180 Connect Inc. reports second quarter 2007 revenue of $87.9 million representing growth of 16% over the prior year and reiterates 2007 financial outlook



    /NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE
    UNITED STATES/

    Stock Symbol: TSX: NCT.U

    TORONTO, Aug. 13 /CNW/ - 180 Connect Inc. ("180 Connect" or the
"Company"), 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 second quarter ended June 30, 2007.

    Certain information contained in this news release constitutes
forward-looking information, including anticipated growth and financial
performance. See "Forward-Looking Information". All amounts are in U.S.
dollars.

    Selected Financial Highlights - Second Quarter Ended June 30, 2007

    For the three months ended June 30, 2007 as compared to the three 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.

    -   Loss from continuing operations was $3.6 million, an improvement of
        $0.7 million compared to a loss of $4.3 million in 2006.

    -   EBITDA from continuing operations(2) was $3.8 million, an increase of
        $1.6 million, or 71.5% compared to $2.2 million in 2006.

    -   Total cash provided by operating activities was $0.3 million, a
        decrease of $2.8 million from the cash provided by operating
        activities of $3.1 million in 2006.

    -   Net loss was $3.7 million, an improvement of $1.4 million compared to
        a loss of $5.1 million in 2006.

    -   Loss per share is as follows:

        -  Loss from continuing operations, basic and diluted, was $0.13 per
           share compared to a loss of $0.18 per share in 2006.

        -  Net loss, basic and diluted, was $0.14 per share compared to a net
           loss of $0.21 per share in 2006.
    

    Peter Giacalone, President and Chief Executive Officer of the Company
stated:
    "The turnaround of 180 Connect is now well in place and the second
quarter of 2007 demonstrates our ability to execute our plan. We have
completed a number of significant initiatives, including securing additional
interim debt financing, strengthening our relationships with our major
customers and streamlining our operations. To that end, we continue to deliver
meaningful growth in revenues and operating margins, allowing us to exceed
analyst expectations for earnings performance in the second quarter.
    We are pleased with the most recent additions to our senior management
team, including our appointment of Mark Burel, our new Chief Operating
Officer. Mark adds significantly to the level of operational experience within
the Company and will help to execute our strategy of delivering a strong track
record of world class customer service.
    In support of our strategy, on August 7, 2007, shareholders and
optionholders of 180 Connect voted over 90% in favour of the resolution
approving the arrangement of 180 Connect and Ad. Venture Partners, Inc.
("AVP") under the Canada Business Corporations Act. The arrangement remains
subject to approval by stockholders of AVP and the Court of Queen's Bench of
Alberta. As a result, the Company moves much closer to a substantial equity
infusion of up to $42 million in cash, providing the foundation for an
improved balance sheet and the opportunity to accelerate profitable growth and
reinvigorate our diversification efforts.
    AVP is expected to hold its stockholders meeting to approve the
arrangement of 180 Connect on August 24, 2007, following which 180 Connect
will make application to the Court of Queen's Bench of Alberta for the Final
Order approving the arrangement. It is anticipated that the effective date of
the arrangement will be on or immediately following the date the Final Order
is granted. We remain optimistic about attaining the requisite approval of the
AVP shareholders and believe that with the completion of this transaction, we
should be well positioned to better leverage our internal resources and
realize many of the opportunities available to drive our growth.

    Second Quarter 2007 Highlights

    Revenue in the second quarter increased to $87.9 million, up from
$75.6 million for the same period in 2006. This 16.3% growth reflects volume
increases across-the-board in both our 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 13.7% from the prior
year, largely attributable to its high-definition upgrade initiatives as
DIRECTV continues to sell more advanced product. We remain optimistic about
our satellite business and are on track to complete over 2.3 million work
orders for DIRECTV alone this year.
    Cable revenues increased 8% from the prior year, as we continue to
benefit from solid market growth, increased market share and our ability to
leverage our competitive advantages in supporting our customer's triple play
initiatives. In addition, 180 Network Services revenue grew an impressive 100%
from the prior year and is well positioned to continue its rapid growth. Our
municipal fiber projects in Boise, Idaho and Ontario and Shafter, California
are not only delivering exceptional margins, but also solidifying 180 Network
Services reputation as a premier fiber engineering company providing an
integrated solution for the multiple stages of a project's life cycle.
    Our general and administrative costs declined 7% in the 2nd quarter of
2007 versus the 2nd quarter of 2006 to approximately 5% of revenue. This
reduction was driven largely by a reduction in software and consulting fees.
    EBITDA from continuing operations(2) for the second quarter of 2007 was
$3.8 million, an increase of 72% over results reported for the same period in
2006. This increase was 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.

    Looking Forward

    Our success this quarter was due to a relentless focus on business
fundamentals under the leadership of a strong management team. We expect to
deliver solid performance for the year, and maintain our outlook for fiscal
2007 revenue of $365 million to $375 million and EBITDA from continuing
operations(2) to be in the range of $24 million to $26 million. We feel
confident that we will be successful as we continue to build on the strong
results we have achieved during the first half of 2007 and further leverage
our competitive advantages in the favorable operating environment we are
experiencing across our various markets."

    Summary Results

    The following is a summary of selected consolidated financial and
operating information of the Company as of and for the three and six months
ended June 30, 2007 and June 30, 2006 and is derived from the Company's
unaudited interim consolidated financial statements.

