- Quarterly Report (10-Q)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

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

EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2009

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

EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission file number 0-16819

CREATIVE VISTAS, INC.

(Exact name of registrant as specified in its charter)

Arizona

(State or other jurisdiction of

incorporation or organization

6770

(Primary Standard Industrial

Classification Code Number)

86-0464104

(I.R.S. Employer

Identification No.)

2100 Forbes Street

Unit 8-10

Whitby, Ontario, Canada L1N 9T3

(905) 666-8676

(Address, including zip code, and telephone number,

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

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

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

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

Large Accelerated Filer ¨	Accelerated Filer ¨

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

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

¨ Yes x No

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

At May 15, 2009, the number of shares outstanding of the registrant’s common stock, no par value (the only class of voting stock), was 37,391,761.

PART I.
FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management's Discussion And Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18
Item 4.	Controls and Procedures	18
PART II.
OTHER INFORMATION
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults upon Senior Securities	19
Item 4.	Submission of Matters to a Vote of Security Holders.	19
Item 5.	Other Information	19
Item 6.	Exhibits and Reports on Form 8-K	19

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Creative Vistas, Inc. Condensed Consolidated Balance Sheets	March 31, 2009			December 31, 2008
	(Unaudited)
Assets
Current Assets
Cash and bank balances	$	3,694,657		$	4,770,337
Accounts receivable, net of allowance for doubtful accounts of $255,689 and $323,183		4,436,023			4,571,327
Income tax recoverable		184,648			188,525
Inventory and supplies		701,588			829,318
Prepaid expenses		383,992			289,638
Due from related parties		2,028			2,094
Total current assets		9,402,936			10,651,239
Property plant and equipment, net of depreciation		8,296,072			9,214,623
Deposits		339,500			460,376
Intangible assets		753,968			850,136
Deferred financing costs, net		427,734			483,331
Deferred income taxes		35,042			35,343
	$	19,255,252		$	21,695,048
Liabilities and Shareholders' (Deficit)
Current Liabilities
Bank Indebtedness	$	1,354,762		$	1,581,912
Accounts payable and accrued liabilities		5,226,099			5,800,061
Current portion of obligation under capital leases		2,061,616			2,125,312
Deferred income		98,096			118,595
Deferred income taxes		25,858			25,858
Current portion of term notes		1,750,000			1,750,000
Current portion of other payable		238,095			245,902
Due to related parties		6,093			6,292
Total current liabilities		10,760,619			11,653,932
Term notes		13,878,920			14,062,290
Notes payable to related parties		1,500,000			1,500,000
Obligation under capital lease		4,064,250			4,554,240
Due to related parties		183,230			189,237
		30,387,019			31,959,699
Shareholders' (deficit)
Share capital
Authorized
50,000,000 no par value preferred shares undesignated, none issued or outstanding
100,000,000 no par value common shares 37,391,761 at March 31, 2009 and 37,224,926 December 31, 2008 issued and outstanding
Common stock		6,533,191			6,488,137
Additional paid-in capital		13,970,918			14,005,627
Accumulated (deficit)		(32,534,913	)		(31,357,923	)
Accumulated other comprehensive income		899,037			599,508
		(11,131,767	)		(10,264,651	)
	$	19,255,252		$	21,695,048

The accompanying notes are an integral part of these financial statements

Creative Vistas, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three months ended
	March 31,
	2009			2008
Contract and service revenue
Contract	$	1,224,040		$	1,479,319
Service		7,909,147			9,291,977
Others		8,986			10,059
		9,142,173			10,781,355
Cost of sales
Contract		628,514			900,707
Service		6,357,928			7,407,221
Project Expenses		223,653			326,055
Selling Expenses		199,007			218,597
General and administrative expenses		1,235,470			2,891,202
Depreciation expense		701,846			500,885
Amortization of intangible assets		82,392			190,167
		9,428,810			12,434,834
Loss from operations		(286,637	)		(1,653,479	)
Interest and other expenses
Net financing expenses		605,665			4,432,917
Amortization of deferred charges		40,998			44,215
Foreign currency translation loss		243,690			255,234
		890,353			4,732,366
(Loss) before income taxes		(1,176,990	)		(6,385,845	)
Income taxes		-			-
Net (loss)		(1,176,990	)		(6,385,845	)
Other comprehensive income (loss):
Unrealized loss – available for sale securities		-			(2,858,282	)
Foreign currency translation adjustment		299,529			180,671
Comprehensive (loss)	$	(877,461	)	$	(9,063,456	)
Basic and diluted weighted-average shares		37,391,761			36,248,724
Basic and diluted earnings (loss) per share	$	(0.03	)	$	(0.18	)

