SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

                  [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR

                  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                 for the quarterly period ended - June 30, 2008.

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                        COMMISSION FILE NUMBER 000-30392

                     ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.

               (Exact name of Company as specified in its charter)

          Florida                                                 13-4172059
------------------------------                               ------------------
State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization                                Identification No.)


                                 335 Connie Cr.
                         Concord Ontario Canada L4K 5R2 (Address of principal
        executive offices, including postal code.)

                                 (905) 695-4142 (Registrant's telephone number,
              including area code)

                         COMMON STOCK, $0.001 PAR VALUE
                                (Title of class)

Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Company was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. YES [X] NO [ ]

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

Large Accelerated Filer | | Accelerated Filer | | Non-Accelerated Filer | | (Do
not check if a smaller reporting Smaller reporting company [x] company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
YES [ ] NO [X]

There were 72,973,851 shares of the registrant's Common Stock outstanding as of
August 7, 2008.



<PAGE>


                                    FORM 10-Q

                     ENVIRONMENTAL SOLUTIONS WORLDWIDE INC.

                                TABLE OF CONTENTS

PAGE #


PART I. FINANCIAL INFORMATION

     Item 1.    Financial Statements.

                Consolidated Condensed Balance Sheets as of
                June 30, 2008 (unaudited) and December 31, 2007              F2

                Consolidated Condensed Statements of Operations and
                Comprehensive Loss for the Three Months and Six Months
                Ended June 30, 2008 and 2007 (unaudited)                     F3

                Consolidated Condensed Statements of Changes in
                Stockholders Equity (Deficit) for the Six Months
                Ended June 30, 2008                                          F4

                Consolidated Condensed Statements of Cash Flows for the
                Six Months Ended June 30, 2008 and 2007 (unaudited)          F5

                Notes to Consolidated Condensed Financial Statements
                (unaudited)                                                  F6

     Item 2.    Management's Discussion and Analysis of
                Financial Condition and Results of Operations.                2

     Item 3.    Quantitative and Qualitative Disclosures About Market Risk.  N/A



PART II. OTHER INFORMATION

     Item 1.    Legal Proceedings.                                           N/A

     Item 1A.   Risk Factors                                                 N/A

     Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds. N/A

     Item 3.    Defaults Upon Senior Securities.                             N/A

     Item 4.    Submission of Matters to a Vote of Security Holders.         N/A

     Item 5.    Other Information.                                           N/A

     Item 6.    Exhibits.                                                    14




<PAGE>


<TABLE>
<CAPTION>

                          ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
                            CONSOLIDATED CONDENSED BALANCE SHEET


                                                              (UNAUDITED)
                                                                JUNE 30,      DECEMBER 31,
                                                                  2008            2007
                                                              ------------    ------------
ASSETS

Current assets
<S>                                                           <C>             <C>
      Cash and cash equivalents (Note 4)                      $    154,417    $  2,891,088
      Accounts receivable, net of allowance
        for doubtful accounts of $23,035
        (2007 - $ NIL) (Note 2)                                    252,038         271,703
      Inventory (Note 5)                                         1,046,743       1,030,843
      Prepaid expenses and sundry assets                           243,818         138,713
                                                              ------------    ------------

           Total current assets                                  1,697,016       4,332,347

Property, plant and equipment under construction (Note 6)          201,260          18,622

Property, plant and equipment, net of accumulated
      depreciation of $ 3,000,751
      (2007 - $2,460,565) (Note 6)                               3,740,201       4,105,746

Patents and trademarks, net of accumulated
      amortization of $1,581,602
      (2007 - $1,475,077)                                          546,550         649,196
                                                              ------------    ------------

                                                              $  6,185,027    $  9,105,911
                                                              ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
      Accounts payable                                        $    473,434    $    145,352
      Accrued liabilities                                          650,052         459,533
      Notes payable to related party (Note 7)                    3,810,737       3,310,737
      Redeemable class A special shares (Note 8)                   453,900         453,900
      Current portion of capital lease obligation (Note 13)         14,039          13,032
                                                              ------------    ------------

           Total current liabilities                             5,402,162       4,382,554

Long Term Liabilities
      Capital lease obligation (Note 13)                            22,735          29,482
                                                              ------------    ------------

           Total liabilities                                     5,424,897       4,412,036
                                                              ------------    ------------

Commitments and contingencies (Note 13)

Stockholders' Equity (Note 10)(Note 11)
      Common stock, $0.001 par value, 125,000,000
           shares authorized; 72,973,851 shares
           issued and outstanding                                   72,972          72,972
      Additional paid-in capital                                25,679,407      25,665,761
      Accumulated other comprehensive income                       368,986         450,318
      Accumulated deficit                                      (25,361,235)    (21,495,176)
                                                              ------------    ------------

           Total stockholders' equity                              760,130       4,693,875
                                                              ------------    ------------

                                                              $  6,185,027    $  9,105,911
                                                              ============    ============

     The accompanying notes are an integral part of these interim financial statements
</TABLE>


                                             F2
<PAGE>

<TABLE>
<CAPTION>

                                          ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
                                      CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                    FOR THE THREE AND SIX MONTHS PERIOD ENDED JUNE 30,
                                                        (UNAUDITED)


                                                              THREE MONTHS ENDED JUNE 30           SIX MONTHS ENDED JUNE 30
                                                                 2008             2007               2008             2007
                                                             ------------     ------------       ------------     ------------
Revenue
<S>                                                          <C>              <C>                <C>              <C>
      Net sales                                              $     58,164     $  3,200,422       $    138,486     $  6,527,267

Cost of sales                                                      48,616        1,012,982            104,644        2,366,978
                                                             ------------     ------------       ------------     ------------

Gross profit                                                        9,548        2,187,440             33,842        4,160,289
                                                             ------------     ------------       ------------     ------------
Operating expenses
      Marketing, office and general costs                         992,310          843,430          2,015,693        1,842,339
      Research and development costs                              389,442          170,562            843,292          293,069
      Officers' compensation and directors fees                   145,722          129,000            296,312          966,235
      Consulting and professional fees                             37,787            7,130             89,973           29,367
      Foreign exchange gain                                       (21,595)         (22,893)           (57,446)         (25,103)
      Depreciation and amortization                               290,148          274,786            570,120          537,527
                                                             ------------     ------------       ------------     ------------