    
    Selected Unaudited Consolidated Financial and Operating Data:

                                    Three Months   Three Months
                                        Ended         Ended             %
                                    June 30, 2007 June 30, 2006     Variance
                                    -----------------------------------------
    Revenue........................ $ 87,908,770  $ 75,583,830         16.31%
    Direct expenses................   79,413,482    68,308,041         16.26%
                                    -----------------------------------------
    Direct contribution
     margin(1).....................    8,495,288     7,275,789         16.76%
    General and administrative.....    4,709,975     5,049,115         -6.72%
    Foreign exchange loss
     (gain)........................      (51,820)      (10,303)       402.96%
    Restructuring costs............            -             -             -
                                    -----------------------------------------
    EBITDA from continuing
     operations(2).................    3,837,133     2,236,977         71.53%
    Depreciation...................    2,771,909     3,254,872        -14.84%
    Amortization of customer
     contracts.....................      920,370       939,077         -1.99%
    Interest expense...............    3,236,474     2,312,780         39.94%
    (Gain) loss on sale of
     investments and assets........      427,442        86,291        395.35%
                                    -----------------------------------------
    Loss from continuing
     operations before income
     taxes.........................   (3,519,062)   (4,356,043)       -19.21%
    Income tax expense
     (recovery)....................       67,840       (34,000)      -299.53%
                                    -----------------------------------------
    Loss from continuing
     operations....................   (3,586,902)   (4,322,043)       -17.01%
    Loss from discontinued
     operations....................      (68,016)     (744,188)       -90.86%
                                    -----------------------------------------
    Net loss for the period........   (3,654,918)   (5,066,231)       -27.86%
                                    -----------------------------------------
                                    -----------------------------------------


                                     Six Months    Six Months
                                       Ended         Ended              %
                                   June 30, 2007  June 30, 2006     Variance
                                    -----------------------------------------
    Revenue........................ $181,094,332  $149,337,387         21.27%
    Direct expenses................  164,938,954   137,378,253         20.06%
                                    -----------------------------------------
    Direct contribution
     margin(1).....................   16,155,378    11,959,134         35.09%
    General and
     administrative................    9,747,977     9,220,616          5.72%
    Foreign exchange loss
     (gain)........................      (40,682)        3,502      -1261.68%
    Restructuring costs............      275,000       392,879         -30.0%
                                    -----------------------------------------
    EBITDA from continuing
     operations(2).................    6,173,083     2,342,137        163.57%
    Depreciation...................    5,516,703     6,580,330        -16.16%
    Amortization of customer
     contracts.....................    1,840,746     1,859,453         -1.01%
    Interest expense...............    6,166,058     3,725,885         65.49%
    (Gain) loss on sale of
     investments and assets........      499,220    (1,250,163)      -139.93%
                                    -----------------------------------------
    Loss from continuing
     operations before income
     taxes.........................   (7,849,644)   (8,573,368)        -8.44%
    Income tax expense
     (recovery)....................      141,840        38,800        265.57%
                                    -----------------------------------------
    Loss from continuing
     operations....................   (7,991,484)   (8,612,168)        -7.21%
    Loss from discontinued
     operations....................      (79,527)   (1,337,795)       -94.06%
                                    -----------------------------------------
    Net loss for the period........   (8,071,011)   (9,949,963)       -18.88%
                                    -----------------------------------------
                                    -----------------------------------------


    Per Share data

                      Three Months  Three Months   Six Months    Six Months
                      ------------  ------------   ----------    ----------
                          Ended         Ended         Ended         Ended
                          -----         -----         -----         -----
                      June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
                      ------------- ------------- ------------- -------------
    Loss  from
     continuing
     operations:
      Basic.......... $      (0.13) $      (0.18) $      (0.31) $      (0.35)
      Diluted........ $      (0.13) $      (0.18) $      (0.31) $      (0.35)
    Net loss for the
     period:
      Basic.......... $      (0.14) $      (0.21) $      (0.32) $      (0.41)
      Diluted........ $      (0.14) $      (0.21) $      (0.32) $      (0.41)
    Weighted average
     number of
     shares:
      Basic..........   26,742,298    24,426,277    25,618,320    24,325,497
    Weighted average
     number of
     shares:
      Diluted........   26,742,298    24,426,277    25,618,320    24,325,497


    Selected Consolidated Balance Sheet Data

                                                     For the period ended:
                                                    June 30,    December 31,
                                                      2007          2006
                                                  ---------------------------
    Cash and cash equivalents.................... $    358,952  $  2,904,098
    Working capital deficit......................    8,191,808     7,618,570
    Total assets.................................  145,668,126   169,383,651
    Total debt and capital lease obligations.....   74,425,736    74,625,127
    Total shareholders' equity................... $  9,437,351  $ 16,072,279


    A copy of the interim unaudited consolidated financial statements of the
Company as of and for the three and six months ended June 30, 2007 and
June 30, 2006 are attached to this news release. The Company will be releasing
its second quarter report on August 13, 2007 which will be available on SEDAR
and the Corporation's website. Additional information relating to the Company
is available on SEDAR at www.sedar.com and on the Corporation's website at
www.180connect.net.

    Non-Canadian 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), restructuring costs, interest expense,
        depreciation, amortization of customer contracts, (gain) or loss on
        the sale of investments and assets and income tax expense (recovery).
        DCM, as referred to in this news release, is a non-Canadian GAAP
        measure which does not have any standardized meaning prescribed by
        Canadian 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
        amortization of customer contracts and depreciation which are non-
        cash expense items; and (3) (gain) or loss on sale of investments and
        assets 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 Canadian GAAP as
        an indicator of our performance. The comparative Canadian GAAP
        measure is net loss from continuing operations. Net loss from
        continuing operations for the three months ended June 30, 2007 was
        $3.6 million compared to net loss from continuing operations of
        $4.3 million in the comparable period for 2006. Net loss from
        continuing operations for the six months ended June 30, 2007 was
        $8.0 million compared to net loss from continuing operations of
        $8.6 million in the comparable period for 2006.

