##### 



As filed with the Securities and Exchange Commission on December 21, 2007
   SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 20-F
 o
    
    Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of
1934
 OR
 þ
    
    Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended September 30, 2007
 OR
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 OR
 o
    
    Shell company report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
 Date of event requiring this shell company report
 Commission file number 0-30082
 ENVOY CAPITAL GROUP INC.
 
 
  
  
    
  
   
  o þ
 o þ
 þ o
 o o þ
 þ o
 o þ




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##### 



TABLE OF CONTENTS
 PART I
 Item 1.
    
    Identity of Directors, Senior Management and Advisers
    
    
    3Item 2.
    
    Offer Statistics and Expected Timetable
    
    
    3Item 3.
    
    Key Information
    
    
    3Item 4.
    
    Information on the Company
    
    
    11Item 4A.
    
    Unresolved Staff Comments
    
    
    16Item 5.
    
    Operating and Financial Review and Prospects
    
    
    16Item 6.
    
    Directors, Senior Management and Employees
    
    
    38Item 7.
    
    Major Shareholders and Related Party Transactions
    
    
    51Item 8.
    
    Financial Information
    
    
    54Item 9.
    
    The Offer and Listing
    
    
    54Item 10.
    
    Additional Information
    
    
    56Item 11.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    66Item 12.
    
    Description of Securities Other than Equity Securities
    
    
    67PART IIItem 13.
    
    Defaults, Dividend Arrearages and Delinquencies
    
    
    67Item 14.
    
    Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    67Item 15.
    
    Controls and Procedures
    
    
    67Item l6A
    
    Audit Committee Financial Expert
    
    
    68Item l6B
    
    Code of Ethics
    
    
    68Item l6C
    
    Principal Accountant Fees and Services
    
    
    69Item 16D
    
    Exemptions from the Listing Standards for Audit Committees
    
    
    70Item 16E
    
    Purchase of Equity Securities by the Issuer and Affiliated Purchases
    
    
    70PART IIIItem 17.
    
    Financial Statements
    
    
    71Item 18.
    
    Financial Statements
    
    
    71Item 19.
    
    Exhibits
    
    
    72Signatures
    
    
    
    
    73CertificationsExhibit Index
 2




---



##### 



Special Note Regarding Forward-Looking Statements
  PART I
 Item 1: Identity of Directors, Senior Management and Advisers
  Item 2: Offer Statistics and Expected Timetable
  Item 3: Key Information
 A. Selected Financial Data 1
  3




---



##### 



Fiscal Years EndedSeptember 30
    
    2007
    
    2006(2)
    
    2005(3)
    
    2004(4)
    
    2003(5)(all amounts in thousands exceptper share data)Statement of Operations Data:Net Revenue
    
    $
    17,551
    
    
    $
    9,672
    
    
    $
    19,567
    
    
    $
    15,838
    
    
    $
    20,103(Loss) Earnings From
Continuing
Operations
    
    
    2,641
    
    
    
    (5,392
    )
    
    
    3,074
    
    
    
    (4,781
    )
    
    
    (148
    )Earnings (Loss)From
Discontinued Operations
    
    
    375
    
    
    
    7,528
    
    
    
    2,868
    
    
    
    1,674
    
    
    
    2,686Earnings (Loss) From
Continuing Operations Basic
Earnings Per Share
    
    
    0.20
    
    
    
    (0.27
    )
    
    
    0.14
    
    
    
    (0.28
    )
    
    
    (0.03
    )Earnings (Loss) From
Continuing Operations
Diluted Earnings Per Share
    
    
    0.20
    
    
    
    (0.27
    )
    
    
    0.14
    
    
    
    (0.28
    )
    
    
    (0.02
    )Net (Loss) Earnings
    
    
    3,017
    
    
    
    2,136
    
    
    
    5,942
    
    
    
    (3,106
    )
    
    
    2,538Net Earnings (Loss) Per
Share Basic
    
    
    0.23
    
    
    
    0.10
    
    
    
    0.27
    
    
    
    (0.18
    )
    
    
    0.58Net Earnings (Loss) Earnings
Per Share Diluted
    
    
    0.23
    
    
    
    0.10
    
    
    
    0.27
    
    
    
    (0.18
    )
    
    
    0.43
 
 1
    
    The Consolidated Financial Statements of Envoy have been prepared by management in accordance with
Canadian Generally Accepted Accounting Principles (Canadian GAAP) which vary in certain
significant respects from U.S. Generally Accepted Accounting Principles (U.S. GAAP).
Reconciliation to U.S. GAAP is set forth in Note 20 to the Notes to the Consolidated Financial
Statements. The fol1owing would be the adjustments under U.S. GAAP to the information provided
above as an increase (decrease) to: Net Revenue 2007 ($5,148), 2006 $nil, 2005 $nil, 2004 $nil and
2003 ($3,387); Earnings (loss) from continuing operations 2007 ($1,240), 2006 $nil, 2005 $344, 2004
($464) and 2003 ($4,025); Earnings (loss) from continuing operations earnings per share basic 2007
($0.09), 2006 $nil, 2005 $0.01, 2004 ($0.03) and 2003 ($0.93); Earnings (loss) from continuing
operations earnings per share diluted 2007 ($0.09), 2006 $nil, 2005 $0.01, 2004 ($0.03) and 2003
($0.33); Net earnings (loss) 2007 ($1,240), 2006 ($2,700), 2005 $344, 2004 $(464) and 2003 $67; and
Net earnings (loss) per share basic 2007 ($0.09), 2006 ($0.13), 2005 $0.01, 2004 $(0.03) and 2003
$0.02; Net earnings (loss) per share diluted 2007 ($0.09), 2006 ($0.13), 2005 $0.01, 2004 $(0.03)
and 2003 $0.01. 4