                                                                1,833,814        1,402,015          3,757,944        3,643,434
                                                             ------------     ------------       ------------     ------------

(Loss) and income from operations                              (1,824,266)         785,425         (3,724,102)         516,855

Write down of property, plant and equipment and patents      $       --               (140)      $       --               (140)
Interest on Long Term Debt                                           --            (61,000)              --           (122,000)
Interest on notes payable to related party                        (87,702)         (74,287)          (161,990)        (134,074)
Interest Income                                                     1,843           13,881             20,033           18,323
                                                             ------------     ------------       ------------     ------------

Net (loss)/income and Comprehensive loss                     $ (1,910,125)    $    663,879       $ (3,866,059)    $    278,964
                                                             ============     ============       ============     ============

(Loss)/income per share (Basic and diluted)                  $      (0.03)    $       0.01       $      (0.05)    $       0.00
                                                             ============     ============       ============     ============

Weighted average number of shares outstanding                  72,973,851       59,938,013         72,973,851       59,903,207
                                                             ============     ============       ============     ============


                     The accompanying notes are an integral part of these interim financial statements
</TABLE>




                                                            F3
<PAGE>

<TABLE>
<CAPTION>


                                              ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
                           CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                                            FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2008
                                                            (UNAUDITED)



                                                                                      Accumulated
                                                                       Additional        other
                                                 Common Stock            Paid-In      comprehensive    Accumulated
                                             Shares        Amount        Capital         income          Deficit          Total
                                         ------------   ------------   ------------   ------------    ------------    ------------

<S>                                    <C>                 <C>            <C>          <C>          <C>               <C>
December 31, 2006                          59,753,240   $     59,752   $ 18,243,710   $       --      $(19,331,555)   $ (1,028,093)

Net Loss                                         --             --             --             --        (2,163,621)     (2,163,621)

Stock based compensation                         --             --          776,271           --              --           776,271

Common stock issued from exercise
  of options                                  655,000            655        292,345           --              --           293,000

Common stock issued for services                6,722              6          4,994           --              --             5,000

Issuance of common stock for interest
  on debentures                               338,889            339        243,661           --              --           244,000

Issuance of common stock for principal
  on debentures                            12,200,000         12,200      6,087,800           --              --         6,100,000

Common stock issued from exercise
  of warrants                                  20,000             20         16,980           --              --            17,000

Foreign currency translation of
  Canadian subsidiaries                          --             --             --          450,318            --           450,318


December 31, 2007                          72,973,851   $     72,972   $ 25,665,761   $    450,318    $(21,495,176)   $  4,693,875
                                         ------------   ------------   ------------   ------------    ------------    ------------

Net loss                                         --             --             --             --        (3,866,059)     (3,866,059)

Stock based compensation                         --             --           13,646           --              --            13,646

Foreign currency translation of
  Canadian subsidiaries                          --             --             --          (81,332)           --           (81,332)
                                         ------------   ------------   ------------   ------------    ------------    ------------

June 30, 2008                              72,973,851   $     72,972   $ 25,679,407   $    368,986    $(25,361,235)   $    760,130



                         The accompanying notes are an integral part of these interim financial statements
</TABLE>



                                                                              F4
<PAGE>

<TABLE>
<CAPTION>

                            ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE SIX MONTHS PERIOD ENDED JUNE 30
                                          (UNAUDITED)

                                                                        2008          2007
                                                                    -----------    -----------

<S>                                                                 <C>            <C>
Net Loss                                                            $(3,866,059)   $   278,964
                                                                    -----------    -----------

Adjustments to reconcile net loss to net cash used in operating activities:
           Depreciation                                                 503,763        507,268
           Amortization                                                 106,525        105,848
           Provision (Recovery) for uncollectible accounts               23,035          4,330
           Interest on debentures                                          --          122,000
           Interest on notes                                            161,990        134,074
           Amortization of debenture warrant fair value                    --           88,000
           Common stock issued for services provided                       --            5,000
           Loss on disposal of property, plant and equipment               --              140
           Stock based compensation                                      13,646        776,271
                                                                    -----------    -----------
                                                                        808,959      1,742,931
Increase (decrease) in cash flows from operating activities resulting from
        changes in:
           Accounts receivable                                           (3,370)    (1,983,208)
           Inventory                                                    (15,900)       139,373
           Prepaid expenses                                            (105,105)      (102,555)
           Accounts payable and accrued liabilities                     356,612       (383,854)
                                                                    -----------    -----------
                                                                        232,237     (2,330,244)

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

Net cash used in operating activities                                (2,824,863)      (308,349)
                                                                    -----------    -----------

Investing activities:
           Acquisition of property, plant and equipment                (138,219)      (329,213)
           Property, plant and equipment under construction            (182,638)       (56,593)
           Increase in patents and trademarks                            (3,879)        (5,303)
                                                                    -----------    -----------

Net cash used in investing activities                                  (324,736)      (391,109)
                                                                    -----------    -----------

Financing activities:
           Repayment of notes payable to related party                     --         (500,000)
           Notes payable to related party                               500,000      1,085,340
           Issuance of common stock                                        --          103,000
           Capital lease obligation                                      (5,740)        (3,232)
                                                                    -----------    -----------

Net cash provided by financing activities                               494,260        685,108
                                                                    -----------    -----------

Net increase (decrease) in cash                                      (2,655,339)       (14,350)

Effect of foreign currency exchange rate on Canadian subsidiaries       (81,332)          --

Cash and cash equivalents, beginning of year                          2,891,088      1,393,294
                                                                    -----------    -----------


Cash and cash equivalents, end of period                            $   154,417    $ 1,378,944
                                                                    ===========    ===========

Supplemental disclosures:
Interest received                                                   $    20,033    $    18,323
                                                                    ===========    ===========


       The accompanying notes are an integral part of these interim financial statements
</TABLE>


                                               F5
<PAGE>





NOTE 1 - NATURE OF BUSINESS AND BASIS OF PRESENTATION

Environmental Solutions Worldwide Inc. (the "Company" or "ESW") is engaged in
the design, development, manufacturing and sales of environmental technologies
and testing services with its primary focus on the international on-road and
off-road diesel market. ESW currently manufactures and markets a line of
catalytic emission control and enabling technologies for a number of
applications.

