8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Amendment No. 2

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 24, 2007

180 CONNECT INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)

000-51456
(Commission File No.) 20-2650200
(IRS Employer Identification No.)

6501 E. Belleview Avenue
Englewood, Colorado 80111
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (303) 395-6000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EXPLANATORY NOTE
	Item 2.01. Completion of Acquisition or Disposition of Assets.
BUSINESS; PROPERTIES; LEGAL PROCEEDINGS
RISK FACTORS
FINANCIAL INFORMATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
RECENT SALES OF UNREGISTERED SECURITIES
DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED
INDEMNIFICATION OF DIRECTORS AND OFFICERS
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
FINANCIAL STATEMENTS AND EXHIBITS
	Item 9.01. Financial Statements and Exhibits.
SIGNATURE
Ex-99.1 Financial Statements of 180 Connect Inc. (Canada)
Ex-99.2 Pro Forma Financial Statements

EXPLANATORY NOTE

     This Amendment No. 2 on Form 8-K/A is filed to amend the Current Report on Form 8-K of 180 Connect Inc. (the “Company”) filed on August 30, 2007, as previously amended in Amendment No. 1, (the “Initial Filing”) in order to correct an error in our Consolidated Balance Sheets as of June 30, 2007 and as of December 31, 2006 and the Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2007, each filed in our Current Report on Form 8-K filed on August 30, 2007.

     We determined that the long-term debt for our revolving credit facility should be reclassified as current in accordance with EITF-95-22. These restatements to reclassify certain amounts of long-term debt as current portion of long-term debt had no impact on the amounts of total debt previously reported in the Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006, the Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2007, the amount of the net loss and comprehensive loss reported in the consolidated statements of operations and comprehensive loss and the statements of shareholders’ equity and cash flows for each of the above noted periods. As a result of these reclassifications, the current portion of long-term debt increased by $28,346,647, and $20,534,422 as of June 30, 2007 and December 31, 2006, respectively, with a corresponding decrease of the same amount to long-term debt for each of the respective periods.

     Except as set forth in this Amendment No. 2 on Form 8-K/A, the other Items to the Initial Filing remain unchanged and are not restated herein. This Amendment No. 2 continues to reflect circumstances as of the date of the Initial Filing and the Company has not updated the disclosures contained therein to reflect events that occurred at a later date, except for the items relating to the restatement.

Item 2.01. Completion of Acquisition or Disposition of Assets.

     On the Effective Date, the Company consummated the plan of arrangement (the “Arrangement”) pursuant to the arrangement agreement (the “Arrangement Agreement”), dated as of March 13, 2007, as amended, by and among Ad.Venture Partners, Inc., Purchaser, and 180 Connect (Canada), pursuant to which the Purchaser (i) acquired all of the outstanding common shares of 180 Connect (Canada) in exchange for either shares of Company common stock, exchangeable shares of Purchaser that are exchangeable into shares of Company common stock at the option of the holder, or a combination of Company common stock and exchangeable shares of Purchaser, and (ii) outstanding options to purchase 180 Connect (Canada) common shares were exchanged for options to purchase Company common stock. The exchangeable shares entitle the holders to dividends and other rights that are substantially economically equivalent to those of holders of Company common stock, and holders of exchangeable shares have the right, through the Voting and Exchange Trust Agreement, to vote at meetings of Company stockholders. In addition, the Company assumed all of 180 Connect (Canada)’s obligations pursuant to 180 Connect (Canada)’s outstanding warrants, stock appreciation rights and convertible debentures.

     As a result of the closing of the Arrangement, the 180 Connect (Canada) stockholders were issued an aggregate of 13,643,183 shares of Company common stock and 2,779,260 exchangeable shares, based on an exchange ratio of 0.6. Effective upon the consummation of the Arrangement, Ad.Venture Partners, Inc. changed its name to 180 Connect Inc. Holders of 1,672,288 shares of common stock properly elected to convert their shares of common stock into cash based on the private portion of the funds held in the trust account (net of taxes payable on interest earned thereon) established at the time the Company’s initial public offering was completed.

     On August 24, 2007, the Company and 180 Connect (Canada) issued a press release announcing the closing of the Arrangement (the “Closing”), a copy of which was attached to the Company’s Current Report on Form 8-K filed on August 24, 2007 as Exhibit 99.1.

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     Reference is made to the disclosure set forth in the Registration Statement in the section entitled “The Arrangement Agreement and Plan of Arrangement” pages 83-101, which is incorporated herein by reference.

BUSINESS; PROPERTIES; LEGAL PROCEEDINGS

     Reference is made to the disclosure set forth in the Registration Statement in the section entitled “Business of 180 Connect” pages 134-140, which is incorporated herein by reference.

RISK FACTORS

     Reference is made to the disclosure set forth in the Registration Statement in the section entitled “Risk Factors” pages 28-40 inclusive, which is incorporated herein by reference.

FINANCIAL INFORMATION

     On August 24, 2007, the Arrangement was consummated. The Arrangement will be accounted for under the reverse acquisition application of the equity recapitalization method of accounting in accordance with U.S. GAAP for accounting and financial reporting purposes. Under this method of accounting, the Company will be treated as the “acquired” company for financial reporting purposes. In accordance with guidance applicable to these circumstances, the arrangement will be considered to be a capital transaction in substance. Accordingly, for accounting purposes, the arrangement will be treated as the equivalent of 180 Connect (Canada) issuing stock for the net monetary assets of the Company, accompanied by a recapitalization. The net monetary assets of the Company will be stated at their fair value, essentially equivalent to historical costs, with no goodwill or other intangible assets recorded. The accumulated deficit of 180 Connect (Canada) will be carried forward after the arrangement. Operations prior to the merger will be those of 180 Connect (Canada). Upon the completion of the arrangement, the Company adopted the fiscal year of 180 Connect (Canada), as the accounting acquirer. The historical results of the registrant are the historical results of 180 Connect (Canada).

180 Connect (Canada) Selected Consolidated Historical Financial Data

     The selected consolidated statement of operations and deficit data for the years ended December 31, 2006, December 31, 2005 and December 25, 2004 and the selected balance sheet data as of December 31, 2006 and 2005 presented below have been derived from 180 Connect (Canada)’s audited consolidated financial statements and the notes related thereto included as an exhibit to this Current Report on Form 8-K. The selected consolidated statement of operations and deficit data for the years ended December 27, 2003 and December 31, 2002 and the selected balance sheet data as of December 25, 2004, December 27, 2003 and December 31, 2002 presented below have been derived from 180 Connect (Canada)’s consolidated financial statements and the notes related thereto which are not included as an exhibit in this Current Report on Form 8-K. Subsequent to December 31, 2005, 180 Connect (Canada) changed its year end accounting period from a 52/53 week year to a calendar year basis. The selected consolidated statements of operations and deficit data for the six months ended June 30, 2007 and 2006 and the selected balance sheet data as of June 30, 2007 presented below have been derived from 180 Connect (Canada)’s unaudited consolidated financial statements and the notes related thereto are included as an exhibit to this Current Report on Form 8-K. Interim results are not necessarily indicative of results for the full fiscal year and historical results are not necessarily indicative of results to be expected in any future period.

     The selected financial data set forth below is presented in U.S. dollars and have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP.

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	Six Months Ended						Year Ended
	June 30,			June 30,			December 31,			December 31,			December 25,			December 27,			December 31,
	2007			2006			2006			2005			2004			2003			2002
	(Restated)(1)						(Restated)(1)
	(In Thousands, Except Per-Share Data)
Revenues	$	181,094		$	149,337		$	335,447		$	279,727		$	210,675		$	85,981		$	47,860
Expenses		174,921			147,086			321,757			279,691			207,895			81,832			57,045
Loss from continuing operations		(12,837	)		(10,170	)		(8,800	)		(5,359	)		(3,691	)		(8,140	)		(22,761	)
Net loss	$	(12,916	)	$	(11,508	)	$	(14,589	)	$	(8,517	)	$	(7,451	)	$	(12,812	)	$	(20,218	)
Net loss from continuing operations per share:
Basic	$	(0.50	)	$	(0.42	)	$	(0.36	)	$	(0.22	)	$	(0.17	)	$	(0.46	)	$	(0.97	)
Diluted	$	(0.50	)	$	(0.42	)	$	(0.36	)	$	(0.22	)	$	(0.17	)	$	(0.46	)	$	(0.97	)
Net loss per share
Basic	$	(0.50	)	$	(0.47	)	$	(0.60	)	$	(0.36	)	$	(0.34	)	$	(0.73	)	$	(0.86	)
Diluted	$	(0.50	)	$	(0.47	)	$	(0.60	)	$	(0.36	)	$	(0.34	)	$	(0.73	)	$	(0.86	)
Summary Balance Sheet Data:
Total assets	$	142,953					$	165,444		$	173,471		$	155,367		$	87,317		$	54,299
Assets net of current liabilities		26,583						43,156			44,891			76,749			53,496			44,548
Long term liabilities, excluding deferred tax liabilities		27,757						33,754			22,977			43,730			48,333			45,251
Shareholders’ equity (deficiency)		(1,174	)					9,402			20,353			34,417			5,163			(744	)
Cash dividends declared per common share	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00

(1) Current and long term liabilities have been restated from the amounts previously presented as a result of the reclassification of balances due under the Laurus Revolver facility being reclassified to current.

180 Connect (Canada) Management’s Discussion and Analysis of Financial Condition and Results of Operations

     You should read the following discussion and analysis of financial condition and results of operations in conjunction with 180 Connect (Canada)’s selected consolidated historical financial information and its audited consolidated financial statements and the related notes included as an exhibit to the Current Report on Form 8-K. In addition to historical information, the following discussion and analysis includes forward looking information that involves risks, uncertainties and assumptions. 180 Connect (Canada)’s actual results and the timing of events could differ materially from those anticipated by these forward looking statements as a result of many factors.

Introduction to 180 Connect (Canada)’s Business and Strategy

     180 Connect (Canada) provides installation, integration and fulfillment services to the home entertainment, communications and home integration service industries. The principal market for 180 Connect (Canada)’s services is the United States. 180 Connect (Canada)’s customers include providers of satellite, cable and broadband media services as well as home builders, developers and municipalities.

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2006 Significant Operating Events

Corporate Relocation

     The corporate office relocation to Denver, Colorado which commenced in 2005 was completed in the fourth quarter of 2006. Approximately $0.8 million was recorded as relocation expense in 2006.

Private Placement

     On March 22, 2006, 180 Connect (Canada) completed a private placement of convertible debentures and warrants to purchase 1,570,100 common shares to a group of institutional investors for an aggregate purchase price of $10.7 million. All of the proceeds of the private placement were utilized to fund working capital requirements.

Refinancing

     On August 1, 2006, 180 Connect (Canada) entered into a Security and Purchase Agreement with Laurus Master Fund, Ltd. (“Laurus”) for a $37 million revolving credit and over-advance facility and a $20 million term facility, bearing an interest rate of prime plus 3% on the revolving credit facility, subject to a minimum interest rate of 10%, an interest rate of prime plus 5% on any over-advance under the revolving credit facility, subject to a minimum interest rate of 11% and an interest rate of prime plus 5% on the term facility, subject to a minimum interest rate of 12%. The funds borrowed under these facilities were used to retire $32.9 million in short-term debt obligations with General Electric Capital Corporation and the remainder was used to fund working capital requirements.

Seasonality

     180 Connect (Canada)’s revenue is subject to seasonal fluctuations. 180 Connect (Canada)’s customers’ subscriber growth, and thus the revenue earned by it, trends higher in the third and fourth quarters of the year. While subscriber activity is subject to seasonal fluctuations, it may also be affected by competition and varying amounts of promotional activity undertaken by 180 Connect (Canada)’s customers. The following chart sets forth 180 Connect (Canada)’s revenue distribution by quarter for fiscal years 2004 through 2006.

Revenue distribution by quarter	Quarter 1			Quarter 2			Quarter 3			Quarter 4			Total
Year 2006		22.0	%		22.6	%		26.9	%		28.5	%		100	%
Year 2005		22.8	%		22.2	%		26.8	%		28.2	%		100	%
Year 2004		19.2	%		22.2	%		28.2	%		30.4	%		100	%

Financial Review

     Revenue from continuing operations is generated from providing installation, integration, fulfillment and long-term maintenance and support services to the home entertainment, communications and home integration service industries. 180 Connect (Canada)’s services are engaged by its customers pursuant to ongoing contracts and on a project-by-project basis.

     Direct cost of revenue is comprised primarily of direct labor costs including amounts paid to 180 Connect (Canada)’s extensive labor force of technicians and third party subcontractors. Also included in direct costs are materials, supplies, insurance and costs associated with operating vehicles.

     General and administrative expenses consist of personnel and related costs associated with 180 Connect (Canada)’s administrative functions, professional fees, office rent and other corporate related expenses.

     The following is a summary of selected consolidated financial and operating information of 180 Connect (Canada) for the three and six months ended June 30, 2007 and June 30, 2006 and should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes for the three months ended June 30, 2007. The comparative amounts presented below have been reclassified to reflect the adjustments associated with the discontinued operations of 180 Connect (Canada).

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Selected Financial Highlights — Second Quarter Ended June 30, 2007

     For the three and six months ended June 30, 2007 as compared to the three and six months ended June 30, 2006:

     Second Quarter Highlights

• Revenue grew to $87.9 million, an increase of $12.3 million, or 16.3%, compared to revenue of $75.6 million in 2006.

• Total cash provided by operating activities was $0.3 million, a decrease of $2.2 million from the cash provided by operating activities of $2.5 million in 2006.

• Loss from continuing operations was $5.6 million, an improvement of $0.8 million compared to $6.4 million in 2006.

• Net loss was $5.7 million, an improvement of $1.5 million compared to $7.2 million in 2006.

• Loss per share is as follows:

• Loss from continuing operations, basic and diluted, was a loss of $0.21 and $0.26 per share for both the three months ended 2007 and 2006, respectively.

• Net loss, basic and diluted, was a loss of $0.21 per share and $0.29 per share for the three months ended June 30, 2007 and 2006, respectively.

     Six Months Ended June 30, 2007 Highlights

• Revenue grew to $181.1 million, an increase of $31.8 million, or 21.3%, compared to revenue of $149.3 million in 2006.

• Total cash used in operating activities was $0.9 million, a decrease of $7.4 million from the cash provided by operating activities of $6.5 million in 2006.

• Loss from continuing operations was $12.8 million, an increase of $2.6 million compared to $10.2 million in 2006.

• Net loss was $12.9 million, an increase of $1.4 million compared to $11.5 million in 2006.

• Loss per share is as follows:

• Loss from continuing operations, basic and diluted, was a loss of $0.50 per share and $0.42 per share for both the six months ended June 30, 2007 and 2006, respectively.

• Net loss, basic and diluted, was a loss of $0.50 per share and $0.47 per share for the six months ended June 30, 2007 and 2006, respectively.

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Selected Financial Highlights — Year to Date

     For the twelve months ended December 31, 2006 as compared to the twelve months ended December 31, 2005.

     Year to Date Highlights

• Revenue grew to $335.4 million, an increase of $55.7 million, or 19.9%, compared to revenue of $279.7 million in 2005.

• Total cash provided by operating activities was $6.3 million, an increase of $21.8 million from the cash used in operating activities of $15.5 million in 2005.

• Loss from continuing operations was $8.8 million, an increase of $3.4 million compared to $5.4 million in 2005.

• Net loss was $14.6 million, an increase of $6.1 million compared to $8.5 million in 2005.

• Loss per share is as follows:

• Loss from continuing operations, basic and diluted, was a loss of $0.36 per share compared to a loss of $0.22 per share in 2005.

• Net loss, basic and diluted, was a loss of $0.60 per share compared to a loss of $0.36 per share in 2005.

Relationship with DIRECTV

     DIRECTV revenue is recognized when the work orders are closed. The contract with DIRECTV also includes mechanisms whereby the amount due to 180 Connect (Canada) by DIRECTV may be reduced for certain reasons. These reasons include a failure to complete a work order as defined within the contract, amounts paid to 180 Connect (Canada) in error or credits issued to DIRECTV customers that were the result of poor services provided by 180 Connect (Canada). Based on historical amounts for actual chargebacks, 180 Connect (Canada) calculates and records a chargeback estimate and records this as a monthly expense and reserve against service revenue. For the year ended December 31, 2006, $5.0 million in chargebacks (1.3% of revenue) was deducted from revenue as compared to $3.7 million (1.2% of revenue) in 2005.

     180 Connect (Canada) recognizes revenue from its role as a commissioned sales agent regarding DIRECTV’s DBS Services. Sales for the year ended December 31, 2006 was $1.0 million versus $2.2 million recorded in the period ended December 31, 2005. Direct Contribution Margin (“DCM”) recognized from this revenue activity was positive at $0.4 million for the year ended December 31, 2006 compared to a loss of $0.5 million for the 2005 fiscal year.

     Included in the DCM for the year ended December 31, 2006 is the effect of approximately $1.1 million of excess equipment costs resulting partially from inventory write-offs and from the usage of more expensive equipment in the installation process which was not reimbursed. The write-offs are included as a direct cost as they represent inventory shrink due to poor inventory management practices.

Selected Annual Information

	December 31,			December 31,			December 25,
	2006			2005			2004
Revenue	$	335,446,741		$	279,726,651		$	210,675,282
Direct expenses		301,158,053			256,334,245			191,797,596
Direct contribution margin( 1)		34,288,688			23,392,406			18,877,686
General and administrative		19,675,563			21,702,824			16,370,043
Foreign exchange loss (gain)		30,361			(18,692	)		(272,585	)
Restructuring costs		892,688			1,672,485			—
Loss from continuing operations		(8,800,207	)		(5,359,023	)		(3,691,176	)
Net loss for the period	$	(14,588,838	)	$	(8,516,655	)	$	(7,450,838	)
Per-share data:
Loss per share from continuing operations
Basic	$	(0.36	)	$	(0.22	)	$	(0.17	)
Diluted	$	(0.36	)	$	(0.22	)	$	(0.17	)
Net loss per share
Basic	$	(0.60	)	$	(0.36	)	$	(0.34	)
Diluted	$	(0.60	)	$	(0.36	)	$	(0.34	)
Number of locations		90			82			92
Number of technicians		4,213			3,750			2,800
Total assets	$	165,443,572		$	173,470,899		$	161,870,565
Total long-term liabilities, excluding deferred tax liabilities		54,288,739			22,976,840			43,730,198

(1) DCM consists of revenue less direct expense and excludes general and administrative expense, foreign exchange loss (gain), restructuring costs, interest, depreciation, amortization of customer contracts, impairment of goodwill and customer contracts, gain on sale of assets, gain on extinguishment of debt and income tax recovery. DCM is a non-GAAP measure. The comparative GAAP measure is loss from continuing operations. For a reconciliation of DCM to loss from continuing operations, see the section entitled “Direct Contribution Margin.”

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Selected Interim Financial Information

	Quarter Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2007			2006			2007			2006
Revenue	$	87,908,770		$	75,583,830		$	181,094,332		$	149,337,387
Direct expenses		79,413,481			68,308,041			164,938,954			137,378,253
Direct contribution margin(1)		8,495,289			7,275,789			16,155,378			11,959,134
General and administrative		4,709,976			5,049,115			9,747,977			9,311,830
Foreign exchange (gain) loss		(51,820	)		(10,303	)		(40,682	)		3,502
Restructuring costs		—			—			275,000			392,879
Depreciation		2,771,909			3,254,872			5,516,703			6,580,330
Amortization of customer contracts		920,370			939,077			1,840,746			1,859,453
Interest expense		3,234,850			2,377,725			6,211,018			4,026,957
(Gain) loss on sale of investments and assets		427,442			86,291			499,220			(1,250,163	)
Loss on change in fair value of derivative liabilities		1,903,270			2,051,968			4,689,661			1,165,575
Loss from continuing operations before income tax recovery		(5,420,708	)		(6,472,956	)		(12,584,265	)		(10,131,229	)
Income tax expense (recovery)		178,444			(34,000	)		252,444			38,800
Loss from continuing operations		(5,599,152	)		(6,438,956	)		(12,836,709	)		(10,170,029	)
Loss from discontinued operations		(68,016	)		(744,188	)		(79,527	)		(1,337,795	)
Net loss	$	(5,667,168	)	$	(7,183,144	)	$	(12,916,236	)	$	(11,507,824	)
Loss per share from continuing operations
Basic	$	(0.21	)	$	(0.26	)	$	(0.50	)	$	(0.42	)
Diluted	$	(0.21	)	$	(0.26	)	$	(0.50	)	$	(0.42	)
Net loss per share
Basic	$	(0.21	)	$	(0.29	)	$	(0.50	)	$	(0.47	)
Diluted	$	(0.21	)	$	(0.29	)	$	(0.50	)	$	(0.47	)

(1) DCM consists of revenue less direct expense and excludes general and administrative expense, foreign exchange loss, restructuring costs, interest, depreciation, amortization of customer contracts, (gain) loss on sale of investments and assets, and income tax expense and recovery. DCM is a non-GAAP measure. The comparative GAAP measure is loss from continuing operations. For a reconciliation of DCM to loss from continuing operations, see “Direct Contribution Margin”.

Comparison of Quarters Ended June 30, 2007 and June 30, 2006

Selected Financial Information

     The following is a summary of 180 Connect (Canada)’s selected consolidated financial and operating information for the three and six months ended June 30, 2007 and 2006 and should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes for the three and six months ended June 30, 2007.

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Revenue

     Revenue for the quarter ended June 30, 2007 increased to $87.9 million from $75.6 million for the quarter ended June 30, 2006. This 16.3% increase reflects continued growth in revenue resulting from DIRECTV channeling more work through their home services provider network and increased customer demand resulting from advanced products penetration as well as growth in our cable, Digital Interiors and Network Services businesses. Advanced product penetration refers to installations and upgrades that we completed with DVR, HD or an HD/DVR receiver. These increases are due to DIRECTV’s marketing efforts to promote the installation and upgrades of advanced products. Work order volume from DIRECTV for the three months ended June 30, 2007, increased by 13.7% from the three months ended June 30, 2006. In addition to the benefits of this increase in volume, there was also a rate increase in the quarter. Different rates are earned for each type of service completed and the mix of services (installations, upgrades and service) impact both the revenue per call and number of service calls that may be completed. The financial impact of the DIRECTV volume and rate increase was approximately $11.6 million.

     Revenue from the majority of 180 Connect (Canada)’s customers is recognized when work orders are closed. 180 Connect (Canada)’s contracts with its customers also include mechanisms whereby it is not paid for certain work that is not completed within the specifications of the contract. Based upon historical payments, 180 Connect (Canada) calculates and estimates a reserve against revenue each month. For the three months ended June 30, 2007, $0.8 million (0.9% of revenue) was recorded as a deduction to revenue as compared to $0.9 million (1.1% of revenue) for the three months ended June 30, 2006.

     For the three months ended June 30, 2007, cable operations continued to grow, particularly in Rogers Communications and Time Warner which experienced increases of 68% and 65% respectively, partially offset by a reduction in revenue at certain other cable operations. 180 Connect (Canada) continued to dedicate resources to supporting growth of our cable business which resulted in a $1.0 million, or 8%, increase in revenue over the prior year. Revenue for our Network Services business increased by 100% over the prior year primarily due to our municipal fiber projects in Boise, Idaho and Ontario and Shafter, California.

Direct Contribution Margin

     DCM, defined as revenue less direct operating expenses, increased by $1.2 million, or 16.4%, from $7.3 million in the quarter ended June 30, 2006 to $8.5 million in the quarter ended June 30, 2007. The increase in DCM is primarily due to the growth in work order volume in our satellite and cable businesses, cost savings achieved by bringing recruiting in house, as well as increased growth from our Network Services business partially offset by the impact of higher fuel prices. DCM, as a percentage of revenue, increased in the quarter to 9.7% in 2007 from 9.6% in 2006.

     DCM is a non-GAAP measure. The comparable GAAP measure is loss from continuing operations. Loss from continuing operations of $5.6 million in the quarter ended June 30, 2007 decreased by $0.8 million compared to loss from continuing operations of $6.4 million in the quarter ended June 30, 2006. See reconciliation of DCM to loss from continuing operations, the comparable GAAP measure.

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Reconciliation of DCM to Loss from Continuing Operations

	For the Three Months Ended
	June 30, 2007			June 30, 2006
Direct contribution margin (1)	$	8,495,289		$	7,275,789
General and administrative		4,709,976			5,049,115
Foreign exchange gain		(51,820	)		(10,303	)
Depreciation		2,771,909			3,254,872
Amortization of customer contracts		920,370			939,077
Interest expense		3,234,850			2,377,725
Loss on sale of investments and assets		427,442			86,291
Loss on change in fair value of derivative liabilities		1,903,270			2,051,968
Loss from continuing operations before income tax expense		(5,420,708	)		(6,472,956	)
Income tax expense (recovery)		178,444			(34,000	)
Loss from continuing operations		(5,599,152	)		(6,438,956	)
Loss from discontinued operations		(68,016	)		(744,188	)
Net loss for the period	$	(5,667,168	)	$	(7,183,144	)

(1) DCM consists of revenue less direct expense and excludes general and administrative expense, foreign exchange gain, interest, depreciation, amortization of customer contracts, loss on sale of investments and assets, and income tax expense (recovery) for the three months ended June 30, 2007 and June 30, 2006 respectively. DCM is a non-GAAP measure. The comparative GAAP measure is loss from continuing operations. For a reconciliation of DCM to loss from continuing operations, see “Direct Contribution Margin”.

General and Administrative Expenses

     General and administrative expenses were $4.7 million for the quarter ended June 30, 2007, a decrease of $0.3 million or 6.7% from the quarter ended June 30, 2006. General and administrative expenses as a percentage of revenue decreased to 5.4% for the quarter ended June 30, 2007 from 6.7% for the quarter ended June 30, 2006. The decrease in general and administrative expenses is primarily due to a decrease in consulting expense.

Other Income and Expense

     During the quarter ended June 30, 2007, depreciation expense of $2.8 million represents a decrease of $0.5 million from the similar period in 2006. This decrease is primarily attributable to the change in the estimated useful life of the vehicles from 48 months in 2006 to 60 months in 2007 in order to better reflect the useful life of the asset. Amortization of customer contracts of $0.9 million in the quarter ended June 30, 2006 remained at $0.9 million for quarter ended June 30, 2007.

     Interest expense was $3.2 million in quarter ended June 30, 2007 and represents an increase of $0.9 million in the similar period in 2006. This increase is primarily due to the amortization of deferred financing costs and accretion attributed to the warrants associated with the convertible debentures and long-term debt.

Income Tax Expense

     For the three months ended June 30, 2007 and June 30, 2006, 180 Connect (Canada) recorded $0.2 million and $nil respectively, for state and local tax liabilities.

Loss from Continuing Operations

     Loss from continuing operations for the quarter ended June 30, 2007 was $5.6 million compared to loss from continuing operations of $6.4 million for the comparable period of 2006, primarily due to the items discussed above.

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Loss from Discontinued Operations

     Loss from discontinued operations for the quarter ended June 30, 2007 was $0.1 million compared to a loss from discontinued operations of $0.7 million for the three months ended June 30, 2006 related to the closure of operations at certain non-profitable branches as well as certain operations where the contracts with the customers were not renewed. The revenue and expenses of these locations have been reclassified as discontinued operations for all periods presented.

Net Loss

     Net loss for the quarter ended June 30, 2007 was $5.7 million compared to a net loss of $7.2 million for the comparable period of 2006, or an improvement of $1.5 million primarily attributed to the items discussed above.

Comparison of Six Months Ended June 30, 2007 and June 30, 2006

	Six Months Ended
	June 30,			June 30,
	2007			2006
Revenue	$	181,094,332		$	149,337,387
Direct expenses		164,938,954			137,378,253
Direct contribution margin(1)		16,155,378			11,959,134
General and administrative		9,747,977			9,311,830
Foreign exchange (gain) loss		(40,682	)		3,502
Restructuring costs		275,000			392,879
Depreciation		5,516,703			6,580,330
Amortization of customer contracts		1,840,746			1,859,453
Interest expense		6,211,018			4,026,957
(Gain) loss on sale of investments and assets		499,220			(1,250,163	)
Loss on change in fair value of derivative liabilities		4,689,661			1,165,575
Loss from continuing operations before income tax recovery		(12,584,265	)		(10,131,229	)
Income tax (recovery) expense		252,444			38,800
Loss from continuing operations		(12,836,709	)		(10,170,029	)
Loss from discontinued operations		(79,527	)		(1,337,795	)
Net loss	$	(12,916,236	)	$	(11,507,824	)
Loss per share from continuing operations
Basic	$	(0.50	)	$	(0.42	)
Diluted	$	(0.50	)	$	(0.42	)
Net loss per share
Basic	$	(0.50	)	$	(0.47	)
Diluted	$	(0.50	)	$	(0.47	)

(1) DCM consists of revenue less direct expense and excludes general and administrative expense, foreign exchange loss, restructuring costs, interest, depreciation, amortization of customer contracts, (gain) loss on sale of investments and assets, and income tax expense and recovery. DCM is a non-GAAP measure. The comparative GAAP measure is loss from continuing operations. For a reconciliation of DCM to loss from continuing operations, see “Direct Contribution Margin”.

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Revenue

     Revenue for the six months ended June 30, 2007 increased to $181.1 million from $149.3 million for the six months ended June 30, 2006. This 21.3% increase reflects continued growth in revenue resulting from DIRECTV channeling more work through their home services provider network and increased customer demand resulting from advanced products penetration as well as growth in our cable, Digital Interiors and Network Services businesses. Advanced product penetration refers to installations and upgrades that we completed with DVR, HD or an HD/DVR receiver. These increases are due to DIRECTV’s marketing efforts to promote the installation and upgrades of advanced products. Work order volume from DIRECTV for the six months ended June 30, 2007, increased by 20.5% from the six months ended June 30, 2006. In addition to the benefits from the increase in volume, there was favorable impact from the rate we are paid on upgrades due to advanced product penetration. Different rates are earned for each type of service completed and the mix of services (installations, upgrades and service) impact both the revenue per call and number of service calls that may be completed. The financial impact of the DIRECTV volume increase and the favorable mix and rate adjustment, was approximately $28.8 million.

