180 Connect Inc. announces third quarter 2007 results



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    Revenue increases to a record $102 million, representing a 14% increase
    from the prior year

    Completion of merger with Ad. Venture Partners, Inc. significantly
    de-leverages balance sheet
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    Stock Symbols: OTCBB: CNCT.OB, CNCTU.OB, CNCTW.OB

    TORONTO and ENGLEWOOD, CO, Nov. 13 /CNW/ - 180 Connect Inc. ("180
Connect" or the "Company") (OTCBB: CNCT.OB, CNCTU.OB, CNCTW.OB), one of North
America's largest providers of installation, integration and fulfillment
services to the home entertainment, communication, and home integration
service industries, today released its financial results for the third quarter
ended September 30, 2007.
    Certain information contained in this news release constitutes
forward-looking information, including anticipated growth and financial
performance. See "Forward-Looking Information".

    Selected Financial Highlights - Third Quarter Ended September 30, 2007

    For the three months ended September 30, 2007 as compared to the three
months ended September 30, 2006:

    
    Third Quarter Highlights

    -   Revenue grew to $102.5 million, an increase of $12.6 million, or
        14.0%, compared to revenue of $89.9 million in 2006.

    -   EBITDA from continuing operations(2) was $8.4 million, an increase of
        $1.9 million or 30% compared to $6.5 million in 2006.

    -   Total cash provided by operating activities was $0.8 million, an
        increase of $7.1 million from the cash used by operating activities
        of $6.3 million in 2006.

    -   Loss from continuing operations was $8.8 million, a decrease of
        $13.8 million compared to income from continuing operations of
        $5.0 million in 2006.

    -   Net loss was $8.8 million, a decrease of $13.3 million compared to
        net income of $4.5 million in 2006.

    -   Net income (loss) per share is as follows:

        -   Net income (loss) from continuing operations was a loss of
            $(0.43) per share basic and diluted, respectively, compared to
            net income from continuing operations of $0.34 and $0.32 per
            share basic and diluted, respectively in 2006.

        -   Net income (loss) was a loss of $(0.43) per share basic and
            diluted, respectively, compared to net income of $0.30 and $0.29
            per share basic and diluted, respectively, in 2006.
    

    Peter Giacalone, President and Chief Executive Officer of the Company
stated:
    "These results reflect another quarter of solid internal growth in our
satellite and cable businesses, as well as contributions from 180 Network
Services and 180 Home. We are particularly excited about the long term growth
opportunities that can be realized from the recent projects announced in our
Network Services business, representing a backlog of approximately $100
million - a market that is experiencing significant near term growth given
current market conditions.
    The standout result from the completion of the merger with Ad.Venture
Partners Inc. is the improved financial strength of the Company. The Company's
stronger balance sheet provides the foundation for refinancing the balance of
its debt and positions the Company to capitalize on attractive strategic
acquisitions."