The unaudited condensed consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United Sates of
America ("US GAAP"), which contemplate continuation of the company as a going
concern. The Company, however, has sustained operating losses and presently
lacks a sufficient source of commercial income, which creates uncertainty about
the Company's ability to continue as a going concern. The Company's ability to
continue operations as a going concern and to realize its assets and to
discharge its liabilities is dependent upon obtaining additional financing
sufficient for continued operations as well as the achievement and maintenance
of a profitable level of operations. Management believes the current business
plan if successfully implemented may provide an opportunity for the Company to
achieve profitable operations and allow it to continue as a going concern.

The Company has incurred significant losses to date, as of June 30, 2008, the
Company has an accumulated deficit of $25,361,235. The Company is pursuing
various financing initiatives; however, there is no assurance that the Company
will be successful in its financing efforts and in achieving sufficient cash
from operations. If the Company is unsuccessful, the Company may be required to
significantly reduce or limit operations. The application of the going concern
basis is dependent upon the Company obtaining additional financing to fund its
continuing operations and meet its obligations as they come due.

These consolidated financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts or the
amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern for a reasonable period of
time.

These statements have not been audited and should be read in conjunction with
the financial statements and the notes thereto included in our Annual Report on
Forms 10-KSB, and amendments thereto, as filed with the United States Securities
and Exchange Commission for the year ended December 31, 2007. The methods and
policies set forth in the year-end audited consolidated financial statements are
followed in these interim consolidated financial statements.

All adjustments considered necessary for fair presentation and of a normal
recurring nature have been included in these interim consolidated financial
statements. Revenues and operating results for the six months ended June 30,
2008 are not necessarily indicative of the results to be expected for the full
year.

                                       F6
<PAGE>


NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

BASIS OF CONSOLIDATION

The condensed consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, ESW America Inc., ESW Technologies
Inc., ESW Canada Inc. and BBL Technologies Inc. All inter-company transactions
and balances have been eliminated on consolidation. Amounts in the condensed
consolidated financial statements are expressed in U.S. dollars.

ESTIMATES

The preparation of consolidated financial statements in conformity with
Generally Accepted Accounting Principles in the United States 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 financial statements and the reported amounts of revenue and
expense during the reported period. Actual results could differ from those
estimates. Significant estimates include amounts for valuation of intangible
assets, share-based compensation, inventory and accounts receivable exposures.

CONCENTRATIONS OF CREDIT RISK

The Company's cash balances are maintained in various banks in Canada and the
United States. Deposits held in banks in the United States are insured up to
$100,000 for each bank by the Federal Deposit Insurance Corporation. The
balances at times may exceed these limits.

Accounts Receivable and Concentrations of Credit Risk: The Company performs
on-going credit evaluations of our customer's financial condition and generally
does not require collateral from our customers. Three of our customers accounted
for 43.3%, 17.7%, and 17.2%, respectively of the Company's revenue for the six
months ended June 30, 2008 and 16.8%, 1%, and nil, respectively of its accounts
receivable as at June 30, 2008. Three of our customers accounted for 90%, 2%,
and 1%, respectively of the Company's revenue as at December 31, 2007 and 56%,
2%, and 0%, respectively of its accounts receivable as at December 31, 2007.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company extends unsecured credit to its customers in the ordinary course of
business but mitigates the associated credit risk by performing credit checks
and actively pursuing past due accounts. An allowance for doubtful accounts is
estimated and recorded based on management's assessment of the credit history
with the customer and current relationships with them. On this basis, management
has determined that a reserve of $23,035 was appropriate as at June 30, 2008 and
that a reserve of nil was appropriate as at December 31, 2007.


                                       F7
<PAGE>


PROPERTY, PLANT AND EQUIPMENT UNDER CONSTRUCTION

The Company capitalizes at cost, customized equipment built to be used in the
future day to day operations. Once complete and available for use, the cost for
accounting purposes is transferred to property, plant and equipment, where
normal depreciation rules apply.

PATENTS AND TRADEMARKS

Patents and trademarks consist primarily of the costs incurred to acquire them
from an independent third party. The Statement of Financial Accounting Standards
("SFAS") No. 142 "Goodwill and Other Intangible Assets," requires intangible
assets with a finite life be tested for impairment whenever events or
circumstances indicate that a carrying amount of an asset (or asset group) may
not be recoverable. An impairment loss would be recognized when the carrying
amount of an asset exceeds the estimated discounted cash flow used in
determining the fair value of the asset. We conducted our test for impairment in
the fourth quarter of 2007 and found no impairment.

Patents and trademarks are being amortized on a straight-line basis over their
estimated life of ten years. Amortization expense for the period ended June 30,
2008 and 2007 were $106,525 and $105,848 respectively.

INVENTORY

Inventory is stated at the lower of cost (first-in first-out) or market.
Inventory is periodically reviewed for use and obsolescence, and adjusted as
necessary. Inventory consists of raw materials, work in progress and finished
goods.

REVENUE RECOGNITION

The Company derives revenue primarily from the sale of its catalytic products.
In accordance with SEC Staff Accounting Bulletin No. 104, "Revenue Recognition",
revenue is recognized when persuasive evidence of an arrangement exists,
delivery has occurred, the amount is fixed and determinable, risk of ownership
has passed to the customer and collection of the resulting receivable is
reasonably assured.

The Company also derives revenue (less than 5.4% of total revenue) from
providing air testing and environmental certification services. Revenues from
these services are recognized upon performance of service.