     Revenue from the majority of 180 Connect (Canada)’s customers is recognized when work orders are closed. 180 Connect (Canada)’s contracts with its customers also include mechanisms whereby it is not paid for certain work that is not completed within the specifications of the contract. Based upon historical payments, 180 Connect (Canada) calculates and estimates a reserve against revenue each month. For the six months ended June 30, 2007, $1.4 million (0.8% of revenue) was recorded as a deduction to revenue as compared to $1.8 million (1.2% of revenue) for the six months ended June 30, 2006.

     For the six months ended June 30, 2007, cable operations continued to grow, particularly in Rogers Communications and Time Warner which experienced increases of 75% and 50% respectively, partially offset by a reduction in revenue at certain other cable operations. We continued to dedicate resources to supporting growth of our cable business which resulted in a $2.8 million, or 13%, increase in revenue over the prior year. Revenue for our Network Services business increased by 83% over the prior year primarily due to our municipal fiber projects in Boise, Idaho and Ontario and Shafter, California.

Direct Contribution Margin

     DCM, defined as revenue less direct operating expenses, increased by $4.2 million, or 35.1%, from $12.0 million for the six months ended June 30, 2006 to $16.2 million for the six month ended June 30, 2007. The increase in DCM is primarily due to the growth in work order volume in our satellite and cable businesses, cost savings achieved by bringing recruiting in house, as well as increased growth from our Network Services business partially offset by the impact of higher fuel. DCM, as a percentage of revenue, increased in the period to 8.9% in 2007 from 8.0% in 2006.

     DCM is a non-GAAP measure. The comparable GAAP measure is loss from continuing operations. Loss from continuing operations of $12.8 million in the six months ended June 30, 2007 decreased by $2.6 million compared to loss from continuing operations of $10.2 million in the six months ended June 30, 2006. See “Reconciliation of DCM to Loss from Continuing Operations” for a reconciliation of DCM to loss from continuing operations.

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Reconciliation of DCM to Loss from Continuing Operations

	For the Six Months Ended
	June 30, 2007			June 30, 2006
Direct contribution margin (1)	$	16,155,378		$	11,959,134
General and administrative		9,747,977			9,311,830
Foreign exchange (gain) loss		(40,682	)		3,502
Restructuring costs		275,000			392,879
Depreciation		5,516,703			6,580,330
Amortization of customer contracts		1,840,746			1,859,453
Interest expense		6,211,018			4,026,957
(Gain) loss on sale of investments and assets		499,220			(1,250,163	)
Loss on change in fair value of derivative liabilities		4,689,661			1,165,575
Loss from continuing operations before income tax expense		(12,584,265	)		(10,131,229	)
Income tax expense		252,444			38,800
Loss from continuing operations		(12,836,709	)		(10,170,029	)
Loss from discontinued operations		(79,527	)		(1,337,795	)
Net loss for the period	$	(12,916,236	)	$	(11,507,824	)

(1) DCM consists of revenue less direct expense and excludes general and administrative expense, foreign exchange loss (gain), restructuring costs, interest, depreciation, amortization of customer contracts, (gain) loss on sale of investments and assets, and income tax expense for the six months ended June 30, 2007 and June 30, 2006 respectively. DCM is a non-GAAP measure. The comparative GAAP measure is loss from continuing operations. For a reconciliation of DCM to loss from continuing operations, see “Direct Contribution Margin”.

General and Administrative Expenses and Restructuring Costs

     General and administrative expenses were $9.7 million for the six months ended June 30, 2007, an increase of $0.4 million or 4.7% from the six months ended June 30, 2006. General and administrative expenses as a percentage of revenue decreased to 5.4% for the six months ended June 30, 2007 from 6.2% for the six months ended June 30, 2006. The increase in general and administrative expenses is primarily due to professional fees related to the in process U.S. registration costs totaling approximately $0.4 million and higher general legal expenses partially offset by lower consulting expenses.

     In addition to the general and administrative expenses above is a restructuring charge of approximately $0.3 million and $0.4 million for the six months ended June 30, 2007 and June 30, 2006 respectively related to the completion of the Company’s relocation of its corporate offices to Denver, Colorado.

Other Income and Expense

     During the quarter ended June 30, 2007, depreciation expense of $5.5 million represents a decrease of $1.1 million from the similar period in 2006. This decrease is primarily attributable to the change in useful life of the vehicles from 48 months in 2006 to 60 months in 2007 in order to better reflect the useful life of the asset. Amortization of customer contracts was $1.8 million and $1.9 million for the six months ended June 30, 2007 and June 30, 2006, respectively.

     Interest expense was $6.2 million for the six months ended June 30, 2007 and represents an increase of $2.2 million in the similar period in 2006. This increase is primarily due to the amortization of deferred financing costs and accretion attributed to the warrants associated with the convertible debentures and long-term debt.

13

     The (gain) loss on sale of investments and assets for the six months ended June 30, 2007 reflects a $1.8 million decrease from a gain of $1.3 million in the same period last year. In the first quarter of 2006, 180 Connect (Canada) sold its interest in Control F-1 Corporation (“Control F-1”) to Computer Associates International, Inc. and Computer Associates Canada Company for net proceeds of $1.3 million, which was recognized as a pre-tax gain of $1.3 million in the six months ended June 30, 2006. The investment had been previously written down to $nil in 2004 due to prevailing market conditions.

Income Tax Expense

     For the six months ended June 30, 2007 and June 30, 2006 180 Connect (Canada) recorded $0.3 million and $0.1 respectively, for income tax expense.

Loss from Continuing Operations

     Loss from continuing operations for the six months ended June 30, 2007 was $12.8 million compared to loss from continuing operations of $10.2 million for the comparable period of 2006 due to the items discussed above.

Loss from Discontinued Operations

     Loss from discontinued operations for the six months ended June 30, 2007 was $0.1 million compared to a loss from discontinued operations of $1.3 million for the six months ended June 30, 2006 related to the closure of operations at certain non-profitable branches as well as certain operations where the contracts with the customers were not renewed. The revenue and expenses of these locations have been reclassified as discontinued operations for all periods presented.

Net Loss

     Net loss for the six months ended June 30, 2007 was $12.9 million compared to a net loss of $11.5 million for the comparable period of 2006, or an increase $1.4 million primarily attributed to the items discussed above.

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Comparison of Years Ended December 31, 2006 and 2005

	2006			2005			% Change
Revenue	$	335,446,741		$	279,726,651			19.9	%
Direct expenses		301,158,053			256,334,245			17.5	%
Direct contribution margin (1)		34,288,688			23,392,406			46.6	%
General and administrative		19,675,563			21,702,824			(9.3	)%
Foreign exchange loss (gain)		30,361			(18,692	)		—
Restructuring costs		892,688			1,672,485			(46.6	%)
Depreciation		13,560,340			6,151,059			120.5	%
Amortization of customer contracts		3,712,673			4,093,985			(9.3	%)
Interest expense		10,043,564			3,440,690			191.9	%
Gain on extinguishment of debt		(1,233,001	)		—			—
Gain on change in fair value of derivative liabilities		(1,363,936	)		—			—
Gain on sale of assets		(726,086	)		(6,897,291	)		(89.5	)%
Impairment of goodwill and customer contracts		—			608,096			—
Loss from continuing operations before income tax recovery		(10,303,478	)		(7,360,750	)		40.0	%
Income tax recovery		(1,503,271	)		(2,001,727	)		(24.9	%)
Loss from continuing operations		(8,800,207	)		(5,359,023	)		64.2	%
Loss from discontinued operations		(5,788,631	)		(3,157,632	)		83.3	%
Net loss for the period	$	(14,588,838	)	$	(8,516,655	)		71.3	%
Loss per share from continuing operations
Basic	$	(0.36	)	$	(0.22	)
Diluted	$	(0.36	)	$	(0.22	)
Net loss per share
Basic	$	(0.60	)	$	(0.36	)
Diluted	$	(0.60	)	$	(0.36	)

(1) DCM consists of revenue less direct expense and excludes general and administrative expense, foreign exchange loss (gain), restructuring costs, interest, depreciation, amortization of customer contracts, impairment of goodwill and customer contracts, gain on sale of investments and assets, gain on extinguishment of debt and income tax recovery for the years ended December 31, 2006 and 2005. DCM is a non-GAAP measure. The comparative GAAP measure is loss from continuing operations. For a reconciliation of DCM to loss from continuing operations, see the section entitled “Direct Contribution Margin.”

Revenue

     Revenue for the year ended December 31, 2006 increased to $335.4 million from $279.7 million for the year ended December 31, 2005. This 19.9% increase reflects continued growth in revenue resulting from DIRECTV channeling more work through their home services provider network and increased customer demand resulting from advanced product penetration as well as growth in 180 Connect (Canada)’s cable, Digital Interiors and Network Services businesses. Advanced product penetration refers to installations and upgrades that 180 Connect (Canada) completed with DVR, HD or an HD/DVR receiver. These increases are due to DIRECTV’s marketing efforts to promote the installation and upgrades. Work order volume from DIRECTV for the year ended December 31, 2006 increased by 20.7% year over year. The benefits of this increase were partially offset by the impact of a less favorable mix. Different rates are earned for each type of service completed and the mix of services (installations, upgrades and service) impact both the revenue per call and number of service calls that may be completed. The financial impact of the volume increase, partially offset with the less favorable rate and mix, was $36.5 million in 2006.

     Revenue from the majority of 180 Connect (Canada)’s customers is recognized when work orders are closed. 180 Connect (Canada)’s contracts with its customers also include mechanisms whereby 180 Connect (Canada) is not paid for certain work that is not completed within the specifications of the contract. Based upon historical payments, 180 Connect (Canada) calculates and estimates a reserve against revenue each month. For the year ended December 31, 2006, $4.3 million (1.29% of revenue) was recorded as a deduction to revenue as compared to $3.6 million (1.29% of revenue) for the year ended December 31, 2005.

15

     Throughout 2006 180 Connect (Canada)’s cable operations continued to grow, adding new operations serving customers such as WoW in Detroit and Time Warner in Greensboro, and expanding current operations for its customers Cablevision, Time Warner and Rogers. Additionally, the New Orleans operation servicing Cox Communication has been completely rebuilt after hurricane Katrina and is operating at pre-Katrina levels. 180 Connect (Canada) continued to dedicate resources to supporting growth of its cable business which resulted in a $13.1 million, or 36%, increase in revenue over the prior year.

Direct Contribution Margin

     DCM, defined as revenue less direct operating expenses, increased by $10.9 million, or 46.6%, from $23.4 million in the year ended December 31, 2005 to $34.3 million in the year ended December 31, 2006. DCM, as a percentage of revenue, increased to 10.2% in 2006 from 8.4% in 2005.

     This increase is due to the revenue growth in 180 Connect (Canada)’s satellite and cable businesses as well as the consistently increasing contribution from its Network Services, retail and 180 Home businesses which accounted for over $2.2 million of the improvement in 2006. 180 Connect (Canada) continues rolling out its perpetual inventory system throughout its operations and it is expected to be completed early in the second quarter of 2007. This system is expected to improve its inventory process and reduce unnecessary costs currently being incurred. The increase of DCM is also a result of the lack of significant start-up operations in the cable business as well as the absence of the effects of Hurricane Katrina, which temporarily closed operations in Louisiana and Texas and resulted in nationwide increases in fuel prices.

     DCM is a non-GAAP measure. The comparable GAAP measure is loss from continuing operations. Loss from continuing operations was $8.8 million in the year ended December 31, 2006; an increase of $3.4 million compared to the loss from continuing operations of $5.4 million for the year ended December 31, 2005. The following is a reconciliation of DCM to income (loss) from operations:

Reconciliation of DCM to Income (Loss) from Continuing Operations

	2006			2005
Direct contribution margin	$	34,288,688		$	23,392,406
General and administrative		19,675,563			21,702,824
Foreign exchange (gain) loss		30,361			(18,692	)
Restructuring costs		892,688			1,672,485
Depreciation		13,560,340			6,151,059
Amortization of customer contracts		3,712,673			4,093,985
Interest expense		10,043,564			3,440,690
Gain on extinguishment of debt		(1,233,001	)		—
Gain on change in fair value of derivative liabilities		(1,363,936	)		—
Gain on sale of assets		(726,086	)		(6,897,291	)
Impairment of goodwill and customer contracts		—			608,096
Loss from continuing operations before income tax		(10,303,478	)		(7,360,750	)
Income tax recovery		(1,503,271	)		(2,001,727	)
Net loss from continuing operations	$	(8,800,207	)	$	(5,359,023	)

General and Administrative Expenses and Restructuring Costs

     General and administrative expenses were $19.7 million for the year ended December 31, 2006, a decrease of $2.0 million or 9.3% from the year ended December 31, 2005. General and administrative expenses as a percentage of revenue decreased from 7.8% for the year ended December 31, 2005 to 5.9% for the year ended December 31, 2006. The decrease in general and administrative expenses is primarily due to lower salary, consulting and travel expenses by approximately $2.3 million, partially offset by certain non-capitalized expenses related to the refinancing of 180 Connect (Canada)’s debt, legal and professional fees related to its U.S. listing costs totaling approximately $1.5 million.

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     In addition to the general and administrative expenses above is a restructuring charge of approximately $0.9 million for employee severance and related costs associated with the completion of the move of 180 Connect (Canada)’s back office operations and corporate offices to Denver. The comparable period of 2005 reflects a restructuring charge of $1.7 million related to the commencement of 180 Connect (Canada)’s move of its back office operations and corporate offices.

Other Income and Expense

     During the year ended December 31, 2006, depreciation expense of $13.6 million represents an increase of $7.4 million from the similar period in 2005. This increase is primarily attributable to the increase in 180 Connect (Canada)’s vehicle fleet from approximately 750 company owned vehicles in 2005, most of which were fully depreciated, to approximately 2,600 new company owned vehicles. Amortization of customer contracts of $3.7 million in the year ended December 31, 2006 decreased by $0.4 million from 2005 primarily due to the discontinuation and impairment of certain operations during the second half of 2005.

     Interest expense was $10.0 million in 2006 and represents an increase of $6.6 million primarily due the completion of the refinancing of 180 Connect (Canada)’s debt and interest related to a private placement of $10.7 million of convertible debentures and warrants completed late in the first quarter of 2006. Interest expense also increased due to the financing related to 180 Connect (Canada)’s newly acquired vehicle fleet. In the first quarter of 2006, 180 Connect (Canada) completed its conversion from a privately owned vehicle model to a company owned vehicle model with the purchase of approximately 2,600 vehicles. These vehicles have been acquired through a capital lease program and are included in the capital lease obligations set forth in 180 Connect (Canada)’s audited consolidated financial statements for the year ended December 31, 2006.

     180 Connect (Canada) recognized a gain of $1.2 million on the extinguishment of debt that it had with its previous lender. The gain was a result of 180 Connect (Canada)’s negotiations with that prior lender reducing the amount of 180 Connect (Canada)’s final payment to an agreed upon amount below what had previously been recorded by 180 Connect (Canada).

     180 Connect (Canada) sold its interest in Control F-1 Corporation (“Control F-1”) to Computer Associates International, Inc. and Computer Associates Canada Company for net proceeds of $1.3 million, which was recognized as a pre-tax gain of $1.3 million in that quarter. The investment had been previously written down to nil in 2004 due to prevailing market conditions. The $6.5 million pre-tax gain on the sale of investments in 2005 was due to the gain on the sale of Guest-Tek.

Income Tax Recovery

     For the year ended December 31, 2006, 180 Connect (Canada) recorded a net $1.5 million income tax recovery, which includes a current tax expense of $0.1 million for state tax liabilities and a deferred tax recovery of $1.6 million to record the amortization of the deferred tax liability associated with certain intangible assets (customer contracts) recognized as part of the acquisition of a U.S. subsidiary and the establishment of a deferred tax asset associated with nondeductible liabilities in the subsidiary.

     For the year ended December 31, 2005, 180 Connect (Canada) recorded a net $2.0 million income tax recovery which consisted of a U.S. federal and state current income tax recovery of $0.5 million, a deferred U.S. federal and state income tax recovery of $2.6 million and a Canadian income tax provision of $1.1 million.

Loss from Continuing Operations

     Loss from continuing operations for the year ended December 31, 2006 was $8.8 million compared to loss from continuing operations of $5.4 million for the comparable period of 2005. This represents an increase of $3.4 million. This increase is primarily due to an increase in depreciation, interest expense and a decrease in the gain on sale of assets, as discussed above in “Other Income and Expense”, partially offset by the items discussed above in the section entitled “Direct Contribution Margin.”

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Loss from Discontinued Operations

     180 Connect (Canada) discontinued its operations at certain non-profitable branches as well as certain operations where the contracts with the customer were not renewed. The revenue and expenses for these locations have been reclassified as discontinued operations for all periods presented. Loss from discontinued operations was $5.8 million as compared to a loss of $3.2 million in 2005.

Net Loss

     Net loss for the year ended December 31, 2006 was $14.6 million compared to a net loss of $8.5 million for the comparable period of 2005, or an increase of $6.1 million.

2005 Significant Operating Events

Corporate Relocation

     In 2005, 180 Connect (Canada) incurred a charge of $1.7 million for employee severance and related costs associated with the relocation of 180 Connect (Canada)’s corporate operations to Denver. Employee severance was $1.4 million and employee moving and other expenses amounted to $0.3 million.

Purchase of Digital Interiors, Inc.

     On March 22, 2005, 180 Connect (Canada) acquired certain assets and liabilities of Digital Interiors, Inc., including customer contracts, for approximately $0.4 million cash plus additional contingent purchase consideration based on certain operating performance metrics for Digital Interiors over the next 18 months. As of December 31, 2006, 180 Connect (Canada) did not owe any additional consideration related to the contingent purchase price provisions.

     This acquisition was accounted for under the purchase method of accounting, the application of which requires the use of management’s judgment and estimates and independent third party valuation to the determine the fair market values of the assets and liabilities acquired. 180 Connect (Canada) obtained a third party valuation for these estimates.

Guest-Tek Interactive Entertainment Inc.

     In February 2004, 180 Connect (Canada) sold 18.7% of its interest in Guest-Tek pursuant to a secondary offering of common shares of Guest-Tek for net proceeds to 180 Connect (Canada) of $3.5 million and 180 Connect (Canada) recognized a gain of approximately $3.0 million. 180 Connect (Canada) utilized the proceeds realized on the sale of the Guest-Tek shares to reduce short-term debt incurred in connection with the acquisition of Mountain Center, Inc. (“Mountain”).

     In January 2005, 180 Connect (Canada) sold its remaining interest in Guest-Tek pursuant to a purchase and sale agreement with a private party. Net proceeds to 180 Connect (Canada) were $9.0 million and a pretax gain of $6.5 million was recorded. 180 Connect (Canada) utilized the proceeds realized on the sale of the Guest-Tek shares to fund working capital requirements.

18

Comparison of Years Ended December 31, 2005 and December 25, 2004

	2005			2004			% Change
Revenue	$	279,726,651		$	210,675,282			32.8	%
Direct expenses		256,334,245			191,797,596			33.6	%
Direct contribution margin (1)		23,392,406			18,877,686			23.9	%
General and administrative		21,702,824			16,370,043			32.6	%
Foreign exchange loss		(18,692	)		(272,585	)		93.1	%
Restructuring costs		1,672,485			—			—
Depreciation		6,151,059			2,129,959			188.8	%
Amortization of customer contracts		4,093,985			2,851,590			43.6	%
Interest expense		3,440,690			2,659,132			29.4	%
Gain on sale of assets		(6,897,291	)		(1,931,648	)		257.1	%
Impairment of goodwill and customer contracts		608,096			1,383,371			(56.0	)%
Loss from continuing operations before income tax recovery		(7,360,750	)		(4,312,176	)		70.7	%
Income tax recovery		(2,001,727	)		(621,000	)		222.3	%
Loss from continuing operations		(5,359,023	)		(3,691,176	)		45.2	%
Loss from discontinued operations		(3,157,632	)		(3,759,662	)		(16.0	%)
Net loss for the period	$	(8,516,655	)	$	(7,450,838	)		14.3	%
Loss per share from continuing operations
Basic	$	(0.22	)	$	(0.17	)
Diluted	$	(0.22	)	$	(0.17	)
Net loss per share
Basic	$	(0.36	)	$	(0.34	)
Diluted	$	(0.36	)	$	(0.34	)

(1) DCM consists of revenue less direct expense and excludes general and administrative expense, foreign exchange loss, restructuring costs, interest, depreciation, amortization of customer contracts, impairment of goodwill and customer contracts, gain on sale of assets and income tax recovery for the years ended December 31, 2005 and 2004. DCM is a non-GAAP measure. The comparative GAAP measure is loss from continuing operations. For a reconciliation of DCM to loss from continuing operations, see the section entitled “Direct Contribution Margin”.

Revenue

     Revenue for 2005 increased to $279.7 million from $210.7 million in 2004. This 32.8% increase reflects continued growth in revenue from the installation, integration and fulfillment services provided to 180 Connect (Canada)’s customers. A significant portion of this increase came as a result of 180 Connect (Canada)’s relationship with DIRECTV. Volume increased 45% as DIRECTV channeled more work orders through its Home Service Provider Network, within which 180 Connect (Canada) operates. The volume increases were partially offset by changes in mix between upgrade and service calls and overall rate reductions. During 2005, 180 Connect (Canada) performed approximately 25% of the gross subscriber installations that DIRECTV channeled through its Home Services Provider Network. The cost of inventory for which 180 Connect (Canada) is reimbursed by DIRECTV is offset against the revenue in which the reimbursement is included. 180 Connect (Canada) also experienced additional growth in work order volume from its cable operations. Work from Rogers, Cablevision, Wide Open West and Time Warner contributed to an approximate $6 million increase in revenue during 2005. In addition to the increase in the pay television revenues, 180 Connect (Canada) also recognized modest revenue increases from its launch of the Network Services business.

Direct Contribution Margin

     DCM, defined as revenue less direct operating expenses, increased by $4.5 million, or 23.9%, from $18.9 million in 2004 to $23.4 million in 2005. DCM, as a percentage of revenue, decreased to 8.4% in 2005 from 9.0% in 2004. The decline as a percentage of revenue is primarily attributable to higher training and recruiting expenses, vehicle costs and increased insurance costs. A significant portion of the cost increases are associated with 180 Connect (Canada)’s continued aggressive top line revenue growth. During 2005, 180 Connect (Canada) converted a significant portion of its business to a company-owned vehicle model from a privately-owned vehicle model. This customer-mandated conversion resulted in 180 Connect (Canada) purchasing approximately 2,200 new vehicles through a capital leasing program to replace privately owned vehicles that technicians were required to have in order to work for 180 Connect (Canada). This transition resulted in reduced labor costs as the technician piece rate was reduced to reflect the reduction of lower vehicle reimbursement costs. These reduced costs were offset by increased training and recruiting costs of approximately $1.3 million as 180 Connect (Canada) recognized a higher than expected attrition rate in the technician work force when the piece rate was reduced. The increased fleet and costs associated with the vehicle deployment were also accompanied by increased fuel costs and insurance costs.

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     Additional training and recruiting costs, along with small tool costs, were incurred during 2005 in support of 180 Connect (Canada)’s continued growth in cable, network services and Digital Interiors businesses. During 2005, 180 Connect (Canada) increased its trained technician work force by 950 employees to end the year with 3,750 technicians. As a result of this increase in headcount and attrition, 180 Connect (Canada) incurred approximately $9.1 million in training and recruiting costs. Of this amount, approximately $1.0 million was specifically related to the growth of 180 Connect (Canada)’s cable business in addition to increased training related to high definition local programming.

     During 2005, 180 Connect (Canada) incurred approximately $0.9 million related to costs associated with hurricanes Katrina and Rita.

     Insurance costs, particularly workers compensation costs primarily in California, negatively impacted 180 Connect (Canada)’s operating results. During 2005, insurance costs increased by approximately $6.2 million over 2004, primarily as a result of the increased fleet and technician headcount.

     During 2005, 180 Connect (Canada) continued to face operational challenges with respect to the management of its inventory flow throughout its entire 85 branch network and its service vehicle fleet which also carry inventory. Tracking 180 Connect (Canada)’s rolling stock on each vehicle continued to prove difficult as there were times when more expensive inventory components were used as substitutes for less expensive inventory components in order to ensure 180 Connect (Canada)’s work orders were completed and closed on a timely, high quality basis. The use of higher cost inventory is often not reimbursed by 180 Connect (Canada)’s customer. The use of higher cost inventory substitutes and the difficulty in tracking the rolling stock included in 180 Connect (Canada)’s fleet vehicles and at subcontractor locations led to an inventory write-off of approximately $2.4 million. The write-offs are included as a direct cost as they represent inventory shrink due to poor inventory management practices. 180 Connect (Canada) continued its diversification and growth strategy during the year and incurred approximately $2.0 million of start-up costs related to its cable and Digital Interiors businesses.

     DCM is a non-GAAP measure. The comparable GAAP measure is loss from continuing operations. Loss from continuing operations was $5.4 million in the year ended December 31, 2005, an increase of $1.7 million compared to loss from continuing operations of $3.7 million in the same financial period of 2004.

     The following is a reconciliation of DCM to net loss from continuing operations:

Reconciliation of DCM to Loss from Continuing Operations

	2005			2004
Direct contribution margin	$	23,392,406		$	18,877,686
General and administrative		21,702,824			16,370,043
Foreign exchange gain		(18,692	)		(272,585	)
Restructuring costs		1,672,485			—
Depreciation		6,151,059			2,129,959
Amortization of customer contracts		4,093,985			2,851,590
Interest expense		3,440,690			2,659,132
Gain on sale of assets		(6,897,291	)		(1,931,648	)
Impairment of goodwill and customer contracts		608,096			1,383,371
Loss from continuing operations before income tax		(7,360,750	)		(4,312,176	)
Income tax recovery		(2,001,727	)		(621,000	)
Net loss from continuing operations	$	(5,359,023	)	$	(3,691,176	)

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General and Administrative Expenses and Restructuring Costs

     General and administrative expenses were $21.7 million for 2005, an increase of $5.3 million from 2004. Administrative expenses as a percentage of revenue remained stable at 7.8% for 2004 and 2005. The increase in general and administrative expenses was caused largely by a $0.2 million charge for legal and professional fees in connection with an abandoned acquisition, $2.5 million of legal reserves recorded in connection with a Department of Labor action and approximately $0.7 million in duplicative costs and travel costs incurred in connection with the transition and closure of 180 Connect (Canada)’s Ft. Lauderdale office. In addition to the charges above and $0.25 million of costs associated with internal control reviews, general and administrative costs increased by approximately $1.25 million resulting from increased professional fees, software licensing costs and rental costs. Further increases of approximately $0.7 million were related to an increase in business development and marketing professionals which were critical to 180 Connect (Canada)’s revenue growth programs and $0.3 million was related to enhanced insurance programs.

     Also during 2005, 180 Connect (Canada) recognized a charge of $1.7 million for employee severance and related costs associated with the commencement of 180 Connect (Canada)’s move of its back office operations and corporate offices to Denver.

Other Income and Expenses

     In 2005, depreciation expense of $6.2 million represented an increase of $4.1 million from 2004, primarily attributable to the new fleet of 2,200 vehicles put into service in 2005. Amortization of customer contracts of $4.1 million in 2005 increased by $1.2 million from 2004 primarily due to amortization of customer contracts associated with the acquisition of Mountain in 2004 and the full year effect of additional amortization of customer contracts recognized on the acquisition of the minority interest in Cable Play Inc. Interest expense increased by $0.7 million in 2005 primarily due to rate variances and the purchase of new vehicles. The $6.9 million gain on investments and asset write-downs in 2005 was due to a gain on the sale of 180 Connect (Canada)’s interest in common shares of Guest-Tek. Impairment of goodwill and customer contracts in 2005 of $0.6 million was primarily due to the termination of a cable customer relationship in the New Jersey market.

Income Tax Recovery

     180 Connect (Canada) recorded a net $2.0 million income tax recovery for 2005 which consisted of a U.S. federal and state income tax recovery of $0.5 million and U.S. Federal tax recovery of $2.6 million, partially offset by a Canadian deferred tax provision of $1.1 million.

     The $1.1 million Canadian tax provision is related to the gain on the sale of the common shares of Guest-Tek. In 2004, a Canadian tax recovery was recognized to effect the utilization of the loss carry forwards as this utilization, as it relates to the amount of the gain on the Guest-Tek common shares had been assured as of December 25, 2004 despite the fact that the gain on the sale of the Guest-Tek common stock was recorded on 180 Connect (Canada)’s financial statements in 2005. This Canadian tax provision reverses that tax recovery to reflect the net utilization of the loss carry forward on the sale of the stock.

     As of December 31, 2005, 180 Connect (Canada)’s Canadian subsidiaries had unused non-capital losses totaling $15.7 million that may be applied to reduce taxable income of future years. These non-capital losses expire commencing in 2007 through to 2012. The Canadian subsidiaries have net capital loss carry forwards of $5.5 million which may be carried forward indefinitely to be applied against future taxable capital gains. 180 Connect (Canada)’s U.S. subsidiaries have a net operating loss carryforward of $17.7 million which will begin to expire in 2021.

Loss from Continuing Operations

     Loss from continuing operations increased by $1.7 million, from a loss of $3.7 million in 2004, to a loss of $5.4 million in 2005.

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Loss from Discontinued Operations

     180 Connect (Canada) discontinued its operations at certain non-profitable branches as well as certain operations where the contracts with the customer were not renewed. The revenue and expenses for these locations have been reclassified as discontinued operations for all periods presented. Loss from discontinued operations was $3.2 million as compared to a loss of $3.8 million in 2004.

Net Loss

     Net loss for the year ended December 31, 2005 was $8.5 million compared to a net loss of $7.5 million for the comparable period of 2004, or an increase of $1.0 million.

Liquidity and Capital Resources

     180 Connect (Canada)’s primary sources of liquidity are its operating cash flows from continuing operations and its borrowings under its credit facilities. Cash flow provided by (used) in continuing operations for the three and six months ended June 30, 2007 was $0.2 million and $(0.9) million, respectively.