    Following is a reconciliation of DCM to loss from continuing operations:

                      Three Months  Three Months   Six Months    Six Months
                      ------------  ------------   ----------    ----------
                          Ended         Ended         Ended         Ended
                          -----         -----         -----         -----
                      June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
                      ------------- ------------- ------------- -------------
    Direct
     contribution
     margin(1)        $  8,495,288  $  7,275,789  $ 16,155,378  $ 11,959,134
    General and
     administrative      4,709,975     5,049,115     9,747,977     9,220,616
    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     3,236,474     2,312,780     6,166,058     3,725,885
    (Gain) loss on
     sale of
     investments
     and assets            427,442        86,291       499,220    (1,250,163)
    Income tax
     expense (recovery)     67,840       (34,000)      141,840        38,800
                      ------------- ------------- ------------- -------------
    Net loss from
     continuing
     operations       $ (3,586,902) $ (4,322,043) $ (7,991,484) $ (8,612,168)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    (2) The term "EBITDA from continuing operations" refers to income from
        continuing operations before deducting depreciation, amortization of
        customer contracts, interest expense, (gain) or loss on sale of
        investments and of assets, amortization of customer contracts and
        income tax expense (recovery). EBITDA from continuing operations, as
        referred to in this news release, is a non-Canadian GAAP measure
        which does not have any standardized meaning prescribed by Canadian
        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 and customer contracts which are non-cash
        expense items and (2) (gain) or loss on sale of investments and
        assets 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, the focus on EBITDA from continuing
        operations gives the reader 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 Canadian GAAP as an indicator of the Company's
        performance. The comparative Canadian GAAP measure is net loss from
        continuing operations. Net loss from continuing operations for the
        three months ended June 30, 2007 was $3.6 million compared to net
        loss from continuing operations of $4.3 million in the comparable
        period for 2006. Net loss from continuing operations for the six
        months ended June 30, 2007 was $8.0 million compared to net loss from
        continuing operations of $8.6 million in the comparable period for
        2006.

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

                   Three Months   Three Months    Six Months   Six Months
                   ------------   ------------    ----------   ----------
                      Ended          Ended          Ended        Ended
                      -----          -----          -----        -----
                  June 30, 2007  June 30, 2006  June 30, 2007  June 30, 2006
                  -------------  -------------  -------------  -------------
    EBITDA from
     continuing
     operations(2)    3,837,133      2,236,977      6,173,083      2,342,137
    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          3,236,474      2,312,780      6,166,058      3,725,885
    (Gain) loss
     on sale of
     investments
     and assets         427,442         86,291        499,220     (1,250,163)
    Income tax
     expense
     (recovery)          67,840        (34,000)       141,840         38,800
                  -------------  -------------  -------------  -------------
    Net loss from
     continuing
     operations   $  (3,586,902) $  (4,322,043) $  (7,991,484) $  (8,612,168)
                  -------------- -------------- -------------- --------------
                  -------------- -------------- -------------- --------------
    

    Conference Call Information

    A live webcast of 180 Connect Inc.'s second quarter 2007 earnings call
will be available at www.180connect.net. The call will begin at 6:00 p.m. ET,
August 13, 2007. The dial-in numbers for the call are international dial
617.597.5341 and toll free at 866.363.8008, participant pass code is 10604639.
The webcast will be archived on the Company's website and a replay of the call
will be available beginning at 8:00 p.m. EST on Monday, August 13, 2007
through to 11:59 p.m. ET Monday, August 20, 2007. The dial-in numbers for the
replay are 617.801.6888 International Dial and toll free at 888.286.8010 pass
code 44728330.

    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 Inc. shares are traded
under the name of 180 Connect Inc. on the TSX under the symbol NCT.U.

    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 "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. See "Risk Factors" contained in the Company's Annual Information
Form for the year ended December 31, 2006. Many factors, including those
discussed under "Risk Factors" in the Annual Information Form, 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.

    
                      Consolidated Financial Statements

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

                                                    June 30,    December 31,
                                                      2007          2006
                                                  ---------------------------
    Assets (Note 5)
    Current Assets
    Cash and cash equivalents.................... $    358,952  $  2,904,098
    Accounts receivable (less allowance for
     doubtful accounts of $3,051,368 and
     $2,506,637, respectively)...................   41,000,390    48,934,952
    Inventory....................................   14,764,500    15,816,148
    Restricted cash (Note 3).....................   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 (Note 4)............................   15,161,264    15,161,264
    Customer contracts, net (Note 4).............   23,232,010    25,072,756
    Other assets (Note 2)........................    3,554,171     4,198,288
                                                  ---------------------------
      TOTAL ASSETS                                $145,668,126  $169,383,651
                                                  ---------------------------
                                                  ---------------------------
    Liabilities and Shareholders' Equity
    Current Liabilities
    Accounts payable and accrued
     liabilities................................. $ 61,805,039  $ 78,686,245
    Current portion of long-term debt
     (Notes 2 and 5).............................    6,341,961     5,967,674
    Current portion of capital lease
     obligations ................................   11,823,226    13,033,104
                                                  ---------------------------
      TOTAL CURRENT LIABILITIES                     79,970,226    97,687,023

    Long-term debt (Notes 2 and 5)...............   36,658,812    32,799,043
    Convertible debt (Notes 2 and 6).............    6,203,623     7,612,194
    Long-term portion of capital lease
     obligations.................................   13,398,114    15,213,112
                                                  ---------------------------
      TOTAL LIABILITIES                            136,230,775   153,311,372

    Commitments and contingencies (Notes 5, 6, 14 and 18)

    Shareholders' Equity
    Share capital (Note 7b)......................   71,719,091    66,397,608
    Contributed surplus (Note 7d)................   22,038,342    22,188,707
    Equity component of convertible
     debentures (Notes 6 and 7b).................    1,973,019     2,434,258
    Warrants (Notes 5, 6 and 7b).................      931,625     4,218,592
    Deficit (Note 2).............................  (87,709,756)  (79,651,916)
    Accumulated other comprehensive income
     (Note 2)....................................      485,030       485,030
                                                  ---------------------------
      TOTAL SHAREHOLDERS' EQUITY                     9,437,351    16,072,279
                                                  ---------------------------
    TOTAL LIABILITIES AND SHAREHOLDERS'
     EQUITY                                       $145,668,126  $ 169,383,651
                                                  ---------------------------
                                                  ---------------------------