RESEARCH AND DEVELOPMENT

The Company is engaged in research and development work. Research and
development costs, other than for the acquisition of property, plant, and
equipment, are charged as operating expense of the Company as incurred. Any
grant money received for research and development work will be used to offset
these expenditures. For the six month period ended June 30, 2008 and 2007 the
Company expensed $843,292 and $293,069 respectively towards research and
development costs. For the six month period ended June 30, 2008 and 2007, grant
money amounted to $177,205.68 and nil, respectively.

                                       F8
<PAGE>


NOTE 3 - RECENTLY ISSUED ACCOUNTING STANDARDS

In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
163, "Accounting for Financial Guarantee Insurance Contracts - An interpretation
of FASB Statement No. 60". SFAS 163 requires that an insurance enterprise
recognize a claim liability prior to an event of default when there is evidence
that credit deterioration has occurred in an insured financial obligation. It
also clarifies how Statement 60 applies to financial guarantee insurance
contracts, including the recognition and measurement to be used to account for
premium revenue and claim liabilities, and requires expanded disclosures about
financial guarantee insurance contracts. It is effective for financial
statements issued for fiscal years beginning after December 15, 2008, except for
some disclosures about the insurance enterprise's risk-management activities.
SFAS 163 requires that disclosures about the risk-management activities of the
insurance enterprise be effective for the first period beginning after issuance.
Except for those disclosures, earlier application is not permitted. The Company
is currently evaluating the impact of SFAS No. 163 on its financial statements,
and the adoption of this statement is not expected to have a material effect on
the Company's financial statements.


In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles". SFAS 162 identifies the sources of accounting principles
and the framework for selecting the principles to be used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with generally accepted accounting principles in the United States.
It is effective 60 days following the SEC's approval of the Public Company
Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present
Fairly in Conformity With Generally Accepted Accounting Principles". The Company
is currently evaluating the impact of SFAS No. 162 on its financial statements,
and the adoption of this statement is not expected to have a material effect on
the Company's financial statements.


In March 2008, the FASB issued SFAS No. 161, Disclosures About Derivative
Instruments and Hedging Activities, an Amendment of FASB Statement No. 133
("SFAS 161"). SFAS 161 changes the disclosure requirements for derivative
instruments and hedging activities. Entities are required to provide enhanced
disclosures about (1) how and why an entity uses derivative instruments, (2) how
derivative instruments and related hedged items are accounted for under SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"),
and its related interpretations, and (3) how derivative instruments and related
hedged items affect an entity's financial position, financial performance, and
cash flows. SFAS 161 is effective for fiscal years beginning after November 15,
2008. The Company will be required to adopt SFAS 161 in the first quarter of
2009. We currently do not have any derivative financial instruments subject to
accounting or disclosure under SFAS 133; therefore, we do not expect the
adoption of SFAS 161 to have any effect on our consolidated statement of
financial position, results of operations or cash flows.

                                       F9
<PAGE>


In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations" ("SFAS 141R"). SFAS 141R establishes principles and requirements
for how a company recognizes assets acquired, liabilities assumed, contractual
contingencies and contingent consideration measured at fair value at the
acquisition date. The Statement also establishes disclosure requirements which
will enable users to evaluate the nature and financial effect of the business
combination. SFAS 141R is effective for fiscal years beginning after December
15, 2008. The Company will consider the effect of SFAS 141 and it's impact on
any future acquisitions.

In December 2007, the FASB issued SFAS No. 160 "Noncontrolling Interests in
Consolidated Financial Statements - an amendment of ARB No. 51" ("SFAS 160").
SFAS 160 establishes accounting and reporting standards for ownership interests
in subsidiaries held by parties other than the parent, the amount of
consolidated net income attributable to the parent and to the noncontrolling
interest, changes in a parent's ownership interest and the valuation of retained
noncontrolling equity investments when a subsidiary is deconsolidated. The
Statement also establishes reporting requirements that provide sufficient
disclosures that clearly identify and distinguish between the interest of the
parent and the interest of the noncontrolling owners. SFAS 160 is effective for
fiscal years beginning after December 15, 2008. The Company does not expect the
adoption of SFAS 160 to have any impact on its financial position, results of
operation or cash flows.

In February 2007, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities - including an amendment
of FASB Statement No. 115," (SFAS 159). SFAS 159 permits entities to choose to
measure many financial instruments and certain other assets and liabilities at
fair value on an instrument-by-instrument basis (the fair value option). SFAS
159 becomes effective for the Company on January 1, 2008. The Company has
evaluated the adoption of this statement and concluded that it did not have any
material impact on the financial statements.

NOTE 4 - CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash and highly liquid investments purchased
with an original or remaining maturity of three months or less at the date of
purchase.

NOTE 5 - INVENTORY

Inventory is summarized as follows:

                                          JUNE 30, 2008   DECEMBER 31, 2007
                                         ---------------  -----------------
                       Raw materials         $   775,367        $   761,832
                       Work-In-Process           249,660            251,358
                       Finished goods             21,716             17,653
                                              ----------         ----------
                                              $1,046,743         $1,030,843
                                              ==========         ==========

                                       F10
<PAGE>



NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

                                             June 30, 2008   DECEMBER 31, 2007
                                             ---------------  -----------------
          Plant, machinery and equipment         $ 5,021,119      $ 4,966,177
          Office equipment                           285,991          242,098
          Furniture and fixtures                     424,426          421,550
          Vehicles                                    12,014           12,014
          Leasehold improvements                     997,402          924,472
                                                 -----------      -----------
                                                   6,740,952        6,566,311
          Less: accumulated depreciation          (3,000,751)      (2,460,565)
                                                 -----------      -----------

                                                 $ 3,740,201      $ 4,105,746
                                                 ===========      ===========


As at June 30, 2008 and December 31, 2007, the Company had $201,260 and $18,622,
respectively, of customized equipment under construction.

The office equipment above includes $17,665 in assets under capital lease with a
corresponding accumulated depreciation of $9,874 at the period ended June 30,
2008. As at December 31, 2007 office equipment included $17,665 in assets under
capital lease with a corresponding accumulated depreciation of $7,879.