    Third Quarter 2007 Highlights

    Revenue in the third quarter increased to $102.5 million, up from
$89.9 million for the same period in 2006. This 14% growth reflects volume
increases across-the-board in both the satellite and cable businesses, as well
as contributions from 180 Network Services and 180 Home, all of which
benefited from a combination of strong internal growth and a disciplined
operational management team. DIRECTV volume increased 14% from the prior year,
largely attributable to increased high-definition sales and upgrade
initiatives as DIRECTV continues to sell more advanced product. The Company is
also very pleased to note that DIRECTV was ranked "Highest in Customer
Satisfaction among Satellite/Cable TV Subscribers" in the Southern, Western
and Eastern regions of the United States, according to the J.D. Power and
Associates 2007 Residential Cable/Satellite TV Customer Satisfaction Study. As
180 Connect is the primary service provider for DIRECTV's western region, the
Company believes that the award reflects its commitment and ability to deliver
exceptional customer service. 180 Connect believes that its satellite business
is on track to complete over 2.3 million work orders for DIRECTV alone this
year.
    Cable revenues increased 6% from the prior year, as 180 Connect continues
to benefit from solid market growth, increased market share and the Company's
ability to leverage its competitive advantages in supporting its customer's
triple play initiatives.
    180 Network Services revenue increased 37% from the prior year and 180
Connect believes it is well positioned to continue its rapid growth. The
Company's significant municipal fiber projects in Boise, Idaho and Ontario,
Santa Clara and Shafter, California, currently underway, continue to deliver
exceptional margins as well as showcase its capabilities to potential future
customers. The Company expects that these projects in addition to recently
announced contracts, including the City of Palo Alto, CA and Truckee Donner,
CA, will more than double its annual revenues in its 180 Network Services
business.
    180 Home, 180 Connect's structured wiring business, continues to grow
rapidly, with third quarter revenue increasing approximately 58% over the
prior year. The Company continues to see significant opportunity to expand
this business, as in-home technology has become an increasingly important
factor in home buying decisions.
    EBITDA from continuing operations(2) excluding a non-cash stock based
compensation charge of $0.2 million was $8.6 million for the third quarter of
2007, an increase of 33% over results reported for the same period in 2006.
For the first nine months of 2007, EBITDA from continuing operations was
$14.6 million, an increase of approximately 67% over the first nine months of
2006, on approximately 19% higher revenue. EBITDA from continuing
operations(2) excluding US listing costs, restructuring charges and non-cash
stock based compensation, for the nine months ended September 30, 2007 was
$15.6 million. This increase was primarily due to the growth in work order
volume in the Company's satellite and cable businesses, cost savings achieved
by implementing better operational controls, as well as increased growth from
its Network Services business, partially offset by the impact of higher fuel
prices. Seasonally, the third and fourth quarters are the Company's strongest
quarters from an EBITDA standpoint, as its customers marketing focus,
primarily DIRECTV's NFL Ticket and high definition sales and upgrade
initiatives, drive a favorable volume and mix shift in work performed.

    Looking Forward

    The Company's continued success in the third quarter was due to a
relentless focus on business fundamentals under the leadership of a strong
management team. Given the strength in demand across the satellite and cable
businesses and the increase in non-operating costs the Company is revising its
2007 revenue guidance to between $380 million to $385 million and EBITDA of
between $22.5 million to $23 million representing earnings growth between 63%
and 67%.
    There are four primary factors contributing to the change in EBITDA
guidance. First, costs associated with the investment in the quality of the
Company's workforce were not offset with its customer's bonus programs.
Despite the impact of higher costs, 180 Connect believes that these programs
are vital and have been critical in protecting its franchise and maintaining
its market share. Second, fuel costs represent a significant cost in the
Company's business, with the spike in fuel prices resulting in approximately
$750,000 of additional costs for the full year, exceeding its original
estimates. The Company is in a constant dialog with its customers regarding
these increased costs and will continue to negotiate a surcharge in order to
share this burden.
    Third, the Company's roll out of an enhanced work force management system
had a short term effect on efficiency and costs, affecting the Company's
margins, however, the Company expects to recover the cost and productivity
benefits of this enhanced system over the longer term. Fourth, 180 Network
Services division continues to post impressive earning and margins, certain
projects previously forecast to contribute in 2007 have been deferred to 2008
due to delays in municipal permitting, developer entitlements, public
financing or vendor specifications. Nevertheless, the Company views these as
deferrals of the earnings cycle and remains confident they will be delivered
in 2008.

    Summary Results

    The following is a summary of the Company's selected consolidated
financial and operating information for the three and nine months ended
September 30, 2007 and 2006 and should be read in conjunction with the
accompanying unaudited consolidated financial statements for the three and
nine months ended September 30, 2007. The amounts presented below have been
reclassified to reflect the adjustments associated with the discontinued
operations of the Company.