                           See accompanying notes



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

                          Three Months 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
    Expenses
    Direct...........   79,413,482    68,308,041   164,938,954   137,378,253
    General and
     administrative..    4,709,975     5,049,115     9,747,977     9,220,616
    Foreign exchange
     loss (gain).....      (51,820)      (10,303)      (40,682)        3,502
    Restructuring
     costs (Note 9)..            -             -       275,000       392,879
    Depreciation
     (Note 2)........    2,771,909     3,254,872     5,516,703     6,580,330
    Amortization
     of customer
     contracts
     (Note 4)........      920,370       939,077     1,840,746     1,859,453
    Interest expense
     (Notes 2, 5
     and 6)..........    3,236,474     2,312,780     6,166,058     3,725,885
    (Gain) loss on
     sale of
     investments
     and assets
     (Note 12).......      427,442        86,291       499,220    (1,250,163)
                      ------------- ------------- ------------- -------------
    Loss from
     continuing
     operations
     before income
     taxes...........   (3,519,062)   (4,356,043)  (7,849,644)    (8,573,368)
    Income tax
     expense
     (recovery)
     (Note 10).......       67,840       (34,000)     141,840         38,800
                      ------------- ------------- ------------- -------------
    Loss from
     continuing
     operations......   (3,586,902)   (4,322,043)  (7,991,484)    (8,612,168)
    Loss from
     discontinued
     operations, net
     of income taxes
     of nil
     (Note 13).......      (68,016)     (744,188)     (79,527)    (1,337,795)
                      ------------- ------------- ------------- -------------
    Net loss and
     comprehensive
     loss for the
     period
     (Note 2)........   (3,654,918)   (5,066,231)  (8,071,011)    (9,949,963)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------
      Loss per share
       from
       continuing
       operations
       (Note 11):
      Basic.......... $      (0.13) $      (0.18) $     (0.31)  $      (0.35)
      Diluted........ $      (0.13) $      (0.18) $     (0.31)  $      (0.35)
    Net loss per
     share:
      Basic.......... $      (0.14) $      (0.21) $     (0.32)  $      (0.41)
      Diluted........ $      (0.14) $      (0.21) $     (0.32)  $      (0.41)
      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
                      ------------- ------------- ------------- -------------



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

                          Three Months Ended           Six Months Ended
                      --------------------------- ---------------------------
                        June 30,      June 30,      June 30,      June 30,
                          2007          2006          2007          2006
                      ------------- ------------- ------------- -------------
    Deficit,
     beginning of
     period.......... $(84,054,838) $(69,215,797) $(79,651,916) $(64,332,065)
    Adoption of new
     accounting
     standards
     (Note 2)........            -             -        13,171             -
                      ------------- ------------- ------------- -------------
    Adjusted deficit,
     beginning of
     period .........  (84,054,838)  (69,215,797)  (79,638,745)  (64,332,065)
    Net loss for the
     period..........   (3,654,918)   (5,066,231)   (8,071,011)   (9,949,963)
                      ------------- ------------- ------------- -------------
    Deficit, end of
     period.......... $(87,709,756) $(74,282,028) $(87,709,756) $(74,282,028)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

                           See accompanying notes



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

                          Three Months Ended           Six Months Ended
                      --------------------------- ---------------------------
                        June 30,      June 30,      June 30,      June 30,
                          2007          2006          2007          2006
                      ------------- ------------- ------------- -------------
    Cash provided by
     (used in) the
     following
     activities:
    Operating
    Loss from
     continuing
     operations...... $ (3,586,902) $(4,322,043)  $ (7,991,484) $ (8,612,168)
    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.......    1,098,375      791,573      2,140,164       815,318
      (Gain) loss on
       sale of
       investments
       and assets
       (Note 12).....      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........      387,661      (46,612)      (490,753)      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)
                      ------------- ------------- ------------- -------------
    Total cash
     provided by
     (used in)
     operating
     activities......      335,130    3,135,198       (875,237)    7,543,824
                      ------------- ------------- ------------- -------------
    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
                      ------------- ------------- ------------- -------------
    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
     (Notes 5 and
      7b)............       17,260      252,000         46,668       259,712
    Increase in bank
     indebtedness....      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
     (Note 6)........            -            -              -    10,686,101
    Issuance costs
     paid on
     convertible debt
     (Note 6)........           -      (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 cash provided
     by (used in)
     continuing
     operations......    (873,636)   (1,894,338)   (2,484,639)     1,669,577
    Net cash used in
     discontinued
     operations......     (60,200)     (658,836)      (60,507)    (1,057,015)
                      ------------- ------------- ------------- -------------
    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

    1.  BASIS OF PRESENTATION

    The interim consolidated financial statements are prepared in accordance
    with Canadian generally accepted accounting principles applicable to
    interim consolidated financial statements and include 180 Connect Inc.
    and its subsidiaries ("180 Connect" or 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 Canadian
    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 interim 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.

    Pending transaction

    Transaction with Ad.Venture Partners, Inc.

    The Company and Ad.Venture Partners, Inc. ("Ad.Venture" or "AVP") are
    proposing to engage in a business combination pursuant to which
    Ad.Venture will indirectly acquire all of our outstanding shares and the
    Company will thereby become an indirect subsidiary of Ad.Venture
    ("Purchaser). The combination will be carried out under a plan of
    arrangement pursuant to the Canada Business Corporations Act ("CBCA") the
    corporate legislation applicable to 180 Connect as set forth in the
    arrangement agreement dated March 13, 2007 among Ad.Venture, 6732097
    Canada Inc ("Purchaser"), and 180 Connect, as amended July 2, 2007,
    whereby Purchaser will acquire all of the Company's outstanding 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 Purchaser (and certain ancillary rights). In addition, as part of the
    arrangement, all outstanding options to purchase the Company's common
    shares will be exchanged for options to purchase Ad.Venture common stock.
    Ad.Venture will also assume all of the Company's obligations pursuant to
    our outstanding warrants, stock appreciation rights and convertible
    debentures. If the arrangement is completed, the Company will be an
    indirect subsidiary of Ad.Venture and Ad.Venture will change its name to
    180 Connect Inc.