The accompanying notes are an integral part of these financial statements

Creative Vistas, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three months ended March 31,
	2009			2008

Operating activities
Net cash (used in) operating activities	$	(621,993	)	$	(399,791	)
Investing activities
Payment for acquisition		-			(300,000	)
Proceeds from sales of property and equipment		162,872			24,830
Purchase of property and equipment		(12,927	)		(586,028	)
Net cash provided by (used in) investing activities		149,945			(861,198	)
Financing activities
Proceeds from (repayment of) bank indebtedness		(179,785	)		1,043,223
Due to related parties		-			(385	)
Repayment of capital leases		(347,146	)		(362,429	)
Proceeds from the exercise of options		-			1,260
Restricted cash		-			52,894
Repayment of term notes		(162,500	)		(270,178	)
Net cash provided by (used in) financing activities		(689,431	)		464,385
Effect of foreign exchange rate changes in cash		85,799			52,070
Net change in cash and cash equivalents		(1,075,680	)		(744,534	)
Cash and cash equivalents, beginning of period		4,770,337			1,960,340
Cash and cash equivalents, end of period	$	3,694,657		$	1,215,806

The accompanying notes are an integral part of these financial statements

Creative Vistas, Inc.

Notes to Consolidated Condensed Financial Statements

March 31, 2009 (Unaudited)

1.	Summary of Accounting Policies

Basis of presentation

The accompanying unaudited condensed consolidated balance sheet as at March 31, 2009, and the consolidated condensed statements of operations and cash flows for the periods ended March 31, 2008 and 2009, include the accounts of Creative Vistas, Inc. (“CVAS”), Creative Vistas Acquisition Corp. (“AC Acquisition”), AC Technical Systems Ltd. (“AC Technical”), Cancable Holding Corp. (“Cancable Holding”), Cancable Inc., Cancable, Inc., Cancable XL Inc., XL Digital Services Inc. (“XL Digital”), 2141306 Ontario Inc., Iview Holding Corp. (“Iview Holding”), and Iview Digital Video Solutions Inc. (“Iview DSI”). All material inter-company accounts, transactions and profits have been eliminated. In the opinion of management, these condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) that are necessary for a fair presentation of the results for and as of the periods shown. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States. However, certain information or footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The results of operations for such periods are not necessarily indicative of the results expected for 2009 or for any future period. These financial statements should be read in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed with the Securities and Exchange Commission.

Reclassifications

Certain amounts from the March 31, 2008, 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 $1,176,990 for the period ended March 31, 2009 and have an accumulated deficit of $32,534,913 at March 31, 2009.

We have outstanding term loans aggregating $15,628,920, 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 March 31, 2009, there were 12,744,983 shares of common stock of CVAS issuable upon the exercise of warrants and 129,155 shares issuable upon the exercise of options which were issued to Laurus, and its related entities, Erato Corporation, Valens Offshore Fund, Valens U.S. Fund, LLC and PSource Structured Debt Limited. Additionally, there were 49 shares of common stock of Cancable Holding issuable upon the exercise of options and 20 shares of common stock of Iview Holding issuable upon the exercise of options to Laurus and its related entities.

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 services 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

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

Inventory

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

Earnings (loss) per share

The Company applies Statement of Financial Accounting Standards No. 128, Earnings Per Share (FAS 128). Basic loss per share (“LPS”) is computed using the weighted average number of common shares outstanding during the period. Diluted LPS is computed using the weighted average number of common and dilutive potential common shares outstanding during the period. Dilutive potential common shares consist of common stock issuable upon exercise of stock options and warrants using the treasury stock method. An adjustment to earnings per share calculation includes reversing the changes in derivative instruments. Dilutive common share equivalents are not considered in periods when their effect is antidilutive.

2.	Deferred Financing Costs, Net

Deferred financing costs, net are associated with the Company’s term notes. For the period ended March 31, 2009, the amortization of deferred financing cost was approximately $40,998 (2008 - $44,215).