---



##### 



As at September 30
    
    2007
    

2006(2)
    

2005(3)
    

2004(4)
    

2003(5)(all amounts in thousands)Balance Sheet Data:Current Assets
    
    $
    38,832
    
    
    $
    68,701
    
    
    $
    44,759
    
    
    $
    59,432
    
    
    $
    18,844Total
Assets(8)
    
    
    50,792
    
    
    
    81,274
    
    
    
    84,057
    
    
    
    88,880
    
    
    
    37,967Total
Debt(7)
    
    
    157
    
    
    
    252
    
    
    
    361
    
    
    
    659
    
    
    
    11,425Shareholders
Equity(8)
    
    
    45,157
    
    
    
    75,047
    
    
    
    73,555
    
    
    
    76,891
    
    
    
    12,359Retained
(Deficit) Earnings(9)
    
    
    3,094
    
    
    
    (40,266
    )
    
    
    (42,403
    )
    
    
    (48,344
    )
    
    
    (45,237
    )
 
 2
    
    The exchange rate utilized with respect to the Statement of Operations Data for the
fiscal year ended September 30, 2006 of Watt Gilchrist Limited (Gilchrist) and Parker Williams
Design Limited (PWD) is £1.00 to $2.0571 and with respect to the Balance Sheet Data of Gilchrist
and PWD is £1.00 to $2.1044. Except as set forth in footnotes 5, 6 and 7, no other acquisitions by
Envoy materially affect the comparability of the information in the Selected Financial Data.3
    
    The exchange rate utilized with respect to the Statement of Operations Data for the
fiscal year ended September 30, 2005 of Watt Gilchrist Limited (Gilchrist) is £1.00 to $2.2641
and with respect to the Balance Sheet Data of Gilchrist is £1.00 to $2.0648. The exchange rate
utilized with respect to the Statements of Operations Data for the fiscal year ended September 30,
2005 of Parker Williams Design Limited (PWD) is £1.00 to $2.2428. The exchange rate utilized with
respect to the Balance Sheet Data of PWD is £1.00 to $2.0648. 5




---



##### 



Except as set forth in footnotes 5, 6 and 7, no other acquisitions by Envoy materially affect the
comparability of the information in the Selected Financial Data.4
    
    The exchange rate utilized with respect to the Statement of Operations Data for the
fiscal year ended September 30, 2004 of Gilchrist is £1.00 to $2.3759 and with respect to the
Balance Sheet Data of Gilchrist is £1.00 to $2.2878. Except as set forth in footnotes 5, 6 and 7,
no other acquisitions by Envoy materially affect the comparability of the information in the
Selected Financial Data.5
    
    The exchange rate utilized with respect to the Statement of Operations Data for the
year ended September 30, 2003 of Gilchrist is £1.00 to $2.3425 and with respect to the Balance
Sheet Data of Gilchrist is £1.00 to $2.2448. The exchange rate utilized with respect to the
Statement of Operations Data of US activities is $1.00 U.S. to $l.4635 and with respect to the
Balance Sheet Data of US activities is $1.00 U.S. to $l.3499. Except as set forth in footnotes 5, 6
and 7, no other acquisitions by Envoy materially affect the comparability of the information in the
Selected Financial Data. During fiscal 2003, Envoy disposed of a number of subsidiaries including
Sage Information Consultants Inc.Sage, Devlin Multimedia Inc. (Devlin) and Hampel Stefanides
Inc. (Hampel) as described in Notes 16 and 17 to the Consolidated Financial Statements.6
    
    As reflected in Note 20 to the Consolidated Financial Statements, the net earnings
(loss) from continuing operations for the fiscal years ended September 30, 2007, 2006, 2005, 2004
and 2003 were $1,401, ($5,392), $3,418, ($5,245) and ($4,276), respectively under U.S. GAAP. The
net earnings (loss) for the fiscal years ended September 30, 2007, 2006, 2005, 2004 and 2003 were
$1,777, ($564), $6,286, ($3,571) and ($2,606), respectively under U.S. GAAP. The diluted net
earnings (loss) per share for the years ended September 30, 2007, 2006, 2005, 2004, and 2003 were
$0.14, ($0.03), $0.28, ($0.21) and ($0.43), respectively under U.S. GAAP.  7
    
    Total debt includes both the current and long term portion of debt.8
    
    As reflected in Note 20 to the Consolidated Financial Statements, the shareholders
equity as at September 30, 2007, 2006, 2005, 2004 and 2003 was $41,140, $72,589, $73,550, $77,066
and $11,765, respectively under U.S. GAAP. Total assets as of September 30, 2007 under U.S. GAAP
would exclude the unrealized gain on private equities of $1,147. In addition, total assets as of
September 30, 2007, 2006, 2005, 2004, and 2003, under U.S. GAAP would include the unrealized gain
(loss) on securities for sale of $nil, $242, ($6), $174 and $nil, respectively, exclude capitalized
incorporation costs of $66, $nil, $nil, $nil and $nil, respectively, and it would exclude cash held
in escrow relating to the sale of the UK operations of $2,803, $2,700, $nil, $nil and $nil,
respectively.
 6




---



##### 



9
    
    Retained earnings as of September 30, 2007, 2006, 2005, 2004, and 2003,excludes the
cumulative foreign currency translation adjustment of ($77), ($51), ($2,153), 74 and ($236)
respectively. See Note 2(g) in the Notes to Consolidated Financial Statements of Envoy.  Exchange Rates:
  Fiscal Year Ended September 30,
 2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Average *
    
    $
    1.0885
    
    
    $
    1.1151
    
    
    $
    1.2171
    
    
    $
    1.2034
    
    
    $
    1.4553
 
 *
    
    The Average rate means the average rates each period, calculated by using the average of the
exchange rates on the last day of each month during the fiscal period. For the Month Ended
 November
    