    The arrangement is expected to be completed during the third calendar
    quarter of 2007. The completion of the arrangement is subject to the
    approval of the arrangement proposal by Ad.Venture's stockholders,
    subject to the approval of the arrangement proposal by 180 Connect's
    security holders (which was received at a meeting held on August 7, 2007
    of 180 Connect shareholders and option holders), compliance with the
    court ordered approval process pursuant to the CBCA and the satisfaction
    of certain other conditions.

    The arrangement consideration

    Upon completion of the arrangement, each common share of 180 Connect will
    be exchanged for 0.6 shares of Ad.Venture common stock or 0.6
    exchangeable shares of Purchaser (and certain ancillary rights). Each
    exchangeable share will be exchangeable for one share of Ad.Venture
    common stock at any time after issuance at the option of the holders and
    will be redeemable or purchasable at the option of Purchaser or the
    parent of Purchaser after two years or upon the earlier occurrence of
    certain specified events. Only Company shareholders that are eligible
    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 to achieve a deferral of Canadian tax on
    any accrued capital gain on their Company common shares in certain
    circumstances until redemption or purchase of such exchangeable shares
    pursuant to its terms.

    After giving effect to the arrangement, assuming the full dilutive effect
    of the Company's securities and full participation of the AVP security
    holders, security holders of the Company will own approximately 59.3% of
    the outstanding voting stock of AVP and the existing security holders of
    AVP will own the balance on a fully diluted basis.

    180 Connect has agreed to pay Ad.Venture a termination fee of $5,800,000
    if 180 Connect terminates the arrangement to accept a superior proposal.
    Additionally, 180 Connect has agreed to pay the transaction expenses of
    Ad.Venture up to a maximum of $3,000,000 if 180 Connect withdraws, amends
    or modifies in a manner adverse to Ad.Venture its approval or
    recommendation of the arrangement and does not terminate as permitted by
    the arrangement agreement and thereafter the required vote of the 180
    Connect shareholders and option holders is not obtained at the 180
    Connect shareholders meeting. In no circumstances will 180 Connect be
    obligated to pay both the termination fee and the transaction expenses of
    Ad.Venture.


    2.  ADOPTION OF RECENT CANADIAN ACCOUNTING PRONOUNCEMENTS IN 2007

    Accounting changes

    In July 2006, the Accounting Standards Board issued a replacement of The
    Canadian Institute of Chartered Accountants' ("CICA") Handbook Section
    1506, Accounting Changes ("Section 1506"). The new standard allows for
    voluntary changes in accounting policy only when they result in the
    financial statements providing reliable and more relevant information,
    requires changes in accounting policy to be applied retrospectively
    unless doing so is impracticable, requires prior period errors to be
    corrected retrospectively and calls for enhanced disclosures about the
    effects of changes in accounting policies, estimates and errors on the
    financial statements. Section 1506 also requires disclosure of
    information relevant to assessing the possible impact that the
    application of a new GAAP standard will have on the Company's financial
    statements in the period of initial application. The adoption of Section
    1506 effective January 1, 2007 has had no impact on these unaudited
    interim consolidated financial statements.

    Financial instruments

    On January 1, 2007, the Company adopted CICA Section 1530, Comprehensive
    Income, Section 3251, Equity, Section 3855, Financial Instruments -
    Recognition and Measurement and Section 3861, Financial Instruments -
    Disclosure and Presentation accounting requirements related to
    securities, hedging derivatives, other comprehensive income ("OCI") and
    certain other financial instruments. Prior periods have not been
    restated, except in respect to cumulative translation adjustment being
    classified as accumulated other comprehensive income.

    Section 1530, Other Comprehensive Income

    The new rules require that the Company present a new Consolidated
    Statement of Comprehensive Income. Other comprehensive income is
    comprised of the change in equity (net assets) of an enterprise during a
    period from transactions and other events and circumstances from non-
    owner sources. It includes all changes in equity during a period except
    those resulting from investments by owners and distributions to owners.
    The Company had no other comprehensive income for all periods presented.
    However, the Company has retroactively reclassified its cumulative
    translation adjustment account to accumulated other comprehensive income.

    Section 3251, Equity

    Section 3251 describes the changes in how to report and disclose equity
    and changes in equity as a result of the new requirements of Section
    1530, including the changes in equity for the period arising from other
    comprehensive income. Accumulated changes in OCI are included in
    accumulated other comprehensive income ("AOCI") and are presented in
    shareholders' equity and comprehensive income is included as a separate
    component of shareholders' equity.

    Section 3855, Financial Instruments - Recognition and Measurement
    Section 3861, Financial Instruments - Disclosure and Presentation

    Financial assets and financial liabilities

    Under the new standards, financial assets and financial liabilities are
    initially recognized at fair value and their subsequent measurements are
    dependent on their classification as described below. Their
    classification depends on the purpose for which the financial instruments
    were acquired or issued, their characteristics and the Company's
    designation of such instruments. The standards require that all financial
    assets be classified as held-for-trading, available-for-sale, held-to-
    maturity, or loans and receivables. The standards require that all
    financial assets, including all derivatives, be measured at fair value
    with the exception of loans and receivables, debt securities classified
    as held-to-maturity and available-for-sale financial assets that do not
    have quoted market prices in an active market. Settlement date accounting
    continues to be used for all financial assets, except changes in fair
    value between the trade date and settlement date are reflected in the
    consolidated statements of operations and comprehensive loss for held-
    for-trading financial assets, while changes in fair value between trade
    date and settlement date are reflected in OCI for available-for-sale
    financial assets.

    Loans and receivables

    Loans and receivables are non-derivative financial assets that are
    initially recognized at fair value and thereafter are accounted for at
    cost or amortized cost.

    Other liabilities

    Other liabilities are non-derivative financial liabilities that are
    initially recognized at fair value and thereafter are recorded at cost or
    amortized cost and include all liabilities, other than derivatives or
    liabilities to which the fair value designation has been applied.