     On March 13, 2007, 180 Connect (Canada) announced that it had entered into an arrangement agreement (“Arrangement Agreement”) with Ad.Venture Partners, Inc. (“AVP”), a special purpose acquisition company. On August 24, 2007, the Arrangement Agreement was consummated and as a result, 180 Connect (Canada) became an indirect wholly-owned subsidiary of AVP, AVP was re-named “180 Connect”.

     On August 1, 2006, 180 Connect (Canada), through its wholly-owned subsidiary 180 Connect, Inc. (“180 Connect Nevada”), entered into a Security and Purchase Agreement with Laurus Master Fund (“Laurus”) for the refinancing of its long-term debt. The original terms of the agreement provided up to $57 million of debt comprised of a $37 million revolving credit and over-advance facility and a $20 million term facility, with an interest rate of prime plus 3% on the revolving credit facility, subject to a minimum interest rate of 10%, an interest rate of prime plus 5% on any over-advance under the revolving credit facility, subject to a minimum interest rate of 11% and an interest rate of prime plus 5% on the term facility, subject to a minimum interest rate of 12%. For the period of August 1, 2006 to July 31, 2007, 180 Connect (Canada) can draw in excess of the eligible trade receivables and inventory an over advance amount up to $9 million but not to exceed an aggregate amount of $37 million. Availability under the revolving facility fluctuates daily based on receivables and inventory. After July 31, 2007, the over advance was to become part of the revolving facility and this date was further extended to August 24, 2007. As of August 29, 2007, 180 Connect (Canada) had availability of $12.0 million under the revolving facility and the balance outstanding was $14.0 million. Monthly repayments on the term loan of $666,667 commenced February 1, 2007. Repayment of its indebtedness to Laurus is secured by all the assets of 180 Connect Nevada. Subsequent to June 30, 2007 180 Connect (Canada) entered into an amendment agreement with Laurus securing additional interim financing. On August 24, 2007, 180 Connect (Canada) repaid $5.0 million on the term loan pursuant to the consummation of the Arrangement Agreement.

     180 Connect (Canada) is not subject to any financial covenants with respect to the credit facilities but is subject to other covenants including certain restrictions on its subsidiaries on assuming or guaranteeing additional indebtedness, forgiving any indebtedness, issuing any preferred stock, purchasing stock (other than of a subsidiary), making loans other than loans to employees or to its subsidiaries, entering into a merger, consolidation or reorganization, materially changing the nature of its business, changing its accounting practices and disposing of its assets. In addition, the failure to make required payments under the facilities or other indebtedness, the failure to adhere to a covenant or the occurrence of material adverse changes to its business, bankruptcy, certain changes to its ownership or Board of Directors, among other events, could result in an event of default under the facilities. The Company’s revolving credit facility (the ‘Revolver”) requires a lockbox arrangement, which provides for all receipts to be swept daily to reduce borrowings outstanding under the credit facility. This arrangement, combined with the existence of a subjective acceleration clause in the revolving credit facility, requires that the borrowings under the Revolver be classified as a current liability on the balance sheet in accordance with the Financial Accounting Standards Board (“FASB”) Emerging Issues Task Force Issue No. 95-22, “Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements that Include Both a Subjective Acceleration Clause and a Lock-Box Arrangement” (“EITF 95-22”). The amount outstanding under the Revolver was previously classified as long-term debt as of December 31, 2006 and the balance sheet has been restated to correct the classification of the balance due under the Revolver to current portion of long-term debt as of December 31, 2006 increasing the current portion of long-term debt by $20,534,422 to $26,502,096 from the amount previously reported of $5,967,674. The restatement had no impact on previously reported consolidated statements of operations, shareholders’ equity, or cash flows.

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     The acceleration clause could allow the lender to forego additional advances should they determine there has been a material adverse change in the Company’s financial position or prospects reasonably likely to result in a material adverse effect on the Company’s business, condition (financial or otherwise), operations, performance or properties. The Company believes that no such material adverse change has occurred; further, as of March 27, 2008, the Company’s lender had not informed the Company that any such event had occurred.

     As of June 30, 2007, 180 Connect (Canada) was in compliance with the covenants of its credit facilities. 180 Connect (Canada) obtained a waiver from its lenders with regards to the AVP acquisition as it may constitute a change of control as defined in section 19(1) of the debt agreement. The replacement credit facilities resulted in the replacement of approximately $33 million of short-term debt which would have matured September 30, 2006 with up to approximately $57 million of long term debt, thereby reducing its current working capital deficiency.

     In addition, 180 Connect (Canada) issued a warrant to Laurus to purchase up to 2,000,000 common shares for nominal consideration of CDN$0.01 per share, having a term of seven years. The issuance of the warrant to Laurus was approved by 180 Connect (Canada)’s shareholders at its annual and special meeting held June 30, 2006. On April 2, 2007, Laurus exercised its right under the warrant to purchase the 2,000,000 common shares.

     Laurus has agreed not to sell any common shares issued upon exercise of the warrant until July 31, 2007. Thereafter, Laurus may, at its election and assuming exercise of the warrant, sell up to 250,000 common shares per calendar quarter (on a cumulative basis) over each of the following eight quarters, subject to applicable securities laws restrictions and limitations.

     On March 22, 2006, 180 Connect (Canada) completed a private placement to a group of institutional investors. For an aggregate purchase price of $10.7 million, the investors purchased convertible debentures and warrants to purchase 1,570,100 common shares. The convertible debentures accrue interest at a rate of 9.33% per annum, payable quarterly, in arrears, based on a 360-day year. The debentures mature on March 22, 2011. In addition, the debentures will accelerate to maturity upon the occurrence of a default on the debentures by 180 Connect (Canada). The terms of the debentures allow the investors, at their discretion, to convert all or part of the debentures into its common shares. The aggregate number of common shares to be delivered upon such conversion is approximately 4.5 million shares, subject to adjustment in accordance with the terms of the debentures and subject to additional contractual limitations as described in the debentures. During the second quarter of 2007, one of the institutional investors of the convertible debentures and warrants exercised its option to convert in total $2,024,785 of principal under the 9.33% convertible debentures into 850,000 common shares. Subsequent to the consummation of the Arrangement, on August 29, 2007 the holders of the convertible debentures exercised their right to call an event of default and to accelerate the maturity of the debentures. Reference is made to the Pro Forma Financial Statements included as an exhibit to the Current Report on Form 8-K.

     The warrants to purchase 1,570,100 common shares issued to the investors in the private placement are exercisable until March 21, 2010. The exercise price of the warrants is $4.331, subject to adjustment in accordance with the terms of the warrants (which adjustment is limited and capped as described in the warrants). The warrants may be exercised through a cashless exercise.

     In connection with the private placement 180 Connect (Canada) also entered into a registration rights agreement which requires it to file a registration statement relating to the common shares underlying the convertible debentures and warrants with the SEC within 30 days after our common shares are listed on a United States trading market.

     In the event 180 Connect (Canada) does not meet deadlines relating to the filing and effectiveness of the registration statement, it is required to pay, on a monthly basis, liquidated damages of approximately $214,000 per month (2% of the aggregate purchase price paid by the investors in the private placement), up to a maximum of approximately $3.4 million, until such obligations are fulfilled.

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     180 Connect (Canada) entered into agreements with third party leasing companies to lease approximately 2,600 vehicles pursuant to its fleet expansion program. Under these agreements, 180 Connect (Canada)’s lease payment obligations amounted to $43.7 million for the periods of 2005 through 2009. As at June 30, 2007, 180 Connect (Canada) had a remaining contractual capital obligation of $25.2 million. These vehicles have been recorded as capital leases.

     On July 2, 2007 180 Connect (Canada) entered into an amendment agreement with Laurus securing additional interim financing to fund working capital until August 24, 2007.

     Pursuant to the terms of the agreement, Laurus agreed to provide an additional $8.0 million to 180 Connect (Canada) as an increase to the current $37.0 million revolving loan, for a total revolving loan of $45.0 million. As part of this arrangement, Laurus also agreed to extend the maturity of the existing $9.0 million over-advance letter on a revolving loan from July 31, 2007 until August 24, 2007.

     Certain AVP shareholders agreed to provide a limited recourse guaranty for the additional financing Laurus is providing to 180 Connect (Canada) by placing $7.0 million in a brokerage account pledged to Laurus which may be used solely to purchase AVP shares.

     Laurus also agreed to loan $10.0 million to a special purpose corporation for the purpose of purchasing shares of AVP common stock. The special purpose corporation is a third-party arms-length corporation to both 180 Connect (Canada) and AVP. Neither the special purpose corporation nor Laurus has agreed to make any specific amount of purchases or to vote any shares purchased in any specific manner in connection with the arrangement. 180 Connect (Canada) and AVP anticipate that any AVP shares purchased by the special purpose corporation would be purchased in privately negotiated transactions.

     In connection with the amendment, Laurus received warrants to purchase one million common shares of 180 Connect (Canada) with a five-year term, exercisable at $2.61 per share, the market price at the time of issue, with the shares issuable thereunder, subject to a one-year lock-up. Laurus will also receive a 2.5% management fee on the $8.0 million increase to the revolver or $200,000 and a $1.4 million commitment fee which will be paid at the Laurus Expiration Date.

     In addition, 180 Connect (Canada) and AVP agreed to adjust the exchange ratio under the arrangement from 0.6272 to 0.60 and to eliminate the adjustment to the exchange ratio based on relative transaction expenses of the parties.

     On August 24, 2007, 180 Connect (Canada) paid Laurus $5.0 million principal on the term note upon the consummation of the Arrangement. At August 24, 2007, 180 Connect (Canada) had no outstanding borrowings under either the additional $8.0 million revolving loan or the existing $9.0 million overadvance facility.

     As consideration for the guaranty and pledge, pursuant to the terms of a Letter Agreement between 180 Connect (Canada) and the AVP Shareholders dated July 2, 2007 (the “180 Connect (Canada)/the AVP Shareholders”), 180 Connect (Canada) agreed to reimburse the AVP Shareholders up to $150,000 for their fees and expenses in connection with the guaranty and pledge.

Cash Flow from Operating Activities

     For the three months ended June 30, 2007 and June 30, 2006, cash provided by operating activities was $0.3 million and $2.5 million, respectively. In the second quarter of 2007, accounts receivable increased by $5.8 million primarily due to an increase in the trade receivable with DIRECTV. Restricted cash requirements were reduced by $1.2 million, primarily as a result of the reduction in 180 Connect (Canada)’s insurance collateral requirements due to 180 Connect (Canada)’s continued satisfaction of its insurance obligations. Insurance premium deposits were reduced by approximately $2.4 million primarily due to 180 Connect (Canada)’s payment arrangement with its insurance carrier.

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     In the second quarter of 2006, inventory decreased by $5.4 million as a result of the efficient management of inventory quantities and reduction in equipment cost primarily related to DIRECTV. This increase in operating cash flow was partially offset by an increase in insurance deposits of $2.3 million.

     For the six months ended June 30, 2007 and June 30, 2006, cash provided by (used in) operating activities was $(0.9) million and $6.5 million, respectively. In 2007, accounts receivable decreased by $7.9 million primarily due to the collection of trade receivables and a decrease in the equipment receivable with DIRECTV. Restricted cash requirements were reduced by $2.6 million, primarily as a result of the reduction in the insurance collateral requirements due to 180 Connect (Canada)’s continued satisfaction of its insurance obligations. Insurance premium deposits were reduced by approximately $4.6 million primarily due to 180 Connect (Canada)’s payment arrangement with its insurance carrier. These increases in operating cash flow were primarily offset by a decrease of $17.3 million in accounts payable and accrued liabilities mostly due to a decrease of $16.3 million in the equipment purchase liability with DIRECTV.

     In 2006, accounts receivable decreased by $18.3 million as a result of a new semi-monthly payment program with DIRECTV. Additionally, inventory decreased by $7.5 million primarily in equipment costs related to DIRECTV. A decrease in accounts payable and accrued liabilities of $15.7 million is also directly related to 180 Connect (Canada)’s business relationship with DIRECTV and the new semi-monthly payment terms.

     For the years ended December 31, 2006 and 2005, cash provided by (used in) operating activities was $6.3 million and $(15.5) million, respectively. The increase in cash provided by operating activities in 2006 was due to an increase in depreciation, amortization and impairment and amortization of deferred financing costs and accretion of loan discount of $19.9 million. The increase in depreciation, amortization and impairment related, primarily, to the financing of 180 Connect (Canada)’s vehicle lease. The reduction in inventory balances of $4.5 million was the result of improved inventory management and payment terms. The payment terms for equipment purchased from DIRECTV are 30-45 days from the shipment date, depending upon the product type. These terms have a positive affect on operating cash flows because DIRECTV pays 180 Connect (Canada) for inventory consumed on average twenty days after it is received. These positive cash flows were offset by an increase in insurance premium deposits of $6.2 million as 180 Connect (Canada) increased the collateral related to the renewal of its insurance program. In 2005, accounts receivable increased by $6.5 million and restricted cash increased by $8.7 million as 180 Connect (Canada) increased the collateral related to the renewal of 180 Connect (Canada)’s insurance program. An increase in accounts payable and accrued liabilities of $14.3 million and an increase in inventory of $2.4 million were directly related to 180 Connect (Canada)’s business relationship with DIRECTV.

     In 2004, cash provided by operating activities was $3.8 million. An increase in accounts payable and accrued liabilities of $18.6 million less the increase in accounts receivable of $0.6 million, and an increase in inventory of $12.9 million is directly related to 180 Connect (Canada)’s relationship with DIRECTV.

Cash Flow from Investing Activities

     Our historical investing activities consisted primarily of the purchase of property, plant and equipment and business acquisitions.

     For the quarter ended June 30, 2007 and June 30, 2006, cash used in investing activities was $1.0 million and $0.4 million respectively, from the purchase of property, plant, and equipment. For the six months ended June 30, 2007 and June 30, 2006 cash used in investing activities was $1.7 million and $0.1 million, respectively. In the six months ended June 30, 2006 180 Connect (Canada) realized net proceeds of $1.3 million for the sale of our remaining interest in Control F-1 which was offset by the purchase of property, plant and equipment of $1.5 million.

     In 2006, cash used in investing was $1.4 million. In 2006, 180 Connect (Canada) realized net proceeds of $1.3 million for the sale of 180 Connect (Canada)’s remaining interest in Control F-1 which was offset by the purchase of property, plant and equipment of $2.7 million.

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     In 2005, cash provided by investing activities was $21.7 million. The increase in cash provided by investing activities during the period was primarily attributable to the sale of short term investments of $16.2 million, proceeds from the sale of the common shares of Guest-Tek of $10.0 million, $2.0 million on sale of investment of Wal-Mart Stores, offset by capital expenditures of $5.7 million.

     In 2004, cash used in investing activities was $16.2 million. The decrease in cash provided by investing activities during the period was primarily attributable to the purchase of long term investments of $18.2 million, and capital expenditures of $1.9 million offset by proceeds from the sale of the common shares of Guest-Tek of $3.5 million.

Cash Flow from Financing Activities

     180 Connect (Canada) financing activities have historically consisted primarily of the use of revolving lines of credit, term loans, debentures and the issuance of equity.

     For the quarter ended June 30, 2007, cash used in financing activities was $0.2 million. The refinancing of approximately 1,020 vehicles with a third party leasing company under a capital lease resulted in net proceeds of approximately $3.5 million and the revolving line of credit provided $0.3 million. This increase in cash was offset by the payment of $4.0 million for scheduled capital lease payments.

     For the quarter ended June 30, 2006, cash used in financing activities was $4.7 million primarily due to the payment of $4.7 million of capital lease payments.

     An assumed one percentage point decrease in interest rates would have the effect of decreasing interest expense by approximately $0.1 million for the quarter ended June 30, 2007.

     For the six months ended June 30, 2007, cash provided by financing activities was $0.1 million. The refinancing of approximately 1,020 vehicles with a third party leasing company under a capital lease resulted in net proceeds of approximately $3.5 million. The revolving line of credit provided $4.1 million offset by the payment of $7.5 million for scheduled capital lease payments.

     For the six months ended June 30, 2006, cash used in financing activities was $5.7 million. 180 Connect (Canada) completed a private placement of $10.7 million of convertible debentures and warrants. This was offset by the repayment of $7.4 million of its long term debt pursuant to agreements with its lenders and the payment of $7.8 million for capital lease obligations primarily related to its new fleet.

     The working capital deficiency at June 30, 2007 was due, primarily, to the 30-45 day payment terms for inventory purchased from DIRECTV and the approximately 20 day receivable terms from DIRECTV for that inventory when it is installed in the consumer’s home.

     180 Connect (Canada) believes that operating cash flow from continuing operations and availability under existing credit facilities and the net funds received upon the consummation of the Arrangement Agreement on August 24, 2007 will be sufficient to meet its short-term and long-term requirements for ongoing operations and planned growth and acquisitions. However, 180 Connect (Canada) derives a significant portion of our revenue from a limited number of customers.

     For the year ended 2006, cash used in financing activities was $5.3 million. In the third quarter of 2006, the refinancing of the long term debt provided $42.1 million used to extinguish 180 Connect (Canada)’s previous debt of $32.9 million plus issuance costs of $3.5 million. In 2006, 180 Connect (Canada) completed a private placement of $10.7 million of convertible debentures and warrants. This was offset by the payments of $15.0 million for capital lease obligations primarily related to 180 Connect (Canada)’s new fleet and the repayment of $7.7 million of its long-term debt pursuant to agreements with its lenders.

     An assumed one percentage point decrease in the interest rates would have the effect of decreasing interest expense by approximately $0.4 million for the year ended December 31, 2006.

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     In 2005, cash used in financing activities was $15.3 million. The decrease in cash flow from financing activities in 2005 was attributable to the repayment of long-term debt of $6.9 million, $4.9 million paid in connection with capital lease financing associated with 180 Connect (Canada)’s new fleet in 2005 and a settlement with the sellers of Mountain for $2.95 million relating to 180 Connect (Canada)’s purchase of that company. 180 Connect (Canada) also paid $1.2 million to repurchase a number of its shares as part of a normal course issuer bid approved by its board of directors for 2005.

     In 2004, cash provided by financing activities was $21.2 million. The increase in cash flow from financing activities in 2004 was attributable to the net IPO proceeds of $27.2 million offset by the repayment of long-term debt of $5.4 million

Contractual Obligations

     180 Connect (Canada) has long-term debt obligations, various operating leases and purchase commitments for equipment. The amount of estimated future payments under such arrangements is detailed in the following table.

	As of June 30, 2007
	Contractual Obligations Due by Period
	Total		Within 1 Year		2 3 Years		4 5 Years		Thereafter
Long term debt (1) (4) (5)	$	43,568,216	$	35,099,533	$	8,468,683	$	—	$	—
Convertible debt (2 and 6)		8,661,316		—		8,661,316		—		—
Operating leases, real property		8,442,919		3,371,601		4,031,915		1,039,403		—
Operating leases, equipment and trucks		1,289,555		364,667		587,411		337,477		—
Capital leases, I/T Equipment		379,129		209,121		127,890		42,118		—
Capital leases — Vehicles (3)		26,684,309		12,718,215		13,943,596		22,498		—
Total	$	89,025,444	$	51,763,137	$	35,820,811	$	1,441,496	$	—

(1)	The long term debt amounts in the schedule above do not include interest because it is at variable rates. 180 Connect (Canada) estimated interest expense based on current interest rates, current balances and scheduled repayments. The estimated interest expense for the remainder of 2007, 2008-2009, 2010-2011 and thereafter is $2,673,203, $8,153,229 and nil, respectively. The amounts due have been restated from the amounts previously presented as a result of the reclassification of balances due under the Laurus Revolver facility being reclassified to current.
(2)	The convertible debt amounts in the schedule above do not include interest because it is at variable rates. 180 Connect (Canada) estimated interest expense based on current interest rates, current balances and scheduled repayments. The estimated interest expense for the remainder of 2007, 2008-2009, 2010-2011 and thereafter is $498,507, $1,994,026 and $1,221,341, respectively.
(3)	Capital lease obligations include interest in the table above.
(4)	On July 2, 2007, 180 Connect (Canada) amended its financing agreement with Laurus.
(5)	On August 24, 2007, 180 Connect (Canada) repaid $5.0 million of long term debt pursuant to the consummation of the Arrangement.
(6)	On August 29, 2007, 180 Connect (Canada) repaid the outstanding principal of the convertible debentures in full including a 20% premium plus accrued interest. The total payment was approximately $10.5 million of which $8.7 million was the face value.

Off-Balance Sheet Arrangements

     There were no off-balance sheet transactions entered into during the three and six months ended, June 30, 2007. Off-balance sheet arrangements include any contractual arrangement with an entity not reported on a consolidated basis with 180 Connect (Canada). 180 Connect (Canada) did not have any obligations under guaranteed contracts for financing instruments, a retained or contingent interest in assets transferred to an unconsolidated entity, any obligations under derivative interests or any special purpose entity transactions.

Transactions with Related Parties

     During the second quarter of 2006, 180 Connect (Canada) entered into a one-year arrangement with a member of its Board of Directors for professional services to be provided in connection with 180 Connect (Canada)’s long-term debt refinancing and strategic alternatives process. The agreements provide for maximum base compensation of $300,000. During 2006, in addition to base salary payments, the director earned and was paid $240,000 in connection with 180 Connect (Canada)’s debt refinancing and a $210,000 discretionary bonus, of which $60,000 was paid in 2006 and $150,000 was paid in the first quarter of 2007. Additional bonuses can be earned by the director in connection with closing of the arrangement transaction with AVP.

     In accordance with their agreement with 180 Connect (Canada), three of the 180 Connect (Canada)’s directors will receive bonuses upon closing of the AVP arrangement, in the amount of $1.6 million, $150,000 and $225,000. In compliance with 180 Connect (Canada)’s policy on conflicts of interest, each of these directors declared their interest and abstained from voting in connection with the approval 180 Connect (Canada)’s Board of Directors of the Arrangement Agreement and the transactions contemplated thereunder.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth information regarding the beneficial ownership of the Company’s common stock upon consummation of the Arrangement by:

• each person known by us to be the beneficial owner of more than 5% of the Company’s outstanding             shares of common stock;

• each of the officers and directors of the Company; and

• all of the officers and directors of the Company as a group.

	Amount and
	Nature of Beneficial		Percentage of
Name and Address of Beneficial Owner	Ownership(2)		Outstanding Common Stock
Howard S. Balter(1)(3)		4,545,811		17.65	%
Ilan M. Slasky(1)(4)		2,618,782		10.70	%
Lawrence J. Askowitz(1)		45,000		*
M. Brian McCarthy(1)(5)		102,000		*
Peter Giacalone(1)(5)		120,000		*
David Hallmen(1)(6)		125,522		*
Byron Osing(1)(7)		1,225,001		5.26	%
Steven Westberg(1)(8)		7,999		*
Mark Burel(1)		0		*
Joel Meltzner(1)		0		*
Jiri Modry(1)		0		*
All directors and executive officers as a group (11 individuals)		8,790,116		32.29	%

*	Less than 1%.
(1)	The business address is c/o 180 Connect Inc., 6501 E. Belleview Avenue, Englewood, Colorado 80111.
(2)	Reflects beneficial ownership following exchange of each outstanding 180 Connect common share for 0.6 shares of Ad.Venture common stock.
(3)	Pursuant to the Schedule 13D/A filed by Mr. Balter on August 20, 2007, includes (i) 1,366,209 shares of common stock held by Mr. Balter, (ii) 300,000 shares of common stock held by The H. Balter 2007 Associates, LLC, of which Mr. Balter is sole non-managing member, (iii) 200,000 shares of common stock held by The Howard S. Balter 2007 Grantor Retained Annuity Trust II (the “Balter GRAT”), and (iv) 2,529,602 shares issuable upon exercise of outstanding warrants within 60 days of August 20, 2007. Mr. Balter also informed the Company that on August 21, 2007, the Balter GRAT purchased an additional 150,000 shares of common stock. Mr. Balter disclaims beneficial ownership of the shares held by the Balter GRAT except to the extent of his pecuniary interest therein.

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(4)	Pursuant to Schedule 13D/A filed by Mr. Slasky on August 20, 2007, includes (i) 1,053,984 shares of common stock held by Mr. Slasky, (ii) 300,000 shares of common stock held by the Ilan Slasky 2007 Grantor Retained Annuity Trust (the “Slasky GRAT”), and (iii) 1,264,798 shares issuable upon exercise of outstanding warrants within 60 days of August 20, 2007. Mr. Slasky disclaims beneficial ownership of the shares held by the Slasky GRAT except to the extent of his pecuniary interest therein.
(5)	Includes 60,000 shares issuable upon exercise of outstanding stock appreciation rights within 60 days of August 24, 2007.
(6)	Includes 51,657 shares issuable upon exercise of outstanding stock options within 60 days of August 24, 2007.
(7)	Includes 85,234 shares issuable upon exercise of outstanding stock options within 60 days of August 24, 2007.
(8)	Includes 7,999 shares issuable upon exercise of outstanding stock appreciation rights within 60 days of August 24, 2007.

DIRECTORS AND EXECUTIVE OFFICERS

     The directors and executive officers of the Company upon consummation of the Arrangement are set forth in the Registration Statement, in the section entitled “Directors and Officers of Ad.Venture Following the Arrangement,” pages 176-179, which is incorporated herein by reference.

EXECUTIVE COMPENSATION

     Reference is made to the disclosure set forth in the Registration Statement, in the section entitled “Compensation Discussion and Analysis,” pages 179-188, which is incorporated herein by reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

     Reference is made to the disclosure set forth in the Registration Statement, in the section entitled “Certain Relationships and Related Transactions,” pages 190-192, and the section entitled “Directors and Officers of Ad.Venture Following the Arrangement,” pages 176-179, which are incorporated herein by reference.

     Reference is made to the disclosure set forth in the written communication pursuant to Rule 425 set forth in the Company’s Current Report on Form 8-K filed with the SEC on August 24, 2007, which is incorporated herein by reference.

Director Independence

     The Board has determined that Messrs. Askowitz, Hallmen, Meltzner, Modry and Osing qualify as independent under the rules of the Nasdaq Global Market.

Audit Committee

     The Board has established an audit committee composed of Mr. Osing as chair and “audit committee financial expert” as that term is defined under Item 407 of Regulation S-K promulgated by the SEC, and Messrs Hallmen and Askowitz as members.

Nominating and Governance Committee

     The Board has established a nominating committee composed of Mr. Meltzner as chair and Messrs. Askowitz, Osing and Hallmen as members.

Compensation Committee

     The Board has established a compensation committee composed of Messrs. Hallmen and Askowitz as co-chairs and Mr. Meltzner as a member.

29

MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS

     The Company’s common stock, warrants and units are traded on the OTC Bulletin Board under the symbols AVPA, AVPAW and AVPAU, respectively.

     The following tables set forth, for the calendar quarter indicated, the quarterly high and low bid information of the Company’s units, common stock and warrants, respectively, as quoted on the OTC Bulletin Board. The quotations listed below reflect interdealer prices, without retail markup, markdown or commission and may not necessarily represent actual transactions.

Units

Quarter Ended	High		Low
June 30, 2007	$	7.15	$	6.37

Common Stock

Quarter Ended	High		Low
June 30, 2007	$	5.79	$	5.69

Warrants

Quarter Ended	High		Low
June 30, 2007	$	0.67	$	0.315

     The following table sets forth, for the calendar quarter indicated, the quarterly high and low sale prices (in $USD) for 180 Connect (Canada)’s common shares on the TSX prior to the completion of the Arrangement.

Quarter Ended	High		Low
June 30, 2007	$	2.91	$	1.99

     Reference is made to the disclosure set forth in the Registration Statement, in the section entitled “Price Range of Securities and Dividends,” pages 193-194, and the disclosure set forth above in the section entitled “Executive Compensation”, which are incorporated herein by reference.

RECENT SALES OF UNREGISTERED SECURITIES

     Reference is made to the disclosure set forth in the Registration Statement on Form S-1, filed with the SEC on April 18, 2005, as amended (No. 333-124141), in “Item 15. Recent Sales of Unregistered Securities”, which is incorporated herein by reference. The information set forth in Item 3.02 of this Report is incorporated herein by reference.

DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED

     Reference is made to the disclosure set forth in the Registration Statement, in the section “Description of Ad.Venture and 180 Connect Securities,” pages 195-202, which is incorporated herein by reference.

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INDEMNIFICATION OF DIRECTORS AND OFFICERS

     The Company’s certificate of incorporation provides that all directors, officers, employees and agents of the registrant shall be entitled to be indemnified by the Company to the fullest extent permitted by Section 145 of the Delaware General Corporation Law. Section 145 of the Delaware General Corporation Law concerning indemnification of officers, directors, employees and agents is set forth below.

     “Section 145. Indemnification of officers, directors, employees and agents; insurance.

     (a) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.

     (b) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

     To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.

     (d) Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.

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     (e) Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.

     (f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office.

     (g) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section.

     (h) For purposes of this section, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.

     (i) For purposes of this section, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this section.

     (j) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

     (k) The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation’s obligation to advance expenses (including attorneys’ fees).”

     Insofar as indemnification for liabilities arising under the Securities Act may be permitted to the Company’s directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

32

     Paragraph B. of Article Seventh of the Company’s amended and restated certificate of incorporation provides:

     “The Corporation, to the full extent permitted by Section 145 of the DGCL, as amended from time to time, shall indemnify all persons whom it may indemnify pursuant thereto. Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or proceeding or which such officer or director may be entitled to indemnification hereunder shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized hereby.”

     Article VII of the Company’s Bylaws provides for indemnification of any of the Company’s present or former directors, officers, employees or agents for certain matters in accordance with Section 145 of the DGCL.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial statements and supplementary data set forth in Item 9.01 of this Report is incorporated herein by reference.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     The information set forth in Item 4.01 of this Report is incorporated herein by reference.

33

FINANCIAL STATEMENTS AND EXHIBITS

     The information set forth in Item 9.01 of this Report is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The following Financial Statements are set forth on Exhibit 99.1 to this Current Report on Form 8-K and are incorporated herein by reference.

