Press Release

Form 10QSB/A for CREATIVE VISTAS INC

April 17, 2006

Quarterly Report

Item 2. Management's Discussion And Analysis or Plan of Operation
(Unaudited)

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

No financial statements are presented for the shell company, Creative Vistas, Inc., prior to the business acquisition and leveraged buyout transactions because, prior to the September 30, 2004 transactions, its assets and results were immaterial. Prior to September 30, 2004, Creative Vistas refers to the shell company. The term the Company refers to the post business acquisition and leveraged buyout consolidated entity.

Overview and Recent Developments

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

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

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

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

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

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

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

Our largest customer, Loblaws Companies Ltd. accounted for approximately 22% and 32% of our revenues in each of the fiscal years ended December 31, 2004 and 2003, respectively. We anticipate that Loblaws Companies Ltd. will account for a significant portion of our future revenues. Five other customers each accounted for from 1% to 6% of our revenues during the same periods.

More than 70% of our revenues are based on purchase orders.

On December 3, 2004, the Company announced that AC Technical was awarded approximately $648,000 in orders for new security projects, providing access control and CCTV equipment plus installation and related services in three projects for the Canadian Government.

In the private sector, on December 20, 2004, the Company announced that AC Technical had been awarded approximately $607,500 in orders for security-related equipment and services for a Canadian regional healthcare facility.

On January 5, 2005, the Company announced that AC Technical was awarded orders for approximately $365,500 in security projects for a Canadian retailer.

On January 12, 2005, the Company announced that AC Technical entered into a letter of intent to acquire the privately-held dataBahn, Inc. dataBahn is based in Farmers Branch, Texas, and provides solutions to connect consumers and commercial users by providing satellite-based internet, voice and data services to the emerging broadband mobile communications markets. The acquisition is subject, among other things, to due diligence and the negotiation of definitive documentation. In furtherance of this acquisition, on March 9, 2005, the Company made a two-year secured loan to dataBahn in the amount of $125,000 and agreed to lend dataBahn an additional $125,000.

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On February 1, 2005, the Company announced that AC Technical was awarded additional ordes worth approximately $178,200 in security projects for a Canadian retailer.

On February 7, 2005, the Company announced that AC Technical was awarded orders for over $324,000 in security projects for the Canadian Government.

On February 11, 2005, the Company announced that AC Technical was selected by BMW to implement a security project to provide the automotive manufacturer with advanced digital video surveillance equipment, plus integration and related services designed to ensure the security of BMWs locations in Canada. The project is expected to be completed during the first half of 2005.

On March 11, 2005 the Company announced that AC Technical was awarded approximately $810,000 in orders for security projects by the Canadian Government, and companies in the education, medical and healthcare markets. On March 24, 2005 the Company announced that AC Technical was awarded approximately $1,377,000 in additional orders for security projects by the Canadian Government, and companies in the education, medical and healthcare markets.

On April 1, 2005 the Company announced that AC Technical received a grant from Canadas Industrial Research Assistance Program.

Results of Operations
Comparison of Period Ended September 30, 2004 to Period Ended September 30, 2003

For purposes of this Managements Discussion and Analysis or Plan of Operation the numbers in the financial statements covering the successor period of the day September 30, 2004 were combined with the predecessor period from January 1, 2004 to September 29, 2004 to reflect the entire nine months period ended September 30, 2004.

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

Sales: Sales for the nine months ended September 30, 2004 totaled $6,052,000 representing a decrease of 7.2% from the nine months ended September 30, 2003. Our contract revenues have decreased by 10.6% which was mainly due to project delays and construction delays. In addition, contract revenue from one of our major customers decreased from approximately $2,000,000 in 2003 to $1,300,000 in 2004. Fiscal 2003s revenue was higher as this customer had a greater number of stores that required security system. On the other hand, our service revenue, have grown by 24% which was mainly due to more maintenance revenue. The increase in service revenue primarily represents the cumulative effect of the growth in contracts and number of customers over the past few years. We have experienced a significant increase in the number of inquiries for systems from the government and retail sector. This increased interest in security products and services may result in our achieving increased revenues in future periods if we are successful in attracting new customers or obtaining additional projects from existing customers. There is no assurance that the Company will be able to attract new customers.