    Derivatives

    Derivatives are carried at fair value and are reported as assets where
    they have a positive fair value and as liabilities where they have a
    negative fair value. The change in fair value during the period is
    recorded in earnings.

    Embedded derivatives

    CICA Section 3855 requires that certain embedded derivatives be recorded
    on the balance sheet at fair value, with remeasurement to fair value at
    each subsequent reporting period. Accordingly, the Company was required
    to assess whether its long-term debt (Note 5) and convertible debt (Note
    6) contained any embedded derivatives under CICA Section 3855. In
    accordance with CICA Section 3861 and EIC 70 "Presentation of a Financial
    Instrument When a Future Event or Circumstance May Affect the Issuer's
    Obligation", the holder conversion option within the Company's
    convertible debentures and the related share purchase warrants continue
    to be required to be recorded in equity. The convertible debentures and
    the long-term debt both contain certain embedded derivatives that require
    bifurcation, namely certain contingent puts, calls and other contingent
    payments. The Company's management, in consultation with a third-party
    valuation firm, has concluded that the value of the rights under the
    contingent puts, calls or other contingent payments, both at issuance and
    on an ongoing basis, is very low, and accordingly the impact of these
    contractual provisions on the Company's financial statements is
    considered to not be material.

    Transaction costs

    Transaction costs related to debt financing, except those related to the
    revolver facility (Note 5) are netted against the carrying value of the
    liability and then amortized over the expected life of the instrument
    using the effective interest method.

    Determination of fair value

    The fair value of a financial instrument is the amount of consideration
    that would be agreed upon in an arm's length transaction between
    knowledgeable, willing parties who are under no compulsion to act. The
    fair value of a financial instrument on initial recognition is the
    transaction price, which is the fair value of the consideration given or
    received. Subsequent to initial recognition, the fair value of financial
    instruments that are quoted in active markets are based on bid prices for
    financial assets held and offer prices for financial liabilities. When
    independent prices are not available, fair values are determined by using
    valuation techniques which refer to observable market data. These include
    comparisons with similar instruments where market observable prices
    exist, discounted cash flow analysis, option pricing models and other
    valuation techniques commonly used by market participants. For certain
    derivatives, fair values may be determined in whole or in part from
    valuation techniques using non-observable market data or transaction
    prices. A number of factors such as bid-offer spread, credit profile and
    model uncertainty are taken into account, as appropriate, when values are
    calculated using valuation techniques.

    Classification of financial instruments

    The following is a summary of the accounting model the Company has
    elected to apply to each of its significant categories of financial
    instruments outstanding as of January 1, 2007:

    -   Cash and cash equivalents are classified as held-for-trading. Changes
        in fair value for the period are recorded in earnings as interest
        income.

    -   Accounts receivable are classified as loans and receivables.

    -   Due to related parties is accounted for on recognition in accordance
        with Section 3840, Related Party Transactions and subsequently
        classified as other liabilities.

    -   Long-term debt is accounted for as other liabilities at amortized
        cost.

    On January 1, 2007, the Company has made the following adjustments to the
    Consolidated Balance Sheet to adopt the new requirements for effective
    interest rates:

    On January 1, 2007, the Company has made the following adjustments to the
    Consolidated Balance Sheet to adopt the new requirements for effective
    interest rates:

                                                                    As at
                                                                 January 1,
                                                                    2007
                                                                -------------
         Debit/(Credit)
    Consolidated Balance Sheet
    Other assets                                                $ (1,660,120)
    Current portion of long-term debt                                540,168
    Long-term debt                                                   330,271
    Convertible debt                                                 802,852
    Deficit                                                          (13,171)

    The impact of these changes on the Company's Consolidated Statements of
    Operations and Comprehensive Loss increase net loss as follows:

                                                     For the       For the
                                                  Three Months   Six Months
                                                      Ended         Ended
                                                  June 30, 2007 June 30, 2007
                                                  ------------- -------------
         Debit/(Credit)
    Consolidated Statement of Operations and
     Comprehensive Loss
    Interest expense                              $    101,652  $     84,154

    Effective interest method

    The impact of these changes on the Company's Consolidated Statements of
    Operations and Comprehensive Loss increase net loss as follows:

    Deferred financing costs which were previously included in other assets
    have been reclassified as a reduction to current portion of long-term
    debt, long-term debt and convertible debt. The new rules require that the
    Company use the effective interest method to recognize the deferred loan
    origination costs whereby the amount recognized varies over the life of
    the loan based on principal outstanding.

    As of January 1, 2007 the Company adjusted deferred financing costs to
    reflect the balance that would have existed had the Company always used
    the effective interest method to recognize deferred financing costs. The
    impact was a decrease in other assets of $1,660,120, a decrease in
    current portion of long-term debt of $540,168, a decrease in long-term
    debt of $330,271, a decrease in convertible debt of $802,852 and a
    decrease in deficit of $13,171.

    For the three and six months ended June 30, 2007, the impact was an
    increase in interest expense of $101,652 and $84,154, respectively.

    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.


    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.

    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 $4.3 million.
    This reduction in the Company's restricted cash balance has been offset
    by a $1.7 million increase in restricted cash as collateral for bonded
    projects currently in progress.

    4.  GOODWILL AND CUSTOMER CONTRACTS

                                   Net Book Value              Net Book Value
                                     December 31,                 June 30,
                                        2006      Amortization      2007
                                    -----------------------------------------
    Goodwill....................... $ 15,161,264  $          -  $ 15,161,264
                                    -----------------------------------------
                                    -----------------------------------------
    Customer contracts............. $ 25,072,756  $  1,840,746  $ 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
    (three and six months ended June 30, 2006 - $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


    5.  LONG-TERM DEBT AND COMMON STOCK PURCHASE WARRANTS
    Long-term debt consists of the following:
                                                    June 30,    December 31,
                                                      2007          2006
                                                  ------------- -------------
    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 13.91%. 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...............................   15,430,073    19,008,242
                                                  ---------------------------
    Total long-term debt.........................   43,000,773    38,766,717
    Less: current portion........................   (6,341,961)   (5,967,674)
                                                  ---------------------------
                                                  $ 36,658,812  $ 32,799,043
                                                  ---------------------------
                                                  ---------------------------

    Pursuant to the terms of the debt agreement, the Company will have
    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. 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. Subsequent to June 30, 2007, the Company
    entered into an amendment agreement with Laurus Master Fund ("Laurus" or
    the "Investor") securing additional interim financing (Note 18).