Index to Financial Statements of 180 Connect Inc. (Canada)	Page
Unaudited Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006	F-2
Unaudited Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2007 and 2006	F-3
Unaudited Consolidated Statements of Shareholders’ Equity (Deficiency) as of June 30, 2007 and December 31, 2006	F-4
Unaudited Consolidated Statements of Cash Flows for the three and six months ended June 30, 2007 and 2006	F-5
Unaudited Notes to Consolidated Financial Statements	F-6
Report of Independent Registered Public Accounting Firm	F-18
Consolidated Balance Sheets as of December 31, 2006 and 2005	F-19
Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2006 and for the periods from December 26, 2004 to December 31, 2005 and from December 28, 2003 to December 25, 2004	F-20
Consolidated Statements of Shareholders’ Equity (Deficiency) as of December 31, 2006 and 2005	F-21
Consolidated Statements of Cash Flows for the year ended December 31, 2006 and for the periods from December 26, 2004 to December 31, 2005 and from December 28, 2003 to December 25, 2004	F-22
Notes to Consolidated Financial Statements	F-23

(b) Pro Forma Financial Information.

The following Pro Forma Financial Statements are set forth on Exhibit 99.2 to this Current Report on Form 8-K and are incorporated herein by reference.

Index to Pro Forma Financial Statements	Page
Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2007	II-3
Unaudited Pro Forma Condensed Combined Statements of Operations for the year ended December 31, 2006 and the six months ended June 30, 2007	II-4
Notes to Unaudited Pro Forma Condensed Combined Financial Statements	II-6

(c) Exhibits.

Exhibit No.	Description
2.1	Arrangement Agreement (1)
2.2	Plan of Arrangement (1)
2.3	Support Agreement (1)
2.4	Voting and Exchange Trust Agreement (1)
2.5	Amendment No. 1 to the Arrangement Agreement (5)
2.6	Amendment No. 2 to the Arrangement Agreement (5)
3.1	Amended and Restated Certificate of Incorporation (7)
3.2	By-laws (2)
4.1	Specimen Unit Certificate (6)
4.2	Specimen Common Stock Certificate (6)
4.3	Specimen Warrant Certificate (6)
4.4	Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant (2)

34

Exhibit No.	Description
4.5	Purchase Option granted to Wedbush Morgan Securities Inc. (2)
4.6	Purchase Option granted to Maxim Partners LLC. (2)
9.1	Form of Voting Agreement entered into between the Registrant and each of Messrs. Giacalone, Hallmen, McCarthy, Osing, Roszak and Simunovic. (1)
9.2	Form of Voting Agreement entered into between 180 Connect Inc. and each of Howard S. Balter, Ilan M. Slasky, Lawrence J. Askowitz and Dr. Shlomo Kalish. (1)
10.1	Letter Agreement between the Registrant and Howard S. Balter (2)
10.2	Letter Agreement between the Registrant and Ilan M. Slasky (2)
10.3	Letter Agreement between Wedbush Morgan Securities Inc. and Howard S. Balter (2)
10.4	Letter Agreement between Wedbush Morgan Securities Inc. and Ilan M. Slasky (2)
10.5	Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant (2)
10.6	Amended and Restated Registration Rights Agreement among the Registrant and each of the Insiders (7)
10.7	Warrant Purchase Agreement among Wedbush Morgan Securities Inc. and each of Howard S. Balter and Ilan M. Slasky (2)
10.8	Form of Note issued by the Registrant to each of Howard S. Balter and Ilan M. Slasky. (3)
10.9	Form of Affiliate Agreement entered into between 180 Connect Inc. and each of Peter Giacalone, David Hallmen, M. Brian McCarthy, Byron Osing, Matthew Roszak and Anton Simunovic. (1)
10.10	Form of Amended and Restated Registration Rights Agreement to be entered into among the Registrant and each of Peter Giacalone, David Hallmen, M. Brian McCarthy, Byron Osing, Matthew Roszak and Anton Simunovic. (1)
10.11	Securities Purchase Agreement dated March 21, 2006 among 180 Connect Inc. and Midsummer Investment Ltd., Radcliffe SPC, Ltd., and CAMOFI Master LDC. (5)
10.12	Registration Rights Agreement dated March 21, 2006 among 180 Connect Inc. and Midsummer Investment Ltd., Radcliffe SPC, Ltd., and CAMOFI Master LDC. (5)
10.13	Replacement 9.33% Convertible Debenture dated August 24, 2007 in the principal amount of $3,975,248.48. (7)
10.14	Replacement 9.33% Convertible Debenture dated August 24, 2007, in the principal amount of $2,343,033.56. (7)
10.15	Replacement 9.33% Convertible Debenture dated August 24, 2007, in the principal amount of $2,343,033.56. (7)
10.16	Replacement Common Stock Purchase Warrant to purchase 206,556 common shares. (7)
10.17	Replacement Common Stock Purchase Warrant to purchase 528,948 common shares. (7)
10.18	Replacement Common Stock Purchase Warrant to purchase 206,556 common shares. (7)

35

Exhibit No.	Description
10.19	Security and Purchase Agreement dated July 31, 2006 among Laurus Master Fund, Ltd., 180 Connect Inc. (a Nevada Corporation), Mountain Center, Inc., JJ&V Communications Inc., Tumbleweed HS Inc., Piedmont Telecommunications Inc., 180 Digital Interiors, Inc., HD Complete, Inc., Ironwood Communications Inc., and Queens Cable Contractors, Inc. (5)
10.20	Secured Non-Convertible Revolving Note dated July 31, 2006 in the principal amount of $37,000,000. (5)
10.21	Secured Non-Convertible Term Note dated July 31, 2006 in the principal amount of $20,000,000. (5)
10.22	Overadvance Letter dated July 31, 2006. (5)
10.23	Guaranty of 180 Connect Inc. dated July 31, 2006. (5)
10.24	Guaranty of Wirecomm America, Inc. dated July 31, 2006. (5)
10.25	Stock Pledge Agreement dated July 31, 2006, among Laurus Master Fund, Ltd., 180 Connect Inc. (a Nevada corporation) and Wirecomm America, Inc. (5)
10.26	Share Pledge Agreement dated July 31, 2006, among Laurus Master Fund, Ltd., 180 Connect Inc. (a Canada corporation) and Wirecomm Systems Inc. (5)
10.27	Master Security Agreement dated July 31, 2006, among Wirecomm America, Inc., 180 Connect Inc. and Laurus Master Fund, Ltd. (5)
10.28	Canadian Master Security Agreement dated July 31, 2006, among Wirecomm Systems Inc., 180 Connect Inc. and Laurus Master Fund, Ltd. (5)
10.29	Common Stock Purchase Warrant dated July 31, 2006 to purchase 2,000,000 common shares. (5)
10.30	Amendment dated July 2, 2007 to that certain Secured Non-Convertible Revolving Note dated July 31, 2006 by and among Laurus Master Fund, Ltd., 180 Connect Inc. and other parties thereto. (5)
10.31	Common Stock Purchase Warrant dated July 2, 2007 to purchase up to 1,000,000 common shares of 180 Connect. (5)
10.32	Letter Agreement dated July 2, 2007 by and among 180 Connect Inc., Howie Balter and Ilan Slasky. (5)
10.33	Reaffirmation and Ratification Agreement dated July 2, 2007 executed and delivered by 180 Connect Inc. and its subsidiaries. (5)
10.34	Amendment Agreement dated July 2, 2007 by and among Laurus, 180 Connect Inc. and its subsidiaries. (5)
10.35	Warrant Letter Agreement dated July 2, 2007 by and between Laurus and Ad.Venture. (4)
10.36	Tri-Party Letter Agreement dated July 10, 2007 by and among Laurus, 180 Connect, Howie Balter and Ilan Slasky. (5)
10.37	Home Services Provider Agreement dated June 1, 2005 between DIRECTV, Inc. and 180 Connect. (5)

36

Exhibit No.	Description
10.38	Form of SAR Exchange Agreement (5)
10.39	Executive Employment Agreement with Mark Burel (5)
10.40	Executive Employment Agreement with Steven Westberg (5)
10.41	Executive Employment Agreement with Peter Giacalone (5)
10.42	Amended Director Employment Agreement with M. Brian McCarthy (5)
10.43	Amendment to M. Brian McCarthy Amended Director Employment Agreement (5)
16.1	Letter from Eisner LLP (7)
20.1	List of Subsidiaries (7)
99.1	Financial Statements of 180 Connect Inc. (Canada) (*)
99.2	Pro Forma Financial Statements(*)

*	Filed herewith.
(1)	Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on March 15, 2007.
(2)	Incorporated by reference to the Company’s Registration Statement on Form S-1 (SEC File No. 333-124141).
(3)	Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on January 30, 2007.
(4)	Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on July 9, 2007.
(5)	Incorporated by reference to the Company’s Registration Statement on Form S-4 (SEC File No. 333-142319)
(6)	Incorporated by reference to the Company’s Form 8-A/A filed with the Commission on August 24, 2007.
(7)	Previously filed with the Company’s Current Report on Form 8-K filed with the Commission on August 30, 2007.

37

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	180 CONNECT INC.
Dated: April 1, 2008	By:	/s/ Peter Giacalone
		Peter Giacalone
		Chief Executive Officer

38

EX-99.1

EXHIBIT 99.1

180 Connect Inc.
Index to Consolidated Financial Statements

	Page
Financial Statements
Unaudited Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006	F-2
Unaudited Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2007 and 2006	F-3
Unaudited Consolidated Statement of Shareholders’ Equity (Deficiency) as of June 30, 2007 and December 31, 2006	F-4
Unaudited Consolidated Statements of Cash Flows for the three and six months ended June 30, 2007 and 2006	F-5
Unaudited Notes to Consolidated Financial Statements	F-6
Report of Independent Registered Public Accounting Firm	F-18
Consolidated Balance Sheets as of December 31, 2006 and 2005	F-19
Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2006 and for the periods from December 26, 2004 to December 31, 2005 and from December 28, 2003 to December 25, 2004	F-20
Consolidated Statements of Shareholders’ Equity (Deficiency) as of December 31, 2006 and 2005	F-21
Consolidated Statements of Cash Flows for the year ended December 31, 2006 and for the periods from December 26, 2004 to December 31, 2005 and from December 28, 2003 to December 25, 2004	F-22
Notes to Consolidated Financial Statements	F-23

F-1

Consolidated Financial Statements

180 Connect Inc.
Consolidated Balance Sheets
(in United States Dollars)
(Unaudited)

	June 30, 2007			December 31, 2006
	(Restated - Note 5)			(Restated - Note 5)
Assets (Note 5)
Current Assets
Cash and cash equivalents	$	358,952		$	2,904,098
Accounts receivable (less allowance for doubtful accounts of $3,051,568 and $2,506,637, respectively)		41,000,390			48,934,952
Inventory		14,764,500			15,816,148
Restricted cash		11,859,300			14,503,000
Prepaid expenses and other assets		3,795,276			7,910,255
TOTAL CURRENT ASSETS		71,778,418			90,068,453
Property, plant and equipment		31,942,263			34,882,890
Goodwill		11,034,723			11,034,723
Customer contracts, net		23,232,010			25,072,756
Deferred tax asset		241,608			—
Other assets		4,723,854			4,384,750
TOTAL ASSETS	$	142,952,876		$	165,443,572
Liabilities and Shareholders’ Equity (Deficiency)
Current liabilities
Accounts payable and accrued liabilities	$	61,805,038		$	78,686,245
Current portion of long-term debt		35,099,533			26,502,096
Fair value of derivative financial instruments		7,641,744			4,065,729
Current portion of capital lease obligations		11,823,226			13,033,104
TOTAL CURRENT LIABILITIES		116,369,541			122,287,174
Income tax liability		352,212			—
Long-term debt		8,468,683			12,264,621
Convertible debt		5,538,582			6,276,584
Long-term portion of capital lease obligations		13,398,114			15,213,112
TOTAL LIABILITIES		144,127,132			156,041,491
Commitments and contingencies (Notes 5, 6 and 14)
Shareholders’ Equity (Deficiency)
Share capital (27,356,034 and 24,476,626 shares issued and outstanding, respectively)		72,174,838			66,397,608
Contributed surplus		22,038,343			22,188,707
Paid in capital		—			3,286,967
Retained earnings (deficit)		(95,872,467	)		(82,956,231	)
Accumulated other comprehensive income		485,030			485,030
TOTAL SHAREHOLDERS’ EQUITY (DEFICIENCY)		(1,174,256	)		9,402,081
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	142,952,876		$	165,443,572

See accompanying notes

F-2

180 Connect Inc.
Consolidated Statements of Operations and Comprehensive Loss
(in United States Dollars)
(Unaudited)

	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	June 30, 2007			June 30, 2006			June 30, 2007			June 30, 2006
Revenue	$	87,908,770		$	75,583,830		$	181,094,332		$	149,337,387
Expenses
Direct expenses		79,413,481			68,308,041			164,938,954			137,378,253
General and administrative		4,709,976			5,049,115			9,747,977			9,311,830
Foreign exchange loss (gain)		(51,820	)		(10,303	)		(40,682	)		3,502
Restructuring costs		—			—			275,000			392,879
Depreciation		2,771,909			3,254,872			5,516,703			6,580,330
Amortization of customer contracts		920,370			939,077			1,840,746			1,859,453
Interest expense		3,234,850			2,377,725			6,211,018			4,026,957
(Gain) loss on sale of investments and assets		427,442			86,291			499,220			(1,250,163	)
(Gain) loss on change in fair value of derivative liabilities		1,903,270			2,051,968			4,689,661			1,165,575
Loss from continuing operations before income tax expense		(5,420,708	)		(6,472,956	)		(12,584,265	)		(10,131,229	)
Income tax expense (recovery)		178,444			(34,000	)		252,444			38,800
Loss from continuing operations		(5,599,152	)		(6,438,956	)		(12,836,709	)		(10,170,029	)
Loss from discontinued operations, net of income taxes of nil		(68,016	)		(744,188	)		(79,527	)		(1,337,795	)
Net loss and comprehensive loss for the period	$	(5,667,168	)	$	(7,183,144	)	$	(12,916,236	)	$	(11,507,824	)
Loss per share from continuing operations:
Basic	$	(0.21	)	$	(0.26	)	$	(0.50	)	$	(0.42	)
Diluted	$	(0.21	)	$	(0.26	)	$	(0.50	)	$	(0.42	)
Net loss per share:
Basic	$	(0.21	)	$	(0.29	)	$	(0.50	)	$	(0.47	)
Diluted	$	(0.21	)	$	(0.29	)	$	(0.50	)	$	(0.47	)
Weighted average number of shares outstanding — basic		26,742,298			24,426,277			25,618,320			24,325,497
Weighted average number of shares outstanding — diluted		26,742,298			24,426,277			25,618,320			24,325,497

See accompanying notes

F-3

180 Connect Inc.
Consolidated Statements of Shareholders’ Equity (Deficiency)
(in United States Dollars)
(Unaudited)

												Accumulated
									Retained			Other
			Contributed						Earnings			Comprehensive
	Share Capital		Surplus			Paid in Capital			(Deficit)			Income (Loss)		Total
Balance, December 31, 2006	$	66,397,608	$	22,188,707		$	3,286,967		$	(82,956,231	)	$	485,030	$	9,402,081
Issuance on exercise of stock options for cash		179,773		(150,364	)										29,409
Issuance on exercise of warrants for cash		17,260													17,260
Issuance on exercise of convertible debt		2,293,230								—					2,293,230
Exercise of warrants on long-term debt		3,286,967					(3,286,967	)							—
Loss from operations										(12,916,236	)				(12,916,236	)
Balance, June 30, 2007	$	72,174,838	$	22,038,343		$	—		$	(95,872,467	)	$	485,030	$	(1,174,256	)

See accompanying notes

F-4

180 Connect Inc.
Consolidated Statements of Cash Flows
(in United States Dollars)
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2007			June 30, 2006			June 30, 2007			June 30, 2006
Cash provided by (used in) the following activities:
Operating
Loss from continuing operations	$	(5,599,152	)	$	(6,438,956	)	$	(12,836,709	)	$	(10,170,029	)
Add (deduct) items not affecting cash:
Depreciation and amortization		3,692,279			4,193,949			7,357,449			8,439,783
Non-cash interest expense		1,096,751			856,518			2,185,124			1,116,390
Stock-based compensation		—			—			—			91,214
Loss on change in fair value of derivative liabilities		1,903,270			2,051,968			4,689,661			1,165,575
(Gain) loss on sale of investments and assets		427,442			86,291			499,220			(1,250,163	)
Other		35,755			3,432			39,926			2,145
Changes in non-cash working capital balances related to operations:
Accounts receivable		(5,797,950	)		(1,110,499	)		7,934,562			18,278,851
Inventory		391,991			5,440,290			1,051,648			7,527,233
Other current assets		498,265			(46,612	)		(380,149	)		113,694
Insurance premium deposits		2,408,595			(2,301,808	)		4,605,732			(2,301,808	)
Other assets		(269,999	)		(53,872	)		(1,372,063	)		20,702
Restricted cash		1,162,263			6,980			2,643,700			247,366
Accounts payable and accrued liabilities		385,620			447,517			(17,293,338	)		(15,737,129	)
Operating cash flows from discontinued operations		60,200			658,836			(60,507	)		(1,057,015	)
Total cash provided by (used in) operating activities		274,930			2,476,362			(935,744	)		6,486,809
Investing
Purchase of property, plant and equipment		(992,766	)		(359,021	)		(1,692,108	)		(1,461,461	)
Net proceeds from disposition of investments		—			—			—			1,327,693
								aa a
Total cash used in investing activities		(992,766	)		(359,021	)		(1,692,108	)		(133,768	)
Financing
Repayment of capital lease obligations		(3,993,907	)		(4,706,252	)		(7,485,667	)		(7,844,081	)
Repayment of long-term debt		—			—			—			(7,350,000	)
Proceeds from share issuance		17,260			252,000			46,668			259,712
Increase in borrowings under the Revolver credit facility		325,688			—			4,090,917			—
Issuance costs on long-term debt		—			(101,081	)		—			(101,081	)
Net proceeds from refinancing of vehicles		3,470,714			—			3,470,714			—
Proceeds from issuance of convertible debt		—			—			—			10,686,101
Issuance costs paid on convertible debt		—			(111,750	)		—			(1,388,985	)
Total cash provided by (used in) financing activities		(180,245	)		(4,667,083	)		122,632			(5,738,334	)
Effect of exchange rates on cash and cash equivalents		(35,755	)		(3,432	)		(39,926	)		(2,145	)
Net increase (decrease) in cash and cash equivalents during the period		(933,836	)		(2,553,174	)		(2,545,146	)		612,562
Cash and cash equivalents, beginning of period		1,292,788			6,519,188			2,904,098			3,353,452
Cash and cash equivalents, end of period	$	358,952		$	3,966,014		$	358,952		$	3,966,014
Supplemental cash flow information:
Interest paid	$	2,176,854		$	1,476,896		$	4,410,120		$	3,078,937
Income taxes paid	$	129,988			94,357		$	142,583		$	94,357

Supplemental disclosure of non-cash investing and financing transactions:
For the six months ended June 30, 2007 and June 30, 2006, the Company had additional capital lease obligations for vehicles of $1,357,480 and $6,547,688, respectively.

See accompanying notes

F-5

180 Connect Inc.
Notes to Consolidated Financial Statements
(In United States Dollars)
(Unaudited)

1. BASIS OF PRESENTATION

     The interim consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles applicable to interim consolidated financial statements and include 180 Connect Inc. and its subsidiaries (the “Company”). The notes presented in these interim consolidated financial statements include only significant events and transactions occurring since the Company’s last fiscal year and are not fully inclusive of all matters normally disclosed in the Company’s annual audited consolidated financial statements. As a result, these interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2006.

     The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

     In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments necessary to fairly present the Company’s results for the interim periods presented. These unaudited interim consolidated financial statements have been prepared by management using the same accounting policies and methods of application as the most recent annual consolidated financial statements of the Company except as described in Note 2 below.

     The results of operations for the three and six months ended June 30, 2007 are not necessarily indicative of the results to be expected for the full year.

     Seasonality

     The Company’s revenue is subject to seasonal fluctuations. Our customers’ subscriber growth, and thus the revenue earned by the Company, trends higher in the third and fourth quarters of the year. While subscriber activity is subject to seasonal fluctuations, it may also be affected by competition and varying amounts of promotional activity undertaken by the Company’s customers.

     Transaction with Ad.Venture Partners, Inc.

     On March 13, 2007, the Company announced that it had entered into an arrangement agreement (“Arrangement Agreement”) with Ad.Venture Partners, Inc. (“AVP”) (OTCBB: AVPA.OB), a special purpose acquisition company, that will result, subject to shareholder approval, in the merger of the Company into an indirect wholly-owned Canadian subsidiary of AVP. AVP, a U.S. corporation, will be re-named “180 Connect” and is expected to qualify for listing on NASDAQ soon after the conclusion of the transaction. AVP is required by the terms of its charter to liquidate if it does not consummate a business combination by August 31, 2007, irrespective of the status of any required approvals or review. On August 24, 2007, the transaction was consummated. See also note 17.

     After giving effect to the arrangement, based on the number of Ad.Venture shares of common stock and 180 Connect common shares outstanding as of the August 24, 2007, 16,422,442 shares of Ad.Venture common stock and/or exchangeable shares, representing 63.2% of the combined company’s voting interets was issued to 180 Connect shareholders in connection with the arrangement.

     The arrangement will be accounted for under the reverse acquisition application of the equity recapitalization method of accounting. Under this method of accounting, Ad.Venture will be treated as the “acquired” company for financial reporting purposes. In accordance with guidance applicable to these circumstances, the arrangement will be considered to be a capital transaction in substance. The accumulated deficit of 180 Connect will be carried forward after the completion of the arrangement. The historical financial statements of the registrant will be the historical financial statements of 180 Connect.

F-6

     Change in Accounting Estimate

     In the first quarter of 2007, the Company changed its depreciation period on its leased vehicles from 48 months to 60 months, resulting in a decrease of approximately $0.7 million and $1.4 million in depreciation expense for the three and six months ended June 30, 2007. This change in accounting estimate was adopted to better reflect the useful life of the asset and was applied prospectively from January 1, 2007.

2. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

     In February 2006, the FASB issued SFAS 155 — Accounting for Certain Hybrid Financial instruments — an amendment of FASB Statements No. 133 and 140 (“SFAS 155”). SFAS 155 resolves issues addressed in Statement 133 Implementation Issue No. D1 “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” This Statement:

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

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

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

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

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

     SFAS 155 is effective for all financial instruments acquired or issued after the beginning of the Company’s fiscal year that commences on January 1, 2007. The application of this pronouncement had no material impact on the financial position or results of operations.

     In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of SFAS 157 are effective for the fiscal years beginning after November 15, 2007. The Company is currently reviewing SFAS 157, but has not yet determined the impact on the consolidated financial statements.

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities- Including an amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The provisions of SFAS 159 are effective for the fiscal years beginning after November 15, 2007. The Company is currently reviewing SFAS 159, but has not yet determined the impact on the consolidated financial statements.

     In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the Company’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes”, and prescribes a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax provision taken or expected to be taken in a tax return. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006 and adopted effective January 1, 2007. The impact of adoption of FIN 48 is disclosed in note 10.

3. RESTRICTED CASH

     As at June 30, 2007 and December 31, 2006, the Company has restricted cash, in the form of term deposits of approximately $11.9 million and $14.5 million, respectively. These term deposits are used to collateralize obligations associated with its insurance program and for contractor licensing surety bonds in several states. Interest earned of 1% to 5% on these funds is received monthly and is not subject to restriction.

F-7

     On February 8, 2007, as a result of the liquidation and reduction in its insurance obligations, the Company negotiated a reduction in its required letter of credit (“LOC”). The LOC requirement, which is collateralized with the Company’s restricted cash, has been reduced by $3.2 million. This reduction in the Company’s restricted cash balance has been offset by a $1.6 million increase in restricted cash as collateral for a $1.6 million bond for the Boise airport project currently in progress by the Company’s Network Services operation.

4. GOODWILL AND CUSTOMER CONTRACTS

     The carrying amount of intangibles is as follows.

	Goodwill		Customer Contracts
Balance as of December 31, 2006	$	11,034,723	$	25,072,756
Amortization expense		—		(1,840,746	)
Balance at of June 30, 2007	$	11,034,723	$	23,232,010

     Amortization expense charged to continuing operations for the three and six months ended June 30, 2007 was $920,370 and $1,840,746, respectively and for the three and six months ended June 30, 2006 was $939,077 and $1,859,453, respectively.

     Estimated future amortization expense is as follows:

2007 (remainder)	$	1,840,757
2008		3,681,503
2009		3,681,503
2010		3,681,503
2011		3,681,503
Thereafter		6,665,241
Total	$	23,232,010

     Operating lease expense for the three months ended June 30, 2007 and June 30 2006, was $931,798 and $1,003,532, respectively, and $1,959,868 and $1,887,147 for the six months ended June 30, 2007 and June 30, 2006, respectively.

F-8

5. LONG-TERM DEBT AND COMMON STOCK PURCHASE WARRANTS

     Long-term debt consists of the following:

	June 30, 2007			December 31, 2006
	(Restated)			(Restated)
Revolving credit facility and over advance facility of up to $37,000,000 bearing interest at prime plus 3% to 5%, subject to a minimum interest rate of 10% to 11% with interest payable monthly. The revolving credit facility is subject to the Company’s eligible trade receivables and inventory as per the debt agreement and collateralized by the Company’s real and personal property. For the period of August 1, 2006 to July 31, 2007, the Company can draw in excess of the eligible trade receivables and inventory an over advance of up to $9,000,000 but not to exceed an aggregate amount of $37,000,000. At June 30, 2007 the interest rate of the revolving credit facility was 11.25% and the interest rate of the over advance facility was 13.25% with an effective interest rate of 12.35%. At December 31, 2006 the interest rate for the revolving credit facility was 11.25% and the interest rate for the over advance facility was 13.25% with an effective interest rate of 12.21%. Repayment is due on or before July 31, 2009. The credit facility may be borrowed, repaid, and reborrowed in accordance with the terms of the Security Agreement	$	27,570,700		$	19,758,475
Term note, bearing interest at prime plus 5%, subject to a minimum interest rate of 12% and interest is payable monthly. At June 30, 2007, the interest rate was 13.25% with an effective interest rate of 20.5%. At December 31, 2006, the interest rate was 13.25% with an effective interest rate of 17.5%. Repayments of the term note commenced on February 1, 2007 for $666,667 per month, with the final payment due on July 31, 2009		15,997,516			19,008,242
Total debt		43,568,216			38,766,717
Less: current portion		(35,099,533	)		(26,502,096	)
Total long-term debt	$	8,468,683		$	12,264,621

     Pursuant to the original terms of the debt agreement, the Company, through its wholly-owned subsidiary 180 Connect, Inc. (“180 Connect Nevada”), had available a maximum amount of $57 million of debt comprising a term facility of $20 million and a combined revolving credit facility and over-advance facility of up to $37 million. The revolving credit facility is subject to the Company’s eligible trade receivables and inventory as per the debt agreement. For the period of August 1, 2006 to July 31, 2007, the Company can draw in excess of the eligible trade receivables and inventory an over-advance amount up to $9 million but not to exceed an aggregate amount of $37 million. After July 31, 2007, the over advance will become part of the revolving facility, this was further extended to August 24, 2007 as disclosed in note 17. The interest rates on the new debt range from prime plus 3% to prime plus 5%, subject to a minimum interest rate of 10% to 12%, and are therefore subject to risk relating to interest rate fluctuations. Monthly term loan repayments commenced February 1, 2007 for $666,667.

     The debt agreement states that there are no financial covenants of the Company with respect to such facilities but includes other covenants and events of default typical for credit facilities of this nature. This facility is collateralized by a security interest in all of the assets of 18 Connect Nevada. 180 Connect Nevada obtained a waiver from Laurus, with regards to the AVP acquisition as it may constitute a change of control as defined in the debt agreement.

     The debt agreement includes a stock purchase agreement which provides for the Company to issue warrants for Laurus to purchase up to 2,000,000 common shares for nominal consideration of Canadian $0.01 per share, having a term of seven years. The issuance of the warrants to Laurus was approved by the shareholders of the Company at the Company’s annual and special meeting held June 30, 2006. Laurus has agreed not to sell any common shares of the Company issuable upon exercise of the warrants for a period of 12 months following the date of issuance of the warrants. Thereafter, Laurus may, at its option and assuming exercise of the warrants, sell up to 250,000 common shares of the Company per calendar quarter (on a cumulative basis) over each of the following eight quarters. On April 2, 2007, Laurus exercised its right under the warrants to purchase the 2,000,000 common shares (Note 7b).

F-9

     The common stock purchase warrants were valued at $3,286,967, net of issuance costs of $299,165, using the Black-Scholes option pricing model using the following variables: volatility of 76.64%, expected life of seven years, a risk free interest rate of 4.5% and a dividend of nil. The fair value of the loan was measured using a three-year maturity and the present value of the cash payments of interest and principal due under the terms of the debt agreement discounted at a rate of 17.5% which approximates a similar non-convertible financial instrument with comparable terms and risk. Under Emerging Issues Task Force No.00-19 and APB Opinion No.14, the fair value of warrants issued in connection with the stock purchase warrants would be recorded as a reduction to the proceeds from the issuance of long-term debt, with the offset to additional paid-in capital. At June 30, 2007, the Company has recorded $1,300,429 of accumulated loan discount.

     The Company paid $3,515,471 of issuance costs to complete the long-term debt financing. The issuance costs have been recorded based on a pro rata calculation of the fair value of the components of the debt and warrants for $3.2 million and $0.3 million, to other assets and paid in capital, respectively. The issuance costs related to the long-term debt were recorded in other assets and are being amortized over the three-year period to maturity of the debt agreement with the Investor.