    
    October
    
    
    September
    
    
    August
    
    
    July
    
    
    June2007
    
    
    2007
    
    
    2007
    
    
    2007
    
    
    2007
    
    
    2007High
    
    $
    1.0007
    
    
    $
    1.0002
    
    
    $
    1.0546
    
    
    $
    1.0754
    
    
    $
    1.0689
    
    
    $
    1.0727Low
    
    $
    0.9168
    
    
    $
    0.9496
    
    
    $
    0.9959
    
    
    $
    1.0497
    
    
    $
    1.0372
    
    
    $
    1.0579
 B. Capitalization and Indebtedness
  C. Reasons for the Offer and Use of Proceeds
  7




---



##### 



D. Risk Factors
 Envoys business, financial condition and results of operations could be materially adversely
affected by any of the following risks. In addition, risk and uncertainties not currently known to
the Company or that the Company currently deems to be immaterial may also materially and adversely
affect its business.
 Risks Related to Envoys Business and Industry
 The Company has a limited number of large clients:
   Fiscal Year Ended September 30, 2007
 Client
 Meijer, Inc.
    
    
    17
    %The Great Atlantic and Pacific Company
    
    
    15
    %Dubai Festival City Retail Development LLC
    
    
    15
    %McDonalds Restaurants of Canada Limited
    
    
    11
    %
   The Company is dependent on its key personnel:
  The Company is exposed to the risks of doing business internationally:
  
    
    currency exchange rate fluctuations;
    
    restrictions on repatriation of earnings; and
    
    changes in the political or economic conditions of a specific country or region,
particularly in emerging markets.
 8




---



##### 



Currency exchange rate fluctuations could adversely affect the Companys results of operations:
  Market rate fluctuations could adversely affect the Companys results of operations:
  The Company may be unsuccessful in evaluating material risks involved in completed and future
investments.
  The Company is subject to credit risk:
   The Company may need to raise additional capital to grow its business, which it may not be able to
do.
 9




---



##### 



The Company is subject to recessionary economic cycles:
  The Company may be subject to certain regulations that could restrict the Companys activities:
 Government Regulations
 The Company competes for clients in a highly competitive industry, which may reduce market share
and decrease profits:
  10




---



##### 



Risks related to the Companys common shares
 Because the Company is a Canadian company, it may be difficult to enforce liabilities against the
Company based solely upon the federal securities laws of the United States:
  The Company believes that it is a Passive Foreign Investment Company, which may have adverse tax
consequences for the Companys shareholders in the United States:
  Item 4: Information on the Company
       11




---



##### 



A. History and Development of the Company
       12




---



##### 



B. Business Overview
 Services in the Envoy Group:
    Our Strategic Direction:
  13




---



##### 



Industry Overview:
 Consumer and Retail Branding
     14




---



##### 



Government Regulations:
  Merchant Banking
      Government Regulations:
  15




---



##### 



C. Organizational Structure
  D. Property, Plants and Equipment
     Item 4A: Unresolved Staff Comments
  Item 5: Operating and Financial Review and Prospects
 The following discussion should be read in conjunction with, and is qualified in its entirety by,
the Consolidated Financial Statements of Envoy and the Notes relating thereto, included as item 17
in this Form 20-F. The information contained in this Item 5 refers to Financial Statements of
Envoy, which are presented in Canadian dollars and are prepared in accordance with Canadian GAAP.
 Canadian GAAP differs in certain significant respects from U.S. GAAP. Reconciliation to U.S. GAAP
is set forth in Note 20 of the Notes to Consolidated Financial Statements. Historical results of
operations, percentage relationships and any trends that may be
 16




---



##### 



inferred there from are not necessarily indicative of the operating results of any future period.
 Overview
 Net Revenue
  (i)
    
    deferred revenue representing fees billed and collected in advance of such fees being earned;
 (ii)
    
    unbilled accounts receivable representing fees earned but not yet billed as well as well as
reimbursable pass-through costs; and
 (iii)
    
    work in process represents costs incurred on projects for which revenue has not yet been
recognized for accounting purposes.Included in work in process are charges for staff time at standard cost and third party
charges. The standard cost rate provides for the recovery of actual labour and overhead costs
incurred.
   Operating Expenses
  17




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##### 



Tax Matters
  A. Operating Results
     18




---



##### 



SELECTED ANNUAL INFORMATION
 Fiscal 2007
    
    
    Fiscal 2006
    
    
    Fiscal 2005Net revenue
    
    $
    17.6 million
    
    
    $
    9.7 million
    
    
    $
    19.6 millionNet earnings (loss):From continuing operations
    
    2.6 million
    
    
    
    (5.4) million
    
    
    3.0 millionFrom discontinued
operations
    
    0.4 million
    
    
    7.5 million
    
    
    2.9 millionTotal
    
    3.0 million
    
    
    2.1 million
    
    
    $
    5.9 millionNet earnings (loss) per shareTotalBasic
    
    $
    0.23
    
    
    $
    0.10
    
    
    $
    0.27Diluted
    
    $
    0.23
    
    
    $
    0.10
    
    
    $
    0.27From continuing
operationsBasic
    
    $
    0.20
    
    
    $
    (0.27
    )
    
    $
    0.14Diluted
    
    $
    0.20
    
    
    $
    (0.27
    )
    
    $
    0.14From discontinued
operationsBasic
    
    $
    0.03
    
    
    $
    0.37
    
    
    $
    0.13Diluted
    
    $
    0.03
    
    
    $
    0.37
    
    
    $
    0.13As at:
    