    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 Company obtained a waiver from its lenders 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 the Investor 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 the
    Investor was approved by the shareholders of the Company at the Company's
    annual and special meeting held June 30, 2006. The Investor 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, the Investor 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, the Investor exercised its right under
    the warrants to purchase the 2,000,000 common shares.

    The common stock purchase warrants were valued 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.  These fair values were pro-
    rated based on the actual funds received resulting in a credit to
    warrants of $3,586,132 and a loan discount which was recorded as a
    reduction to long-term debt of $3,586,132. At June 30, 2007, the Company
    has recorded $1,991,277 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 as a discount to
    the current and long-term portion of long-term debt for the term
    facility, and equity based on a pro rata calculation of the fair value of
    the components of the debt and warrants. The issuance costs related to
    the revolver facility were recorded in other assets and are being
    amortized over the three-year period to maturity of the debt agreement
    with the Investor.


    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 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.

    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
    shares, or the shares of AVP in the event of a successful merger, are 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 (this date
    to be known as the "Required Delisting 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 by the Required Listing Date, 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 the
    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).

    As at June 30, 2007, the debt component of $6,203,623 consists of the
    initial fair value of $6,872,909, less $1,505,163 conversion into common
    shares and $835,877 of accumulated discount presented as a long-term
    liability. The fair value of the debt was determined at the time of
    issuance using a three-year maturity and the present value of the cash
    payments of interest and principal due under the terms of the debentures
    discounted at a rate of 18%, which approximates a similar non-convertible
    financial instrument with comparable terms and risk. The resulting
    discount is being amortized over the life of the debt as accreted
    interest using the effective interest rate method. The equity components
    were valued using the Black-Scholes option pricing model using the
    following variables: volatility of 59.5%, expected life of three years
    for the conversion option and four years for the warrants, a risk-free
    interest rate of 4.7% and a dividend of nil. The fair value of the equity
    component and warrants has been recorded as a credit to shareholders'
    equity for $2,742,383 and $1,070,809, respectively, based on a pro rata
    calculation of the fair value components of the debt, options and
    warrants.

    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.

    180 Connect obtained waivers from the holders of its convertible
    debentures, whereby such holders waived certain obligations of 180
    Connect to list its common shares on a U.S. trading market by March 31,
    2007 and to delist its common shares from the TSX by June 30, 2007.
    However, the consummation of the Arrangement Agreement may constitute an
    event of default under the convertible debentures as it may constitute a
    fundamental transaction or change of control thereunder.

    As a result of the listing requirement, the convertible debt is a short
    term liability, however it is classified as long term in the consolidated
    financial statements as the Company has the ability to refinance this
    liability with its existing long term credit facility.

    The Company paid $1,388,985 of issuance costs to complete the private
    placement. Effective January 1, 2007, the issuance costs have been
    recorded as a discount to the long-term liability and as equity based on
    a pro rata calculation of the fair value components of the debt and
    equity.  The issuance costs in long-term liability are being accreted as
    part of the debt discount using the effective interest rate method.


    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 stock purchase
     warrants for cash Issuance on exercise
     of stock purchase warrants..................    2,000,000     3,304,227
    Issuance on exercise of convertible
     debentures..................................      850,000     1,837,483
                                                  ---------------------------
                                                  ---------------------------
    Balance, June 30, 2007.......................   27,356,034  $ 71,719,091
                                                  ---------------------------
                                                  ---------------------------

    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 a debit to warrants of $3,286,967 and a credit to share
    capital of $3,304,227. 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 of $1,376,244, a debit to the
    equity component of convertible debentures of $461,239, and a credit to
    share capital of $1,837,483.

    (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.

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

    -------------------------------------------------------------------------
                            Six Months Ended               Year Ended
                             June 30, 2007              December 31, 2006
    -------------------------------------------------------------------------
                                      Weighted                    Weighted
                                       Average                     Average
                        Number of     Exercise      Number of     Exercise
                         Options       Price         Options        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               0.6            $  1.00
    $2.09...................... 400,340               3.5            $  2.09

    Stock-based compensation for non-employees and employees is measured and
    recorded in the consolidated financial statements at fair value.

    (d)  Contributed surplus

    Contributed surplus consists of:

                                      Six Months Ended         Year Ended
                                       June 30, 2007       December 31, 2006
                                     ------------------    ------------------

    Balance, beginning of period.... $      22,188,707     $      23,516,635
    Issuance on exercise of stock
     options for cash...............          (150,365)           (1,327,928)
                                     ----------------------------------------
    Balance, end of period.......... $      22,038,342     $      22,188,707
                                     ----------------------------------------
                                     ----------------------------------------


    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'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 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 Company's Board of Directors of the
    Arrangement Agreement and the transactions contemplated thereunder.

    9.  RESTRUCTURING COSTS

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

                                        Restruc-
                                        turing
                         Reserve        Costs                      Reserve
                       December 31,    Incurred    Paid During     June 30,
                           2006         in 2007        2007          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.