    
    Selected Unaudited Consolidated Financial and Operating Data:

                                  Three Months   Three Months
                                         Ended          Ended              %
                                 Sept 30, 2007  Sept 30, 2006         Change

    Revenue                       $102,521,340   $ 89,908,346          14.0%

    Expenses
    Direct                          89,914,862     78,711,246          14.2%
    General and administrative       4,054,289      4,712,862         -14.0%
    Stock-based compensation           227,019              -         100.0%
    Foreign exchange loss (gain)       (72,760)          (469)             -
    Restructuring costs                      -              -              -
    Depreciation                     3,058,116      3,433,006         -10.9%
    Amortization of customer
     contracts                         920,376        929,727          -1.0%
    Interest expense                 7,801,006      2,898,538         169.1%
    (Gain) loss on fair market
     value of derivatives              887,062     (4,599,330)       -119.3%
    Gain on extinguishment of debt           -     (1,233,001)       -100.0%
    Other expense                    4,379,459              -         100.0%
    (Gain) loss on sale of assets       (7,336)       135,696        -105.4%
                                  -------------------------------------------
    Income (loss) from continuing
     operations before income
     taxes                          (8,640,753)     4,920,071        -275.6%
    Income tax expense (recovery)      130,583        (96,965)       -234.7%
                                  -------------------------------------------
    Gain (loss) from continuing
     operations                     (8,771,336)     5,017,036        -274.8%
    Loss from discontinued
     operations, net of income
     taxes of nil                            -       (538,899)       -100.0%
                                  -------------------------------------------
    Net income (loss) and total
     comprehensive income (loss)
     for the period                 (8,771,336)     4,478,137        -295.9%
                                  -------------------------------------------
                                  -------------------------------------------


                                   Nine Months    Nine Months
                                         Ended          Ended              %
                                 Sept 30, 2007  Sept 30, 2006         Change

    Revenue                       $283,615,672   $239,245,733          18.6%
    Expenses
    Direct                         254,853,816    216,089,499          17.9%
    General and administrative      13,802,266     13,933,478          -0.9%
    Stock-based compensation           227,019         91,214         100.0%
    Foreign exchange loss (gain)      (113,442)         3,033              -
    Restructuring costs                275,000        392,879         -30.0%
    Depreciation                     8,574,819     10,013,336         -14.4%
    Amortization of customer
     contracts                       2,761,122      2,789,180          -1.0%
    Interest expense                14,012,024      6,925,495         102.3%
    (Gain) loss on fair market
     value of derivatives            5,576,723     (3,433,755)       -262.4%
    Gain on extinguishment of debt           -     (1,233,001)       -100.0%
    Other expense                    4,379,459              -         100.0%
    (Gain) loss on sale of assets      491,884     (1,114,467)       -144.1%
                                  -------------------------------------------
    Income (loss) from continuing
     operations before income
     taxes                         (21,225,018)    (5,211,158)        307.3%
    Income tax expense (recovery)      383,027        (58,165)       -758.5%
                                  -------------------------------------------
    Gain (loss) from continuing
     operations                    (21,608,045)    (5,152,993)        319.3%
    Loss from discontinued
     operations, net of income
     taxes of nil                      (79,527)    (1,876,694)        -95.8%
                                  -------------------------------------------
    Net income (loss) and total
     comprehensive income (loss)
     for the period                (21,687,572)    (7,029,687)        208.5%
                                  -------------------------------------------
                                  -------------------------------------------


    Per Share data

                                Three        Three         Nine         Nine
                               Months       Months       Months       Months
                                Ended        Ended        Ended        Ended
                              Sept 30,     Sept 30,     Sept 30,     Sept 30,
                                 2007         2006         2007         2006
                          ------------ ------------ ------------ ------------
    Income (loss) from
     continuing
     operations:
      Basic.............  $     (0.43) $      0.34  $     (1.27) $     (0.35)
      Diluted...........  $     (0.43) $      0.32  $     (1.27) $     (0.35)
    Net income (loss)
     for the period:
      Basic.............  $     (0.43) $      0.30  $     (1.27) $     (0.48)
      Diluted...........  $     (0.43) $      0.29  $     (1.27) $     (0.48)
    Weighted average
     number of shares:
      Basic.............   20,243,082   14,685,976   17,011,000   14,625,856
    Weighted average
     number of shares:
      Diluted...........   20,243,082   15,510,667   17,011,000   14,625,856