Cost of Goods Sold: Cost of goods sold for the nine months ended September 30, 2004 decreased to $4,109,000 or 68% of revenues from $4,073,000 or 62% of revenues, for the nine months ended September 30, 2003. The increase was mainly due to the increase of the labor and subcontractor cost to $1,331,000 or 22% of revenues for the nine months ended September 30, 2004 from $985,000 or 15% of revenues for the nine months ended September 30, 2003. The increase was mainly due to the increase in salaries. The increase was offset by the decrease of material costs to $2,748,000 or 45% of revenues for the nine months ended September 30, 2004 from $3,044,000 or 47% of revenues for the nine months ended September 30, 2003. The decrease of the cost of materials was mainly due to the decrease in revenue by 7%.

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Project, Selling, General and Administrative Expenses: Projects, selling, general and administrative expenses for the nine months ended September 30, 2004 increased to $3,135,000 or 52% of revenues from $2,329,900 or 36% of revenues, for the nine months ended September 30, 2003. The increase was mainly due to the increase in research and development expenses to $128,000 for the period ended September 30, 2004 from $18,000 for the period ended September 30, 2003. It was mainly due to the hiring of new staff and more equipment was purchased for research and development department. In addition, salaries and benefits increased by $32,000 which was mainly due to the hiring the new Chief Financial Officer. The travel expenses increased to $82,000 for the period ended September 30, 2004 from $66,000 for the period ended September 30, 2003 which was mainly due to more travel by the CEO and President for the business acquisition and leverage buyout transaction. The insurance expenses have increased by $24,000 which is mainly due to the industry-wide increase in premiums. The truck and auto expenses increased by $46,000 which was mainly due to the increase in usage of the gas and more repair and maintenance on automobile. The investment banking fees and legal fees increased to $148,000 and $108,000 for the period ended September 30, 2004.

Operating Income/Loss: Our losses were mainly due to some projects with lower gross margins in 2004. The gross margin for the period ended September 30, 2004 decreased by 5.5%. In addition, we hired more administrative staff. There were increases in expenses incurred in the business acquisition and leveraged buyout transactions and also expenditures on infrastructure in preparation of becoming a public company and in preparation for future expansion. We have also invested in research and development to improve and expand our technology base, which may result in increased margins and increased revenues in the future.

Interest Expense: Interest expenses for the nine months ended September 30, 2004 slightly increased by $6,000. The increase was primarily due to there being nine months of interest during the nine months ended September 30, 2004 on additional borrowings from the Chief Executive Officer amounting to $192,500 but only seven months of interest during the nine months ended September 30, 2003. The loan was received in 2003 to fund the additional operating costs associated with hiring more personnel in anticipation of future growth and the completion of the business acquisition and leveraged buyout transaction.

Net Income/Loss: Net loss for the nine months ended September 30, 2004 was $1,022,000 compared to net income of $77,000 for the nine months ended September 30, 2003. The net loss for the nine months ended September 30, 2004 was caused by the decrease in gross margin by 5.5%. In addition, we hired more administrative staff. There were increases in expenses incurred in the business acquisition and leveraged buyout transactions and also expenditures on infrastructure in preparation of becoming a public company and in preparation for future expansion. We have also invested in research and development to improve and expand our technology base, which may result in increased revenues in the future.

Liquidity and Capital Resources
Since our inception, we have financed our operations through bank debt, loans and equity from our principals, loans from third parties and funds generated by our business. As of September 30, 2004, we had $1,562,000 in cash. We believe that cash from operations and other existing resources such as our credit facilities with Laurus Master Funds, Ltd. will continue to be adequate to satisfy the ongoing working capital needs of the Company. During the next 12 months, our primary objectives in managing liquidity and cash flows will be to ensure financial flexibility to support growth and entry into new markets and improve inventory management and to accelerate the collection of accounts receivable.