    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           Six Months Ended
                      --------------------------- ---------------------------
                        June 30,      June 30,      June 30,      June 30,
                          2007          2006          2007          2006
                      ------------- ------------- ------------- -------------
    Numerator:
    Loss from
     continuing
     operations...... $ (3,586,902) $ (4,322,043) $ (7,991,484) $ (8,612,168)
    Loss from
     discontinued
     operations......      (68,016)     (744,188)      (79,527)   (1,337,795)
                      ------------- ------------- ------------- -------------
    Net loss for
     the period...... $ (3,654,918) $ (5,066,231) $ (8,071,011) $ (9,949,963)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------
    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...... $      (0.13) $      (0.18) $      (0.31) $      (0.35)
    Basic and
     diluted
     - from
     discontinued
     operations......        (0.01)        (0.03)        (0.01)        (0.06)
                      ------------- ------------- ------------- -------------
    Basic, and
     diluted, net.... $      (0.14) $      (0.21) $      (0.32) $      (0.41)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    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 5.8 million common shares of the
    Company outstanding.


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

    (Gain) loss on sale of investments and assets for the three and six
    months ended June 30, 2007 and June 30, 2006, consist of the following:

                          Three Months Ended           Six Months Ended
                      --------------------------- ---------------------------
                        June 30,      June 30,      June 30,      June 30,
                          2007          2006          2007          2006
                      ------------- ------------- ------------- -------------
    Gain from
     investments      $          -  $          -  $          -  $ (1,320,193)
    (Gain) loss on
     disposal of
     assets                427,442        86,291       499,220        70,030
                      ------------- ------------- ------------- -------------
    Total (gain)
     loss on sale
     of investments
     and assets...... $    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).


    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.

    15. COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS

    Certain amounts in the comparative consolidated financial statements have
    been reclassified from statements previously presented to conform to the
    presentation of the 2007 consolidated financial statements and to account
    for the reclassification of discontinued operations.


    16. 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 months and six months ended June 30, 2007 and June 30, 2006.

                           Geographic information

                                                     June 30,    December 31,
                                                      2007          2006
                                                  ---------------------------
    Property plant and equipment, goodwill and
     customer contracts
    Canada....................................... $  1,670,245  $  1,468,498
    United States................................   68,665,292    73,648,412
                                                  ---------------------------
    Total........................................ $ 70,335,537  $ 75,116,910
                                                  ---------------------------
                                                  ---------------------------


                          Three Months Ended           Six Months Ended
                      --------------------------- ---------------------------
                        June 30,      June 30,      June 30,      June 30,
                          2007          2006          2007          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
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------


    17. 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 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. Subsequent to June 30, 2007, 20,000 share
    appreciation rights were cancelled.

    As the LTIP has not yet been approved by the shareholders of 180 Connect,
    no compensation expense has been recorded in 2007. If approved by the
    shareholders, the fair value of the share appreciation rights will be
    measured at that date and compensation expense will be recorded in that
    period.

    If the transaction with AVP is consummated (Note 1), shareholder approval
    will not be required to convert, replace or adjust outstanding options or
    other equity compensation to reflect the transaction. Shares available
    under certain plans acquired in acquisitions and mergers may be used for
    certain post-transaction grants without further shareholder approval.


    18. SUBSEQUENT EVENTS

    On July 2, 2007 the Company entered into an amendment agreement with
    Laurus securing additional interim financing to fund working capital
    until the earlier of (a) the date the arrangement is completed,
    (b) 45 days from the date shareholders of AVP vote against the
    arrangement but in no event later than September 30, 2007,
    (c) September 30, 2007, if the arrangement is not completed by August 31,
    2007 and (d) the date of a capital raising transaction or refinancing of
    the Company (the "Laurus Expiration Date").

    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 the Laurus Expiration Date.

    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 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 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 at the Laurus Expiration Date.

    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.

    On the Laurus Expiration Date, 180 Connect will be required to pay Laurus
    $5.0 million principal on the term note upon the consummation of the
    Arrangement or a capital raising transaction and any amount drawn on the
    revolving credit facility above $37.0 million. No payments will be
    required to be made by 180 Connect on the Laurus Expiration Date in
    respect of the $9.0 million over-advance facility provided the Company
    has the necessary borrowing base capacity (which the Company expects will
    be the case). If such payment is not made, Laurus may foreclose on the
    additional $7.0 million collateral and apply the collateral against the
    $8.0 million increase to the revolving credit and over-advance facility.
    In the event of a foreclosure by Laurus on such additional collateral,
    180 Connect will be required to repay certain AVP shareholders ("AVP
    Shareholders") $7.0 million. However, 180 Connect will be prohibited from
    such repayment under the terms of 180 Connect's indebtedness owned by
    Laurus except to the extent it consummates a capital raising transaction.

    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.

    -   agreed to reimburse Ad.Venture and/or the AVP Shareholders up to
        $1.4 million for professional fees and expenses incurred in
        connection with the arrangement in the event the arrangement is not
        completed due to the failure of the 180 Connect shareholders to
        approve the arrangement (a "180 Connect Shareholder Disapproval") or
        due to 180 Connect's requirement for additional financing prior to
        the closing of the arrangement, which would cause 180 Connect to
        issue additional debt or equity securities and which would require an
        amendment to AVP's registration statement related to the arrangement
        agreement at a time such that the Ad.Venture special meeting could
        not be held on or prior to August 31, 2007 (a "180 Connect Financing
        Delay").

    -   to issue 250,000 warrants to the AVP Shareholders, with a five-year
        term, exercisable at the five-day volume weighted average price on
        the TSX for the five trading days immediately following such
        announcement in the event the arrangement is not completed due to a
        180 Connect Shareholder Disapproval or a 180 Connect Financing Delay,
        on the later of August 31, 2007 or such day which is five days
        following the announcement of the failure of the arrangement to
        complete. The common shares issued upon exercise of the warrants will
        be subject to a one-year lock-up period.

    -   if the arrangement is not completed, the AVP Shareholders would be
        entitled to participate in any private placement or similar financing
        transaction of 180 Connect consummated during the remainder of 2007
        on the same terms and conditions as the other investors in such
        private placement or other financing transaction in an amount up to
        $7.0 million.

    On August 7, 2007, the Company's shareholders and optionholders voted to
    approve the arrangement.

    
    %SEDAR: 00020398E




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

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180 CONNECT INC.

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