    Sep 30, 2007

    
    Sep 30, 2006

    
    Sep 30, 2005Total assets
    
    $
    50.8 million
    
    $
    81.3 million
    
    $
    84.0 millionTotal
long-term financial liabilities
    
    $
    0.1 million
    
    $
    0.2 million
    
    $
    0.3 millionCash dividends declared
    
    $
    nil
    
    $
    nil
    
    $
    nil
 19




---



##### 



FISCAL YEAR ENDED SEPTEMBER 30, 2007, COMPARED TO FISCAL YEAR ENDED SEPTEMBER 30, 2006
   Consumer and Retail Branding Segment
   Net revenue for the year ended September 30(in millions)2007
    
    
    % of total
    
    
    2006
    
    
    % of totalBy customer location:USA and South America
    
    $
    6.4
    
    
    
    52
    %
    
    $
    3.5
    
    
    
    36
    %Canada
    
    
    4.1
    
    
    
    33
    %
    
    
    5.0
    
    
    
    52
    %Middle East and Asia
    
    
    1.9
    
    
    
    15
    %
    
    
    1.2
    
    
    
    12
    %$
    12.4
    
    
    
    100
    %
    
    $
    9.7
    
    
    
    100
    %
   20




---



##### 



Merchant Banking Segment
  21




---



##### 



Corporate
   22




---



##### 



Income Taxes
  Income from discontinued operations
   Fiscal year:
    
    2007
    
    
    2006
    
    
    2005Net revenue
    
    $
    
    
    
    $
    21,432,172
    
    
    $
    26,741,062Operating expenses
    
    
    
    
    
    
    17,460,973
    
    
    
    23,252,416Interest income
    
    
    
    
    
    
    (60,327
    )
    
    
    (11,623
    )Depreciation
    
    
    
    
    
    
    1,294,822
    
    
    
    1,770,052Income tax expense
    
    
    
    
    
    
    582,122
    
    
    
    512,023Earnings from discontinued operations
(excluding gain on sale)
    
    
    
    
    
    
    2,154,582
    
    
    
    1,218,194Minority interest
    
    
    
    
    
    
    347,599
    
    
    
    149,808Gain on sale of discontinued operations
    
    
    375,514
    
    
    
    5,721,229
    
    
    
    1,799,631Earnings from discontinued operations
    
    $
    375,514
    
    
    $
    7,528,212
    
    
    $
    2,868,017
 Net earnings (loss)
   23




---



##### 



FISCAL YEAR ENDED SEPTEMBER 30, 2006, COMPARED TO FISCAL YEAR ENDED SEPTEMBER 30, 2005
  Net revenue by type of service and by customer location:
 Net Revenue for the twelve monthsended September 30(in millions)2006
    
    
    % of total
    
    
    2005
    
    
    % of totalBy type of By type of serviceConsumer Consumer and retail branding
    
    $
    9.7
    
    
    
    100
    %
    
    $
    19.6
    
    
    
    100
    %
 2006
    
    
    % of total
    
    
    2005
    
    
    % of totalBy customer locationCanada
    
    $
    5.0
    
    
    
    52
    %
    
    $
    5.7
    
    
    
    29
    %USA/South America
    
    
    3.5
    
    
    
    36
    %
    
    
    13.5
    
    
    
    69
    %Middle East/Asia
    
    
    1.2
    
    
    
    12
    %
    
    
    0.4
    
    
    
    2
    %$
    9.7
    
    
    
    100
    %
    
    $
    19.6
    
    
    
    100
    %
 Net revenue by type of service:
  Net revenue by customer location:
  Operating Expenses
  24




---



##### 



Depreciation expense
  Interest (income) expense and financing costs
  Investment earnings
  25




---



##### 



Income from discontinued operations
   Net earnings (loss)
  THREE MONTHS ENDED SEPTEMBER 30, 2007, COMPARED TO THREE MONTHS ENDED SEPTEMBER 30,
2006 (UNAUDITED)
    26




---



##### 



Consumer and Retail Branding Segment
   Net revenue for the three months ended September 30(in millions)2007
    
    % of total
    
    2006
    
    % of totalBy customer location:USA and South America
    
    $
    2.2
    
    
    
    65
    %
    
    $
    0.4
    
    
    
    16
    %Canada
    
    
    0.9
    
    
    
    26
    %
    
    
    1.3
    
    
    
    52
    %Middle East and Asia
    
    
    0.3
    
    
    
    9
    %
    
    
    0.8
    
    
    
    32
    %$
    3.4
    
    
    
    100
    %
    
    $
    2.5
    
    
    
    100
    %
      27




---



##### 



Merchant Banking Segment
     Corporate
  Income Taxes
  28




---



##### 



Income from discontinued operations
  Net earnings (loss)
   29




---



##### 



SUMMARY OF QUARTERLY RESULTS
 Q4 2007
    
    
    Q3 2007
    
    
    Q2 2007
    
    
    Q1 2007Net revenue
    
    $
    4.5 million
    
    
    $
    4.3 million
    
    
    $
    3.8 million
    
    
    $
    5.0 millionNet earnings (loss):From continuing
    
    
    ($0.01) million
    
    
    $
    0.20 million
    
    
    $
    0.86 million
    
    
    $
    1.59 millionoperations
Including
discontinued
operations
    
    $
    0.36 million
    
    
    $
    0.20 million
    
    
    $
    0.86 million
    
    
    $
    1.59 millionNet earnings per shareFrom continuing
operationsBasic
    
    $
    0.00
    
    
    $
    0.02
    
    
    $
    0.07
    
    
    $
    0.08Diluted
    
    $
    0.00
    
    
    $
    0.02
    
    
    $
    0.07
    
    
    $
    0.08Including
discontinued
operationsBasic
    
    $
    0.04
    
    
    $
    0.02
    
    
    $
    0.07
    
    
    $
    0.08Diluted
    
    $
    0.04
    
    
    $
    0.02
    
    
    $
    0.07
    
    
    $
    0.08Q4 2006
    
    
    Q3 2006
    

    
    Q2 2006
    

    
    Q1 2006Net revenue
    
    $
    2.5 million
    
    
    $
    5.5 million
    
    
    $
    3.8 million
    
    
    $
    5.5 millionNet earnings (loss):From continuing
    
    
    ($1.84) million
    
    
    