     Subsequent to the issuance of the Company’s audited and unaudited consolidated financial statements as of and for the year ended December 31, 2006, and as of and for the six months ended June 30, 2007, respectively, the Company’s management determined that an error existed in previously issued consolidated balance sheets. The Company determined that the long-term debt for the Revolver credit facility should be classified as current in accordance with EITF-95-22, “Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements that Include Both a Subjective Acceleration Clause and a Lockbox Arrangement” (“EITF 95-22”). As a result, the accompanying balance sheets as of December 31, 2006 and June 30, 2007 have been restated from amounts previously reported in Form 8-K dated August 24, 2007. The restatements had no impact on the previously reported consolidated statements of operations and comprehensive loss, shareholders’ equity or cash flows. A summary of the effects of the restatements are as follows:

	Previously Reported		As restated
	June 30, 2007		June 30, 2007
Current portion of long-term debt	$	6,752,886	$	35,099,533
Long-term debt		36,815,330		8,468,683

	Previously Reported		As restated
	December 31, 2006		December 31, 2006
Current portion of long-term debt	$	5,967,674	$	26,502,096
Long-term debt		32,799,043		12,264,621

     The Company’s revolving credit facility (the ‘Revolver”) requires a lockbox arrangement, which provides for all receipts to be swept daily to reduce borrowings outstanding under the credit facility. This arrangement, combined with the existence of a subjective acceleration clause in the revolving credit facility, requires that the borrowings under the Revolver be classified as a current liability on the balance sheet in accordance with EITF 95-22. The acceleration clause could allow the Company’s lender to forego additional advances should they determine there has been a material adverse change in the Company’s financial position or prospects reasonably likely to result in a material adverse effect on the Company’s business, condition (financial or otherwise), operations, performance or properties. The Company believes that no such material adverse change has occurred; further, as of March 27, 2008, the Company’s lender had not informed the Company that any such event had occurred.

6. CONVERTIBLE DEBENTURES AND WARRANTS

     On March 22, 2006, the Company completed a private placement with a group of qualified, accredited institutional investors of $10,686,101 of convertible debentures and warrants. The convertible debentures bear interest at 9.33% per annum, have a term of five years that are due March 22, 2011, and are convertible into 4,486,000 common shares at an initial conversion price of $2.3821 per share. The warrants, which have a four-year term, are exercisable into 1,570,100 common shares of the Company at an exercise price of $2.5986 per share. During the second quarter of 2007, one of the institutional investors of the convertible debentures and warrants exercised its option to convert in total $2,024,785 of principal under the 9.33% convertible debentures into 850,000 common shares.

F-10

     On March 7, 2007, the Company received written approval from the institutional investors of the holders of the Company’s convertible debentures and warrants for an extension of the original requirement to be listed or quoted on a U.S. trading market. If the Company’s common stock, or the shares of Ad.Venture Partners, Inc. (“AVP”) in the event of a successful merger is not listed on a U.S. trading market as soon as reasonably practicable after the earlier of the date on which the transaction proposed in the Arrangement Agreement is consummated or the ninetieth day following the date on which the Arrangement Agreement is terminated by either party, but no later than August 31, 2007 (the “Required Listing Date”), the Company shall be required to immediately pay retroactive monthly principal payments of $1.0 million from January 1, 2007. The Company shall thereafter be obligated to make monthly principal payments of $1.0 million on each ensuing monthly redemption date until fully paid by November 30, 2007, regardless of whether or not the Company subsequently obtains a listing of the common stock on a U.S. trading market. The Company’s obligation to delist from the Toronto Stock Exchange (“TSX”) on or before December 31, 2006 has also been conditionally waived and replaced with an obligation to delist the common stock from the TSX on or before the ninetieth day following the Required Listing Date.

     In the event the Company does not meet deadlines relating to the filing and effectiveness of a registration statement with the United States Securities and Exchange Commission, the Company is required to pay, on a monthly basis, liquidated damages of approximately $214,000 per month (2% of the aggregate purchase price paid by the investors in the private placement), up to a maximum of approximately $3.4 million, until such obligations are fulfilled.

     The debentures are convertible, in whole or in part into common shares at the option of the holder, at any time after the original issue date, subject to certain conversion limitations. The holder also has the option to force redemption of some or all of its outstanding debentures at any time after the three-year anniversary of the original issue date. If the price of the Company’s common stock exceeds $5.9551 for a period of any 20 consecutive days, on a U.S. trading market, the Company may have the holder convert up to 50% of the then outstanding principal amount of debentures. If the price of the Company’s common stock exceeds $7.0379 per share for any 20 consecutive trading days, the Company may force a holder to convert all or part of the outstanding principal amount of the debentures.

     The Company shall pay interest to the holder on the aggregate unconverted and then outstanding principal amount of the debenture at the rate of 9.33% per annum, increasing to 12% per annum if the Company’s common stock, or the shares of AVP in the event of a successful merger, are not listed or quoted on a U.S. trading market on or before the Required Listing Date, payable quarterly, in arrears. If the Company’s common stock, or the shares of AVP in the event of a successful merger, are not listed on a U.S. trading market on or before the Required Listing Date, the Company shall be required to immediately pay the interest rate increase retroactive to January 1, 2007 and the interest rate increase shall apply prospectively thereafter, regardless of whether or not the Company subsequently obtains a listing of the common stock on a U.S. trading market. The interest rate shall be reduced by 1.33% beginning in the month following the date the holder receives an opinion from counsel to the Company, in form and substance reasonably satisfactory to the holder, that distributions including interest payments under this debenture, are no longer subject to mandatory tax withholding under the Income Tax Act (Canada).

     SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as amended, requires that an embedded derivative included in a debt arrangement for which the economic characteristics and risks are not clearly and closely related to the economic characteristics of the debt host contract be measured at fair value and presented as a liability. Changes in fair value of the embedded derivative are recorded in the consolidated statements of operations and deficit at each reporting date. Embedded derivatives that meet the criteria for bifurcation from the convertible debt and that are therefore presented as liabilities and measured at fair value consist of (i) a holder conversion option whereby the Holder may elect to convert at any time with an initial conversion price of $2.38 per share, (during the second quarter of 2007, one of the institutional investors of the convertible debentures and warrants exercised its option to convert in total $2,024,785 of principal under the 9.33% convertible debentures into 850,000 common shares), (ii) accelerated repayment due to default provisions including change in control and other fundamental transactions in which the holders may receive the greater of 120% of the outstanding principal amount plus accrued interest or the conversion value, (iii) forced conversion provisions whereby the Company may force conversion of the outstanding balance of the debenture into common stock based upon the Company’s stock price, and (iv) an accelerated repayment schedule required in the event that a U.S. stock exchange listing is not completed by a specified date.

     In December 2006, the FASB issued EITF 00-19-2, “Accounting for Registration Payment Arrangements.” This FSP addresses an issuer’s accounting for registration payment arrangements and specifies that the contingent liability to make future payments or otherwise transfer consideration under a registration payment arrangement should be separately recognized and measured in accordance with FASB No. 5. At January 1, 2007, the Company adopted EITF 00-19-2, and the embedded derivatives were reevaluated by management in consultation with a third party valuation firm. No adjustments to the prior period presented were required as the impact on the Company’s financial statements was insignificant.

     The warrants issued with the convertible debenture are presented as a liability because they do not meet the criteria of EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, for equity classification. Subsequent changes in fair value are recorded in the consolidated statements of operations and deficit.

F-11

     The Company allocated the gross proceeds received to the convertible debt and warrants on a relative fair value basis. The embedded derivatives were then measured at fair value and the residual amount was allocated to the debt host. The Company allocated $5.3 million to the debt, $1.1 million to the warrants and $4.3 million to the embedded derivatives. The issuance costs of $1.4 million related to the transaction were allocated to the debt and the warrants based upon their relative fair value which approximates the relative costs to raise capital for debt and equity. Issuance costs of $0.2 million allocated to the warrants were expensed on the origination date of the transaction. Issuance costs of $1.2 million allocated to the debt will be amortized over the deemed life of three years using the effective interest method. Each reporting period, the Company is required to accrete the carrying value of the convertible debentures such that at the deemed maturity date of March 22, 2009 the carrying value of the debentures will be their face value of $10.7 million. As of June 30, 2007, the Company recognized $1.8 million in accumulated accretion expense under US GAAP which has increased the value of the convertible debentures from $5.3 million to $7.1 million.

     The following tables show the changes in the fair values of derivative instruments recorded in the consolidated financial statements for the three and six months ended June 30, 2007.

	Warrants		Embedded Derivatives			Total
Fair value at March 31, 2007	$	1,773,138	$	5,078,982		$	6,852,120
Changes in fair value — three months ended		623,268		1,280,002			1,903,270
Settled on conversion of debentures		—		(1,113,646	)		(1,113,646	)
Fair value, June 30, 2007	$	2,396,406	$	5,245,338		$	7,641,744
Fair value at December 31, 2006	$	1,035,207	$	3,030,522		$	4,065,729
Changes in fair value — six months ended		1,361,199		3,328,462			4,689,661
Settled on conversion of debentures		—		(1,113,646	)		(1,113,646	)
Fair value, June 30, 2007	$	2,396,406	$	5,245,338		$	7,641,744

     If at any time after one year from the date of issuance of the warrants there is no effective registration statement registering, or no current prospectus available for, the resale of the warrant shares by the holder, and the common stock is listed on a U.S. trading market, then the warrant may also be exercised at such time by means of a cashless exercise in which the holder shall be entitled to receive a certificate for the number of warrant shares equal to the quotient obtained by dividing the average stock price for the five trading days immediately preceding the date of such election less the exercise price of the warrant, as adjusted multiplied by the number of warrant shares issuable upon exercise of the warrant in accordance with the terms of the warrant by means of a cash exercise rather than a cashless exercise.

     The consummation of the Arrangement Agreement constitutes an event of default as it is a fundamental transaction under 180 Connect’s convertible debt agreement. On August 29, 2007, the lenders exercised their right to redeem the convertible debentures in full in the amount of approximately $10.4 million plus accrued interest of $0.1 million in accordance with the terms of the convertible debenture agreement. See note 17.

7. SHARE CAPITAL

(a) Authorized

     Unlimited number of voting common shares.

(b) Issued

	Common Shares
	Shares		$
Balance, December 31, 2005		24,216,914	$	64,809,968
Issuance on exercise of stock options — for cash		259,712		1,587,640
Balance, December 31, 2006		24,476,626	$	66,397,608
Issuance on exercise of stock options — for cash		29,408		179,773
Issuance on exercise of warrants for cash		—		17,260
Issuance on exercise of stock purchase warrants for cash		2,000,000		3,286,967
Issuance on conversion of convertible debentures		850,000		2,293,230
Balance, June 30, 2007		27,356,034	$	72,174,838

     On April 2, 2007, Laurus exercised its right under the warrants to purchase the 2,000,000 common shares for $17,260, resulting in a debit to cash for $17,260, and a credit to share capital of $17,260 and in addition $3,286,967 was transferred from paid in capital to share capital. During the second quarter of 2007, one of the institutional investors of the convertible debentures and warrants exercised its option to convert in total $2,024,785 of principal under the 9.33% convertible debentures into 850,000 common shares. This was recorded as a debit to convertible debt and embedded derivative liabilities and a credit to share capital of $2,452,205. In addition, $158,975 of the associated issuance costs were reclassified from other assets to share capital.

(c) Employee stock options

     As at June 30, 2007, the Company has 553,836 options outstanding to employees and directors of the Company (December 31, 2006 — 583,244) to purchase an equal amount of common shares for an exercise price equal to the fair market value of the Company’s common shares on the date of the grant. The options have a life of up to 10 years from the date of grant. Vesting terms and conditions are determined by the Board of Directors at the time of grant and vesting terms range from three to five years. The Company does not have a stock option plan; rather it has stock option agreements with certain individuals. On July 20, 2007, 14,704 options were exercised.

F-12

     The following table summarizes the Company’s stock option activity:

	Six Months Ended					Year Ended
	June 30, 2007					December 31, 2006
				Weighted					Weighted
	Number of			Average		Number of			Average
	Options			Exercise Price		Options			Exercise Price
Outstanding, beginning of period		583,244		$	1.75		1,426,666		$	1.31
Granted		—			—		—			—
Exercised		(29,408	)	$	1.00		(259,712	)	$	1.00
Cancelled		—			—		(583,710	)	$	1.00
Outstanding, end of period		553,836		$	1.79		583,244		$	1.75
Options exercisable, end of period		553,836		$	1.79		583,244		$	1.75

     The following table summarizes information about stock options outstanding as at June 30, 2007:

	Options Outstanding and Exercisable
			Weighted Average
			Remaining
	Number		Contractual Life		Weighted Average
Exercise Price	of Shares		(Years)		Exercise Price
$1.00		153,496		0.8	$	1.00
$2.09		400,340		3.8	$	2.09

     Stock-based compensation for non-employees and employees is measured and recorded in the consolidated financial statements at fair value. In connection with the acquisition of the remaining 7% interest in Cable Play Inc., the Company exchanged 2,726,592 of its options for 3,181,922 options of those previously granted by Cable Play Inc. The Company applied FASB interpretation No.44 (“FIN44”), “Accounting for Certain Transactions Involving Stock Compensation.” The fair value of the unvested options granted at the date of acquisition of $4,126,541 was recognized as compensation cost over the remaining vesting periods and the Company recorded compensation expense of $nil and $91,214, for the six months ended June 30, 2007 and 2006, respectively.

8. RELATED PARTY TRANSACTIONS

     During the second quarter of 2006, the Company entered into a one-year arrangement with a member of its Board of Directors for professional services to be provided in connection with the Company’s long-term debt refinancing and strategic alternatives process. The agreements provide for maximum base compensation of $300,000. During 2006, in addition to base salary payments, the director earned and was paid $240,000 in connection with the Company’s debt refinancing and a $210,000 discretionary bonus, of which $60,000 was paid in 2006 and $150,000 was paid in the first quarter of 2007.

     In accordance with their agreement with the Company, three of the Company directors will receive bonuses upon closing of the AVP arrangement, in the amount of $1.6 million, $150,000 and $225,000. In compliance with the Company’s policy on conflicts of interest, each of these directors declared their interest and abstained from voting in connection with the approval by the Board of Directors of the Arrangement Agreement and the transactions contemplated thereunder.

F-13

9. RESTRUCTURING COSTS

     Restructuring costs and remaining reserve as at June 30, 2007 consist of the following:

	Reserve		Restructuring				Reserve
	December 31, 2006		Costs Incurred in 2007		Paid During 2007		June 30, 2007
Rent	$	—	$	275,000	$	209,375	$	65,625
Moving expenses		500		—		500		—
Other		6,325		—		6,325		—
Total restructuring	$	6,825	$	275,000	$	216,200	$	65,625

     In the first quarter of 2007, there was a $0.3 million charge for additional costs associated with completion of the Company’s relocation of its back office operations and corporate offices to Denver related to a lease termination.

10. INCOME TAXES

     The Company recorded a current income tax expense of $0.1 million and nil for the three months ended June 30, 2007 and June 30, 2006 respectively, and $0.1 million and nil for the six months ended June 30, 2007 and June 30, 2006, respectively, for state and local tax liabilities.

     The adoption of FIN 48 effective January 1, 2007 resulted in an increase of tax liabilities of $241,608 and a corresponding decrease of the valuation allowance of $241,608 as at June 30, 2007.

     As of the date of adoption, the Company’s total gross unrecognized benefit is $1,153,269 of which $110,604, if recognized, would impact the effective tax rate. There are no material changes to the total gross unrecognized tax benefits in the first and second quarters of 2007. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits as income tax expense. The Company is not subject to,and therefore, has not accrued an amount in respect of interest and penalties.

     As of the date of adoption of FIN 48, tax years 2003 — 2006 remain subject to examination in the U.S. and tax years 2001-2006 remain subject to examination in Canada. The Company does not currently anticipate that its unrecognized tax benefits will significantly change within the next twelve months. Therefore, the FIN 48 liability is recognized as a non-current liability on the financial statements.

11. LOSS PER SHARE

     The following table sets forth the computation of basic and diluted loss per share for the three and six months ended June 30, 2007 and June 30, 2006, respectively.

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2007			June 30, 2006			June 30, 2007			June 30, 2006
Numerator:
Loss from continuing operations	$	(5,599,152	)	$	(6,438,956	)	$	(12,836,265	)	$	(10,170,029	)
Loss from discontinued operations		(68,016	)		(744,188	)		(79,527	)		(1,337,795	)
Net loss for the period	$	(5,667,168	)	$	(7,183,144	)	$	(12,916,236	)	$	(11,507,824	)
Denominator:
Denominator for basic and diluted loss per share — weighted average number of shares		26,742,298			24,426,277			25,618,320			24,325,497
Loss per share data:
Basic and diluted — from continuing operations	$	(0.21	)	$	(0.26	)	$	(0.50	)	$	(0.42	)
Basic and diluted — from discontinued operations (Note 13)		(0.00	)		(0.03	)		(0.00	)		(0.05	)
Basic and diluted, net	$	(0.21	)	$	(0.29	)	$	(0.50	)	$	(0.47	)

F-14

     Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. For the three and six months ended June 30, 2007 and June 30, 2006, respectively, the diluted net loss per share is equivalent to basic net loss per share as the outstanding options, convertible debt and warrants are anti-dilutive. The potential dilution of the convertible debentures, warrants and employee stock options could result in an additional 5.25 million common shares of the Company outstanding. Subsequent to the quarter end, the convertible debentures were repaid. As a result, the conversion option for 3.65 million common shares expired. See note 17.

12. (GAIN) LOSS ON SALE OF INVESTMENTS AND ASSETS

     (Gain) loss on sale of investments and assets consists of the following:

	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	June 30, 2007		June 30, 2006		June 30, 2007		June 30, 2006
Gain from investments	$	—	$	—	$	—	$	(1,320,193	)
(Gain) loss on disposal of assets		427,442		86,291		499,220		70,030
	$	427,442	$	86,291	$	499,220	$	(1,250,163	)

     For the three and six months ended June 30, 2007, the Company has a loss of $427,442, and $499,220, respectively, on the disposal of leased vehicles (three and six months ended June 30, 2006 — $86,291 and $70,030, respectively).

     During the first quarter of 2006, the Company sold its remaining interest in Control F-1 Corporation. This resulted in net proceeds of $1,327,693. The investment had been previously written down to nil in 2004 due to prevailing market conditions. However, during the first quarter of 2006, an agreement was reached between the Company and Computer Associates International, Inc. and Computer Associates Canada Company for the Company’s holding in Control F-1 Corporation. The Company recognized a pre-tax gain of $1,320,193 on the sale of the investment in the first quarter of 2006.

13. DISCONTINUED OPERATIONS

     The Company discontinued its operations at certain non-profitable branches during 2007. The revenues and expenses for these locations have been reclassified as discontinued operations for all periods presented on the consolidated financial statements. For the three and six months ended June 30, 2007, loss from discontinued operations was $68,016 and $79,527 respectively (three and six months ended June 30, 2006 — $744,188 and $1,337,795, respectively).

Consolidated statements of operations and deficit for discontinued operations is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
Revenue from discontinued operations	$	36,072		$	800,192		$	199,744		$	1,590,963
Impairment of goodwill and customer contracts	$	—		$	—		$	—		$	—
Loss from discontinued operations, net of income taxes of nil	$	(68,017	)	$	(744,188	)	$	(79,527	)	$	(1,337,795	)
Diluted loss per share from discontinued operations	$	(0.00	)	$	(0.03	)	$	(0.00	)	$	(0.05	)

14. CONTINGENCIES

     During the fourth quarter of 2005, the Company was notified by regulatory authorities of the initiation of an investigation of certain wage practices in Washington. As a result of this, the Company has provided for estimated costs. The provision is reflected on the consolidated balance sheets in accrued liabilities and at June 30, 2007 was $1.5 million. By their nature, these estimates are subject to measurement uncertainty and relate to events whose outcome will not be fully resolved until future periods. As a result revisions to these estimates could have a material impact on financial results of future periods.

     In 2006, the Company was named as a defendant in a purported class action case in California regarding the investigation of certain wage practices for which the Company has not established reserves. The Company intends to vigorously contest each of these claims. In addition, the Company is subject to a number of individual employment-related lawsuits. No reserve has been recorded for these cases as the Company is unable to estimate the amount of probable and reasonably estimable loss. These lawsuits are not expected to have a material impact on the Company’s results of operations, financial position or liquidity.

F-15

15. SEGMENT INFORMATION

     The Company provides installation, integration and fulfillment services to the home entertainment, communications, security and home integration service industries. As such the revenue derived from this business is part of an integrated service offering provided to the Company’s customers and thus is reported as one operating segment.

     The Company’s operations are located in the United States and Canada. Revenue is attributed to geographical segments based on the location of the customers.

     The following table sets out property, plant and equipment, goodwill and customer contracts from continuing operations by country as at June 30, 2007 and December 31, 2006 and revenue from continuing operations for the three and six months ended June 30, 2007 and June 30, 2006.

Geographic information

	June 30, 2007		December 31, 2006
Property, plant and equipment, goodwill and customer contracts
Canada	$	1,670,245	$	1,468,498
United States		64,538,751		69,521,871
Total	$	66,208,996	$	70,990,369

	Three months ended				Six months ended
	June 30, 2007		June 30, 2006		June 30, 2007		June 30, 2006
Revenue
Canada	$	3,753,793	$	2,240,636	$	6,407,543	$	3,666,373
United States		84,154,977		73,343,194		174,686,789		145,671,014
Total	$	87,908,770	$	75,583,830	$	181,094,332	$	149,337,387

16. LONG-TERM SHARE COMPENSATION PLAN

     During 2004, the Company established the Long-Term Share Compensation Plan (the “LTIP”) for the benefit of executive officers and key employees. Outside directors of the Company and consultants to the Company are not entitled to participate in the LTIP. The LTIP was designed to (i) strengthen the ability of the Company to attract and retain qualified officers and employees which the Company and its affiliates require; (ii) encourage the acquisition of a proprietary interest in the Company by such officers and employees, thereby aligning their interests with the interests of the Company’s shareholders; and (iii) focus management of the Company and its affiliates on operating and financial performance and total long-term shareholder return by providing an increased incentive to contribute to the Company’s growth and profitability. Pursuant to the LTIP, the Board of Directors may grant options to purchase common shares, share appreciation rights or performance share units. The maximum number of common shares reserved for issuance pursuant to the LTIP shall not exceed 13% of the issued and outstanding common shares from time to time. The LTIP is a separate plan from the employee stock options (Note 7c), and is subject to Board and shareholder approval. During the fourth quarter of 2006, the Company’s Board of Director’s granted 299,999 share appreciation rights to eight of the Company’s officers and senior management, subject to shareholder approval. The share appreciation rights have an exercise price of $1.50 and expire December 6, 2011.

     The LTIP was approved by the shareholders in conjunction with the consummation of the transaction with Ad.Venture. The fair value of the share appreciation rights will be measured at the date of approval and compensation expense will be recorded in that period.

17. SUBSEQUENT EVENTS

     On July 2, 2007 the Company entered into an amendment agreement with Laurus securing additional interim financing to fund working capital until August 24, 2007.

F-16

     Pursuant to the terms of the agreement, Laurus agreed to provide an additional $8.0 million to the Company as an increase to the current $37.0 million revolving loan, for a total revolving loan of $45.0 million. As part of this arrangement, Laurus also agreed to extend the maturity of the existing $9.0 million over-advance letter on a revolving loan from July 31, 2007 until August 24, 2007. On August 24, 2007, there was no balance outstanding under this agreement.

     Certain AVP shareholders agreed to provide a limited recourse guaranty for the additional financing Laurus is providing to 180 Connect by placing $7.0 million in a brokerage account pledged to Laurus which may be used solely to purchase AVP shares.

     Laurus also agreed to loan $10.0 million to a special purpose corporation for the purpose of purchasing shares of AVP common stock. The special purpose corporation is a third-party arms-length corporation to both the Company and AVP. Neither the special purpose corporation nor Laurus agreed to make any specific amount of purchases or to vote any shares purchased in any specific manner in connection with the arrangement. 180 Connect and AVP anticipate that any AVP shares purchased by the special purpose corporation would be purchased in privately negotiated transactions.

     In connection with the amendment, Laurus received warrants to purchase one million common shares of the Company with a five-year term, exercisable at $2.61 per share, the market price at the time of issue, with the shares issuable thereunder, subject to a one-year lock-up. Laurus will also receive a 2.5% management fee on the $8.0 million increase to the revolver or $200,000 and a $1.4 million commitment fee which will be paid on August 24, 2007.

     In addition, 180 Connect and AVP agreed to adjust the exchange ratio under the arrangement from 0.6272 to 0.60 and to eliminate the adjustment to the exchange ratio based on relative transaction expenses of the parties.

     Upon closing of the arrangement with AVP, 180 Connect repaid Laurus $5.0 million principal on the term note on August 24, 2007. At August 24, 2007, 180 Connect had no outstanding borrowings under either the additional $8.0 million revolving loan or the existing $9.0 million overadvance facility.

     As consideration for the guaranty and pledge, pursuant to the terms of a Letter Agreement between 180 Connect and the AVP Shareholders dated July 2, 2007 (the “180 Connect/the AVP Shareholders”), 180 Connect agreed to reimburse the AVP Shareholders up to $150,000 for their fees and expenses in connection with the guaranty and pledge.

     The consummation of the Arrangement Agreement constitutes an event of default as it is a fundamental transaction under 180 Connect’s convertible debt agreement. On August 29, 2007, the lenders exercised their right to redeem the convertible debentures in full in the amount of approximately $10.4 million plus accrued interest of $0.1 million in accordance with the terms of the convertible debenture agreement.

F-17

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of 180 Connect Inc.

We have audited the accompanying consolidated balance sheets of 180 Connect Inc. as at December 31, 2006 and 2005 and the related consolidated statements of operations and comprehensive loss, shareholders’ equity (deficiency), and cash flows for the year ended December 31, 2006 and for the periods from December 26, 2004 to December 31, 2005 and from December 28, 2003 to December 25, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements refered to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2006 and December 31, 2005 and the consolidated results of its operations and its cash flows for the year ended December 31, 2006 and for the periods from December 26, 2004 to December 31, 2005 and from December 28, 2003 to December 25, 2004 in conformity with United States generally accepted accounting principles.

As described in note 11, the consolidated balance sheet as at December 31, 2006 has been restated.