Cost	$	960,929
Accumulated amortization		(533,195	)
	$	427,734

The estimated amortization expense for each of the next five fiscal years and thereafter is as follows:

Year	Amount
2009	$	107,300
2010		141,778
2011		122,254
2012		37,654
2013		18,748
	$	427,734

3.	Intangible Assets

	Cost		Accumulated amortization		Net book value
Customer relationships	$	1,531,746	$	809,524	$	722,222
Trade name		1,263,492		1,231,746		31,746
	$	2,795,238	$	2,041,270	$	753,968

Amortization expense for the three month period ended March 31, 2009 amounted to $82,392 (2008-$190,167).

4.	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 March 31, 2009, the interest rate of the Canadian dollar amount was 3.75%. At March 31, 2009, the borrowings outstanding under both facilities were $1,354,762. 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 were due in March 2009 and the Company is currently negotiating the renewal of these banking facilities.

5.	Term Notes

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

The Cancable Note bears interest at the prime rate plus 1.75% with a minimum rate of 7%. 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 noncontrolling interests. Because the options have not been exercised and Cancable and Iview Holding have incurred losses, no noncontrolling interests have been recognized at March 31, 2009.

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, 2010, with a balance of $4,950,000 payable on the maturity date. Through March 31, 2009, the Company has issued warrants to purchase up to 1,944,000 shares of common stock of the Company at prices from $0.19 to $2.84 per share to defer until maturity the principal repayments that were due from March 1, 2007 to March 1, 2009.

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”). Valens Offshore and Valens U.S. are entities related to Laurus. The Company also issued to Valens Offshore and Valens U.S. warrants to purchase up to 1,333,333 and 627,451 shares, respectively, of common stock of the Company at a price of $0.01 per share. The loans are secured by all of the assets of the Company and all its subsidiaries.

Interest on the term note for the period ended March 31, 2009 was $376,181 (2008: $318,968).

Cancable Note interest at prime plus 1.75% (minimum of 7%), due December 31, 2011	$	5,148,754
Company Note interest at prime plus 2% (minimum of 7%), due February 13, 2010		7,287,500
Iview Note interest at prime plus 2% (minimum of 7%), due on February 13, 2011		1,789,874
Company Second Notes. interest at 12%, due on June 24, 2013		2,500,000
Less: unamortized discount		(1,097,208	)
		15,628,920
Less: current portion		1,750,000
	$	13,878,920

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

	Amount
2009	$	1,312,500
2010		6,150,000
2011		6,763,628
2012		-
2013		1,402,792
	$	15,628,920

6.	Net Financing Expenses

	Three months ended March 31,
	2009		2008
Capital leases	$	176,705	$	103,790
Interest of credit facility		376,181		318,968
Interest on deferred principal repayment of term note		40,005		274,196
Warrants issued for proposed new financing		-		3,723,565
Others		12,774		12,398
	$	605,665	$	4,432,917

7.	Note Payable to Related Parties

In September 2004, the Company issued two promissory notes with an aggregate principal amount of $3,300,000. On September 30, 2004, the Company repaid an aggregate of $1,800,000 of the principal balance. The outstanding principal 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.).

Interest expense recognized for the three month period ended March 31, 2009 was $12,774 (2008 - $12,398).

8.	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, 2009, the Company issued 166,835 common shares for legal fees with the fair market value of $45,056.

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 amends 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:

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.

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.

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.

During 2009, the Company granted to employees options to purchase 130,000 shares of common stock, at prices ranging from $0.26 to $0.63 per share; the options expire in 2013.

At March 31, 2009 options to purchase 2,023,000 shares of common stock were outstanding. These options vest ratably in annual installment s, over the four year period from the date of grant. As of March 31, 2009, there was $182,966 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 March 31, 2009, 934,750 options were vested. The cost recognized for the three month period ended March 31, 2009 was ($29,660) (2008:$405,409) which was recorded as general and administrative expenses.

In valuing the options issued, the following assumptions were used;

	2009		2008
Expected volatility		140%		45%
Expected dividends		0%		0%
Expected term (in years)		4.0		4.0
Risk-free rate		1.33% - 1.35%		2.99% - 3.41%

A summary of option activity under the Plan during the period ended March 31, 2009 is presented below:

Options	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term		Intrinsic Value
Outstanding at December 31, 2008		2,939,000		$	1.27		4.75	$	1.57
Granted		130,000		$	0.29		4.77	$	0.00
Exercised		-			-
Forfeited or expired		(1,046,000	)	$	2.35		3.43	$	0.00
Outstanding at March 31, 2009		2,023,000		$	0.66		2.64	$	0.00

Exercisable at March 31, 2009		934,750		$	0.64		2.37	$	0.00

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, 2009, in connection with financing, the Company issued warrants to purchase 216,000 shares of common stock. The fair value of the warrants of $40,005 was measured using the Black-Scholes option pricing model using the following assumptions: risk free interest rate of 1.51% to 1.57%, expected dividend yield of 0%, volatility of 140%, exercise prices of $0.19 to $0.25 and the life of the warrants 4 years.