    ($1.51) million
    
    
    
    ($1.08) million
    
    
    
    ($0.96) millionoperations
Including
discontinued
operations
    
    $
    4.82 million
    
    
    
    ($1.12) million
    
    
    
    ($0.43) million
    
    
    
    ($1.13) millionNet earnings per shareFrom continuing
operationsBasic
    
    
    ($0.10
    )
    
    
    ($0.07
    )
    
    
    ($0.05
    )
    
    
    ($0.05
    )Diluted
    
    
    ($0.10
    )
    
    
    ($0.07
    )
    
    
    ($0.05
    )
    
    
    ($0.05
    )Including
discontinued
operationsBasic
    
    $
    0.23
    
    
    
    ($0.05
    )
    
    
    ($0.02
    )
    
    
    ($0.05
    )Diluted
    
    $
    0.23
    
    
    
    ($0.05
    )
    
    
    ($0.02
    )
    
    
    ($0.05
    )
 30




---



##### 



RECONCILIATION TO U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
  2007
    
    
    2006
    
    
    2005Net earnings  Canadian GAAP
    
    $
    3,016,719
    
    
    $
    2,136,186
    
    
    $
    5,941,690Stock-based compensation 20(a)
    
    
    
    
    
    
    
    
    
    
    344,151Cash held in escrow 20(b)
    
    
    (103,549
    )
    
    
    (2,700,000
    )
    
    
    Capitalized incorporation costs 20(g)
    
    
    (66,339
    )
    
    
    
    
    
    
    Income recognized on reclassification
of investments 20(h)
    
    
    77,416
    
    
    
    
    
    
    
    Gains on privately-held securities 20(h)
    
    
    (1,147,500
    )
    
    
    
    
    
    
    Net earnings (loss) based on
U.S. GAAP
    
    $
    1,776,747
    
    
    $
    (563,814
    )
    
    $
    6,285,841Net earnings (loss) from continuing
operations
    
    $
    1,401,233
    
    
    $
    (5,392,026
    )
    
    $
    3,417,824Net earnings from discontinued
operations (Notes 19)
    
    $
    375,514
    
    
    $
    4,828,212
    
    
    $
    2,868,017
  2007
    
    
    2006Total assets based on Canadian GAAP
    
    $
    50,792,314
    
    
    $
    81,273,654Cash held in escrow 20(b)
    
    
    (2,803,549
    )
    
    
    (2,700,000
    )Capitalized incorporation costs 20(g)
    
    
    (66,339
    )
    
    
    Investments held for trading 20(h)
    
    
    (1,147,500
    )
    
    
    242,378Total assets based on U.S. GAAP
    
    $
    46,774,926
    
    
    $
    78,816,032
  2007
    
    
    2006Shareholders equity based on Canadian GAAP
    
    $
    45,157,001
    
    
    $
    75,046,589Cash held in escrow 20(b)
    
    
    (2,803,549
    )
    
    
    (2,700,000
    )Accumulated other comprehensive income 20(c)
    
    
    
    
    
    
    242,378Capitalized incorporation costs 20(g)
    
    
    (66,339
    )
    
    
    Gains on privately-held securities 20(h)
    
    
    (1,147,500
    )
    
    
    Shareholders equity based on U.S. GAAP
    
    $
    41,139,613
    
    
    $
    72,588,967
 31




---



##### 



2007
    
    
    2006
    
    
    2005Net earnings (loss) for the year in
accordance with U.S. GAAP
    
    $
    1,776,747
    
    
    $
    (563,814
    )
    
    $
    6,285,841Unrealized gain (loss) on available
for sale securities arising during
the year
    
    
    
    
    
    
    242,378
    
    
    
    (5,859
    )Less: reclassification adjustment
for gains realized in net income
    
    
    (242,378
    )
    
    
    5,859
    
    
    
    (174,426
    )Change in cumulative translation
adjustment account
    
    
    (25,514
    )
    
    
    2,101,995
    
    
    
    (2,183,228
    )$
    1,508,855
    
    
    $
    1,786,418
    
    
    $
    3,922,328
 B. Liquidity and Capital Resources
     32




---



##### 



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
    Goodwill
    33




---



##### 



Intangible assets
  Income Taxes
  Revenue
   Stock-based compensation
  34




---



##### 



Financial Instruments
          35




---



##### 



IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
 Accounting for Uncertainty in Income Taxes  an interpretation of FAS Statement No. 109 (FIN 48)
  Fair Value Measurements (SFAS 157)
  Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159)
  36




---



##### 



FORWARD LOOKING STATEMENTS
  C. Research and Development, Patents and Licenses, etc.
  D. Trend Information
  E. Off-Balance Sheet Arrangements
  F. Commitments and Contractual Commitments
 (all amounts in thousands)
 Due in
    
    
    Due in
    
    
    Due in
    
    
    Due inTotal
    
    
    year 1
    
    
    year 2
    
    
    year 3
    
    
    year 4Operating leases
    
    $
    1,898,623
    
    
    $
    820,178
    
    
    $
    768,724
    
    
    $
    306,681
    
    
    $
    3,040Long term debt
    
    
    162,625
    
    
    
    91,990
    
    
    
    70,635
    
    
    
    
    
    
    