Net Cash Used in Operating Activities. Net cash used in operating activities amounted to $650,000 for the nine months ended September 30, 2004 compared to $232,300 for the nine months ended September 30, 2003. The changes in operating assets and liabilities resulted in a use of cash of $455,000, which included a $60,000 increase in accounts receivable, a $178,100 decrease in inventory, a $2,900 increase in prepaid expenses, a $218,000 increase in accounts payable, a $105,000 decrease in income taxes and a $227,000 increase in deferred revenue.

Accounts Receivable

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Our accounts receivable increased by 4.5% to $2,209,000 which more government related jobs during the first 9 months, which have a longer payment cycle than the non-government jobs. 70% of the accounts receivable outstanding at September 30, 2004 was less than 60 days old compared which was consistent with 70% at September 30, 2003.

Inventory

Inventory on hand at September 30, 2004 decreased to $547,000 from $715,000 at September 30, 2003. The decrease was mainly due to the improvement of inventory control and keeping minimum levels of inventory.

Accounts Payable and Accrued Liabilities

Accounts payable increased 6.3% to $2,080,000 which was mainly due to the accrued expenses related to the business acquisition and leverage buyout transaction amounted to $166,000.

Deferred Financing Costs

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

Deferred Revenue

Deferred revenue increased $343,000 in 2004 from $101,000 in 2003. Deferred revenue primarily relates to payments associated with the contract revenue where revenue is recognized on a percentage of completion basis. (See summary of accounting policy in our consolidated financial statements).

Incomes Taxes Recoverable

The income taxes recoverable increased to $69,500 as at September 30, 2004 compared to income tax payable of $40,000 as at December 31, 2003. The changes were mainly due to the loss incurred for the period and we expect that we will have loss carry-back for prior years.

Net Cash Used in Investing Activities. Net cash used in investing activities was $1,800,000 for the nine months ended September 30, 2004 compared to $26,000 for the nine months ended September 30, 2003. The increase was mainly due to the acquisition of A.C. Technical Systems Ltd. for cash payments of $1,800,000.

Net Cash Provided From Financing Activities. Net cash provided from financing activities increased to $4,014,000 for the nine months ended September 30, 2004 compared to $258,700 for the nine months ended September 30, 2003. The increase was principally caused by additional borrowings from Laurus Master Fund, Ltd. including revolving facilities of $2,250,000 and convertible notes of $4,500,000. (see details of arrangement with Laurus Master Fund, Ltd. in the following paragraphs.). In addition, the increase was partially offset by the repayment of a total of $1,000,000 of credit facilities with a Canadian Bank with the proceeds of the Companys new facilities with Laurus and $1,250,000 was deposited in the bank as restricted cash.

The cost of capital of this transaction was approximately $900,000 with total borrowings from Laurus amounting to $7,000,000. Some of the expenses incurred have been deferred and are recorded under Deferred Charges (see Note 4 in the financial statements as at September 30, 2004). Even though the Company has obtained a better interest rate from Laurus of prime plus 2% compared to the interest rate the Company obtained from the Canadian Bank which varied for different dollar amounts borrowed but ranged from prime plus 2% to prime plus 5%, the effective rate of the loan from Laurus will be 9.89%. The cost of capital will not decrease. However, instead of requiring the Company to repay principal and interest on the loans in cash, if certain criteria are met, Laurus may convert the principal and interest of the loans due from the Company to shares of the Company stock. This will reduce the cash flow requirement of the Company in the future. The value of the lower interest payments is offset by Laurus ability to convert the debt owed into shares of the Companys Stock and the stand-alone Warrants and Options the Company has granted to Laurus.

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

Our indebtedness increased to $2,250,000 as at September 30, 2004 mainly due to the additional borrowings from Laurus Master Fund, Ltd.