As of March 31, 2009, we had the following common stocks warrants outstanding:

Issue Date	Expiry Date		Number of warrants		Exercise Price Per share		Value-issue date		Issued for
09–30-2004		09-30-2009		199,500	$	1.00	$	111,853	Consulting and investment banking fees
09-30-2004		09-30-2016		2,250,000	$	1.15	$	1,370,000	Financing*
03-31-2005		03-31-2012		100,000	$	1.20	$	60,291	Financing
04-30-2005		04-30-2017		100,000	$	1.01	$	44,309	Financing*
05-31-2005		05-31-2012		100,000	$	1.01	$	56,614	Financing
06-22-2005		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	Financing
08-31-2005		08-31-2012		100,000	$	1.05	$	22,979	Financing
09-30-2005		09-30-2012		100,000	$	0.80	$	36,599	Financing
10-31-2005		10-31-2012		100,000	$	0.80	$	27,367	Financing
11-30-2005		11-30-2012		100,000	$	0.80	$	16,392	Financing
12-31-2005		12-31-2012		100,000	$	0.80	$	10,270	Financing
02-13-2006		02-13-2016		1,927,096	$	0.01	$	1,529,502	Financing
03-01-2007		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	Financing
06-01-2007		06-01-2011		108,000	$	2.28	$	101,470	Financing
07-01-2007		07-01-2011		108,000	$	2.10	$	93,307	Financing
08-01-2007		08-01-2011		108,000	$	2.55	$	112,117	Financing
09-01-2007		09-01-2011		108,000	$	2.73	$	118,647	Financing
10-01-2007		10-01-2011		108,000	$	2.43	$	105,362	Financing
11-01-2007		11-01-2011		108,000	$	2.60	$	111,868	Financing
12-01-2007		12-01-2011		108,000	$	2.55	$	107,284	Financing
01-01-2008		01-01-2012		108,000	$	2.84	$	108,331	Financing
01-22-2008		01-22-2058		812,988	$	0.01	$	1,470,687	Acquisition
01-22-2008		01-22-2058		1,738,365	$	0.01	$	3,144,685	Financing
01-30-2008		01-30-2058		506,250	$	0.01	$	1,001,909	Financing
01-30-2008		01-30-2058		292,500	$	0.01	$	578,880	Financing
02-01-2008		02-01-2012		108,000	$	2.09	$	85,612	Financing
03-01-2008		03-01-2012		108,000	$	2.04	$	80,253	Financing
04-01-2008		04-01-2012		108,000	$	1.09	$	162,748	Financing
05-01-2008		05-01-2012		108,000	$	1.19	$	103,180	Financing
06-01-2008		06-01-2012		108,000	$	1.02	$	88,114	Financing
06-23-2008		06-23-2018		627,451	$	0.01	$	560,736	Financing
06-23-2008		06-23-2018		1,333,333	$	0.01	$	1,211,168	Financing
02-01-2009		02-01-2013		108,000	$	0.25	$	22,728	Financing
03-01-2009		03-01-2013		108,000	$	0.19	$	17,277	Financing
				12,944,483

9.	Major Customers

During the three months ended March 31, 2009 the Company derived 55.1% (2008:60.4%) of its revenue from two customers. The accounts receivable from this customer comprises 37.1% (2008: 40.4%) of the total trade receivable .

10.	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 based entity which is also the wholly owned subsidiary of Cancable Inc. (collectively, “Cancable”). Cancable is in the business of providing deployment and servicing of broadband technologies in both residential and commercial markets. The Cancable service 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.