    Total contractual
cash obligations
    
    $
    2,061,248
    
    
    $
    912,168
    
    
    $
    839,359
    
    
    $
    306,681
    
    
    $
    3,040
 37




---



##### 



G. Safe Harbor
  Item 6: Directors and Senior Management and Employees
 A. Directors and Senior Management
  NameAge
    
    Positions Held with EnvoyGeoffrey B. Genovese
53
    
    President, Chairman and Chief
Executive Officer and DirectorJ. Joseph Leeder
53
    
    Executive Vice President Mergers
& Acquisitions and Chief Financial OfficerJohn H. Bailey
62
    
    Executive Vice President,
Corporate Secretary and DirectorDavid Hull 123
51
    
    DirectorHugh Aird 123
51
    
    DirectorDavid Parkes 123
51
    
    Director
 
 1
    
    Member of the Audit Committee2
    
    Member of the Compensation Committee3
    
    Member of the Nominating and Corporate Governance Committee  Geoffrey B. Genovese :
 38




---



##### 



J. Joseph Leeder , CA :
 John H. Bailey:
 David Hull :
 Hugh Aird :
 David Parkes :
   39




---



##### 



B. Compensation
  Long-Term CompensationAwardsSecurities
    
    RestrictedAnnual Compensation
    
    Under
    
    Shares or
    
    PayoutsName and
    
    
    
    
    
    
    
    
    
    Other
    
    Option/SARs
    
    Restricted
    
    LTIP
    
    All OtherPrincipal
    
    Salary
    
    
    
    
    
    Annual
    
    Granted
    
    Share Units
    
    Payouts
    
    CompensationPosition
    
    ($)
    
    Bonus
    
    ($)
    
    (#)
    
    ($)
    
    ($)
    
    ($)Geoffrey B. Genovese,
    
    $
    550,000
    
    
    
    850,000
    
    
    
    330,3131
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    182,3502Chairman, President
and Chief Executive
OfficerJ. Joseph Leeder,
    
    $
    400,000
    
    
    
    300,000
    
    
    
    20,603
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vice President,
Mergers and
Acquisitions and Chief
Financial OfficerJohn H. Bailey,
    
    $
    300,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Executive Vice
President, and
SecretaryColin Beaton
    
    $
    183,061
    
    
    $
    29,169
    
    
    $
    38,462
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Managing Director,
Watt Retail Design
PracticePatrick Rodmell,
    
    $
    285,129
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Managing Director,
Watt International Inc.
 
 1
    
    Included in this amount is $300,000 which was paid to a corporation related
to Mr. Genovese as an annual management fee.2
    
    Mr. Genovese received taxable benefits for life insurance premiums paid by
the Corporation and a car allowance. 40




---



##### 



Stock Options Exercised During 2007 Fiscal YearUnexercised Options at
    
    Value of Unexercised InNumber of Shares
    
    Aggregate
    
    FY-End Exercisable/
    
    the Money Options at FY-EndAcquired on
    
    Value Realized
    
    Unexercisable
    
    Exercisable/Unexercisable 1Name
    
    Exercise
    
    ($)
    
    (#)
    
    ($)Geoff Genovese
    
    Nil
    
    Nil
    
    80,000/nil
    
    nil/nilJoseph Leeder
    
    Nil
    
    Nil
    
    nil/nil
    
    nil/nilJohn H. Bailey
    
    Nil
    
    Nil
    
    40,000/nil
    
    nil/nilPatrick Rodmell
    
    Nil
    
    Nil
    
    13,333/nil
    
    21,999/nil15,000/nil
    
    nil/nilColin Beaton
    
    Nil
    
    Nil
    
    nil/nil
    
    nil/nil
  Employment Contracts and Termination Agreements:
   41




---



##### 



Compensation of Directors:
  42




---



##### 



Directors and Officers Liability Insurance:
  C. Board Practices
 Corporate Governance:
 Disclosure Corporate Governance Practices Corporate Governance Guidelines Audit Committees
   43




---



##### 



Board of Directors:
       44




---



##### 



Director
    
    Board Meetings Attended 1Hugh Aird
    
    25
    
    of
    
    25John Bailey
    
    25
    
    of
    
    25Geoff Genovese
    
    25
    
    of
    
    25David Hull
    
    25
    
    of
    
    25David Parkes
    
    23
    
    of
    
    25
 Note: 1
 Mandate of the Board:
   Business Corporations
Act
 Board Committees:
  (a) Audit Committee
  45




---



##### 



(b) Compensation Committee
  Nominating and Corporate Governance Committee
  Position Descriptions:
  46




---



##### 



Orientation and Continuing Education:
   Nomination of Directors:
    47




---



##### 



Other Board Committees:
  Assessments:
   Shareholder Communication:
  48




---



##### 



D. Employees
      E. Share Ownership
  Options
   49




---



##### 



Number of CommonShares Under
    
    ExerciseClass of Optionee
    
    Options Granted
    
    Price
    
    Date of ExpiryGeoffrey Genovese
    
    
    80,000
    
    
    $
    4.00
    
    
    May 24, 2009John H. Bailey
    
    
    40,000
    
    
    $
    4.00
    
    
    May 24, 2009Joseph Leeder
    
    nil
    
    
    
    n/a
    
    
    
    
    n/aPatrick Rodmell
    
    
    15,000
    
    
    $
    4.00
    
    
    May 24, 2009Other
    
    
    90,000
    
    
    $
    4.00
    
    
    May 24, 2009Total
    
    
    225,000
  Number of Common
    
    Percent ofIdentity of Person
    
    Shares Owned
    
    Outstanding ClassGeoffrey Genovese
    
    
    332,551
    
    
    
    3.5
    %Joseph Leeder
    
    nil
    
    
    nilColin Beaton
    
    nil
    
    
    nilPatrick Rodmell
    
    
    13,333
    
    
    
    0.1
    %John H. Bailey
    
    
    25,000
    
    
    