We plan to adopt an incentive stock option plan during the third quarter of 2005.

On September 30, 2004, we entered into a series of agreements with Laurus whereby we issued to Laurus (i) a secured convertible term note in the amount of $4.5 million, (ii) secured revolving notes in the aggregate maximum amount of $3 million, (iii) a related option to purchase up to 1,499,997 shares of our common stock at a price of two-thirds of two cent per share, and (iv) a seven year warrant to purchase up to 2,250,000 shares of our common stock at a price of $1.15 per share. The term note and revolving notes are secured by all of our assets and the assets of our subsidiaries. Each of the agreements with Laurus is part of an integrated financing structure which, on the whole, management believes to be beneficial to our capital structure.

The principal amount of the term note and revolving notes bear interest at the prime rate plus two percent with a minimum rate of six percent. The minimum monthly payment on the term note and revolving notes are $100,000, plus the monthly interest payment, and may be paid in cash, our common stock or a combination thereof, dependant upon the occurrence of certain criteria. Laurus has the option to convert the entire principal amount of the term note and revolving notes, together with interest thereon into shares of our common stock at a conversion price of $1 ($3 before the 3 for 1 stock split), provided that such conversion does not result in Laurus beneficially owning more than 4.99% of our outstanding shares of common stock. We have agreed to register all of the shares that are issuable upon conversion of the notes or exercise of the option or warrant. For more information regarding the Laurus Financing, see Note 7 in the financial statements as of September 30, 2004.

Our capital requirements have grown since our inception with the growth of our operations and staffing. We expect our capital requirements to continue to increase in the future as we seek to expand our operations. On September 30, 2004, we obtained additional funding through the series of agreements entered into with Laurus, described above. If Laurus converts the term note and/or the revolving notes into shares of the Companys common stock, the Company may avoid or reduce any cash payment required for principal and interest payable. As a result, it will improve our cash flow. However, such conversion by Laurus will dilute the existing shareholders.

Recent Accounting Pronouncements - In January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities. This interpretation of Accounting Research Bulletin No. 51, Consolidated Financial Statements, addresses consolidation by business enterprises of variable interest entities. FIN 46 explains the concept of a variable interest entity and requires consolidation by the primary beneficiary where there is a controlling financial interest in a variable interest entity or where the variable interest entity does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties. The primary beneficiary is the party that is exposed to the majority of the risk or stands to benefit the most from the entitys activities. In December 2003, the FASB released a revised version of FIN 46 (hereafter referred to as FIN 46R) clarifying certain aspects of FIN 46 and providing certain entities with exemptions from the requirements of FIN 46. Based upon managements evaluation of FIN 46R, the adoption did not have a material effect on the consolidated financial statements.

In April 2004, the Financial Accounting Standards Board issued FASB Staff Position, FSP 129-1, Disclosure of Information about Capital Structure, Relating to Contingently Convertible Securities. The purpose of this FASB Staff Position is to interpret how the disclosure provisions of Statement 129 apply to contingently convertible securities and to their potentially dilutive effects on EPS. FSP explains that Statement 129 applies to all contingently convertible securities, including those containing contingent conversion requirements that have not been met and are not otherwise required to be included in the computation of diluted EPS in accordance with FASB Statement No. 128, Earnings per share. To comply with paragraph 4 of Statement 129, the significant terms of the conversion features of the contingently convertible security should be disclosed to enable users of financial statements to understand the circumstances of the contingency and the potential impact of conversion. Quantitative and qualitative terms of the contingently convertible security, disclosure of which would be helpful in understanding both the nature of the contingency and the potential impact of conversion. The guidance in this FSP is effective immediately. The Company adopted the disclosure provision required by FAS 129.

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

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

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

DISCUSSION OF CRITICAL ACCOUNTING ESTIMATES

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

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

Goodwill represents the excess of cost over the net tangible and identifiable assets acquired in business combinations and are stated at cost. Goodwill and intangibles with indefinite lives are not amortized but tested for impairment no . . .

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