	March 31, 2009			March 31, 2008
Sales:
Cancable	$	7,455,320		$	8,871,904
AC Technical		1,567,840			1,846,753
Iview		21,073			62,698
Creative Vistas, Inc.		97,940			-
Consolidated Total	$	9,142,173		$	10,781,355
Depreciation and amortization:
Cancable	$	685,332		$	490,533
AC Technical		8,340			10,352
Iview		8,174			-
Consolidated Total	$	701,846		$	500,885
INTEREST EXPENSES:
Cancable	$	393,271			214,795
Iview		31,763			35,629
AC Acquisition		12,774			12,398
Creative Vistas, Inc.		167,857			4,170,095
CONSOLIDATED TOTAL	$	605,665		$	4,432,917
Net (Loss):
Cancable	$	(893,343	)	$	(1,824,129	)
AC Technical		57,901			215,362
Iview		(94,044	)		(76,500	)
AC Acquisition		(12,774	)		(12,398	)
Corporate (1)		(234,730	)		(4,688,180	)
Consolidated Total	$	(1,176,990	)	$	(6,385,845	)
TOTAL ASSETS
Cancable	$	12,315,788		$	12,275,543
AC Technical		2,770,370			3,623,690
Iview		1,124,554			1,379,437
Creative Vistas, Inc.		3,044,540			7,233,587
Consolidated Total	$	19,255,252		$	24,512,257
CAPITAL ASSETS
Cancable	$	7,572,455		$	6,237,896
AC Technical		648,181			814,913
Iview		75,436			-
Consolidated Total	$	8,296,072		$	7,052,809
CAPITAL EXPENDITURES
Cancable	$	7,382		$	1,506,176
AC Technical		1,139			3,048
Iview		4,406			-
CONSOLIDATED TOTAL	$	12,927		$	1,509,224

(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:

	Marc 31, 2009		March 31, 2008
Contract	$	1,224,040	$	1,479,319
Service		7,909,147		9,291,977
Others		8,986		10,059
Total sales to external customers	$	9,142,173	$	10,781,355

Revenue generated by the Company in Canada and the United States was $7,168,113 (2008:$10,501,775) and $1,974,060 (2008: $279,580), respectively.

11.	Subsequent Events

Subsequent to period end, the Company issued 216,000 warrants to Laurus to defer the monthly principal requirement from April to May 2009.

Item 2.

Management's Discussion And Analysis of Financial Condition and Results of Operations

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

Results of Operations

Comparison of Three Months Period Ended March 31, 2009

to Period Ended March 31, 2008

For purposes of this “Management’s Discussion and Analysis or Plan of Operation”, we compared the three month period ended March 31, 2009, to the comparable period in 2008.

Sales : Sales for the three month period ended 2009 decreased 15.2% to $9,142,200 from $10,781,400 for the three months period ended 2008. The decrease in revenue was mainly due to the decrease in service revenue of Cancable Segment to $7,455,300 for the three month period ended 2009 from $8,871,900 for the same period in 2008.

(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 for the first quarter of fiscal 2009 from the Cancable segment was $7,455,300 as compared to $8,871,900 in 2008. The decrease in revenue was primarily due to the decline of the revenue generated from Rogers Cable Inc. as a customer. The decline was offset by the continued growth of revenue in the United States. Total revenue generated in the United States for the first quarter of fiscal 2009 was $1,974,100 compared to $280,000 for the same period in fiscal 2008. Rogers Cable Inc. is Cancable Group’s largest customer and the revenue from this customer for the three months ended March 31, 2009 was $3,854,200 or 51.7% of its total Cancable revenue compared to $6,508,100 or 73.4% for the same period of fiscal 2008. (b) AC Technical segment - Total revenue of AC Technical segment was $1,567,800 for the first three months of fiscal 2009 compared to $1,846,800 for the same period of fiscal 2008. The decrease in revenue was mainly due to a fluctuation of the foreign exchange rate. All revenue generated from AC Technical Segment was in Canadian dollars. Total revenue of AC Technical Segment was $1,567,800 (CAD$1,944,000) for the first quarter of fiscal 2009 and $1,846,800 (CAD$ $1,846,800) for the same period of fiscal 2008. Contract revenue was $1,205,600 for the first quarter of fiscal 2009 compared to $1,426,700 for the same period of fiscal 2008. The service revenue was $362,200 for the three months ended March 31, 2009, compared to $420,100 for the same period of fiscal 2008. Service revenue primarily represents the cumulative effect of the growth in contracts and number of customers over the past few years. We have experienced a significant increase in the number of inquiries for systems from the government and retail sector. This increased interest in security products and services may result in our achieving increased revenues in future periods if we are successful in attracting new customers or obtaining additional projects from existing customers. There is no assurance that the Company will be able to attract new customers.