Toronto, Canada, April 20, 2007 (except for notes 25(d) and (e) and 25(b) and (f), 25(g), and 11 as to which the dates are July 6, 2007 and August 24, 2007, August 29, 2007 and March 27, 2008, respectively).	Chartered Accountants Licensed Public Accountants

F-18

Consolidated Financial Statements

180 Connect Inc.
Consolidated Balance Sheets
(in United States Dollars)

	December 31, 2006			December 31, 2005
	(Restated-Note 11)
Assets
Current Assets
Cash and cash equivalents	$	2,904,098		$	3,353,452
Accounts receivable (less allowance for doubtful accounts of $2,506,637 and $1,167,310, respectively)		48,934,952			50,048,816
Inventory		15,816,148			20,302,667
Restricted cash		14,503,000			14,750,366
Prepaid expenses and other assets		7,910,255			2,039,246
TOTAL CURRENT ASSETS		90,068,453			90,494,547
Property, plant and equipment		34,882,890			41,658,071
Goodwill		11,034,723			11,347,925
Customer contracts, net		25,072,756			28,964,807
Other assets		4,384,750			1,005,549
TOTAL ASSETS	$	165,443,572		$	173,470,899
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	78,686,245		$	76,664,469
Current portion of long-term debt		26,502,096			40,034,506
Fair value of derivative financial instruments		4,065,729			—
Current portion of capital lease obligations		13,033,104			11,881,026
TOTAL CURRENT LIABILITIES		122,287,174			128,580,001
Deferred tax liabilities		—			1,561,031
Long-term debt		12,264,621			—
Convertible debt		6,276,584			—
Long-term portion of capital lease obligations		15,213,112			22,976,840
TOTAL LIABILITIES		156,041,491			153,117,872
Commitments and contingencies (Notes 11,12, 13 and 22)
Shareholders’ Equity
Share capital		66,397,608			64,809,968
Contributed surplus		22,188,707			23,425,422
Paid in capital		3,286,967			—
Retained earnings (deficit)		(82,956,231	)		(68,367,393	)
Accumulated other comprehensive income		485,030			485,030
TOTAL SHAREHOLDERS’ EQUITY		9,402,081			20,353,027
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	165,443,572		$	173,470,899

See accompanying notes

F-19

180 Connect Inc.
Consolidated Statements of Operations and Comprehensive Loss
(in United States Dollars)

	Years Ended
				December 26, 2004			December 28, 2003
				to			to
	December 31, 2006			December 31, 2005			December 25, 2004
Revenue	$	335,446,741		$	279,726,651		$	210,675,282
Expenses
Direct expenses		301,158,053			256,334,245			191,797,596
General and administrative		19,675,563			21,702,824			16,370,043
Foreign exchange loss (gain)		30,361			(18,692	)		(272,585	)
Restructuring costs		892,688			1,672,485			—
Depreciation		13,560,340			6,151,059			2,129,959
Amortization of customer contracts		3,712,673			4,093,985			2,851,590
Interest expense		10,043,564			3,440,690			2,659,132
Gain on extinguishment of debt		(1,233,001	)		—			—
Gain on change in fair value of derivative liabilities		(1,363,936	)		—			—
Gain on sale of assets and asset write-down		(726,086	)		(6,897,291	)		(1,931,648	)
Impairment of goodwill and customer contracts		—			608,096			1,383,371
Loss from continuing operations before income tax recovery		(10,303,478	)		(7,360,750	)		(4,312,176	)
Income tax recovery		(1,503,271	)		(2,001,727	)		(621,000	)
Loss from continuing operations		(8,800,207	)		(5,359,023	)		(3,691,176	)
Loss from discontinued operations, net of income taxes of nil		(5,788,631	)		(3,157,632	)		(3,759,662	)
Net loss for the period		(14,588,838	)		(8,516,655	)		(7,450,838	)
Unrealized gain on available-for-sale securities		—			18,584			6,503,740
Less: reclassification adjustments for gains included in net income		—			(6,522,324	)		—
Comprehensive loss	$	(14,588,838	)	$	(15,020,395	)	$	(947,098	)
Loss per share from continuing operations;
Basic	$	(0.36	)	$	(0.22	)	$	(0.17	)
Diluted	$	(0.36	)	$	(0.22	)	$	(0.17	)
Net loss per share:
Basic	$	(0.60	)	$	(0.36	)	$	(0.34	)
Diluted	$	(0.60	)	$	(0.36	)	$	(0.34	)
Weighted average number of shares outstanding — basic		24,401,683			23,948,106			21,660,799
Weighted average number of shares outstanding — diluted		24,401,683			23,948,106			21,660,799

See accompanying notes

F-20

180 Connect Inc.
Consolidated Statements of Shareholders’ Equity (Deficiency)
(in United States Dollars)

												Accumulated
									Retained			Other
				Contributed			Paid in		Earnings			Comprehensive
	Share Capital			Surplus			Capital		(Deficit)			Income (Loss)			Total
Balance, December 27, 2003	$	30,964,950		$	25,714,480		$	—	$	(52,001,680	)	$	485,030		$	5,162,780
Issuance of shares from initial public offering		30,000,000														30,000,000
Issuance of shares from over allotment		1,200,000														1,200,000
Share issuance costs		(4,154,694	)													(4,154,694	)
Repayment of share purchase loans		64,438														64,438
Issuance on cashless exercise of stock options		1,958,556			(1,958,556	)										—
Issuance on exercise of stock options for cash		1,324,098			(1,144,195	)										179,903
Stock-based compensation					2,910,675											2,910,675
Unrealized gain on available-for-sale securities										—			6,503,740			6,503,740
Net loss										(7,450,838	)					(7,450,838	)
Balance, December 25, 2004	$	61,357,348		$	25,522,404		$	—	$	(59,452,518	)	$	6,988,770		$	34,416,004
Issuance of exercise of stock options for cash		4,212,448			(3,484,115	)										728,333
Normal course issuer bid		(759,828	)							(398,220	)					(1,158,048	)
Stock-based compensation					1,387,133											1,387,133
Reclassification adjustment for gains included in net income													(6,522,324	)		(6,522,324	)
Unrealized gain on available-for-sale securities													18,584			18,584
Net loss										(8,516,655	)					(8,516,655	)
Balance, December 31, 2005	$	64,809,968		$	23,425,422		$	—	$	(68,367,393	)	$	485,030		$	20,353,027
Issuance on exercise of stock options for cash		1,587,640			(1,327,929	)										259,711
Issuance of warrants on long-term debt								3,286,967								3,286,967
Stock-based compensation					91,214											91,214
Net loss										(14,588,838	)					(14,588,838	)
Balance, December 31, 2006	$	66,397,608		$	22,188,707		$	3,286,967	$	(82,956,231	)	$	485,030		$	9,402,081

F-21

180 Connect Inc.
Consolidated Statements of Cash Flows
(in United States Dollars)

	Year Ended			December 26, 2004 to			December 28, 2003 to
	December 31, 2006			December 31, 2005			December 25, 2004
Operating
Loss from continuing operations	$	(8,800,207	)	$	(5,359,023	)	$	(3,691,176	)
Add (deduct) items not affecting cash:
Depreciation, amortization and impairment		17,273,013			10,853,140			6,364,920
Amortization of deferred financing costs and accretion of loan discount		3,210,141			459,852			1,335,691
Stock-based compensation		91,214			1,387,133			2,910,674
Deferred income taxes		(1,561,031	)		(1,491,941	)		(2,098,000	)
Gain on extinguishment of debt		(1,233,001	)		—			—
Gain (loss) on change in fair value of derivative liabilities		(1,363,936	)
Gain on sale of assets		(726,086	)		(6,897,291	)		(1,931,648	)
Other		(292	)		3,816			—
Changes in non-cash working capital balances related to operations, net of business acquisition
Accounts receivable		227,513			(6,464,271	)		579,947
Inventory		4,486,519			(2,412,713	)		(12,946,164	)
Other current assets		338,030			(688,922	)		328,999
Insurance premium deposits		(6,209,037	)		1,126,896			1,623,871
Settlement of class action lawsuit		—			(7,973,623	)		—
Settlement of certain wage practices		—			(1,217,639	)		—
Other assets		(37,035	)		(18,928	)		81,081
Restricted cash		247,366			(8,696,719	)		(5,156,010	)
Accounts payable and accrued liabilities		2,375,179			14,320,065			18,610,302
Operating cash flows from discontinued operations		(2,029,961	)		(2,469,829	)		(2,270,171	)
Total cash provided by (used in) operating activities		6,288,389			(15,539,997	)		3,742,316
Investing
Purchase of property, plant and equipment		(2,742,727	)		(5,656,286	)		(1,898,151	)
Proceeds from sale of property, plant and equipment		—			665,000			36,200
Short-term investments		—			16,178,848			(18,160,149	)
Net proceeds from disposition of investments		1,327,693			10,968,388			3,545,839
Business acquisition		—			(429,603	)		224,209
Total cash provided by (used in) investing activities		(1,415,034	)		21,726,347			(16,252,052	)
Financing
Repayment of capital lease obligations		(15,010,698	)		(4,960,341	)		(234,503	)
Repayment of debt		(7,350,000	)		(6,908,003	)		(5,422,030	)
(Decrease) in borrowings under the Revolver credit facility		(377,494	)
Proceeds from share issuance, net of issuance costs		259,712			728,335			27,225,209
Repurchase of shares through normal course issuer bid		—			(1,158,047	)		64,438
Proceeds from refinancing of long-term debt		42,140,497			—			—
Extinguishment of long-term debt		(32,863,525	)		—			—
Net proceeds from refinancing of vehicles		2,127,542			—			—
Decrease in bank indebtedness		—			—			(454,167	)
Issuance costs on long-term debt		(3,546,150	)		—			—
Proceeds from issuance of convertible debt		10,686,101			—			—
Settlement with selling shareholders of Mountain Center Inc.		—			(2,950,000	)		—
Proceeds from options and warrants exercised		—			(4,727	)		—
Issuance costs on convertible debt		(1,388,985	)		—			—
Total cash provided by (used in) financing activities		(5,323,000	)		(15,252,783	)		21,178,947
Effect of exchange rates on cash and cash equivalents		291			39,753			—
Net (decrease) increase in cash and cash equivalents during the period		(449,354	)		(9,026,680	)		8,669,211
Cash and cash equivalents, beginning of period		3,353,452			12,380,132			3,710,921
Cash and cash equivalents, end of period	$	2,904,098		$	3,353,452		$	12,380,132
Supplemental cash flow information:
Interest paid	$	6,091,487		$	2,485,035		$	3,384,328
Income taxes paid	$	429,279		$	1,265,756		$	—

Supplemental disclosure of non-cash investing and financing transactions: (a) As at December 31, 2006 and December 31, 2005, the Company leased 2,589 and 2,262 vehicles, respectively, for $6,175,153 and $39,403,406, respectively, through a capital lease obligation. (b) The consolidated statements of cash flows exclude the following non-cash transaction in 2004; the balance of the purchase price consideration due related to the purchase of Mountain Center, Inc.

See accompanying notes

F-22

180 Connect Inc.

Notes to Consolidated Financial Statements
(in United States Dollars)

1. BASIS OF PRESENTATION

     180 Connect Inc. (the “Company”), formerly Launchworks Inc., is incorporated under the laws of Canada. On December 28, 2003, the Company and three of its subsidiaries amalgamated and changed its year end from December 31 to the last Saturday in December. Subsequent to December 31, 2005, the Company changed its year end accounting period from a 52/53 week year to a calendar year basis. Accordingly, the consolidated financial statements presented for 2006, 2005 and 2004 have year-end dates of December 31, December 31, and December 25, respectively. The Company provides installation, integration and fulfillment services to the home entertainment, communications and home integration service industries. The principal market for these services is the United States.

2. SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

     The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of the Company and its subsidiaries. All inter-company items and transactions have been eliminated on consolidation.

Revenue Recognition

     The Company provides installation, integration and fulfillment services to the home entertainment, communications and home integration service industries. Revenue from services is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, service has been provided, the fee is fixed or determinable, and collection is reasonably assured. Fulfillment services include installations, upgrades and service of DIRECTV systems. Fulfillment revenues are recognized when the work orders are closed. A provision is recorded for estimated billing discrepancies or penalties due to poor service. Revenue relating to certain equipment purchased from DIRECTV for which the Company is directly reimbursed is recorded on a net basis in accordance with EITF 99-19, Recording Revenue Gross as a Principal Versus Net as an Agent.

     Revenue for services provided to the Company’s cable customers is contracted via work orders; revenue is recorded as services are completed and work orders are closed. A provision is recorded for estimated billing discrepancies.

     The services provided to the Company’s Network Services and Digital Interiors customers are for the installation of communication systems. Revenues earned by these businesses are recognized upon the completion of contractual obligations. Contracts may extend over several months but often include discernible projects that have stated completion milestones and contractual amounts that are billed as these services are completed.

Allowance for Doubtful Accounts

     The Company maintains an allowance for doubtful accounts for estimated losses resulting from uncollectible amounts. Management specifically analyzes accounts receivable balances, customer credit-worthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts.

Cash and Cash Equivalents

     The Company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less to be cash equivalents. There were no cash equivalents for all periods presented.

Inventory

     Inventory of materials, components and direct broadcast satellite equipment is stated at the lower of cost or market, determined on a first-in, first-out basis. Market is determined as replacement cost for materials and components and net realizable value for direct broadcast satellite equipment.

F-23

Property, Plant and Equipment

     Property, plant and equipment are stated at cost, less accumulated depreciation. Repairs and maintenance expenditures are charged to operating expense as incurred. Depreciation is calculated on a straight-line basis over the expected useful lives of the property, plant and equipment as follows:

Vehicles	4 years
Tools	2 years
Equipment	5 years
Computer equipment and software	3 years
Office furniture and equipment	5 -7 years
Leasehold improvements	Shorter of economic life or term of the lease

     Software developed for internal use is capitalized in accordance with Statement of Position 98-1, “Accounting for Computer Software Developed or Obtained for Internal Use”, and is amortized over its estimated useful life of three years.

Investments

     Investments in entities that are not consolidated but over which the Company exercises significant influence are accounted for using the equity method of accounting.

     Equity securities having a readily determinable fair value and not classified as trading securities are classified as “available-for-sale securities” and reported at fair value, with unrealized gains and losses included in comprehensive income and reported as a separate component of shareholders’ equity net of related deferred income taxes. Gains and losses on the sale of available-for-sale securities are determined using the specific identification method. Declines in the fair value of individual available-for-sale securities below their cost that are other than temporary result in write-downs of the individual securities to their fair value. The related write-downs are included in earnings as realized losses.

Deferred Financing Costs

     Deferred charges relating to financing costs and credit facility arrangement fees associated with the issuance of long-term debt are included in other assets and are amortized to interest expense over the period to maturity of the related debt.

Insurance Premium Deposits

     The Company maintains a self-insurance program for property and casualty coverage, including workers compensation, automobile and general liability coverage. The program is administered by a U.S. based insurance company. As part of the self-insurance program, the Company is required to pay up to $500,000 for each individual workers compensation claim and up to $350,000 for each auto liability claim. For the most recent plan year, the amount payable by the Company was reduced to $100,000 for each individual workers compensation claim in the state of California. The aggregate limit is $26,650,000 for all workers compensation and automobile liability claims. The Company is required to pay up to $500,000 for each general liability claim for the period ended April 30, 2007. Any amounts exceeding the maximum amounts are covered by the Company’s umbrella insurance policy. As is common with these types of insurance programs, the Company is required to make periodic estimates of its ultimate actuarially determined liability, based on experience, claims filed and an estimate of claims incurred but not yet reported. These estimates take into account policy loss limits and future anticipated payouts on an individual claims basis. The Company makes periodic premium payments to the program administrator to cover claim payments as well as fixed costs associated with the administration of the plan. Such periodic payments can fluctuate based on the loss experience and actuarial estimates.

     The Company has restricted cash of $14,503,000 on deposit at December 31, 2006, and $14,750,366 at December 31, 2005, primarily related to the Company’s insurance plan (Note 4). The sufficiency of the restricted cash amount is determined by the insurance carrier and is based upon several factors which include the Company’s credit history, work force characteristics and historical claim results.

F-24

     The Company calculates the annual insurance cost using actuarial estimates provided by third-party service providers at the beginning of the plan year. For the most recent plan and the plan years prior to May 1, 2004, the Company was required to pre-pay the full estimated costs of insurance for the plan year. The accounting for these periods was to record a prepaid asset for the payments made in advance of the plan year. The prepaid asset is then amortized on a pro-rata basis each month during which the coverage is provided. For the plan years beginning on May 1, 2004 and May 1, 2005, the Company entered into an alternative arrangement with its insurance carrier which required the Company to pay the fixed costs associated with the insurance plan upfront, and pay the actual claim amounts as they were settled.

Goodwill

     Goodwill represents the excess of the purchase price paid in a business acquisition over the fair values of the identifiable assets acquired and liabilities assumed. The Company tests for goodwill impairment by reporting units on an annual basis and at any other time if events occur or circumstances change that suggest that goodwill could be impaired.

     The Company uses the two-step impairment process. The fair value of a reporting unit is compared with its carrying amount, including goodwill, in order to identify a potential impairment. When the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not to be impaired and the second step is unnecessary.

     If step one of the test is not met, an impairment loss is recorded for the carrying amount of the goodwill exceeding the implied value of that goodwill. Measurement of the fair value of a reporting unit is based on a fair value measure using the sum of the discounted estimated future cash flows (Note 8).

Intangible Assets

     Intangible assets primarily represent the value of customer contracts acquired. All intangible assets are charged to operations on a straight-line basis over their estimated useful life of 10 years.

Impairment or Disposal of Long-Lived Assets

     The Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that its carrying amount may not be recoverable. Recoverability is assessed based on the carrying amount of the asset and its net recoverable value, which is generally determined based on undiscounted cash flows expected to result from the use and the eventual disposal of the asset. An impairment loss is recognized to write the asset down to its fair value.

Income Taxes

     The Company accounts for income taxes using the liability method, whereby deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities measured using income tax rates and laws that are expected to be in effect when the differences are expected to reverse. Income tax expense for the period is the tax payable for the period and any change during the period in deferred tax assets and liabilities. A valuation allowance is provided to the extent that it is more likely than not that deferred tax assets will not be realized.

Use of Estimates

     The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. The most significant assumptions made by management in the preparation of the Company’s consolidated financial statements include provisions for credit adjustments and doubtful accounts to reflect credit exposures and unrecoverable amounts, valuation allowances and impairment assessments for various assets including customer contracts and goodwill, property, plant and equipment, deferred income taxes, accruals related to liabilities arising from legal claims, periodic estimates of ultimate liabilities related to losses associated with workers compensation and employment liability, business automotive liability and general liability insurance claims and liabilities associated with derivative financial instruments and embedded derivatives. Actual results could differ as a result of revisions to estimates and assumptions which may have a material impact on financial results of future periods.

F-25

Foreign Currency Translation

     The Company’s functional currency is the United States dollar. The financial statements of the foreign subsidiaries are measured using the United States dollar as the functional currency. Included in the Company’s consolidated financial statements are the results of all foreign operations. Consequently, monetary assets and liabilities of the wholly-owned subsidiaries are translated into United States dollars at exchange rates in effect at the consolidated balance sheet dates with non-monetary assets and liabilities being translated into United States dollars at historical exchange rates. Revenue and expense items were translated at average exchange rates prevailing during the period. The resulting gains or losses were reflected in net loss for the period.

Net Loss per Share

     Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. The computation of diluted loss per share assumes the basic weighted average number of common shares outstanding during the period is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. The dilutive effect of warrants and stock options is determined using the treasury stock method. For the periods ended December 31, 2006, December 31, 2005 and December 25, 2004, diluted loss per share is equivalent to basic loss per share as the outstanding options and warrants are anti-dilutive.

Leases

     Leases have been classified as either capital or operating leases. Leases which transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as if there were an acquisition of an asset and incurrence of an obligation at the inception of the lease and are accounted for as capital leases. All other leases are accounted for as operating leases wherein rental payments are expensed as incurred.

Stock-Based Compensation

     In 2003, the Company prospectively adopted Statement of Financial Accounting Standard (“FAS”) 123, “Accounting for Stock-Based Compensation” as amended by FAS 148, “Accounting for Stock-Based Compensation — Transition and Disclosure”. These accounting standards recommend the expensing of stock option grants after January 1, 2003. The standards recommend that the fair value of stock options be recognized in income over the applicable vesting period as a compensation expense. Any consideration paid by employees on exercise of stock options or purchse of stock is credited to share capital.

     In December 2004, the FASB enacted FAS 123 — revised 2004 (“FAS 123R), “Share-Based Payment”, which replaces FAS 123. FAS 123R requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in the consolidated statement of operations. The Company was required to adopt FAS 123R in the first quarter of 2006. There was no impact on the Company based on the adoption of the new requirements under FAS 123R.

Impact of Recently Issued Accounting Standards

     In February 2006, the FASB issued SFAS 155 — Accounting for Certain Hybrid Financial instruments — an amendment of FASB Statements No. 133 and 140 (“SFAS 155”). SFAS 155 resolves issues addressed in Statement 133 Implementation Issue No. D1 “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” This Statement:

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

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

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

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

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

F-26

     SFAS 155 is effective for all financial instruments acquired or issued after the beginning of the Company’s fiscal year that commences on January 1, 2007. The Company is currently evaluating the implications of this Statement.

     In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the Company’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes”, and prescribes a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax provision taken or expected to be taken in a tax return. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006. The Company is currently reviewing FIN 48, but has not yet determined the impact on the consolidated financial statements.

     In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of SFAS 157 are effective for the fiscal years beginning after November 15, 2007. The Company is currently reviewing SFAS 157, but has not yet determined the impact on the consolidated financial statements.

     On December 21, 2006, the FASB issued EITF 00-19-2, “Accounting for Registration Payment Arrangements”. The Company is currently reviewing EITF 00-19-2, but has not yet determined the impact on the consolidated financial statements.

3. FINANCIAL INSTRUMENTS

     The estimated fair values of financial instruments are based on the relevant market prices and information available. These fair value estimates are not indicative of the amounts that the Company might receive or incur in actual market transactions. The carrying values of cash and cash equivalents, accounts receivable, insurance premium deposits, accounts payable and accrued liabilities approximate their fair values due to the relatively short periods to maturity of these financial instruments. The carrying values of long-term debt and capital lease obligations approximate their fair values as these financial instruments bear market rates of interest, and as such are subject to risk relating to interest rate fluctuations.

     Credit exposure on financial instruments arises from the possibility that a counterparty to an instrument fails to perform. The Company performs ongoing credit evaluations of customers and generally does not require collateral. Allowances are maintained for potential credit losses. The Company is economically dependent on one customer and the temporary or permanent loss of this customer would have a material adverse effect on the Company’s results of operations and financial condition (Note 23).

     The Company’s financial instruments include loans bearing an interest rate based on the prime rate plus 3% to prime plus 5% and are therefore subject to risk relating to interest rate fluctuations.

4. RESTRICTED CASH

     As of December 31, 2006 and December 31, 2005, the Company has restricted cash, in the form of term deposits of approximately $14.5 million and $14.8 million, respectively. These term deposits are used to collateralize obligations associated with its insurance program and for contractor licensing surety bonds in several states. Interest earned of 1% to 5% on these funds is received monthly and is not subject to restriction.

5. INVENTORY

     Inventory consists of the following:

	December 31, 2006		December 31, 2005
Direct broadcast satellite	$	12,633,189	$	16,676,629
equipment Materials and components		3,182,959		3,626,038
	$	15,816,148	$	20,302,667

     Direct broadcast satellite equipment represents equipment purchased from DIRECTV to service DIRECTV’s customers. Certain items of this inventory are directly reimbursed to the Company on installation for an amount equal to the initial purchase price. Therefore, no revenue or cost of sales are recorded with respect to this inventory with the exception of a charge to direct expenses for loss due to theft or damage.

F-27

6. PREPAID EXPENSES AND OTHER ASSETS

     Prepaid expenses and other assets consist of the following:

	December 31, 2006		December 31, 2005
Prepaid rent	$	83,481	$	375,615
Prepaid expenses		1,301,894		1,017,462
Insurance premium deposits		6,524,880		646,169
	$	7,910,255	$	2,039,246

7. PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consist of the following:

	December 31, 2006			December 31, 2005
Cost
Vehicles	$	49,307,080		$	44,439,884
Tools and equipment		4,629,918			2,855,997
Computer equipment and software		4,115,997			5,529,273
Office furniture and equipment.		1,537,515			1,643,576
Leasehold improvements		602,592			562,871
	$	60,193,102		$	55,031,601
Accumulated Depreciation
Vehicles	$	(18,533,260	)	$	(8,091,288	)
Tools and equipment		(2,754,619	)		(1,879,379	)
Computer equipment and software		(2,738,050	)		(2,055,666	)
Office furniture and equipment.		(960,480	)		(1,017,485	)
Leasehold improvements		(323,803	)		(329,712	)
	$	(25,310,212	)	$	(13,373,530	)
Net book value	$	34,882,890		$	41,658,071

     Depreciation expense charged to continuing operations for fiscal years 2006, 2005 and 2004 was $13,560,340, $6,151,059 and $2,129,959, respectively. Property, plant and equipment include assets under capital leases of $30,805,454, net of accumulated depreciation of $15,761,508 as of December 31, 2006, and $36,396,714, net of accumulated depreciation of $4,436,366 as of December 31, 2005. The fiscal years ended December 31, 2006 and December 31, 2005 included depreciation of $232,289 and $11,159, respectively, in loss from discontinued operations.

8. GOODWILL AND CUSTOMER CONTRACTS

     The carrying amounts of intangibles are as follows.

	Goodwill			Customer Contracts
Balance as of December 31, 2004	$	11,231,609		$	35,792,994
Additions (Reductions)		313,202			(2,013,966	)
Amortization expense					(4,097,436	)
Impairment		(196,886	)		(716,785	)
Balance at of December 31, 2005		11,347,925			28,964,807
Amortization expense		—			(3,714,850	)
Impairment		(313,202	)		(177,201	)
Balance at of December 31, 2006	$	11,034,723		$	25,072,756

F-28

     Amortization expense charged to continuing operations for the fiscal years ended December 31, 2006, December 31, 2005 and December 25, 2004 was $3,712,673, $4,093,985 and $2,851,590, respectively. The fiscal years ended December 31, 2006 and December 31, 2005 included amortization of $2,177 and $3,451 respectively, in loss from discontinued operations.

     Estimated future amortization expense is as follows:

2007	$	3,681,503
2008		3,681,503
2009		3,681,503
2010		3,681,503
2011		3,681,503
Thereafter		6,665,241
Total	$	25,072,756

     Additions to goodwill and customer contracts in 2005 relate to a business acquisition completed by the Company on March 22, 2005
(Note 15). Reductions in customer contracts relate to the settlement of the outstanding litigation with the selling shareholders of Mountain Center Inc. (“Mountain”) which resulted in a reduction of long-term debt of $1.2 million, a reduction in the deferred tax liability of $0.8 million and a corresponding reduction of customer contracts of $2.0 million.

     Goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. Goodwill impairment is evaluated on an annual basis (or sooner if indicators of impairment are identified) using the two-step impairment process. As a result of the shutdown of certain operating branch locations, the Company wrote off the remaining goodwill and customer contracts associated with those branches. In 2006, the Company recorded a goodwill impairment charge of $313,202 and a customer contract impairment charge of $177,202 in loss from discontinued operations. In 2005, the Company recorded a goodwill impairment charge of $196,886 and a customer contract impairment charge of $716,785, of which $305,575 was included in loss from discontinued operations in 2005. In 2004, the Company recorded a goodwill impairment charge of $233,648 and a customer contract impairment charge of $2,394,795, of which $1,245,072 was included in loss from discontinued operations.

     The customer contracts represent the agreement between the Company and its customers to provide installation, upgrade and repair services to the customers’ subscribers. The contracts typically include exclusivity arrangements. The exclusivity arrangements limit the Company’s ability to sign contracts with the Company’s customers’ competitors if the competitor sells the same services in the same markets as the Company’s current customers. These contracts were recognized apart from goodwill as the assets resulted from contractual or other legal rights and are capable of being separated or divided from the acquired enterprise. The acquired companies had existing contracts with their customers at the time of the acquisition. These contracts required the Company to provide installation and other services over a period of time in a specific geographic area on an exclusive basis for the Company’s customers. As such, a value was assigned to the future benefits to be realized from this exclusive contractual arrangement with the Company’s customers.

9. OTHER ASSETS

     Other assets consist of the following:

	December 31,		December 31,
	2006		2005
Deferred financing costs (net of accumulated amortization of $1,590,620 and $390,680, respectively)	$	3,661,598	$	300,674
Security deposits		666,002		639,042
Other miscellaneous		57,150		65,833
	$	4,384,750	$	1,005,549

F-29

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

     Accounts payable and accrued liabilities consist of the following:

	December 31,		December 31,
	2006		2005
Equipment purchase liability	$	44,497,745	$	41,291,915
Accrued insurance		9,556,789		12,471,009
Trade accounts payable		8,461,228		8,910,330
Accrued payroll and employee benefits		7,238,919		2,799,148
Accrued costs for legal settlements (Note 22)		1,671,000		2,500,000
Taxes payable		584,659		913,598
Restructuring reserve (Note 17)		6,825		577,437
Other accrued expenses		6,669,079		7,201,032
	$	78,686,244	$	76,664,469

     The accounts payable and accrued liabilities amount includes $44.5 million and $41.3 million as of December 31, 2006 and December 31, 2005, respectively, payable to DIRECTV, a major supplier of the equipment used by the Company in its installation business. The amount due from DIRECTV once this equipment is installed is included in accounts receivable and was $17.9 million and $19.5 million at December 31, 2006 and 2005, respectively.

     The Company is currently party to a class action lawsuit filed in federal court in Seattle, Washington brought by current and former employees. The claims relate to alleged violations of Washington wage and hour laws. The class period dates back to April 2002. As a result of this class action, the Company established a reserve for estimated costs of $2.5 million at December 31, 2005 (Note 22). As of December 31, 2006, $1.7 million remained in this reserve.

F-30

11. LONG-TERM DEBT AND COMMON STOCK PURCHASE WARRANTS

     Long-term debt consists of the following:

	December 31, 2006			December 31, 2005
	(Restated)
Revolving credit facility and over advance facility of up to $37,000,000 bearing interest at prime plus 3% to 5%, subject to a minimum interest rate of 10% to 11% with interest payable monthly. The revolving credit facility is subject to the Company’s eligible trade receivables and inventory as per the debt agreement and collateralized by the Company’s real and personal property. For the period of August 1, 2006 to July 31, 2007, the Company can draw in excess of the eligible trade receivables and inventory an over advance of up to $9,000,000 but not to exceed a cumulative amount of $37,000,000. At December 31, 2006 the interest rate for the revolving credit facility was 11.25% and the interest rate for the over advance facility was 13.25% with an effective interest rate of 12.21%. Repayment is due on or before July 31, 2009. The credit facility may be borrowed, repaid, and reborrowed in accordance with the terms of the Security Agreement.	$	19,758,475			—
Term note, bearing interest at prime plus 5%, subject to a minimum interest rate of 12% and interest is payable monthly. At December 31, 2006, the interest rate was 13.25% with an effective interest rate of 17.5%. Repayments of the term note commence on February 1, 2007 for $666,667 per month, with the final payment due on July 31, 2009		19,008,242			—
Revolving credit facility of up to $16,500,000, bearing interest at prime plus 3.00% or LIBOR plus 4.50% at the option of the Company, and is payable quarterly. The revolving credit facility is secured by all of the Company’s existing and after-acquired real and personal property. At December 31, 2005, the interest rate was 8.2431% and repayment on the revolving credit facility commenced March 31, 2004 at specified reduction rates running through September 30, 2006. This revolving credit facility was paid in full to the lender during the third quarter of 2006		—			16,500,000
Term Note A bearing interest at prime plus 3.50% or LIBOR plus 5.00% at the option of the Company, accrues monthly interest commencing in April 2002 and is payable quarterly commencing in April 2003. The note is secured by all of the Company’s existing and after-acquired real and personal property. At December 31, 2005, the interest rate was 8.7431%. The note is repayable in one final payment of $12,459,721 on September 30, 2006. This Term Note A was paid in full to the lender during the third quarter of 2006		—			12,459,721
Term Note B, bearing interest at prime plus 4.50% or LIBOR plus 6.00% at the option of the Company, accrues monthly interest commencing in April 2002 and is payable quarterly commencing in May 2005. The note is secured by all of the Company’s existing and after-acquired real and personal property. At December 31, 2005, the interest rate was 9.7431%. The Company made a payment of $6,600,000 in the first quarter of 2006 and one final payment of $3,835,788 during the third quarter of 2006		—			10,435,788
Debt issuance cost payable, unsecured and non-interest bearing, discounted at 10.9%, due on September 30, 2006		—			638,997
Total debt		38,766,717			40,034,506
Less: current portion		(26,502,096	)		(40,034,506	)
Total long-term debt	$	12,264,621		$	—

F-31

     On August 1, 2006, the Company refinanced its current long-term debt with Laurus Master Fund (the “Investor”), an arm’s-length third party.

     Pursuant to the original terms of the debt agreement with Laurus Master Fund, Ltd. (“Laurus”), the Company, through its wholly owned subsidiary 180 Connect, Inc. (“180 Connect Nevada”), had available a maximum amount of $57 million of debt comprising a term facility of $20 million and a combined revolving credit facility and over-advance facility of up to $37 million. The revolving credit facility is subject to the Company’s eligible trade receivables and inventory as per the debt agreement. For the period of August 1, 2006 to July 31, 2007, the Company can draw in excess of the eligible trade receivables and inventory an over-advance amount up to $9 million but not to exceed a cumulative amount of $37 million. The interest rates on the new debt range from prime plus 3% to prime plus 5%, subject to a minimum interest rate of 10% to 12%, and are therefore subject to risk relating to interest rate fluctuations. Monthly term loan repayments commence February 1, 2007 for $666,667.

     The debt agreement states that there are no financial covenants of the Company with respect to such facilities but includes other covenants and events of default typical for credit facilities of this nature. This facility is collateralized by a security interest in all of the assets of the Company.