    Selected Consolidated Balance Sheet Data

                                                    For the period ended:
                                                      Sept 30,   December 31,
                                                         2007           2006
                                                 ----------------------------
    Cash and cash equivalents..................  $    969,285   $  2,904,098
    Working capital deficit....................    15,625,580     11,684,299
    Total assets...............................   158,370,876    165,443,572
    Total debt and capital lease obligations...    51,074,549     73,289,517
    Total shareholders' equity.................  $ 17,318,538   $  9,402,081
    


    A copy of the interim unaudited consolidated financial statements of the
Company for the three and nine months ended September 30, 2007 are attached to
this news release. The Company will be releasing its third quarter report on
November 14, 2007 which will be available on EDGAR and the Company's website.
Additional information relating to the Company is available on EDGAR at
www.sec.gov/edgar.shtml, on SEDAR at www.sedar.com and on the Company's
website at www.180connect.net.

    Non-GAAP Measures:

    (1) The term "Direct Contribution Margin" ("DCM") consists of revenue
less direct expense and excludes general and administrative expense, foreign
exchange loss (gain), stock-based compensation, (gain) loss in sale of
investments and assets, depreciation, amortization of customer contracts,
interest and expense, (gain) loss on fair market value of derivatives, gain on
extinguishment of debt, interest expense, and income tax expense (recovery).
DCM, as referred to in this news release, is a non-GAAP measure which does not
have any standardized meaning prescribed by US GAAP and is therefore unlikely
to be comparable to similar measures presented by other issuers. We believe
that this term provides a better assessment of the contribution of the field
operations dealing directly with our customers' subscribers by eliminating:
(1) the general and administrative costs that are not part of the direct costs
of generating revenue; (2) the charge for the amortization of customer
contracts and depreciation and stock based compensation which are non-cash
expense items; and (3) (gain) or loss on sale of assets, (gain) loss on fair
market value of derivatives, gain on extinguishment of debt, and other
expense, which are not considered to be in the normal course of operating
activity. Investors should be cautioned, however, that DCM should not be
construed as an alternative to income (loss) from continuing operations
determined in accordance with US GAAP as an indicator of our performance. For
a reconciliation of DCM to the comparable US GAAP measure, loss from
continuing operations, see "Direct Contribution Margin"
    Following is a reconciliation of DCM to loss from continuing operations:

    
                                Three        Three         Nine         Nine
                               Months       Months       Months       Months
                                Ended        Ended        Ended        Ended
                              Sept 30,     Sept 30,     Sept 30,     Sept 30,
                                 2007         2006         2007         2006
                          ------------ ------------ ------------ ------------
    Direct contribution
     margin(1)            $12,606,478  $11,197,100  $28,761,856  $23,156,234
    General and
     administrative         4,054,289    4,712,862   13,802,266   13,933,478
    Non-cash stock-based
     compensation             227,019            -      227,019       91,214
    Foreign exchange loss
     (gain)                   (72,760)        (469)    (113,442)       3,033
    Restructuring costs             -            -      275,000      392,879
    Depreciation            3,058,116    3,433,006    8,574,819   10,013,336
    Amortization of
     customer contracts       920,376      929,727    2,761,122    2,789,180
    Interest expense        7,801,006    2,898,538   14,012,024    6,925,495
    Gain on extinguishment
     of debt                        -   (1,233,001)           -   (1,233,001)
    (Gain) loss on sale
     of assets                 (7,336)     135,696      491,884   (1,114,467)
    (Gain) loss on change
     in fair value of
     derivative liabilities   887,062   (4,599,330)   5,576,723   (3,433,755)
    Other expense           4,379,459            -    4,379,459            -
    Income tax expense
     (recovery)               130,583      (96,965)     383,027      (58,165)
                          ------------ ------------ ------------ ------------
    Income (loss) from
     continuing
     operations           ($8,771,336)  $5,017,036 ($21,608,045) ($5,152,993)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    (2) The term "EBITDA from continuing operations" refers to income from
        continuing operations before deducting depreciation, amortization of
        customer contracts, (gain) loss in sale assets, interest expense,
        (gain) loss on fair market value of derivatives, gain on
        extinguishment of debt, other expense, and income tax expense
        (recovery). EBITDA from continuing operations, as referred to in this
        news release, is a non-GAAP measure which does not have any
        standardized meaning prescribed by US GAAP and is therefore unlikely
        to be comparable to similar measures presented by other issuers.
        Management believes that EBITDA from continuing operations provides a
        better assessment of cash flow from the Company's operations by
        eliminating: (1) the charge for depreciation, amortization of
        customer contracts and stock-based compensation, which are non-cash
        expense items and (2) (gain) or loss on sale of assets, (gain) loss
        on fair market value of derivatives, gain on extinguishment of debt,
        and other expense, which are not considered to be in the normal
        course of operating activity. In addition, financial analysts and
        investors use a multiple of EBITDA from continuing operations for
        valuing companies within the same sector, in order to eliminate the
        differences in accounting treatment from one company to the next.
        Given that the Company is in a growth stage, we believe the focus on
        EBITDA from continuing operations gives the investor or reader of the
        Company's consolidated financial statements and MD&A more insight
        into the operating capabilities of management and its utilization of
        the Company's operating assets. Management further believes that
        EBITDA from continuing operations is also the best metric for
        measuring the Company's valuation. Investors should be cautioned,
        however, that EBITDA from continuing operations should not be
        construed as an alternative to income (loss) from continuing
        operations determined in accordance with US GAAP as an indicator of
        the Company's performance. For a reconciliation of EBITDA from
        continuing operations to the comparable GAAP measure, being income
        (loss) from continuing operations, see "EBITDA from Continuing
        Operations."