    0.3
    %Hugh Aird
    
    
    250
    
    
    
    0.0
    %David Hull
    
    
    55,700
    
    
    
    0.6
    %David Parkes
    
    
    10,000
    
    
    
    0.1
    %
 50




---



##### 



Item 7: Major Shareholders And Related Party Transactions
 A. Major Shareholders
       51




---



##### 



Number ofIdentity of
    
    Common Shares
    
    Percent ofPerson or Group
    
    Beneficially Owned
    
    Outstanding ClassGeoffrey B. Genovese1
    
    
    332,551
    
    
    
    3.5
    %
   B. Related Party Transactions
      52




---



##### 



Discontinued
Operations Acquisition of
Subsidiaries
     C. Interests of Experts and Counsel
  53




---



##### 



Item 8: Financial Information
  Item 9: The Offer and Listing
 A. Price History
    High
    
    LowFiscal 2003
    
    $
    8.35
    
    
    $
    0.50Fiscal 2004
    
    
    10.75
    
    
    
    2.45Fiscal 2005
    
    
    4.50
    
    
    
    2.30Fiscal 2006
    
    
    2.70
    
    
    
    1.50Fiscal 2007
    
    
    4.71
    
    
    
    2.35Quarterly 2007First Quarter
    
    
    3.10
    
    
    
    2.35Second Quarter
    
    
    4.71
    
    
    
    2.60Third Quarter
    
    
    4.42
    
    
    
    3.05Fourth Quarter
    
    
    3.61
    
    
    
    2.76Quarterly 2006First Quarter
    
    
    2.70
    
    
    
    1.62Second Quarter
    
    
    1.95
    
    
    
    1.65Third Quarter
    
    
    1.85
    
    
    
    1.56Fourth Quarter
    
    
    2.61
    
    
    
    1.50
 54




---



##### 



High
    
    LowFor the month endingNovember 30, 2007
    
    
    3.13
    
    
    
    2.81October 31, 2007
    
    
    3.24
    
    
    
    2.84September 30, 2007
    
    
    3.10
    
    
    
    2.76August 31, 2007
    
    
    3.40
    
    
    
    3.00July 31, 2007
    
    
    3.61
    
    
    
    3.20June 30, 2007
    
    
    3.34
    
    
    
    3.21
  High
    
    LowFiscal 2003
    
    
    U.S. $6.10
    
    
    
    U.S. $0.30Fiscal 2004
    
    
    8.05
    
    
    
    1.85Fiscal 2005
    
    
    3.75
    
    
    
    1.80Fiscal 2006
    
    
    2.36
    
    
    
    1.31Fiscal 2007
    
    
    4.07
    
    
    
    2.13Quarterly 2007First Quarter
    
    
    2.69
    
    
    
    2.13Second Quarter
    
    
    4.04
    
    
    
    2.50Third Quarter
    
    
    4.07
    
    
    
    2.81Fourth Quarter
    
    
    3.45
    
    
    
    2.81Quarterly 2006First Quarter
    
    
    2.09
    
    
    
    1.42Second Quarter
    
    
    1.72
    
    
    
    1.43Third Quarter
    
    
    1.65
    
    
    
    1.43Fourth Quarter
    
    
    2.36
    
    
    
    1.31For the month endingNovember 30, 2007
    
    
    3.25
    
    
    
    2.71
 55




---



##### 



High
    
    LowOctober 31, 2007
    
    
    3.39
    
    
    
    2.93September 30, 2007
    
    
    3.05
    
    
    
    2.81August 31, 2007
    
    
    3.27
    
    
    
    2.91July 31, 2007
    
    
    3.45
    
    
    
    3.02June 30, 2007
    
    
    3.17
    
    
    
    3.00
   B. Plan of Distribution
  C. Markets
  D. Selling Shareholders
  E. Dilution
  F. Expenses of the Issue
  Item 10: Additional Information
 A. Share Capital
  B. Memorandum and Articles of Association
  56




---



##### 



C. Material Contracts
  D. Exchange Controls and Other Limitations Affecting Security Holders
       57




---



##### 



E. Taxation
     58




---



##### 



59




---



##### 



Passive Foreign Investment Company Rules
  60




---



##### 



QEF Election
  61




---



##### 



62




---



##### 



Market-to-Market Election
   63




---



##### 



U.S. Holders are urged to consult their tax advisors concerning the United States
federal income tax consequences of holding and disposing of stock of a PFIC.
 Ownership and Disposition of Common Shares if Envoy is Not a PFIC
  64




---



##### 



Backup Withholding and Information Reporting
   F. Dividend and Paying Agents
  65




---



##### 



G. Statement by Experts
  H. Documents on Display
  http://www.sec.gov
 I. Subsidiary Information
  Item 11: Quantitative and Qualitative Disclosures about Market Risk
  Market Risk:
 Credit Risk:
 Foreign Currency Risk:
 66




---



##### 



Item 12: Description of Securities Other Than Equity Securities
  PART II
 Item 13: Defaults, Dividends Arrearages and Delinquencies
 A.
 B.
 Item 14: Material Modifications to the Rights of Security Holders and Use of
Proceeds
 A.
 B.
 C.
 D.
 E.
 Item 15: Controls and Procedures
   67




---



##### 



Item 16A: Audit Committee Financial Expert
  Item 16B: Code of Business Conduct
    68




---



##### 



Business Corporations Act
 Item 16C: Principal Accountant Fees and Services
 (a)
    
    AUDIT FEESwere $250,000 in 2007 and $450,000 in 2006. These fees include
year end audit work, consents, reviews and assistance with regulatory filings.
 (b)
    
    AUDIT-RELATED FEESwere $10,000 in 2007 and $17,000 in 2006. These fees
include assistance with due diligence and accounting research.
 (c)
    