     The debt agreement includes a stock purchase agreement which provides for the Company to issue warrants for Laurus to purchase up to two million common shares for nominal consideration of Canadian $0.01 per share, having a term of seven years. The issuance of the warrants to Laurus was approved by the shareholders of the Company at the Company’s annual and special meeting held June 30, 2006. Laurus has agreed not to sell any common shares of the Company issuable upon exercise of the warrants for a period of twelve months following the date of issuance of the warrants. Thereafter, Laurus may, at its option and assuming exercise of the warrants, sell up to 250,000 common shares of the Company per calendar quarter (on a cumulative basis) over each of the following eight quarters (Note 26).

     The common stock purchase warrants were valued at $3,286,967, net of $299,165 in issue costs, using the Black-Scholes option pricing model using the following variables: volatility of 76.64%, expected life of seven years, a risk free interest rate of 4.5% and a dividend of nil. The fair value of the loan was measured using a three-year maturity and the present value of the cash payments of interest and principal due under the terms of the debt agreement discounted at a rate of 17.5% which approximates a similar non-convertible financial instrument with comparable terms and risk. Under Emerging Issues Task Force No.00-19 and APB Opinion No.14, the fair value of warrants issued in connection with the stock purchase warrants would be recorded as a reduction to the proceeds from the issuance of long-term debt, with the offset to additional paid-in capital. At December 31, 2006, the Company has recorded $589,845 of interest expense for the accretion of the loan discount.

     The Company paid $3,515,471 of issuance costs to complete the long-term debt financing. The issuance costs have been recorded based on a pro rata calculation of the fair value of the components of the debt and warrants for $3.2 million and $0.3 million, to other assets and warrants, respectively. The issuance costs related to the long-term debt were recorded in other assets and are being amortized over the three-year period to maturity of the debt agreement with the Investor.

     The replacement credit facilities resulted in the extinguishment of approximately $33 million of short-term debt maturing September 30, 2006. These facilities were collateralized by a security interest in and lien upon all of the Company’s real and personal property. During the third quarter of 2006, the Company recognized a gain of $1,233,001 on the extinguishment of this debt with its previous lender. The gain was a result of the Company’s negotiations with its prior lender, reducing the amount of its final payment including any accrued interest to an agreed upon amount below what had previously been recorded by the Company.

F-32

     Subsequent to the issuance of the Company’s consolidated financial statements as of and for the year ended December 31, 2006, the Company’s management determined that an error existed in the previously issued consolidated balance sheet. The Company determined that the long-term debt for the Revolver credit facility as at December 31, 2006 should be classified as current in accordance with EITF-95-22, “Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements that Include Both a Subjective Acceleration Clause and a Lockbox Arrangement” (“EITF 95-22”). As a result, the accompanying balance sheet as of December 31, 2006 has been restated from amounts previously reported in Form 8-K dated August 24, 2007. The restatement had no impact on the previously reported consolidated statement of operations and comprehensive loss, shareholders’ equity or cash flows. A summary of the effects of this restatement is as follows:

	Previously Reported		As restated
	December 31, 2006		December 31, 2006
Current portion of long-term debt.	$	5,967,674	$	26,502,096
Long-term debt		32,799,043		12,264,621

     The Company’s revolving credit facility (the ‘Revolver”) requires a lockbox arrangement, which provides for all receipts to be swept daily to reduce borrowings outstanding under the credit facility. This arrangement, combined with the existence of a subjective acceleration clause in the revolving credit facility, requires that the borrowings under the Revolver be classified as a current liability on the balance sheet in accordance with EITF 95-22. The acceleration clause could allow the Company’s lender to forego additional advances should they determine there has been a material adverse change in the Company’s financial position or prospects reasonably likely to result in a material adverse effect on the Company’s business, condition (financial or otherwise), operations, performance or properties. The Company believes that no such material adverse change has occurred; further, as of March 27, 2008, the Company’s lender had not informed the Company that any such event had occurred.

12. CONVERTIBLE DEBENTURES AND WARRANTS

     On March 22, 2006 the Company completed a private placement with a group of qualified, accredited institutional investors of $10,686,101 of convertible debentures and warrants. The convertible debentures bear interest at 9.33% per annum, have a term of five years, are due March 22, 2011, and are convertible into 4,486,000 common shares at an initial conversion price of $2.3821 per share. The warrants, which have a four-year term, are exercisable into 1,570,100 common shares of the Company at an exercise price of $2.5986 per share.

     On March 7, 2007, the Company received written approval from the institutional investors of the holders of the Company’s convertible debentures and warrants for an extension of the original requirement to be listed or quoted on a U.S. trading market. If the Company’s common stock, or the shares of Ad.Venture Partners, Inc. (“AVP”) in the event of a successful merger (see Note 25(b) — Subsequent Events), is not listed on a U.S. trading market as soon as reasonably practicable after the earlier of the date on which the transaction proposed in the Arrangement Agreement is consummated or the ninetieth day following the date on which the Arrangement Agreement is terminated by either party, but no later than August 31, 2007 (the “Required Listing Date”),the Company shall be required to immediately pay retroactive monthly principal payments of $1.0 million from January 1, 2007. The Company shall thereafter be obligated to make monthly principal payments of $1.0 million on each ensuing monthly redemption date until fully paid by November 30, 2007 regardless of whether or not the Company subsequently obtains a listing of the common stock on a U.S. trading market. The Company’s obligation to delist from the Toronto Stock Exchange (“TSX”) on or before December 31, 2006 has also been conditionally waived and replaced with an obligation to delist the common stock from the TSX on or before the ninetieth day following the Required Listing Date.

     In the event the Company does not meet deadlines relating to the filing and effectiveness of the registration statement, the Company is required to pay, on a monthly basis, liquidated damages of approximately $214,000 per month (2% of the aggregate purchase price paid by the investors in the private placement), up to a maximum of approximately $3.4 million, until such obligations are fulfilled.

     The debentures are convertible, in whole or in part into common shares at the option of the holder, at any time after the original issue date, subject to certain conversion limitations. The holder also has the option to force redemption of some or all of its outstanding debentures at any time after the three-year anniversary of the original issue date. Therefore, the life of the debentures is deemed to be three years. If the price of the Company’s common stock exceeds $5.9551 for a period of any 20 consecutive days, on a U.S. trading market, the Company may have the holder convert up to 50% of the then outstanding principal amount of debentures. If the price of the Company’s common stock exceeds $7.0379 per share for any 20 consecutive trading days, the Company may force a holder to convert all or part of the outstanding principal amount of the debentures.

F-33

     The Company shall pay interest to the holder on the aggregate unconverted and then outstanding principal amount of the debenture at the rate of 9.33% per annum, increasing to 12% per annum if the Company’s common stock, or the shares of AVP in the event of a successful merger, are not listed or quoted on a U.S. trading market on or before the Required Listing Date, payable quarterly, in arrears. If the Company’s common stock, or the shares of AVP in the event of a successful merger, are not listed on a U.S. trading market on or before the Required Listing Date, the Company shall be required to immediately pay the interest rate increase retroactive to January 1, 2007 and the interest rate increase shall apply prospectively thereafter, regardless of whether or not the Company subsequently obtains a listing of the common stock on a U.S. trading market. The interest rate shall be reduced by 1.33% beginning in the month following the date the holder receives an opinion from counsel to the Company, in form and substance reasonably satisfactory to the holder, that distributions including interest payments under this debenture are no longer subject to mandatory tax withholding under the Income Tax Act (Canada).

     SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as amended, requires that an embedded derivative included in a debt arrangement for which the economic characteristics and risks are not clearly and closely related to the economic characteristics of the debt host contract be measured at fair value and presented as a liability. Changes in fair value of the embedded derivative are recorded in the consolidated statements of operations and deficit at each reporting date. Embedded derivatives that meet the criteria for bifurcation from the convertible debt and that are therefore measured at fair value consist of (i) a holder conversion option whereby the Holder may elect to convert at any time with an initial conversion price of $2.38 per share, (ii) accelerated repayment due to default provisions including change in control and other fundamental transactions in which the holders may receive the greater of 120% of the outstanding principal amount plus accrued interest or the conversion value, (iii) forced conversion provisions whereby the Company may force conversion of the outstanding balance of the debenture into common stock based upon the Company’s stock price, and (iv) an accelerated repayment schedule and stepped up interest required in the event that a U.S. stock exchange listing is not completed by a specified date.

     The warrants issued with the convertible debenture are presented as a liability because they do not meet the criteria of EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, for equity classification. Subsequent changes in fair value are recorded in the consolidated statements of operations and deficit.

     The Company allocated the gross proceeds received to the convertible debt and warrants on a relative fair value basis. The embedded derivatives were then measured at fair value and the residual amount was allocated to the debt host. The Company allocated $5.3 million to the debt, $1.1 million to the warrants and $4.3 million to the embedded derivatives. The issuance costs of $1.4 million related to the transaction were allocated to the debt and the warrants based upon their relative fair value which approximates the relative costs to raise capital for debt and equity. Issuance costs of $0.2 million allocated to the warrants were expensed on the origination date of the transaction. Issuance costs of $1.2 million allocated to the debt and included in other assets will be amortized over the deemed life of three years. Each reporting period, the Company is required to accrete the carrying value of the convertible debentures such that at the deemed maturity date of March 22, 2009 the carrying value of the debentures will be their face value of $10.7 million. As of December 31, 2006, the Company recognized $1,020,148 in accretion expense which has increased the value of the convertible debentures from $5.3 million to $6.3 million.

     The following table shows the changes in the fair values of derivative instruments recorded in the consolidated financial statements for fiscal year 2006.

				Embedded
	Warrants			Derivatives			Total
Fair value at origination	$	1,076,693		$	4,352,972			$	5,429,665
Changes in fair value		(41,486	)		(1,322,450	)			(1,363,936	)
Fair value, December 31, 2006	$	1,035,207		$	3,030,522			$	4,065,729

     If at any time after one year from the date of issuance of the warrants there is no effective registration statement registering, or no current prospectus available for, the resale of the warrant shares by the holder, and the common stock is listed on a U.S. trading market, then the warrant may also be exercised at such time by means of a cashless exercise in which the holder shall be entitled to receive a certificate for the number of warrant shares equal to the quotient obtained by dividing the average stock price for the five trading days immediately preceding the date of such election less the exercise price of the warrant, as adjusted multiplied by the number of warrant shares issuable upon exercise of the warrant in accordance with the terms of the warrant by means of a cash exercise rather than a cashless exercise.

     The consummation of the Arrangement Agreement constitutes an event of default as it a fundamental transaction under 180 Connect’s convertible debt agreement. On August 29, 2007, the lenders exercised their right to redeem the convertible debentures in full in the amount of approximately $10.4 million plus accrued interest of $0.1 million in accordance with the terms of the convertible debenture agreement. See note 25.

F-34

13. LEASE COMMITMENTS

(a) Operating Leases

     The Company leases office, warehouse facilities and equipment under various non-cancelable operating lease agreements which expire on various dates through 2012.

     Future minimum annual lease payments under such lease agreements that have initial or remaining terms in excess of one year at December 31, 2006 are as follows:

2007	$	3,979,706
2008		3,172,658
2009		2,324,508
2010		1,735,670
2011		1,137,911
2012		263,042
	$	12,613,495

     The Company has a contingent exposure on certain property leases related to repairs and/or maintenance costs that the landlord, at its discretion, may incur and charge to the Company. Operating lease expense for the year ended December 31, 2006, the period December 26, 2004 to December 31, 2005 and the period December 28, 2003 to December 25, 2004 was $3,980,584, $4,039,214 and $2,990,600, respectively.

(b) Capital Leases

     At December 31, 2006, the future minimum annual payments under capital lease obligations are as follows:

2007	$	14,214,126
2008		11,332,805
2009		4,393,730
2010		121,597
Future minimum lease payments		30,062,258
Less: amount representing interest		1,816,042
Present value of minimum lease payments		28,246,216
Less: current portion		13,033,104
	$	15,213,112

     As of December 31, 2006, the Company has acquired 2,589 vehicles which relate to $28.2 million of remaining principal related to capital lease obligations. The interest rates for the remaining lease obligations are both fixed and variable. The fixed interest rates range from 5.2% through 6.2% and the variable interest rates are determined quarterly using the Merrill Lynch AA published trading Corporate Bond index plus 0.25%.

     At December 31, 2005, the future minimum annual payments under capital lease obligations are as follows:

2006	$	13,434,784
2007		10,587,818
2008		9,662,538
2009		4,467,674
Future minimum lease payments		38,152,814
Less: amount representing interest		3,294,948
Present value of minimum lease payments		34,857,866
Less: current portion		11,881,026
	$	22,976,840

F-35

     As of December 31, 2005, the Company has acquired 2,262 vehicles which relate to $34.9 million of remaining principal related to capital lease obligations. The interest rates for the remaining lease obligations range from 4.475% through 5.801%.

14. SHAREHOLDERS’ EQUITY

(a) Authorized

     Unlimited number of voting common shares.

(b) Issued

	Class B Series 1 Special Shares						Common Shares
	Shares			$			Shares			$
Balance, December 27, 2003		16,324,272		$	30,324,102			631,667		$	640,848
Issuance on exercise of stock options
— for cash		—			—			223,778			1,324,098
— for other consideration		—			—			2,747,985			1,958,556
Conversion of Class B shares to common shares		(16,324,272	)		(30,388,540	)		16,324,272			30,388,540
Repayment of share purchase loans (i)		—			64,438			—			—
Issuance of shares from initial public offering		—			—			3,750,000			30,000,000
Issuance of shares from over allotment		—			—			150,000			1,200,000
Share issue costs		—			—			—			(4,154,694	)
Balance, December 25, 2004		—		$	—			23,827,702		$	61,357,348
Issuance on exercise of stock options — for cash		—			—			681,412			4,212,448
Normal course issuer bid (ii)		—			—			(292,200	)		(759,828	)
Balance, December 31, 2005		—			—			24,216,914		$	64,809,968
Issuance on exercise of stock options — for cash		—			—			259,712			1,587,640
Balance, December 31, 2006		—		$	—			24,476,626		$	66,397,608

(i)	Employee share purchase loans in the aggregate amount of $64,438 were repaid in the first quarter of 2004. As of December 31, 2005 and December 25, 2004, total employee loans debited to share capital amounted to nil and nil, respectively.
(ii)	During the twelve months ended December 31, 2005, the Company purchased for cancellation 292,200 of its common shares for $1,158,048 in connection with the normal course issuer bid, of which $759,828 was attributed to share capital and the remaining $398,220 was attributed to the deficit.

(c) Employee stock options

     As of December 31, 2006, the Company has 583,244 options outstanding to employees and directors of the Company (December 31, 2005 — 1,426,666) to purchase an equal amount of common shares for an exercise price equal to the fair market value of the Company’s common shares on the date of the grant. The options have a life of up to 10 years from the date of grant. Vesting terms and conditions are determined by the Board of Directors at the time of grant and vesting terms range from three to five years. The Company does not have a stock option plan; rather it has stock option agreements with certain individuals.

F-36

     The following table summarizes the Company’s stock option activity:

						Period from December 26, 2004					Period from December 28, 2003
	Year Ended December 31, 2006					to December 31, 2005					to December 25, 2004
				Weighted					Weighted					Weighted
	Number of			Average		Number of			Average		Number of			Average
	Options			Exercise Price		Options			Exercise Price		Options			Exercise Price
Outstanding, beginning of period		1,426,666		$	1.31		2,154,349		$	1.19		5,775,405		$	1.37
Granted		—			—		—			—		—			—
Exercised		(259,712	)	$	1.00		(681,412	)	$	1.07		(3,605,633	)	$	1.00
Cancelled		(583,710	)	$	1.00		(46,271	)	$	1.00		(15,423	)	$	1.00
Outstanding, end of period		583,244		$	1.75		1,426,666		$	1.31		2,154,349		$	1.19
Options exercisable, end of period		583,244		$	1.75		1,037,369		$	1.31		1,241,751		$	1.19

     The following table summarizes information about stock options outstanding as at December 31, 2006:

	Options Outstanding and Exercisable
			Weighted Average
			Remaining
	Number		Contractual Life		Weighted Average
Exercise Price	of Shares		(Years)		Exercise Price
$1.00		182,904		0.9	$	1.00
$2.09		400,340		4.0	$	2.09

     Stock-based compensation for non-employees and employees is measured and recorded in the consolidated financial statements at fair value. In connection with the acquisition of the remaining 7% interest in Cable Play Inc., the Company exchanged 2,726,592 of its options for 3,181,922 options of those previously granted by Cable Play Inc. The Company applied FASB interpretation No.44 (“FIN 44”), “Accounting for Certain Transactions Involving Stock Compensation.” The fair value of the unvested options granted at the date of acquisition of $4,126,541 was recognized as compensation cost over the remaining vesting periods resulting in compensation expense of $91,214, $1,321,681 and $2,713,646 for the years ended December 31, 2006, December 31, 2005 and December 25, 2004, respectively.

(d) Accumulated Other Comprehensive Income

     As at December 31, 2006 and 2005, the Company’s accumulated other comprehensive income is comprised solely of translation adjustments. At December 31, 2004, the Company’s accumulated other comprehensive income also included an unrealized gain on available-for-sale securities.

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15. ACQUISITIONS

(a) 2005

     On March 22, 2005, the Company acquired certain assets and liabilities of Digital Interiors, Inc., including customer contracts, for $429,603 cash plus additional contingent purchase consideration based upon certain operating performance metrics for Digital Interiors, Inc. over the next 18 months. This additional contingent consideration is not included as part of the purchase equation as no additional amounts are due.

     This acquisition was accounted for under the purchase method of accounting, the application of which requires the use of management’s judgment and estimates and third-party valuation professionals as to the determination of the fair market values of the assets and liabilities acquired.

     The allocation of fair value is as follows:

Inventory	$	77,366
Property, plant and equipment		129,773
Goodwill		313,202
Customer contracts		27,000
Trade name		187,000
Net assets acquired	$	734,341
Net liabilities assumed		304,738
Cash consideration	$	429,603

     The Company has included the revenue and expenses of this acquired company in these consolidated financial statements from the date of acquisition (March 22, 2005).

(b) 2004

     In January 2004, the Company acquired all of the outstanding stock of Mountain Center, Inc. (“Mountain”) for a purchase price, net of estimated amounts due from the sellers and discount of the consideration to present value, including acquisition related costs, of approximately $7.2 million. The Company paid $3.0 million at the closing of the purchase, with additional amounts payable of $1.0 million 30 days after the closing of the Company’s initial public offering and six annual non-interest bearing payments of $1.0 million commencing in January 2005, subject to the Company’s right of offset for certain pre-acquisition claims. At the time of the acquisition, Mountain was a defendant in three lawsuits filed in the state of California for employment-related breaches. The Company stopped making payments to Mountain when it was determined that the expected settlement amount exceeded that agreed to in the purchase price. Mountain sued the Company for non-payment. The California employment-related lawsuits were settled at mediation on February 24, 2005 for $8.0 million which included legal fees incurred by the Company. The Company was responsible for paying the damages and offset the amounts paid on the previous owners’ behalf against amounts owed to the previous owner. During the fourth quarter of 2005, the Company settled all outstanding litigation matters with the selling shareholders of Mountain for $2.95 million. The settlement resulted in the reduction of long-term debt of $1.2 million, a reduction in the deferred tax liability of $0.8 million and a corresponding reduction in customer contracts of $2.0 million.

     This acquisition was accounted for under the purchase method of accounting, the application of which requires the use of judgment and estimates as to the determination of the fair market values of the assets and liabilities acquired.

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     The allocation of fair value, adjusted in 2005, is as follows:

Cash	$	3,551,425
Other assets		15,612
Property plant and equipment		696,982
Customer contracts		21,189,221
Debt assumed		(1,045,605	)
Working capital deficit		(7,042,751	)
Deferred tax liability		(6,594,957	)
Additional liabilities assumed		(3,611,631	)
Net assets acquired	$	7,158,296

16. RELATED PARTY TRANSACTIONS

     During the second quarter of 2006, the Company entered into an arrangement with a member of its Board of Directors for professional services to be provided in connection with the Company’s long-term debt refinancing and strategic alternatives process. The agreements provide for maximum base compensation of $300,000. During 2006, in addition to base salary payments, the director earned and was paid $240,000 in connection with the Company’s debt refinancing. Included in accounts payable and accrued liabilities is an amount of $150,000 related to a discretionary performance bonus payable as at December 31, 2006. Additional bonuses up to $360,000 can be earned by the director in connection with closing of the arrangement transaction with AVP or as part of the Company’s discretionary bonus plan.

     Beginning in fiscal 2004, the Company required its senior management to spend the majority of their time at the Company’s Fort Lauderdale headquarters. To that end, the Company paid $245,000 to purchase 17.19% of the former Chief Executive Officer’s home in the United States. The former Chief Executive Officer had the option to purchase the Company’s interest at a later date. Subsequent to December 25, 2004, the former Chief Executive Officer purchased the 17.19% interest in the home from the Company. There was no gain or loss recorded on this transaction.

17. RESTRUCTURING COSTS

     Restructuring costs and remaining reserve as of December 31, 2006 consist of the following:

	Reserve		Restructuring		Paid During		Reserve
	December 31, 2005		Costs Incurred in 2006		2006		December 31, 2006
Severance	$	549,987	$	560,173	$	1,110,160	$	—
Moving expenses		—		185,261		184,761		500
Rent expense		27,450		—		27,450		—
Other		—		147,254		140,929		6,325
Total restructuring	$	577,437	$	892,688	$	1,463,300	$	6,825

     Moving costs are associated with the Company’s relocation of its back office operations and corporate offices to Denver.

     Restructuring costs and remaining reserve as of December 31, 2005 consist of the following:

	Reserve		Restructuring Costs
	December 25, 2004		Incurred in 2005		Paid During 2005		December 31, 2005
Severance	$	—	$	1,439,339	$	889,352	$	549,987
Moving expenses		—		136,341		136,341		—
Rent expense		—		32,805		5,355		27,450
Other		—		64,000		64,000		—
Total restructuring	$	—	$	1,672,485	$	1,095,048	$	577,437

     In 2005, there was a charge of $1.7 million for employee severance and related costs associated with the Company’s relocation of its back office operations and corporate offices to Denver. Employee severance was $1.4 million and employee moving and other expenses amounted to $0.3 million.

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18. INCOME TAXES

     The income tax benefit differs from the amount computed by applying the Canadian statutory tax rates to loss from continuing operations before income taxes for the following reasons:

	January 1, 2006			December 26, 2004 to			December 28, 2003
	to December 31,			December 31,			to December 25,
	2006			2005			2004
Tax expense/(benefit) on loss from continuing operations at Canadian statutory rate (2006 — 32.50%: 2005 — 33.75%:
2004 — 33.75%)	$	(3,348,630	)	$	(2,484,253	)	$	(1,455,359	)
Increase in taxes resulting from non-deductible items		518,086			523,246			1,422,102
Foreign rate differences		(1,080,076	)		(688,308	)		527,335
Non-taxable portion of gain from sale of investment		(216,877	)		(1,100,588	)		—
Deferred tax asset valuation allowance		2,624,226			1,748,176			(1,337,205	)
Other		—			—			222,127
Total income tax recovery	$	(1,503,271	)	$	(2,001,727	)	$	(621,000	)
Allocation of income tax recovery
Current income tax expense (recovery)	$	57,760		$	(509,786	)	$	1,477,000
Deferred income tax recovery		(1,561,031	)		(1,491,941	)		(2,098,000	)
Income tax recovery	$	(1,503,271	)	$	(2,001,727	)	$	(621,000	)

     The Company recorded a net $1.5 million income tax recovery for the year ended December 31, 2006, which includes a current tax expense of $0.1 million for state tax liabilities and a deferred tax recovery of $1.6 million to record the amortization of the deferred tax liability associated with certain intangible assets (customer contracts) recognized as part of the acquisition of Mountain and the establishment of a deferred tax asset associated with a portion of the loss carryforwards in that entity.

F-40

     Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company’s deferred tax assets and liabilities are as follows:

	December 31, 2006			December 31, 2005
Deferred tax assets
Loss carryforwards	$	19,616,110		$	13,943,312
Goodwill and customer contracts		6,703,610			6,880,469
Deductible temporary differences		6,737,751			6,830,064
Tax cost of venture investments in excess of carrying value		94,517			409,173
Undeducted share issuance costs		754,832			983,205
Derivative financial instruments		2,226,939			—
Total deferred tax assets		36,133,759			29,046,223
Valuation allowance		(25,115,431	)		(22,093,355	)
Deferred tax assets	$	11,018,328		$	6,952,868
Deferred tax liabilities
Convertible debenture	$	1,640,397		$	—
Intangibles		6,819,573			7,106,793
Capital assets		2,558,358			1,407,106
Deferred tax liabilities	$	11,018,328		$	8,513,899
Net deferred tax liabilities	$	—		$	1,561,031

     The Company provides a valuation allowance for the amount of deferred tax assets where it is more likely than not that the asset will not be realized.

     The deferred tax assets and liabilities associated with Mountain have been presented on a net basis on the consolidated balance sheets as follows, since the temporary differences will reverse in the same jurisdiction:

	December 31, 2006			December 31, 2005
Deferred tax assets related to loss carryforwards and other temporary differences	$	7,727,121		$	6,084,521
Deferred tax liabilities related to intangible assets		(6,819,573	)		(7,106,793	)
Deferred tax liabilities related to capital assets		(907,548	)		(538,759	)
Net deferred tax liabilities	$	—		$	(1,561,031	)

     The Company and its Canadian subsidiaries have non-capital loss carryforwards for income tax purposes totaling $18,112,279, $2,491,768 of which expires in 2007, $5,690,637 in 2008, $2,400,082 in 2009, $2,847,483 in 2010, $1,977,491 in 2014 and $2,704,817 in 2015.

     Subsidiaries of the Company have losses for U.S. tax purposes of approximately $33,849,000 which will begin to expire in 2021.

19. LOSS PER SHARE

     The following table sets forth the computation of basic and diluted loss per share for the fiscal years ended December 31, 2006, December 31, 2005 and December 25, 2004 respectively.

	January 1, 2006 to			December 26, 2004 to			December 28, 2003 to
	December 31, 2006			December 31, 2005			December 25, 2004
Numerator:
Loss from continuing operations	$	(8,800,207	)	$	(5,359,023	)	$	(3,691,176	)
Loss from discontinued operations		(5,788,631	)		(3,157,632	)		(3,759,662	)
Net loss for the period	$	(14,588,838	)		(8,516,655	)		(7,450,838	)
Denominator:
Denominator for basic loss per share — weighted average number of shares		24,401,683			23,948,106			21,660,799
Effect of dilutive stock options.		—			—			—
Denominator for diluted loss per share — adjusted weighted average shares and assumed conversions		24,401,683			23,948,106			21,660,799
Loss per share data:
Basic and diluted — from continuing operations	$	(0.36	)	$	(0.22	)	$	(0.17	)
Basic and diluted — from discontinued operations (Note 21)		(0.24	)		(0.14	)		(0.17	)
Basic and diluted, net	$	(0.60	)	$	(0.36	)	$	(0.34	)

F-41

     Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per share is derived by using the weighted average number of common shares outstanding during the period plus the effect of dilutive stock options. For the fiscal years ended 2006, 2005 and 2004, respectively, the diluted net loss per share is equivalent to basic net loss per share as the outstanding options, convertible debt and warrants are anti-dilutive.

     As of December 31, 2006, the Company had issued convertible debentures and warrants (see Notes 11 and 12). The conversion and exercise of the convertible debentures and warrants would be anti-dilutive. The potential dilution of the convertible debentures and warrants could result in an additional 8.1 million common shares of the Company outstanding. Subsequent to year end, $2,024,785 of the outstanding principal on the convertible debentures was converted into 850,000 common shares. As a result of the redemption of the convertible debentures, the remaining options to convert into 3.65 million common shares expired. (Note 25)

20. GAIN ON SALE OF ASSETS AND ASSET WRITE-DOWN

     Gain on sale of assets and asset write-down consists of the following:

	January 1, 2006 to			December 26, 2004 to		December 28, 2003 to
	December 31, 2006			December 31, 2005		December 25, 2004
Gain from investments	$	1,320,193		$	6,522,324	$	2,982,559
Write-down of investments and assets		(297,960	)		—		(1,050,911	)
Refinancing of vehicles under capital lease		(296,147	)		—		—
Gain on sale of asset		—			374,967		—
	$	726,086		$	6,897,291	$	1,931,648

     During the first quarter of 2006, the Company sold its remaining interest in Control F-1 Corporation. This resulted in net proceeds of $1,327,693. As of December 25, 2004, as a result of changing conditions in the technology sector, management reviewed the carrying value of its investments and determined that a write-down in the carrying value of its investment in Control F-1 was appropriate and recorded an investment write-down of $1,050,911 resulting in the carrying value of the investment being nil. However, during the first quarter of 2006, an agreement was reached between the Company and Computer Associates International, Inc. and Computer Associates Canada Company for the Company’s holding in Control F-1 Corporation. The Company recognized a pre-tax gain of $1,320,193 on the sale of the investment in the first quarter of 2006.

     For the fiscal year ended December 31, 2006, the Company had a loss of $297,960 on the write-down of leased vehicles and a net loss on refinancing of vehicle capital leases of $296,147. The refinancing of vehicles under capital leases involved the sale of 750 vehicles under the Company’s capital lease obligations to a new third-party leasing company. The loss of $296,147 is primarily attributable to the fair value of the asset being less than the undepreciated cost of the vehicles at the time of the transaction. The refinancing transaction resulted in net proceeds of $2,127,542.

     In 2005, the Company sold its remaining interest in Guest-Tek for net cash proceeds of $9.0 million, of which the Company recognized a pre-tax gain on the sale of approximately $6.5 million. During the third quarter of 2005, the Company sold a building in California. In connection with the sale, the Company recognized a gain of $0.3 million.

     In 2004, the Company sold 500,000 shares of its interest in Guest-Tek pursuant to a secondary offering of common shares of Guest-Tek for net cash proceeds to the Company of $3.5 million and recognized a gain on the sale of approximately $3.0 million. At December 31, 2004, the Company’s investment in Guest-Tek had an unrealized gain on investments of approximately $6.5 million.