    Following is a reconciliation of EBITDA from continuing operations to net
loss from continuing operations:

                                Three        Three         Nine         Nine
                               Months       Months       Months       Months
                                Ended        Ended        Ended        Ended
                              Sept 30,     Sept 30,     Sept 30,     Sept 30,
                                 2007         2006         2007         2006
                          ------------ ------------ ------------ ------------
    EBITDA from continuing
     operations(2)          8,397,930    6,484,707   14,571,013    8,735,630
    Depreciation            3,058,116    3,433,006    8,574,819   10,013,336
    Amortization of
     customer contracts       920,376      929,727    2,761,122    2,789,180
    Interest expense        7,801,006    2,898,538   14,012,024    6,925,495
    Gain on extinguishment
     of debt                        -   (1,233,001)           -   (1,233,001)
    (Gain) loss on sale of
     assets                    (7,336)     135,696      491,884   (1,114,467)
    (Gain) loss on change
     in fair value of
     derivative liabilities   887,062   (4,599,330)   5,576,723   (3,433,755)
    Other expense           4,379,459            -    4,379,459            -
    Income tax expense
     (recovery)               130,583      (96,965)     383,027      (58,165)
                          ------------ ------------ ------------ ------------
    Income (loss) from
     continuing
     operations           ($8,771,336)  $5,017,036 ($21,608,045) ($5,152,993)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------
    

    Conference Call Information

    A live webcast of 180 Connect Inc.'s third quarter 2007 earnings call
will be available at www.180connect.net. The call will begin at 4:30 p.m. EST,
November 13, 2007. The dial-in numbers for the call are international dial
617.213.8857 and toll free at 866.831.6267, participant pass code is 81992339.
The webcast will be archived on the Company's website and a replay of the call
will be available beginning at 6:30 p.m. EST on Tuesday, November 13, 2007
through to 11:59 p.m. EST Tuesday, November 20, 2007. The dial-in numbers for
the replay are 617.801.6888 International Dial and toll free at 888.286.8010
pass code 27422392.

    180 Connect Inc.

    180 Connect Inc. is one of North America's largest providers of
installation, integration and fulfillment services to the home entertainment,
communications and home integration service industries. With more than 4,000
skilled technicians and 750 support personnel based in over 85 operating
locations, 180 Connect is well positioned as the only pure play national
residential service provider in the market. 180 Connect shares are traded
under the name of 180 Connect Inc. on the OTCBB under the symbols CNCT.OB,
CNCTU.OB and CNCTW.OB.