Direct Expenses (excluding depreciation) : Direct expenses as a percentage of revenue for the three months ended March 31, 2009 was $6,986,400 or 76.4% of revenues compared to $8,307,900 or 77.1% of revenues for same period in 2008. The direct expenses for the three month period ended March 31, 2008 were higher which was driven predominantly by the initial training and set up cost of developing the business in the United States. (a)Cancable segment – Direct expenses of this segment were $6,226,500 for the three months ended March 31, 2009 which is comprised principally of labor expenses $4,768,000, vehicle expenses $478,000 and material cost $424,300. (b) AC Technical segment – Direct expenses of this segment were $747,900. The material cost was $444,100 or 28.3% of the AC Technical revenue for the three months ended March 31, 2009 compared to $591,900 or 32.1% of revenues in the same period of fiscal 2008. 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 $289,500 or 18.5% of AC Technical revenues for the three months ended March 31, 2009 compared to $264,100 or 14.3% of AC Technical revenues for the same period of fiscal 2008. The increase in labor and subcontractor cost was mainly due to some contracts required more labor hours.

Project cost : Project cost was decreased to $223,700 or 2.5% of revenue for the three months ended March 31, 2009, compared to $326,100 or 3.0% for the same period in 2008. Project cost was mainly related to the AC Technical segment. The balance mainly includes the salaries and benefits of indirect staff amounting to $147,300 in the first quarter of fiscal 2009 compared to $208,700 for the same period of fiscal 2008. The decrease was mostly due to the decrease in the number of indirect staff. Automobile and travel expenses decreased to $57,200 for the three months ended March 31, 2009 compared to $65,900 for the same period of fiscal 2008. There was no material fluctuation of percentage in automobile and travel expenses.

Selling expense : Selling expense was $199,000 or 2.2% of revenues for the first quarter of fiscal 2009 compared to $218,600 or 2.0% of revenues for the same period in 2008. Selling expenses were mainly related to AC Technical segment. The balance for the three months ended March 31, 2009 is mainly comprised of salaries and commission to salespersons of $96,700 compared to $151,600 for the same period of fiscal 2008. The decrease was mainly due to the decrease in salesperson headcount. The advertising and promotion and trade show expenses were $29,400 in the first quarter of fiscal 2009 compared to $28,000 for the same period of fiscal 2008 with no material fluctuation.

General and administrative expenses : General and administrative expenses were $1,235,500 or 13.5% of revenues for the first quarter of fiscal 2009 compared to $2,891,200 or 26.8% for the same period in 2008. The balance for the three months ended March 31, 2009 is mainly comprised of $99,600 of professional fees related to preparation of the quarterly reports and other corporate matters compared to $203,300 in 2008. In addition, investor relations expenses amounted to $45,000 for first quarter of fiscal 2009 compared to $142,500 for the same period of fiscal 2008. Total salaries and benefits to administrative staff were $589,100 for the first quarter of fiscal 2009 compared to $1,086,300 for the same period of 2008. The higher amount in 2008 was mainly due to additional staff hired for the expansion of the new development in the United States. Due to the restructuring of the Company, the total number of administrative staff decreased compared to the same period of fiscal 2008.

Depreciation : Total depreciation of property plant and equipment was $701,800 for the first quarter of fiscal 2009 compared to $500,900 for the same period in 2008. The increase in balance was primarily due to the capital expenditures incurred during the last fiscal year in the amount of $7,497,557.

Amortization of Intangible Assets : Amortization of customer relationships and trade name was $82,400 for the three months ended March 31, 2009 compared to $190,200 for the same period of fiscal 2008. The decrease was mainly due to the trade name related to the acquisition in 2006 being fully amortized.

Interest and other Expenses : Interest and net other expenses for the three months ended March 31, 2009 were $890,400 or 9.7% of revenues compared to net expenses of $4,732,400 or 43.9% of revenues for the same period in 2008. The balance for the current period is primarily comprised of the amortization of deferred charges amounting to $41,000 compared to $44,200 for the same period of fiscal 2008. Additionally, net financing expenses decreased to $605,700 or 6.6% of revenues compared to $4,432,900 or 41.1% of revenues for the same period of 2008. The interest due with respect to the Company’s credit facility was $376,200 for the three months ended March 31, 2009 compared to $319,000 for the same period in 2008. The increase in the balance reflects the increase in outstanding balances of the term notes compared to the same period of the prior year. In addition, the Company issued warrants related to proposed financings valued at $3,723,600 which were charged to financing costs for the three months ended March 31, 2008. There was no such balance for the current period ended March 31, 2009. Additionally, the foreign currency translation loss for this quarter was $243,700 compared to foreign currency translation loss of $255,200 for the same period of 2008. The balance was related to the foreign currency translation of term notes.