The Plant, machinery and equipment above includes $33,957 in assets under
capital lease with a corresponding accumulated depreciation of $8,133 at the
period ended June 30, 2008. As at December 31, 2007, Plant, machinery and
equipment above includes $33,957 in assets under capital lease with a
corresponding accumulated depreciation of $4,347.

NOTE 7 - NOTES PAYABLE

The Company has three unsecured subordinated promissory notes in the principal
amount of $2,308,148, $1,002,589 and $ 500,000, respectively.

In accordance with the terms of the Consolidated Note in the principal amount of
$2,308,148, same will be due and payable to Holder upon demand. The Consolidated
Note bears interest at a rate of 9% per annum if principal and interest are paid
by the Company in cash, or if principal and interest are paid in shares of
restricted common stock of the Company, the Consolidated Note will bear interest
at a rate of 12% per annum. The Company may repay the Consolidated Note without
penalty at any time. The Note was issued to a company controlled by a trust of
which a director and shareholder of our Company is the beneficiary. The holder
of the Note has the option to receive payment of principal and all accrued
interest in the form of restricted shares of the Company's common stock, par
value ($0.001) with cost free piggyback registration rights. Under this
repayment option, interest will be calculated at 12% per annum.

The Consolidated Note in the principal amount of $1,002,589 bears interest at a
rate of 9% per annum and is payable upon demand. The Company may repay the
Consolidated Note without penalty at any time. The Note was issued to a director
and shareholder of our Company.

As at June 30, 2008 and December 31, 2007 $420,874 and $258,855, respectively,
of interest payable has been accrued on the two promissory notes in the total
principal amount of $3,810,737.

                                       F11
<PAGE>


Effective June 2, 2008 the Company entered into a Credit Facility Agreement with
Bengt Odner a director and shareholder of the Company. Pursuant to the
Agreement, the Company can request draw down(s) under the Facility of up to
$1,500,000 in the aggregate with funds to be used for general working capital
purposes. All request(s) to draw down under the Facility are subject to Mr.
Odner's consent and approval. An approved draw down by the Company under the
Facility will be represented by a 9% unsecured subordinated demand promissory
note issued by the Company to Mr. Odner or his designee. The Company may repay
the Note at anytime without penalty. At the option of the Note holder, in lieu
of cash, principal and interest earned on the Note can be repaid in restricted
common stock of the Company. Should the Note holder elect to receive stock of
the Company, interest on principal will be calculated at a rate of 12% per
annum. The number of shares of Common Stock to be issued in satisfaction of
interest and principal shall be determined by dividing the principal and accrued
interest by the greater of 105% of the twenty (20) day average closing price of
the Company's Common Stock immediately preceding the date the Note holder elects
to have the Note satisfied with Common Stock, or the Closing Price on that date.
Under no circumstance can the conversion price be below the fair market price of
the Company's Common Stock on the date the Note holder elects to have the Note
satisfied with Common Stock. The Company may request draw down(s) under the
Facility through December 31, 2008.

On June 2, 2008, concurrent with entering into the Credit Facility Agreement,
the Company issued a Request for Issuance pursuant to the terms of the Facility
for the sum of $500,000 with said funds to be used for general working capital.
The Request for Issuance was approved and the Company issued a $500,000 Note in
favor of Mr. Odner. As at June 30, 2008 $3,575 of interest payable has been
accrued on the $500,000 promissory note.



NOTE 8 - REDEEMABLE CLASS A SPECIAL SHARES

        700,000 Class A special shares      $ 453,900 (based on the historical
        Authorized, issued, and             exchange rate at the time of
        outstanding. issuance.)


The Class A special shares are issued by the Company's wholly-owned subsidiary
BBL Technologies, Inc. ("BBL") without par value, and are redeemable on demand
by the Holder of the shares which is a private Ontario Corporation at $700,000
CDN (which translates to $686,476 USD at June 30, 2008). As the Class A special
shares were issued by the Company's wholly-owned subsidiary BBL, the maximum
value upon which the Company is liable is the net book value of BBL. As at June
30, 2008 BBL has an accumulated deficit of $1,198,092 USD ($1,850,874 CDN as at
June 30, 2008) and therefore, the holder would be unable to redeem the Class A
special shares at their ascribed value.

NOTE 9 - INCOME TAXES

As at June 30, 2008, there are loss carryforwards for Federal income tax
purposes of approximately $19,034,826 available to offset future taxable income
in the United States. The carryforwards expire in various years through 2026.
The Company does not expect to incur a Federal income tax liability in the
foreseeable future. Accordingly, a valuation allowance for the full amount of
the related deferred tax asset of approximately $6,662,190 has been established
until realizations of the tax benefit from the loss carryforwards are more
likely than not.

Additionally, as at June 30, 2008, the Company's two wholly owned Canadian
subsidiaries had loss carryforwards of approximately $2,873,195 be used, in
future periods, to offset taxable income. The deferred tax asset of
approximately $1,037,223 has been fully offset by a valuation allowance until
realization of the tax benefit from the loss carryforwards are more likely than
not.

                                       F12
<PAGE>

<TABLE>
<CAPTION>

                                                                          For the period ended
                                                                               June 30,
                                                                         2008           2007
                                                                     -----------     -----------
                Statutory tax rate:

<S>                                                                          <C>             <C>
          U.S                                                                35.0%           35.0%
          Foreign                                                            36.1%           36.1%

  Income (loss) before income taxes:

          U.S                                                         $(1,995,140)    $(2,778,393)
          Foreign                                                      (1,870,919)      3,057,357
                                                                      -----------     -----------
                                                                      $(3,866,059)    $   278,964
                                                                      -----------     -----------
  Expected income tax (recovery) expense                              $(1,373,701)    $   131,268

  Differences in income tax resulting from:

          Depreciation (Foreign operations)                           $    44,005     $    43,639
          Stock Based Compensation                                          4,776         271,694
                                                                      -----------     -----------
                                                                      $(1,324,920)    $   446,601