    Forward-Looking Information

    This news release contains forward-looking statements which reflect
management's expectations regarding the Company's future growth, results of
operations, performance and business prospects and opportunities. Statements
about the Company's future plans and intentions, results, levels of activity,
performance, goals or achievements or other future events constitute
forward-looking statements. Wherever possible, words such as "will be", "may",
"should", "could", "expect", "plan", "intend", "anticipate", "believe",
"estimate", "predict" or "potential" or the negative or other variations of
these words, or other similar words or phrases, have been used to identify
these forward-looking statements. These statements reflect management's
current beliefs and are based on information currently available to
management. Forward-looking statements involve significant risk, uncertainties
and assumptions. Many factors, including those discussed under section 1A
"Risk Factors" of the Report Form 10-Q could cause actual results, performance
or achievements to differ materially from the results discussed or implied in
the forward-looking statements. These factors should be considered carefully
and prospective investors should not place undue reliance on the
forward-looking statements. Although the forward-looking statements contained
in this news release are based upon what management believes to be reasonable
assumptions, the Company cannot assure investors that actual results will be
consistent with these forward-looking statements. These forward-looking
statements are made as of the date of this news release and the Company
assumes no obligation to update or revise them to reflect new events or
circumstances, except as required by law.

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

                                                             As at
                                                 ----------------------------
                                                 September 30,   December 31,
                                                         2007           2006
                                                 ----------------------------
    Assets
    Current Assets
    Cash and cash equivalents                    $    969,285   $  2,904,098
    Accounts receivable (less allowance for
     doubtful accounts of $1,652,894 and
     $2,506,637, respectively)                     52,009,680     48,934,952
    Inventory                                      18,388,807     15,816,148
    Restricted cash                                11,859,300     14,503,000
    Prepaid expenses and other assets               7,523,344      7,910,255
                                                 ----------------------------
      TOTAL CURRENT ASSETS                         90,750,416     90,068,453

    Property, plant and equipment                  31,375,700     34,882,890
    Goodwill                                       11,034,723     11,034,723
    Customer contracts, net                        22,311,634     25,072,756
    Deferred tax asset                                276,608              -
    Other assets                                    2,621,795      4,384,750
                                                 ----------------------------
      TOTAL ASSETS                               $158,370,876   $165,443,572
                                                 ----------------------------
                                                 ----------------------------

    Liabilities and Shareholders' Equity
    Current liabilities
    Accounts payable and accrued liabilities     $ 81,395,821   $ 78,686,245
    Current portion of long-term debt               6,817,352      5,967,674
    Fair value of derivative financial
     instruments                                    8,194,756      4,065,729
    Current portion of capital lease
     obligations                                    9,968,067     13,033,104
                                                 ----------------------------
      TOTAL CURRENT LIABILITIES                   106,375,996    101,752,752

    Income tax liability                              387,212              -
    Long-term debt                                 18,667,844     32,799,043
    Convertible debt                                        -      6,276,584
    Capital lease obligations                      15,621,286     15,213,112
                                                 ----------------------------
      TOTAL LIABILITIES                           141,052,338    156,041,491

    Shareholders' Equity
    Common stock $.0001 par value; authorized
     100,000,000, at September 30, 2007 and
     December 31, 2006 issued and outstanding
     shares  25,500,152 and 14,685,976,
     respectively                                       2,550          1,469
    Paid- in capital                              121,698,780     91,871,813
    Treasury stock, 500,000 shares and nil at
     September 30, 2007 and December 31, 2006
     respectively                                    (224,019)             -
    Deficit                                      (104,643,803)   (82,956,231)
    Accumulated other comprehensive income            485,030        485,030
                                                 ----------------------------
      TOTAL SHAREHOLDERS' EQUITY                   17,318,538      9,402,081
                                                 ----------------------------
      TOTAL LIABILITIES AND SHAREHOLDERS'
       EQUITY                                    $158,370,876   $165,443,572
                                                 ----------------------------
                                                 ----------------------------