    TAX FEESwere $25,000 in 2007 and $25,000 in 2006. These fees include tax
compliance services and tax advice.(d)
    
    All OTHER FEESwere $nil in 2007, and $nil in 2006.
 (e)
    
    In accordance with the Companys Audit Committee Charter, the Audit
Committee ensures the independent auditor submits a formal written statement
delineating all relationships between the independent auditor and the Company and
pre-approves all audit fees and non-audit services to be provided to the Company
or any subsidiary by the independent auditor. All services provided to the
Company after the adoption of the Audit Committee Charter were pre-approved by
the Audit Committee.
 69




---



##### 



Item 16D: Exemptions from the Listing Standards for Audit Committees
  Item 16E: Purchases of Equity Securities by the Issuer and Affiliated Purchasers
   (d) Maximum Number(c) Total Number
    
    (or Approximate(b) Average
    
    of Shares (or Units)
    
    Dollar Value) of Shares(a) Total Number
    
    Price Paid
    
    Purchased as Part
    
    (or Units) that May Yetof Shares (or
    
    per Share
    
    of Publicly Announced
    
    Be Purchased Under thePeriod
    
    Units) Purchased
    
    (or Units)
    
    Plans or Programs
    
    Plans or ProgramsJanuary 25, 2007
    
    
    9,002,383
    
    
    $
    3.36
    
    
    
    9,002,283
    
    
    nilFebruary 7, to
February 28, 2007
    
    nil
    
    
    nil
    
    
    nil
    
    
    
    1,001,818March 1, to
March 31, 2007
    
    
    136,752
    
    
    $
    3.58
    
    
    
    136,752
    
    
    
    865,066April 1, to
April 30, 2007
    
    
    139,088
    
    
    $
    3.68
    
    
    
    139,088
    
    
    
    725,978May 1, to
May 31, 2007
    
    
    154,794
    
    
    $
    3.65
    
    
    
    154,794
    
    
    
    571,184June 1, to
June 30, 2007
    
    
    105,035
    
    
    $
    3.32
    
    
    
    105,035
    
    
    
    466,149July 1, to
July 31, 2007
    
    
    81,867
    
    
    $
    3.34
    
    
    
    81,867
    
    
    
    384,282August 1, to
August 31, 2007
    
    
    195,930
    
    
    $
    3.25
    
    
    
    195,930
    
    
    
    188,352September 1, to
September 30, 2007
    
    nil
    
    
    nil
    
    
    nil
    
    
    
    94,612October 1, to
October 31, 2007
    
    
    93,740
    
    
    $
    3.08
    
    
    
    93,740
    
    
    
    94,612November 1, to
November 30, 2007
    
    
    94,569
    
    
    $
    3.01
    
    
    
    94,569
    
    
    
    43Total
    
    
    1,001,775
    
    
    
    
    
    
    
    1,001,775
 70




---



##### 



PART III
 Item 17: Financial Statements
 (a)
    
    Envoy Capital Group Inc.
 (i)
    
    Auditors Report on
the financial
statements for the
year ended
September 30, 2007
    
    F-1Comments by Auditor
for U.S. Readers on
Canada-U.S.
Reporting
DifferencesAuditors Report on the financial statements for the year ended
September 30, 2006 and 2005(ii)
    
    Consolidated Balance Sheets as at September 30, 2007 and 2006
    
    F-2(iii)
    
    Consolidated Statements of Operations for the years ended September
30, 2007, 2006 and 2005
    
    F-3(iv)
    
    Consolidated Statements of Retained Earnings (Deficit) for the years ended September 30, 2007,
2006 and 2005
    
    F-4(v)
    
    Consolidated Statements of Cash Flows for the years ended September
30, 2007, 2006 and 2005
    
    F-5(vi)
    
    Notes to Consolidated Financial Statements
    
    F-6
 Item 18: Financial Statements
  71




---



##### 



Item 19: Exhibits
 EXHIBIT INDEX
 Exhibit No.
    
    Description1.1*
    
    Articles of Incorporation and By-Law No. 1 (as amended on May 2, 2000) of Envoy
Communications Group Inc.1.2**
    
    Articles of Amendment (as amended on January 9, 2004) and By-Law No. 1 of Envoy
Communications Group Inc.1.3**
    
    Articles of Amendment (as amended on January 21, 2005) and By-Law No. 1 of Envoy
Communications Group Inc.1.4
    
    Articles of Amendment (as amended on March 30, 2007) and By-Law No. 1 of Envoy
Capital Group Inc.8.1
    
    List of Significant Subsidiaries (contained in Item 4.C hereof)11.1***
    
    Code of Business Conduct11.2***
    
    Complaint Procedures for Accounting and Auditing Matters11.3***
    
    Board Mandate12.1
    
    Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 200212.2
    
    Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 200213.1
    
    Certifications of CEO and CFO Pursuant to Section 906 of the Sarbanes-Oxley Act of
200215.1***
    
    Audit Committee Charter15.2***
    
    Compensation Committee Charter15.3***
    
    Nominating and Corporate Governance Committee Charter17
    
    Financial Statements
 
 *
    
    Incorporated by reference to the Companys Annual Report on Form 20-F, filed on May 15, 2000
(Commission File No. 000-30082)**
    
    Incorporated by reference to the Companys Annual Report on Form 20-F, filed on December
29, 2006 (Commission File No. 000-30082).***
    
    Incorporated by reference to the Companys Annual Report on Form 20-F, filed on December
29, 2005 (Commission File No. 000-30082). 72




---



##### 



SIGNATURES
  ENVOY CAPITAL GROUP INC.Date: December 19, 2007
    /s/ GEOFFREY B. GENOVESEName:
    Geoffrey B. GenoveseTitle:
    Chairman, President and
Chief Executive Officer 73