Income taxes : No income tax was paid for the period ended March 31, 2009, 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 assets.

Net Income/Loss : Net loss for the first quarter of fiscal 2009 was $1,177,000 compared to net loss of $6,385,800 for the same period in 2008. The Company’s operating loss was $286,600 for the three months ended March 31, 2009 compared to operating loss of $1,653,500 for the same period of 2008. The loss was primarily attributed to the Company’s allocation of resources to grow the business in the United States and increased costs.

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 March 31, 2009, we had $3,694,657 in cash. We believe that cash from operations and our credit facilities with our banks will continue to be adequate to satisfy the ongoing working capital needs of the Company. During fiscal year 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 in operating activities amounted to $621,993 for the three months ended March 31, 2009. The changes in operating assets and liabilities resulted in a use of cash of $312,300, which included a $167,900 increase in accounts receivable, a $103,000 decrease in inventory, a $3,400 decrease in prepaid expenses, a $231,700 decrease in accounts payable, a $2,100 increase in income tax recoverable and a $17,000 decrease in deferred revenue.

Comparison of the balance sheet as at March 31, 2009 to December 31, 2008

Accounts Receivable

Our accounts receivable decreased by approximately $135,300 compared to the balance as at December 31, 2008. Accounts receivable of Cancable segment were $2,797,800 as at March 31, 2009 compared to $2,912,200 as at December 31, 2008. Accounts receivable of AC Technical segment was $1,560,300 as at March 31, 2009 compared to $1,547,500 as at December 31, 2008. The fluctuation in balance was mainly due to the timing of payments from our customers.

Inventory

Inventory on hand at March 31, 2009 was $701,600 compared to $829,300 as at December 31, 2008. The inventory of the Cancable segment as at March 31, 2009 was $229,900 compared to $319,600 as at December 31, 2008. The inventory of AC Technical segment as at March 31, 2009 was $396,600 compared to $421,700 as at December 31, 2008.

Accounts Payable and Accrued Liabilities

Accounts payable decreased to approximately $5,226,099 as at March 31, 2009 from $5,800,100 as at December 31, 2008. The decrease was mainly due to the timing of payments to our suppliers.

Deferred Revenue

Deferred revenue increased to $98,100 as at March 31, 2009 compared to $118,600 as at December 31, 2008. This decrease was mainly due to the timing of payments by our customers. Deferred revenue primarily relates to payments associated with contracts in which revenue is recognized on a percentage of completion basis.

Net Cash Used in Investing Activities . Net cash provided by investing activities was $149,900 for the three months ended March 31, 2009, compared to $861,200 used for the three months ended March 31, 2008. The balance for both periods was mainly due to the purchase of property and equipment of the Company and offset by the sale proceeds from the sale of property and equipment. For the three month period ended March 31, 2008, the Company has paid $300,000 for the acquisition of XL Digital. 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 was to be paid in notes, warrants to acquire stock of the Company and cash (including the $300, 000 described above), with the total balance due on January 5, 2009. Based on the Company’s subsequent purchase price calculation, the Company disagrees with the Seller regarding the calculation of the purchase price, including the $300,000 cash already paid. and the Company is in the process of negotiating with the seller.

Net Cash Provided From Financing Activities . Net cash used in financing activities was $689,400 for the three months ended March 31, 2009 compared to net cash provided of $464,400 for the three months ended March 31, 2008. The current year’s balance mainly represents the repayment of capital leases, bank indebtedness and term notes in the amount of $689,400. Last year’s balance represents net proceeds received from new banking facilities set up with a Canadian financial institution in the amount of $1,043,000. The balance was offset with the repayment of term notes and capital leases in the amount of $632,600.