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

                      Three Months  Three Months   Nine Months   Nine Months
                             Ended         Ended         Ended         Ended
                         September     September     September     September
                          30, 2007      30, 2006      30, 2007      30, 2006
                      -------------------------------------------------------
    Revenue           $102,521,340  $ 89,908,346  $283,615,672  $239,245,733
    Expenses
    Direct expenses     89,914,862    78,711,246   254,853,816   216,089,499
    General and
     administrative      4,054,289     4,712,862    13,802,266    13,933,478
    Non-cash stock-
     based compensation    227,019             -       227,019        91,214
    Foreign exchange
     loss (gain)           (72,760)         (469)     (113,442)        3,033
    Restructuring costs          -             -       275,000       392,879
    Depreciation         3,058,116     3,433,006     8,574,819    10,013,336
    Amortization of
     customer contracts    920,376       929,727     2,761,122     2,789,180
    Other (income) expense
    Interest and
     loan fees           7,801,006     2,898,538    14,012,024     6,925,495
    Gain on extinguish-
     ment of debt                -    (1,233,001)            -    (1,233,001)
    (Gain) loss on sale
     of investments
     and assets             (7,336)      135,696       491,884    (1,114,467)
    (Gain) loss on change
     in fair value of
     derivative
     liabilities           887,062    (4,599,330)    5,576,723    (3,433,755)
    Other expense        4,379,459             -     4,379,459             -
                      -------------------------------------------------------
    Income (loss) from
     continuing
     operations before
     income tax
     expense            (8,640,753)    4,920,071   (21,225,018)   (5,211,158)
    Income tax expense
     (recovery)            130,583       (96,965)      383,027       (58,165)
                      -------------------------------------------------------
    Income (loss)
     from continuing
     operations         (8,771,336)    5,017,036   (21,608,045)   (5,152,993)
    Loss from discontinued
     operations, net of
     income taxes of nil         -      (538,899)      (79,527)   (1,876,694)
                      -------------------------------------------------------
    Net income (loss)
     and comprehensive
     income (loss)
     for the period   $ (8,771,336) $  4,478,137  $(21,687,572) $ (7,029,687)
                      -------------------------------------------------------
                      -------------------------------------------------------
    Net income (loss)
     per share from
     continuing
     operations:
    Basic             $      (0.43) $       0.34  $      (1.27) $      (0.35)
    Diluted           $      (0.43) $       0.32  $      (1.27) $      (0.35)
    Net income (loss)
     per share:
    Basic             $      (0.43) $       0.30  $      (1.27) $      (0.48)
    Diluted           $      (0.43) $       0.29  $      (1.27) $      (0.48)

    Weighted average
     number of shares
     outstanding
      - basic           20,243,082    14,685,976    17,011,000    14,625,856
    Weighted average
     number of shares
     outstanding
      - diluted         20,243,082    15,510,667    17,011,000    14,625,856



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

                            Three Months Ended          Nine Months Ended
                          ------------------------- -------------------------
                           September    September    September    September
                          ------------ ------------ ------------ ------------
                            30, 2007     30, 2006     30, 2007     30, 2006
                          ------------ ------------ ------------ ------------

    Cash provided by (used in)
     the following activities:
    Operating
    Income (loss) from
     continuing
     operations           $(8,771,336) $ 5,017,036 $(21,608,045) $(5,152,993)

    Add (deduct) items not
     affecting cash:
    Depreciation and
     amortization           3,978,492    4,362,733   11,335,941   12,802,516
    Non-cash interest
     expense                4,680,713    1,008,180    6,865,837    2,124,570
    Stock-based
     compensation             227,019            -      227,019       91,214
    Future income taxes             -     (180,000)           -     (180,000)
    Settlement of derivative
     liability             (2,766,573)           -   (2,766,573)           -
    Gain on extinguishment
     of debt                        -   (1,233,001)           -   (1,233,001)
    (Gain) loss on change
     in fair value of
     derivative liabilities   887,062   (4,599,330)   5,576,723   (3,433,755)
    (Gain) loss on sale of
     investments and assets    (7,336)     135,696      491,884   (1,114,467)
    Other                      34,067          961       73,993        3,106

    Changes in non-cash working
     capital balances related
     to operations:

    Accounts receivable   (11,009,290) (13,939,349)  (3,074,728)   4,339,502
    Inventory              (3,624,307)  (5,004,743)  (2,572,659)   2,522,490
    Other current assets     (320,110)    (419,655)    (700,259)    (305,961)
    Insurance premium
     deposits              (3,289,009)    (525,317)   1,316,723   (2,827,125)
    Other assets              918,776      (58,765)    (453,287)     (38,063)
    Restricted cash                 -            -    2,643,700      247,366
    Accounts payable and
     accrued liabilities   19,886,709    9,613,919    2,593,371   (6,123,210)
    Operating cash flows
     from discontinued
     operations                     -     (472,882)     (60,507)  (1,529,897)
                          ------------ ------------ ------------ ------------

    Total cash provided by
     (used in) operating
     activities               824,877   (6,294,517)    (110,867)     192,292
                          ------------ ------------ ------------ ------------
    Investing
    Purchase of property,
     plant and equipment     (360,421)    (630,210)  (2,052,529)  (2,091,671)
    Net proceeds from
     disposition of
     investments                    -            -            -    1,327,693
                          ------------ ------------ ------------ ------------
    Total cash used in
     investing activities    (360,421)    (630,210)  (2,052,529)    (763,978)

                          ------------ ------------ ------------ ------------
    Financing
    Repayment of capital
     lease obligations     (1,755,783)  (3,533,928)  (9,241,450) (11,378,009)
    Repayment of
     long-term debt        (7,000,001)           -  (10,333,336)  (7,350,000)
    Proceeds from share
     issuance                  14,704            -       61,372      259,712
    Net proceeds from
     reverse merger        37,933,165            -   37,933,165            -
    Issuance costs on
     reverse merger        (6,976,440)           -   (6,976,440)           -
    Redemption of
     convertible debt     (10,393,577)           -  (10,393,577)           -
    Increase (decrease)
     in borrowings under
     long-term debt       (11,418,105)   1,098,488   (3,993,853)   1,098,488
    Issuance costs on
     long-term debt                 -   (3,414,390)           -   (3,515,471)
    Net proceeds from
     refinancing of vehicles        -            -    3,470,714            -
    Proceeds from issuance of
     convertible debt               -            -            -   10,686,101
    Proceeds from refinancing
     of long-term debt              -   42,140,497            -   42,140,497
    Extinguishment
     of long-term debt              -  (32,863,525)           -  (32,863,525)
    Repurchase of common
     stock                   (224,019)           -     (224,019)           -
    Issuance costs paid on
     convertible debt               -            -            -   (1,388,985)
                          ------------ ------------ ------------ ------------
    Total cash provided by
     (used in) financing
     activities               179,944    3,427,142      302,578   (2,311,192)
                          ------------ ------------ ------------ ------------
    Effect of exchange
     rates on cash and
     cash equivalents         (34,067)     (19,892)     (73,993)     (22,037)
                          ------------ ------------ ------------ ------------
    Net increase (decrease)
     in cash and cash
     equivalents during
     the period               610,333   (3,517,477)  (1,934,813)  (2,904,915)
    Cash and cash equivalents,
     beginning of period      358,952    3,966,014    2,904,098    3,353,452
                          ------------ ------------ ------------ ------------
    Cash and cash equivalents,
     end of period        $   969,285  $   448,537  $   969,285  $   448,537
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------
    Supplemental cash flow
     information:
    Interest paid         $ 1,691,880  $ 1,425,122  $ 6,102,000  $ 4,504,060
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------
    Income taxes paid     $    76,715  $   228,935  $   219,298  $   323,292
                          ------------ ------------
                          ------------ ------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Supplemental disclosure of non-cash investing and financing transactions:
    For the nine months ended September 30, 2007 and September 30, 2006, the
Company had additional capital lease obligations for vehicles of $3,182,956
and $6,797,554, respectively.





For further information:

For further information: please contact the following or visit our
website at www.180connect.net. Claudia A. Di Maio, Director Investor
Relations, TEL: (866) 995-8888, DIRECT LINE: (416) 930-7710, EMAIL:
cdimaio@180connect.net; Devlin Lander, Integrated Corporate Relations, TEL.:
(415) 292-6855

Organization Profile

180 CONNECT INC.

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