F-42

     Due to the sale of the investment in 2005, the unrealized gain in 2004 was recognized as a realized gain in 2005. There was minimal change in market value from 2004 to 2005.

21. DISCONTINUED OPERATIONS

     The Company discontinued its operations at certain non-profitable branches in 2006, 2005 and 2004, including its New York City unionized location in May 2004. The revenues and expenses for these locations have been reclassified as discontinued operations for all periods presented in the consolidated financial statements. The Company was able to determine the financial results of the discontinued branches as financial information is available for each branch. The operations and cash flows of the branches have been eliminated from the ongoing operations of the entity as a result of the disposal transaction and the Company will not have any significant continuing involvement in the operations of the branches after the disposal transaction.

     The Company’s current assets for discontinued operations consisted of accounts receivable of nil and $214,410 for the periods ended December 31, 2006 and December 31, 2005, respectively. Accounts payable and accrued liabilities for discontinued operations was approximately $1.0 million and nil for the periods ended December 31, 2006 and December 31, 2005 respectively.

Consolidated statements of operations and deficit for discontinued operations is as follows:

	January 1, 2006 to			December 26, 2004 to			December 28, 2003 to
	December 31, 2006			December 31, 2005			December 25, 2004
Revenue from discontinued operations	$	1,237,839		$	3,036,671		$	9,765,841
Impairment of goodwill and customer contracts	$	490,404		$	305,575		$	1,245,072
Loss from discontinued operations, net of income taxes of nil	$	(5,788,631	)	$	(3,157,632	)	$	(3,759,662	)
Diluted loss per share from discontinued operations	$	(0.24	)	$	(0.13	)	$	(0.17	)

(a) Discontinued cable, security and high definition branches

     Throughout all the reportable periods, the Company closed certain branch locations throughout the United States. As a result of these closings, the Company recognized a loss from discontinued operations excluding any impairment charge of $5,298,227, $2,852,057 and $2,430,404 for the years ended December 31, 2006, December 31, 2005 and December 25, 2004, respectively. The impairment charges reducing goodwill and customer contracts were $490,404, $305,575 and $1,245,072 for the years ended December 31, 2006, December 31, 2005 and December 25, 2004, respectively. Revenues applicable to the closed branches were $1,237,839, $3,036,671 and $9,765,841 for the years ended December 31, 2006, December 31, 2005 and December 25, 2004, respectively.

(b) Sale of construction operations

     As of December 27, 2003, the Company had made the decision to dispose of the construction operations of its wholly-owned subsidiary, Wirecomm Systems, Inc. For the year ended December 25, 2004, the Company incurred a loss of $84,186 from discontinued construction operations.

22. CONTINGENCIES

     During the fourth quarter of 2005, the Company was notified by regulatory authorities of the initiation of an investigation of certain wage practices in Washington. The balance of this provision as at December 31, 2006 is $1.7 million. The provision is reflected on the consolidated statements of operations and deficit in general and administrative expenses, and on the consolidated balance sheets in accrued liabilities (Note 10). By their nature, these estimates are subject to measurement uncertainty and relate to events whose outcome will not be fully resolved until future periods. As a result revisions to these estimates could have a material impact on financial results of future periods.

F-43

     In 2006, the Company was named as a defendant in a purported class action case in California for which the Company has not established reserves. The Company intends to vigorously contest each of these claims. In addition, the Company is subject to a number of individual employment-related lawsuits. No reserve has been recorded for these cases as the Company is unable to reasonably estimate the amount of probable and reasonably estimable loss. These lawsuits are not expected to have a material impact on the Company’s results of operations, financial position or liquidity.

23. SEGMENT INFORMATION

     The Company provides installation, integration and fulfillment services to the home entertainment, communications, security and home integration service industries. As such the revenue derived from this business is part of an integrated service offering provided to the Company’s customers and thus is reported as one operating segment.

     The Company’s operations are located in the United States and Canada. Revenue is attributed to geographical segments based on the location of the customers.

     The following table sets out property, plant and equipment, goodwill and customer contracts from continuing operations by country as of December 31, 2006 and December 31, 2005 and revenue from continuing operations for the fiscal years ended December 31, 2006, December 31, 2005 and December 25, 2004.

Geographic information

	December 31, 2006		December 31, 2005
Property, plant and equipment, goodwill and customer contracts
Canada	$	1,468,498	$	510,732
United States		69,521,871		81,460,071
Total	$	70,990,369	$	81,970,803

	January 1, 2006 to		December 26, 2004 to		December 28, 2003 to
	December 31, 2006		December 31, 2005		December 25, 2004
Revenue
Canada	$	9,161,281	$	6,737,941	$	4,804,219
United States		326,285,460		272,988,710		205,871,063
Total	$	335,446,741	$	279,726,651	$	210,675,282

     For the fiscal years ended December 31, 2006, December 31, 2005 and December 25, 2004, one customer accounted for approximately 83%, 86% and 86% of consolidated revenues, respectively. This customer accounted for 76%, 89% and 84% of consolidated accounts receivable at December 31, 2006, December 31, 2005, and December 25, 2004, respectively.

     The Company is economically dependent on this customer and the loss of this customer would have a material adverse effect on the Company’s results of operations and financial condition.

F-44

24. LONG-TERM SHARE COMPENSATION PLAN

     During 2004, the Company established the Long-Term Share Compensation Plan (the “LTIP”) for the benefit of executive officers and key employees. Outside directors of the Company and consultants to the Company are not entitled to participate in the LTIP. The LTIP was designed to (i) strengthen the ability of the Company to attract and retain qualified officers and employees which the Company and its affiliates require; (ii) encourage the acquisition of a proprietary interest in the Company by such officers and employees, thereby aligning their interests with the interests of the Company’s shareholders; and (iii) focus management of the Company and its affiliates on operating and financial performance and total long-term shareholder return by providing an increased incentive to contribute to the Company’s growth and profitability. Pursuant to the LTIP, the Board of Directors may grant options to purchase common shares, share appreciation rights or performance share units. The maximum number of common shares reserved for issuance pursuant to the LTIP shall not exceed 13% of the issued and outstanding common shares from time to time. The LTIP is a separate plan from the employee stock options (Note 14c), and is subject to Board and shareholder approval. During the fourth quarter of 2006, the Company’s Board of Directors granted 299,999 share appreciation rights to eight of the Company’s officers and senior management, subject to shareholder approval. The share appreciation rights have an exercise price of $1.50 and expire December 6, 2011.

     As the LTIP has not yet been approved by the shareholders, no compensation expense has been recorded in 2006. When approval is received, the fair value of the share appreciation rights will be measured at that date and compensation expense will be recorded in that period. See note 25.

25. SUBSEQUENT EVENTS

(a) Reduction of Letter of Credit

     On February 8, 2007, as a result of the liquidation and reduction in its insurance obligations, the Company has negotiated a reduction in its required letter of credit (“LOC”). The LOC requirement, which is collateralized with the Company’s restricted cash (Note 4), has been reduced by $3.2 million. This reduction in the Company’s restricted cash balance has been partially offset by a $1.1 million increase in restricted cash as collateral for a $1.6 million bond for the Boise airport project currently in progress by the Company’s Network Services operation.

(b) Transaction with Ad.Venture Partners, Inc.

     On March 13, 2007, the Company announced that it had entered into an arrangement agreement with Ad.Venture Partners, Inc. (“AVP”) (OTCBB: AVPA.OB), a special purpose acquisition company, that would result in the merger of the Company with an indirect wholly-owned Canadian subsidiary of AVP. On August 24, 2007, the transaction was consummated. AVP, a U.S. corporation, will be re-named “180 Connect”.

     The arrangement will be accounted for under the reverse acquisition application of the equity recapitalization method of accounting. Under this method of accounting, Ad.Venture will be treated as the “acquired” company for financial reporting purposes. In accordance with guidance applicable to these circumstances, the arrangement will be considered to be a capital transaction in substance. The accumulated deficit of 180 Connect will be carried forward after the completion of the arrangement. The historical financial statements of the registrant will be the historical financial statements of 180 Connect.

     After giving effect to the arrangement, based on the number of Ad.Venture shares of common stock and 180 Connect common shares outstanding as of the August 24, 2007, 16,422,442 shares of Ad.Venture common stock and/or exchangeable shares, representing 63.2% of the combined company’s voting interest was issued to 180 Connect shareholders in connection with the arrangement. The Corporation was in compliance with the covenants of its credit facilities and obtained the appropriate waivers from its lender pursuant to the credit facilities in connection with entering into the Arrangement Agreement subject to the convertible debenture holders retaining their rights that consummation of the Arrangement may be an event of default as more fully described below.

     In accordance with their agreements with the Corporation, three of the Corporation’s directors will receive bonuses upon closing of the AVP arrangement. Mr. McCarthy will be paid a bonus of $1.6 million, Mr. Simunovic will be paid a bonus of $150,000 and Mr. Giacalone will be paid a bonus of $225,000. In compliance with the Corporation’s policy on conflicts of interest, each of these directors declared their interest and abstained from voting in connection with the approval by the Board of Directors of the Arrangement Agreement and the transactions contemplated thereunder.

F-45

     The LTIP was approved by shareholders in conjunction with the consummation of the transaction with Ad.Venture.

(c) Exercise of Laurus Warrants

On April 2, 2007, Laurus exercised its right under the warrant to purchase 2,000,000 common shares. Laurus has agreed not to sell any common shares issued upon exercise of the warrant until July 31, 2007. Thereafter, Laurus may, at its election, sell up to 250,000 common shares per calendar quarter (on a cumulative basis) over each of the following eight quarters, subject to applicable securities laws restrictions and limitations. The Company received proceeds of $17,000 from this exercise.

(d) Subsequent to year end, on May 2, 2007 the Company completed a transaction with a third party leasing company, refinancing approximately 1,020 vehicles under a capital lease resulting in net proceeds of approximately $3.5 million and an additional capital lease liability of approximately $3.8 million including transaction fees.

(e) Subsequent to year end, on May 22, 2007 and June 6, 2007, one of the institutional investors of the convertible debentures and warrants has exercised its option to convert in total $2,024,785 of principal under the 9.33% convertible debenture into 850,000 common shares.

(f) On July 2, 2007 the Company entered into an amendment agreement with Laurus securing additional interim financing to fund working capital up until the closing of the arrangement with AVP on August 24, 2007.

Pursuant to the terms of the agreement, Laurus agreed to provide an additional $8.0 million to the Company as an increase to the current $37.0 million revolving loan, for a total revolving loan of $45.0 million. As part of this arrangement, Laurus also agreed to extend the maturity of the existing $9.0 million over advance letter on a revolving loan from July 31, 2007. After July 31, 2007, the over advance became part of the revolving facility. AVP management agreed to provide a limited recourse guaranty for the additional financing Laurus is providing to 180 Connect by placing $7.0 million in a brokerage account pledged to Laurus which may be used solely to purchase AVP shares.

In connection with the amendment agreement, Laurus also agreed to loan $10.0 million to a special purpose corporation for the purpose of purchasing shares of AVP common stock. The Special Purpose Corporation is a third party arms-length corporation to both the Company and AVP. Neither the Special Purpose Corporation nor Laurus agreed to make any specific amount of purchases or to vote any shares purchased in any specific manner in connection with the arrangement. 180 Connect and AVP anticipate that any AVP shares purchased by the special purpose company would be purchased in privately negotiated transactions.

In connection with the completion of the amendment agreement, Laurus received warrants to purchase one million 180 Connect common shares with a 5-year term, exercisable at $2.61 per share, the market price at the time of issue, and subject to a 1 year lock-up. Laurus will receive a 2.5% management fee on the $8.0 million increase to the revolver or $200,000 and a $1.4 million commitment fee which will be paid on August 24, 2007.

In addition, 180 Connect and AVP agreed to an adjustment to the previously announced exchange ratio per AVP share of 0.627 to 0.6000 and to the elimination of a mechanism to adjust the exchange ratio based on relative transaction expenses of the parties.

Upon the closing of the arrangement with AVP, 180 Connect repaid Laurus $5.0 million principal on the term note on August 24, 2007. At August 24, 2007, 180 Connect had no outstanding borrowings under either the additional $8.0 million revolving loan or the existing $9.0 million overadvance facility.

As consideration for the guaranty and pledge, pursuant to the terms of a Letter Agreement between 180 Connect and the AVP Shareholders dated July 2, 2007 (the “180 Connect/AVP Shareholders”), 180 Connect agreed to reimburse the AVP Shareholders up to $150,000 for their fees and expenses in connection with the guaranty and pledge.

(g) The consummation of the Arrangement Agreement constitutes an event of default as it is a fundamental transaction under 180 Connect’s convertible debt agreement. On August 29, 2007, the lenders exercised their right to redeem the convertible debentures in full in the amount of approximately $10.4 million plus accrued interest of $0.1 million in accordance with the terms of the convertible debenture agreement.

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EX-99.2

EXHIBIT 99.2

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     On March 13, 2007, Ad.Venture, Purchaser and 180 Connect entered into the arrangement, whereby Purchaser will acquire all the outstanding 180 Connect common shares in exchange for either shares of Ad.Venture common stock, exchangeable shares of Purchaser (and certain ancillary rights) or a combination of shares of Ad.Venture common stock and exchangeable shares of the Purchaser (and certain ancillary rights). On August 24, 2007, the Company consummated the plan of arrangement. As part of the arrangement, which is discussed in greater detail below, all outstanding options to purchase 180 Connect common shares were exchanged for options to purchase Ad.Venture common stock. Ad.Venture assumed all of 180 Connect’s obligations pursuant to 180 Connect’s outstanding warrants, stock appreciation rights and convertible debentures. On consummation, 180 Connect became an indirect subsidiary of Ad.Venture and Ad.Venture changed its name to “180 Connect Inc.”

     The following unaudited pro forma condensed combined balance sheet combines the historical balance sheet of Ad.Venture and the consolidated balance sheet of 180 Connect as of June 30, 2007, giving effect to the arrangement as if it had been consummated on June 30, 2007. The following unaudited pro forma condensed combined statement of operations for the twelve-month period ended December 31, 2006 combines the statement of operations of Ad.Venture for the twelve-month period ended December 31, 2006 with the consolidated statement of operations of 180 Connect for its year ended December 31, 2006, giving effect to the arrangement as if it had occurred at January 1, 2006. The following unaudited pro forma condensed combined statement of operations for the six-month period ended June 30, 2007 combines the statement of operations of Ad.Venture for the six-month period ended June 30, 2007 with the consolidated statement of operations of 180 Connect for the six months ended June 30, 2007, giving effect to the arrangement as if it had occurred at January 1, 2006.

     We are providing the following information to aid you in your analysis of the financial aspects of the arrangement. We derived the historical financial information of Ad.Venture from (i) the audited financial statements of Ad.Venture for the period from April 7, 2005 (inception) to March 31, 2006, (ii) the audited financial statements of Ad.Venture as of and for the year ended March 31, 2007, (iii) the unaudited financial statements of Ad.Venture for the period from April 7, 2005 (inception) to December 31, 2005, (iv) the unaudited financial statements of Ad.Venture for the nine months ended December 31, 2006, and (v) the unaudited financial statements for Ad.Venture for the three months ended June 30, 2007. The unaudited statement of operations information of Ad.Venture for the twelve-month period ended December 31, 2006 is derived by adding Ad.Venture’s unaudited statement of operations for the nine months ended December 31, 2006 to the audited statement of operations for the period from April 7, 2005 (inception) to March 31, 2006 and subtracting therefrom Ad.Venture’s unaudited statement of operations for the period from April 7, 2005 (inception) to December 31, 2005. The unaudited statement of operations information of Ad.Venture for the six-month period ended June 30, 2007 is derived by adding Ad.Venture’s unaudited statement of operations for the three months ended June 30, 2007 to the audited statement of operations for the year ended March 31, 2007 and subtracting Ad.Venture’s unaudited statement of operations for the nine months ended December 31, 2006. We derived the historical financial information of 180 Connect for the year ended December 31, 2006 from the audited consolidated financial statements of 180 Connect for the year ended December 31, 2006, included elsewhere in this Current Report on Form 8-K. We derived the historical financial information of 180 Connect for the six months ended June 30, 2007 from the unaudited consolidated financial statements of 180 Connect for the six months ended June 30, 2007, included elsewhere in this Current Report on Form 8-K.

     This information should be read together with 180 Connect’s audited and unaudited financial statements and related notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of 180 Connect and other financial information included elsewhere in this Current Report on Form 8-K.

     The historical financial information has been adjusted to give pro forma effect to events that are related and/or directly attributable to the arrangement, are factually supportable and are expected to have a continuing impact on the combined results. Accordingly the adjustments presented on the pro forma condensed combined financial statements have been identified and presented in accordance with their timing to provide relevant information necessary for an accurate understanding of the combined company upon consummation of the arrangement.

II-1

     The unaudited pro forma condensed combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies been combined for the periods presented or the future results that the combined company will experience. Ad.Venture and 180 Connect have not had any historical relationships prior to the arrangement. Accordingly, no pro forma adjustments were required to eliminate activities among the companies. The historical financial statements of the registrant will be the historical financial statements of 180 Connect.

     Upon completion of the arrangement, each 180 Connect common share will be exchanged for 0.60 shares of Ad.Venture common stock or 0.60 exchangeable shares of Purchaser (and certain ancillary rights). Each exchangeable share will be exchangeable for one share of Ad.Venture common stock. Only 180 Connect shareholders who are Canadian residents may elect to receive exchangeable shares. The exchangeable shares will entitle holders to dividends and other rights that are substantially economically equivalent to those of holders of shares of Ad.Venture common stock. Holders of exchangeable shares will also have the right, through a voting trust arrangement, to vote at meetings of Ad.Venture stockholders. The exchangeable share structure is designed to provide an opportunity for shareholders of 180 Connect that are eligible Canadian residents and who validly make the required tax election to achieve a deferral of Canadian tax on any accrued capital gain on their 180 Connect common shares in certain circumstances until redemption or purchase of such exchangeable shares pursuant to its terms. Based on the number of Ad.Venture shares of common stock and 180 Connect common shares outstanding as of the consummation of the arrangement, 16,422,442 million shares of Ad.Venture common stock and/or exchangeable shares, representing 63.2% of the combined company’s voting interests has been issued to 180 Connect shareholders in connection with the arrangement.

     The arrangement will be accounted for under the reverse acquisition application of the equity recapitalization method of accounting in accordance with U.S. GAAP for accounting and financial reporting purposes. Under this method of accounting, Ad.Venture will be treated as the “acquired” company for financial reporting purposes. In accordance with guidance applicable to these circumstances, the arrangement will be considered to be a capital transaction in substance. Accordingly, for accounting purposes, the arrangement will be treated as the equivalent of 180 Connect issuing stock for the net monetary assets of Ad.Venture, accompanied by a recapitalization. The net monetary assets of Ad.Venture will be stated at their fair value, essentially equivalent to historical costs, with no goodwill or other intangible assets recorded. The accumulated deficit of 180 Connect will be carried forward after the completion of the arrangement. Operations prior to the merger will be those of 180 Connect. Upon the completion of the arrangement, Ad.Venture adopted the fiscal year of 180 Connect, as the accounting acquiror. As a result, the fiscal year presented in these pro forma condensed combined financial statements is December 31, 2006 and the interim period is the six months ended June 30, 2007.

     As disclosed in note 24 of the 180 Connect audited financial statements for the year ended December 31, 2006, no compensation expense was recorded related to the stock appreciation rights issued to certain employees in December 2006 under the long term incentive plan because the long term incentive plan had not been approved by the shareholders. Had 180 Connect recorded compensation expense in 2006, the amount would have been approximately $5,000. The stock appreciation rights had a fair market value of approximately $0.25 million on the grant date and vest over four years. Under the arrangement, Ad.Venture assumed the obligation to issue equity upon the settlement of the stock appreciation rights at a value equivalent to the issue-date fair market value. Therefore, compensation expense will be recorded in the period the long term incentive plan was approved by the shareholders of Ad.Venture.

     The following unaudited pro forma condensed combined financial statements have been prepared based on the conversion of 9,577,709 outstanding shares of Ad.Venture common stock, which is net of 1,672,288 of shares that were not converted by shareholders.

     The exchangeable shares are substantially economically equivalent to Ad.Venture shares and can only be settled for Ad.Venture shares, accordingly, such exchangeable shares have been presented as equity in these pro forma condensed combined balance sheets and included in the number of basic common shares outstanding.

     The unaudited pro forma condensed combined financial statements should be read in conjunction with the notes thereto.

II-2

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 2007

							Pro Forma
	180 Connect			Ad.Venture			Adjustments			Pro Forma
	(Restated)									(Restated)
				(in thousands)
Assets
Cash	$	359		$	101		$	52,666	A	$	14,640
								(10,620	)B
								(1,050	)C
								(1,600	)D
								(5,000	)E
								(9,822	)F
								(10,394	)G
Accounts receivable		41,001									41,001
Inventory		14,765									14,765
Restricted cash		11,859									11,859
Prepaid expenses and other assets		3,795			5						3,800
Taxes receivable					229						229
Total current assets		71,779			335			14,180			86,294
Property, plant and equipment		31,942			3						31,945
Goodwill		11,034									11,034
Customer contracts, net		23,232									23,232
Deferred tax asset		242									242
Other assets		4,724						(680	)G		4,044
Investments held in trust account					52,666			(52,666	)A		—
Total assets	$	142,953		$	53,004			(39,166	)	$	156,791
Liabilities and Shareholders’ Equity
Accounts payable and accrued liabilities	$	61,805		$	859		$	—		$	62,664
Taxes payable					72						72
Current portion of long-term debt		35,100						5,149	G,L		35,100
								(5,149	)G
Current portion of capital lease obligations		11,823									11,823
Fair value of derivative financial instruments		7,642			10,822			(5,245	)G		13,219
Notes payable to shareholders					900			(900	)C		—
Total current liabilities		116,370			12,653			(6,145	)		122,878
Tax liability		352									352
Long-term debt		8,468						(5,000	)E,L		3,468
Convertible debt		5,539						(5,539	)G		—
Long-term portion of capital leases		13,398									13,398
Common stock, and changes in Trust Account value attributable to shares subject to possible redemption, 1,799,100 shares at approximately $5.81 per share					10,625			(10,625	)F		—
Total liabilities		144,127			23,278			(27,309	)		140,096
Shareholders’ Equity
Paid in capital		72,175			32,344			(8,645	)B		96,698
								803	F
								(2,618	)H
								2,639	D
Retained earnings (deficit)		(73,834	)		(2,618	)		(1,975	)B		(80,488	)
								(150	)C
								(290	)G
								2,618	H
								(2,639	)D
								(1,600	)D
Accumulated other comprehensive income		485									485
Total shareholders’ equity (deficiency)		(1,174	)		29,726			(11,857	)		16,695
Total liabilities and shareholders’ equity	$	142,953		$	53,004		$	(39,166	)	$	156,791

See notes to unaudited pro forma condensed combined financial statements.

II-3

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2007

							Pro Forma
	180 Connect			Ad.Venture			Adjustments			Pro Forma
	(in thousands, except share and per-share data)
Revenue	$	181,094		$	—					$	181,094
Expenses
Direct		164,939									164,939
General and administrative		9,748			1,630						11,378
Foreign Exchange loss (gain)		(41	)								(41	)
Restructuring Costs		275									275
Depreciation		5,517									5,517
Amortization of customer contracts		1,841									1,841
Interest expense (income)		6,211			(826	)		154 I			5,539
Gain on sale of assets		499									499
Loss from change in fair value of derivative instruments		4,689			6,163						10,852
Income (loss) from continuing operations before income tax recovery		(12,584	)		(6,967	)		(154	)		(19,705	)
Income tax expense (recovery)		253			167						420
Income (loss) from continuing operations	$	(12,837	)	$	(7,134	)		(154	)	$	(20,125	)
Income (Loss) per share from continuing operations
Basic										$	(0.77	)
Diluted										$	(0.77	)
Weighted average number of shares outstanding — basic											26,000,151	J
Weighted average number of shares outstanding — diluted											26,000,151	K

See notes to unaudited pro forma condensed combined financial statements.

II-4

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006

							Pro Forma
	180 Connect			Ad.Venture			Adjustments			Pro Forma
	(in thousands, except share and per-share data)
Revenue	$	335,447		$	—		$	—		$	335,447
Expenses
Direct		301,158			—						301,158
General and administrative		19,675			512						20,187
Foreign Exchange loss (gain)		30			—						30
Restructuring Costs		893			—						893
Depreciation		13,560			—						13,560
Amortization of customer contracts		3,713			—						3,713
Interest expense (income)		10,044			(1,539	)		286I			8,791
Gain on extinguishment of debt		(1,233	)		—						(1,233	)
Gain on sale of assets		(726	)		—						(726	)
Gain from change in fair value of derivative instruments		(1,364	)		(3,898	)					(5,262	)
Income (loss) from continuing operations before income tax recovery		(10,303	)		4,925			(286	)		(5,664	)
Income tax expense (recovery)		(1,503	)		345						(1,158	)
Income (loss) from continuing operations	$	(8,800	)	$	4,580		$	(286	)	$	(4,506	)
Income (loss) per share from continuing operations
Basic										$	(0.17	)
Diluted											(0.17	)
Weighted average number of shares outstanding — basic											26,000,151	J
Weighted average number of shares outstanding — diluted											26,000,151	K

See notes to unaudited pro forma condensed combined financial statements.

II-5

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following adjustments represent the pro forma adjustments giving effect to the arrangement as if it had occurred at June 30, 2007 with respect to the unaudited pro forma condensed combined balance sheets and January 1, 2006 with respect to the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2006 and for the six months ended June 30, 2007.

A.	Reflects the release of Ad.Venture’s restricted cash held in trust and the transfer of the balance to cash.
B.	Gives effect to the payment of $8.645 million of estimated costs payable in cash directly attributable to the arrangement. The estimated costs include $4.045 million in legal and accounting fees payable by Ad.Venture and 180 Connect, $3.0 million in financial advisory fees payable by 180 Connect and $1.6 million in deferred underwriting fees payable by Ad.Venture. As the arrangement is being treated as the equivalent of 180 Connect issuing stock for the net monetary assets of Ad.Venture, these costs are charged to equity. In addition, this gives effect to the payment of $1.975 million in bonuses to certain of 180 Connect’s directors and officers, which are charged to retained earnings (deficit) in the pro forma financial statements.
C.	Gives effect to the payment of $900,000 of notes payable to shareholders and $150,000 to cover operating expenses.
D.	On July 2, 2007, Laurus and 180 Connect entered into an amendment of the existing 180 Connect credit facility, whereby Laurus increased 180 Connect’s revolving credit facility from $37.0 million to $45.0 million until August 24, 2007. In addition, Laurus also agreed to extend the maturity of the over-advance facility from July 31, 2007 until August 24, 2007.
	Pursuant to this amendment, 180 Connect issued to Laurus 1,000,000 warrants with a five year term and an exercise price of $2.61. Ad.Venture issued to Laurus warrants to purchase 250,000 shares of Ad.Venture common stock upon the completion of the arrangement on August 24, 2007 with an exercise price of $2.38. These warrants have been valued using the Black-Scholes model. Additionally, Laurus received a management fee of $200,000 and upon the closing of the arrangement received a commitment fee of $1.4 million. In the event that funds are drawn from the additional $8.0 million available under the amendment to the revolving credit facility, they would be repaid on August 24, 2007. At August 24, 2007, there was no balance outstanding under this agreement.
	This pro forma adjustment reflects the recording of the warrants and the payment of the fees.
E.	On August 24, 2007 the Laurus term loan was paid down by $5.0 million without any redemption premium. This pro forma adjustment reflects the required repayment.
F.	This adjustment reflects the payout of the conversion value to the Ad.Venture common stockholders who exercised their conversion rights (1,672,288 shares at approximately $5.87 per share). The remainder of the conversion value was reclassified to stockholders’ equity.
G.	The consummation of the Arrangement Agreement constitutes an event of default as it is a fundamental transaction under 180 Connect’s convertible debt agreement. As a result, the convertible debenture has been reclassified as a current liability in the pro forma condensed combined balance sheet. The amount together with the related embedded derivatives liability amount has been increased to 120% of the convertible debenture principal amount. On August 29, 2007, the lenders exercised their right to redeem the convertible debentures in full at an amount of 120% of the outstanding principal in accordance with the terms of the convertible debenture agreement. The payment of this redemption has been reflected in this pro forma adjustment.
H.	Reflects the reclassification of Ad.Venture’s net monetary assets to paid in capital and the issuance of 16,413,620 shares of common stock at $0.0001 par value in exchange for 27,356,034 180 Connect shares of common stock.

II-6

I.	Reflects the elimination of interest income attributable to cash paid as a result of common stock subject to conversion.
J.	Reflects 11,249,997 shares of Ad.Venture common stock outstanding before the acquisition plus 16,422,442 shares issued to 180 Connect stockholders less 1,672,288 Ad.Venture shares not converted. See the table set forth below under Note K.
K.	Given the pro forma loss from continuing operations, diluted earnings per share is anti-dilutive. The table below shows the number of shares that would be outstanding if all potential dilutive instruments were exercised or converted:

AVP Shares Outstanding	11,249,997
180 Connect Shares Outstanding	16,422,442
Less: AVP Shares Not Converted	(1,672,288	)
Total Shares Outstanding	26,000,151
Potentially Dilutive Securities:
PIPE Warrants	942,060
Employee Options	323,479
Laurus Warrants	600,000
Stock Appreciation Rights	167,999
AVP Warrants and Unit Options	19,350,000
AVP Warrants (issued in connection with the bridge financing)	250,000
Maximum Potential Diluted Shares Outstanding	47,633,689

L. Reflects the restatement of the 180 Connect balance sheet as at June 30, 2007 to reclassify to current portion of long-term debt amounts previously disclosed as long-term debt in accordance with the Financial Accounting Standards Board (“FASB”) Emerging Issues Task Force Issue No.95-22, “Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements that Include Both a Subjective Acceleration Clause and a Lock-Box Arrangement.

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