SPV I, Ltd. for the Right to Purchase 582,367
      Shares of Common Stock of Creative Vistas, Inc. incorporated by reference
      to the Schedule 13 D filed by the Registrant with respect to 180 Connect
      Inc. dated February 1, 2008.10.14*
                              Non-binding
      Letter of Intent between Creative Vistas, Inc. and Valens U.S. Fund, LLC
      incorporated by reference to the Registrant’s Form 10-K filed March 31,
      2008.10.15*
                              Letter
      of Intent dated February 13, 2008 incorporated by reference to the
      Schedule 13D Amendment filed by the Registrant with respect to 180 Connect
      Inc. dated February 19,
2008
  37
  10.16*
                          Consulting
      Agreement, dated July 16, 2008, between Creative Vistas, Inc. and
      Nationwide Solutions Inc. incorporated by reference to the Registrant's
      Form 8-K filed July 18, 200810.17*
                          Termination
      and Release Agreement, dated July 16, 2008, between AC Technical Systems
      Ltd., Nationwide Solutions Inc. and Sayan Navaratnam incorporated by
      reference to the Registrant's Form 8-K filed July 18,
  200821.1+
                          List
      of all subsidiaries31.1+
                          Rule
      13a-14(a) Certification of  the Principal Executive
      Officer31.2+
                          Rule
      13a-14(a) Certification of the Principal Financial
  Officer32.1+
                          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
 _______________
  *
Previously filed and incorporated by reference
   + Filed
herewith
  38
  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/ Dominic
      BurnsDominic
      BurnsChief
      Executive Officer
  39