  Benefit of losses (gains) not recognized                              1,324,920     $  (446,601)
                                                                      -----------     -----------
  Income tax provision (recovery) per financial statements            $         0     $         0
                                                                      -----------     -----------


                Deferred income tax assets and liabilities consist of the
  following difference:

                                                                               As at
                                                                               June 30,
                                                                         2008            2007
                                                                     ------------    ------------

  Assets

             Capital Assets - Tax Basis (Foreign operations only)    $  1,099,539    $  1,754,800
             Capital Assets - Book Value (Foreign operations only)     (1,664,682)     (1,983,681)
                                                                     ------------    ------------
             Net Capital Assets                                      $   (565,143)   $   (228,881)
             Tax loss carry forwards                                   21,908,021      16,856,852
                                                                     ------------    ------------
  Net temporary differences (foreign operations only)                $ 21,342,878    $ 16,627,971

             Statutory tax rate:

             Foreign                                                         36.1%           36.1%

  Temporary differences (foreign operations only)                       7,704,779       6,002,698
             Valuation Allowance                                       (7,704,779)     (6,002,698)
                                                                     ------------    ------------
             Carrying Value                                          $          0    $          0
                                                                     ============    ============
</TABLE>


                                       F13
<PAGE>


Effective January 1, 2007, the company adopted the provisions of FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an
interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48 prescribes a
recognition threshold and a measurement attribute for the financial statement
recognition and measurement of tax positions taken or expected to be taken in a
tax return. For those benefits to be recognized, a tax position must be
more-likely-than-not to be sustained upon examination by taxing authorities.
There was not a material impact on the company's consolidated financial position
and results of operations as a result of the adoption of the provisions of FIN
48. The Company does not believe there will be any material changes in its
unrecognized tax positions over the next twelve months.

The Company will recognize interest and penalties related to unrecognized tax
benefits within the income tax expense line in the consolidated statement of
operations. Accrued interest and penalties will be included within the related
tax liability line in the consolidated balance sheet.

In many cases the Company's uncertain tax positions are related to tax years
that remain subject to examination by tax authorities. The following describes
the open tax years, by major tax jurisdiction, as of June 30, 2008:

              United States - Federal                   2004 - present
              United States - State                     2004 - present
              Canada - Federal                          2005 - present
              Canada - Provincial                       2005 - present


Valuation allowances reflect the deferred tax benefits that management is
uncertain of the ability to utilize in the future.

NOTE 10 - ISSUANCE OF COMMON STOCK

For the six months ended June 30, 2008 there was nil issuance of common shares.

NOTE 11 - STOCK OPTIONS AND WARRANT GRANTS

A total of $13,646 and $776,271 for stock based compensation has been recorded
as at June 30, 2008 and 2007, respectively. The Company used the simplified
method for computing the expected term of the option.

On February 7, 2008 the board of directors granted the aggregate award of
400,000 stock options to five employees, two executive officers and one
director. The options have immediate vesting with an exercise price of $0.71 and
$1.00 per share (above fair-market value at the date of grant) with exercise
periods ranging from three and five years from the date of award.

On February 13, 2007 the board of directors granted the aggregate award of
2,450,000 stock options to eight employees, two executive officer/directors and
four outside directors. The options have immediate vesting with an exercise
price of $0.71 per share (fair-market value at the date of grant) with exercise
periods ranging from three and five years from the date of award.

                                       F14
<PAGE>


A summary of option transactions, including those granted pursuant to the terms
of certain employment and other agreements is as follows:

                                                STOCK              WEIGHTED
                                               PURCHASE             AVERAGE
                                               OPTIONS          EXERCISE PRICE
                                           ----------------    ---------------

          Outstanding, January 1, 2007         5,246,667             $0.60
          Granted                              2,450,000             $0.71
          Expired                                (45,000)           ($0.50)
          Exercised                             (655,000)           ($0.45)
                                              ----------            ------
          Outstanding, December 31, 2007       6,996,667             $0.65
          Granted                                100,000             $0.71
          Granted                                300,000             $1.00
          Expired                                (35,000)           ($0.50)
                                              ----------            ------
          Outstanding, June 30, 2008           7,361,667             $0.67


At June 30, 2008, the outstanding options have a weighted average remaining life
of 25 months.

The weighted average fair value of options granted during 2008 and 2007 was
$0.93 and $0.71 respectively and was estimated using the Black-Scholes
option-pricing model, and the following assumptions:

                                               2008           2007
                                            --------       --------
                 Expected volatility           49-52%         56-69%
                 Risk-free interest Rate       3.00%          5.00%
                 Expected life            1.5 to 2.5 yrs   1.5 to 2.5 yrs
                 Dividend yield                0.00%          0.00%
                 Forfeiture rate               0.00%          0.00%


                                       F15
<PAGE>


The Black-Scholes model used by the Company to calculate options and warrant
values, were developed to estimate the fair value of freely tradable, fully
transferable options without vesting restrictions, which significantly differ
from the Company's stock purchase options and warrants. These models also
require highly subjective assumptions, including future stock price volatility
and expected time until exercise, which greatly affect the calculated values.
Accordingly, management believes that this model does not necessarily provide a
reliable single measure of the fair value of the Company's stock options and
warrants.

At June 30, 2008, the Company had outstanding options as follows:

       NUMBER OF OPTIONS        EXERCISE PRICE      EXPIRATION DATE
       ----------------        --------------      ---------------
                250,000            0.27            August 6, 2013
                 50,000            0.45            April 20, 2009
                500,000            0.50            May 1, 2009
              1,750,000            0.50            August 11, 2009
                150,000            0.50            December 1, 2009
                150,000            0.50            July 31, 2008
                666,667            0.66            September 10,2008
                300,000            0.71            February 16, 2010
              2,150,000            0.71            February 16, 2012
                200,000            1.00            July 31, 2008
                795,000            1.00            December 31, 2010
                100,000            0.71            February 3, 2011
                200,000            1.00            February 7, 2011
                100,000            1.00            February 7, 2013
        ---------------
              7,361,667
        ---------------