Our capital requirements have grown since our inception with the growth of our operations and staffing. We expect our capital requirements to continue to increase in the future as we seek to expand our operations. On September 30, 2004, we obtained funding through a series of agreements with Laurus. In 2006, through our wholly owned subsidiary, we acquired all of the issued and outstanding shares of capital stock and any other equity interests of Cancable. Simultaneously, Cancable entered into a series of agreements with Laurus whereby Cancable issued to Laurus a secured term note (the “Cancable Note”) in the amount of $6,865,000. We completed a refinancing transaction with Laurus in February 2006; we issued to Laurus a secured term note (the “Company Note”) in the amount of $8,250,000 and Iview DSI issued to Laurus a secured term note (the “Iview Note”) in the amount of $2,000,000. Simultaneously with the closing of this refinancing transaction, we paid off the entire outstanding principal amount and all obligations due to Laurus under the Secured Convertible Term Note dated September 30, 2004, the Secured Convertible Minimum Borrowing Note dated September 30, 2004 and the Secured Revolving Note dated September 30, 2004 (collectively, the “2004 Notes”) and such 2004 Notes were subsequently cancelled. In September 2008, the Company and its subsidiary, Cancable Inc., entered into a financing transaction whereby the Company issued to Valens Offshore SPV II, Corp. (“Valens Offshore”) and Valens U.S. SPV I, LLC (“Valens U.S.”) secured term notes in the amount of $1,700,000 and $800,000, respectively (collectively, the “Company Second Notes”). 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 June 2003, the U.S. Securities and Exchange Commission adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002, as amended by SEC Release No. 33-8934 on June 26, 2008. Commencing with our annual report for the year ended December 31, 2009, we will be required to include a report of management on our internal control over financial reporting. The internal control report must include a statement.

of management’s responsibility for establishing and maintaining adequate internal control over our financial reporting;

of management’s assessment of the effectiveness of our internal control over financial reporting as of year end; and

of the framework used by management to evaluate the effectiveness of our internal control over financial

Furthermore, in the following fiscal year, management is required to file the registered accounting firm’s attestation report separately on our internal control over financial reporting on whether it believes that we have maintained, in all material respects, effective internal control over financial reporting.

On December 30, 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) No. FAS 132(R)-1, “ Employers’ Disclosures About Postretirement Benefit Plan Assets ”, which amends Statement of Financial Accounting Standards (“SFAS”) No. 132(R), “ Employers’ Disclosures About Pensions and Other Postretirement Benefits ,” to require more detailed disclosures about plan assets, including investment strategies, major categories of plan assets, concentrations of risk within plan assets, and valuation techniques used to measure the fair value of plan assets consistent with fair value hierarchy model described in SFAS No. 157, “ Fair Value Measurements ”. We do not anticipate that the adoption of this statement will have any effect on our financial condition and results of operations since we do not have any postretirement plans.

In April 2009, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) Financial Accounting Standard (FAS) 157-4 “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”. Based on the guidance, if an entity determines that the level of activity for an asset or liability has significantly decreased and that a transaction is not orderly, further analysis of transactions or quoted prices is needed, and a significant adjustment to the transaction or quoted prices may be necessary to estimate fair value in accordance with Statement of Financial Accounting Standards (SFAS) No. 157 “Fair Value Measurements”. This FSP is to be applied prospectively and is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009. There is no expected impact on the Financial Statements.

In April 2009, the FASB issued FSP FAS 107-1 and Accounting Principles Board (APB) 28-1 “Interim Disclosures about Fair Value of Financial Instruments”. The FSP amends SFAS No. 107 “Disclosures about Fair Value of Financial Instruments” to require an entity to provide disclosures about fair value of financial instruments in interim financial information. This FSP is to be applied prospectively and is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009. The company will include the required disclosures in its quarter ending June 30, 2009.

Off Balance Sheet Arrangements

None

DISCUSSION OF CRITICAL ACCOUNTING ESTIMATES

Critical accounting estimates are those that management deems to be most important to the portrayal of our financial condition and results of operations, and that require management’s most difficult, subjective or complex judgments, due to the need to make estimates about the effects of matters that are inherently uncertain. We have identified six critical accounting estimates: accounts receivable allowances, goodwill, revenue, inventory, accounting for income taxes and financial instruments. See our Form 10-K for the year ended December 31, 2008, for a discussion of our critical accounting estimates.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

For further information about these and other risks, uncertainties and factors, please review the disclosure included in our December 31, 2008, Annual Report on Form 10-K under the caption “Risk Factors.”

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

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

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

Item 4.

Controls and Procedures

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 March 31, 2009, the end of the period covered by this quarterly report on Form 10Q, our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our disclosure controls and procedures, as such terms are defined under rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this assessment, our management concluded that our disclosure controls and procedures were effective as of the end period covered by this annual report.

Management’s assessment of internal control over financial reporting as of December 31, 2008 was included in Form 10-K filed on March 31, 2009.

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 first fiscal quarter ended March 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

Not applicable.

Item 1A.

Risk Factors

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

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3.

Defaults upon Senior Securities

Not applicable.

Item 4.

Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5.

Other Information

Not applicable.

Item 6.

Exhibits

(a) Exhibits

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

SIGNATURES

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