Warrants issued in connection with various private placements of equity
securities, are treated as a cost of capital and no income statement recognition
is required. A summary of warrant transactions is as follows:

                                                                     WEIGHTED
                                                      WARRANT        AVERAGE
                                                      SHARES     EXERCISE PRICE
                                                     ----------  --------------
            Outstanding, January 1, 2007              6,322,500      $   0.93
            Granted                                        --             --
            Exercised                                   (20,000)     $  (0.85)
            Expired                                  (3,030,000)     $  (0.85)
                                                     ----------      --------
            Outstanding, December 31, 2007            3,272,500      $   1.28
            Granted                                        --             --
            Exercised                                      --             --
            Expired                                  (1,700,000)     $ (1.28)
                                                     ----------      --------
           Outstanding,  June 30, 2008                1,572,500      $   1.28
                                                     ----------      --------


                                       F16
<PAGE>


Outstanding warrants as of June 30, 2008:

           NUMBER OF WARRANT SHARES     EXERCISE PRICE       EXPIRATION DATE
           ------------------------     --------------       -----------------

                1,202,500                  0.90    (A)       July 5, 2008
                  185,000                  2.00              July 5, 2008
                  185,000                  3.00              July 5, 2008
                ---------
                1,572,500
                ---------


(A) Contain certain anti-dilution provisions.

NOTE 12 - RELATED PARTY TRANSACTIONS

During the period ended June 30, 2008 and 2007, the Company paid shareholders
and their affiliates $62,500 and nil, respectively for various services rendered
in addition to salaries and reimbursement of business expenses. All transactions
are recorded at the exchange amounts. A director and shareholder of the company,
provides consulting services to the company under a consulting agreement. The
agreement provides for a monthly retainer of $12,500 per month. Any one
transaction or combination attributed to one individual or entity exceeding
$120,000 on an annual basis has been disclosed.

The Company has three unsecured subordinated promissory notes in the principal
amount of $2,308,147, $1,002,589 and $500,000. The $2.3 million Note was issued
to a company controlled by a trust of which a director and shareholder of our
Company is the beneficiary. Total interest accrued on the $2.3 million
consolidated Note for the quarter ended June 30, 2008 amounted to $295,824. The
$1.0 million and $0.5 million Note were issued to a director and shareholder of
our Company. Total interest accrued on the $1.0 million and $0.5 million Note
for the quarter ended June 30, 2008 amounted to $121,476 and $3,575
respectively. (See Note 7).

NOTE 13 - COMMITMENTS AND CONTINGENCIES

LEASES

Effective November 24, 2004, the Company's wholly owned subsidiary ESW America
Inc. entered into a lease agreement for approximately 40,220 square feet of
leasehold space at 2 Bethlehem Pike Industrial Center, Montgomery Township,
Pennsylvania. The leasehold space houses the Company's research and development
facilities. The lease commenced on January 15, 2005 and expires January 31,
2010.

Effective December 20, 2004, the Company's wholly owned subsidiary ESW Canada
Inc. entered into an offer to Lease agreement for approximately 50,000 square
feet of leasehold space in Concord Ontario Canada. The leasehold space houses
the Company's executive offices and a high volume manufacturing plant. The
possession of the leasehold space took place on May 24, 2005 and the term of the
lease will run for a period of 5 years from the commencement date of July 15,
2005.

The following breakdown is the total, of the minimum annual lease payments, for
both leases.

                        2008      $ 241,857
                        2009        489,893
                        2010        169,534


The Company has no pending lawsuits.

                                       F17
<PAGE>


CAPITAL LEASE OBLIGATION

The Company is committed to the following lease payments in connection with the
acquisition of capital assets under capital leases:

                  2008                                     $   8,846
                  2009                                        17,691
                  2010                                        10,443
                  2011                                         2,282
                  2012                                           951
                                                           ---------
                                                           $  40,213

                  Less imputed interest                        3,439
                                                           ---------
                  Total obligation under capital lease        36,774

                  Less current portion                        14,039
                                                           ---------
                  Total long-term portion                  $  22,735
                                                           =========


The Company has incurred $3,439 interest expense on capital leases for the year.

NOTE 14 - LOSS PER SHARE
Potential common shares of 7,361,667 related to ESW's outstanding stock options
and potential common shares of 1,572,500 related to ESW's outstanding Warrants
were excluded from the computation of diluted earnings/(loss) per share for the
year ended June 30, 2008. As at June 30, 2007, 995,000 antidilutive stock
options and 6,322,500 antidilutive stock warrants have been excluded from the
computation of diluted earnings per share as the effect of inclusion of these
shares and the related interest expense would have been antidilutive.

The reconciliation of the number of shares used to calculate the diluted loss
per share is estimated as follows:

<TABLE>
<CAPTION>

                                              For the Six Month Period ended    For the Three Month Period ended
                                                      Ended June 30,                    Ended June 30,

                                                     2008           2007               2008           2007
Numerator

<S>                                             <C>              <C>               <C>             <C>
Net (Loss) / earnings for the year              $ (3,866,059)    $   278,964       $ (1,910,125)   $ (1,401,759)
Interest on debentures                          $          0     $   122,000       $          0    $     61,000
Amortization of debenture fair value            $          0     $    88,000       $          0    $     44,000
Interest on note                                $    161,990     $   101,946       $     87,702    $        --
                                                ------------------------------------------------------------------
                                                $ (3,704,069)    $   590,910       $ (1,822,423)   $ (1,296,759)

Denominator

Weighted average number of shares outstanding     72,973,851      59,903,207          72,973,851      58,902,570
Dilutive effect of :
Stock options                                           --         6,426,667                --            --
Warrants                                                --            --                    --            --
Convertible Debt conversion                             --        12,200,000                --            --
Note Payable Conversion                                 --         3,853,000                --            --
                                                ------------------------------------------------------------------
Diluted weighted average shares outstanding             --        82,382,874                --            --
</TABLE>

                                       F18
<PAGE>




NOTE 15 - COMPARATIVE FIGURES

Certain 2007 figures have been reclassified to conform to the financial
statements presentation adopted in 2008.



NOTE 16 - SUBSEQUENT EVENTS

Effective July 17, 2008 the Company completed a second drawdown in the sum of
$300,000 under the $1,500,000 Credit Facility Agreement with Mr. Bengt Odner
(See Note 7). Pursuant to the Agreement, the Company requested drawdown(s) under
the Facility of $300,000 for general working capital purposes. The drawdown
under the facility was approved and was provided for in the sum of $150,000 each
from Mr. Odner and Mr. Louis Edmondson also a shareholder of the Company who by
separate agreement with Mr. Odner and the Company agreed to provide funding to
the Company under the Facility in connection with the drawdown(s).The sums
received by the Company in connection with the drawdowns are represented by 9%
unsecured subordinated demand promissory notes issued by the Company to Mr.
Odner and Mr. Edmondson each in the amount of $150,000 pursuant to the Facility.

In a separate Agreement, Mr. Edmondson also advanced the Company's wholly owned
subsidiary ESW America the sum of $125,000 in connection with research cost
incurred. ESW America has assigned its interest to Mr. Edmondson in grant moneys
up to $125,000 anticipated to be awarded to it for said research.




                                       F19


<PAGE>



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The following discussion should be read in conjunction with our Financial
Statements and Notes thereto included elsewhere in this Report.

This Form 10-Q contains certain forward-looking statements regarding, among
other things, the anticipated financial and operating results of our business.
Investors are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. We undertake no obligation
to publicly release any modifications or revisions to these forward-looking
statements to reflect events or circumstances occurring after the date hereof or
to reflect the occurrence of unanticipated events. In connection with the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995, we
caution investors that actual financial and operating results may differ
materially from those projected in forward-looking statements made by, or on
behalf of, us. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause the actual results, performance,
or achievements to be materially different from any future results, performance,
or achievements expressed or implied by such forward-looking statements. This
report should be read in conjunction with our Annual Report on Forms 10-KSB, and
amendments thereto for the year ended December 31, 2007 as filed with the
Securities and Exchange Commission.

GENERAL OVERVIEW

Environmental Solutions Worldwide Inc. is a publicly traded company engaged
through its wholly owned subsidiaries ESW Canada Inc. and ESW America Inc. (the
ESW Group of Companies) in the design, development, ISO 9001:2000 certified
manufacturing and sales of environmental technologies. The ESW Group of
Companies currently manufacture and market a diversified line of catalytic
emission control products and support technologies for diesel, gasoline and
alternative fuelled engines. The ESW Group of Companies also operates a
comprehensive EPA/CARB/MSHA recognized emissions testing and verification
laboratory.

Our primary business objective is to capitalize on the growing global
requirement of reducing emissions, by offering catalyst technology solutions to
the market and build upon our military product lines to continue sales to the
U.S. and NATO countries. We have and continue to seek to develop relationships
with OEM's of engines for both automotive and other markets. As part of our
efforts to grow our business, as well as to achieve increased production and
distribution efficiencies we have and continue to make capital investments in
manufacturing capability to support our products as well as expensing money on
research and development in order for new products to be developed that meet the
new legislative regulations.

The field of emission control is very complex and requires a variety of
different technologies to be employed. We are currently developing additional
products that meet the needs of our customers and which meet industry standards.
We have partnered with several strategic alliances assuring immediate access to
leading edge technologies that address the needs of our global customer base.

Both our facilities are in full compliance with ISO 9001:2000. We currently hold
a full registration certificate effective until March 2010 for ESW America and
January 2010 for ESW Canada.

                                        2
<PAGE>


Our largest customer is International Truck and Engine Corporation
(International), the operating company of Navistar International Corporation. On
November 8, 2007 we announced that we signed an Emissions Control and
Technologies Provider and Cooperation agreement with International. Our
relationship with International has been and will continue to be of singular
importance to our near term growth. In 2007 our revenues from sales to end
users, through International, was 90% of total revenues, or approximately $ 8.4
million. We expect this percentage of revenue will be significant in the future
as a result of sales of diesel catalytic converter products that are currently
being verified by the EPA and CARB, and which subsequently will be branded and
marketed by the "Green Diesel Technology" division. Being North America's
biggest diesel engine, truck and bus manufacturer, International has the
potential to capture a significant share of the retrofit truck and bus market in
the U.S. and provides us direct access to that market. We expect that
International will be important to our growth for ESW technology products, and
our other products worldwide.

We also intend to continue our efforts to develop innovative products and
manufacturing processes to serve our customers better globally and improve our
product mix and profit margins. This quarter we expensed $389,442 in research
and development costs, a major increase over last period. We are reducing our
dependence on our current proprietary products by introducing new products and
systems and acquiring other product lines. Sales depend on the success of
efforts to develop and market the products, and there can be no certainty that
those efforts will succeed.

As we have a substantial amount of indebtedness, our ability to generate cash,
both to fund operations and service our debt, is also a significant area of
focus for our Company. See "Liquidity and Capital Resources" below for further
discussion of cash flows.



COMPARISON OF THREE MONTH PERIOD ENDED JUNE 30, 2008 TO THREE MONTH PERIOD ENDED
JUNE 30, 2007

RESULTS OF OPERATIONS

The following management's discussion and analysis of financial condition and
results of operations (MD&A) should be read in conjunction with the MD&A
included in our Annual Report on Forms 10-KSB, and amendments thereto for the
year ended December 31, 2007

Revenues for the three month period ended June 30, 2008 decreased by $3,142,258
or 98.2 percent, to $58,164 from $3,200,422 for the three month period ended
June 30, 2007. There was a net loss for the quarter which amounted to
$1,910,125. The revenue decline can be attributed to the fact that the last
period included the sale of 400 shroud Scat-R-shield units to the U.S. military
which did not recur in the current period. In the current period the company
focused its efforts on developing the next generation of diesel catalyst
products to meet new regulations; these products are expected to generate
revenues in the latter part of 2008.

                                        3
<PAGE>


Cost of sales as a percentage of revenues for the three month period ended June
30, 2008 was 83.6 percent compared to 31.7 percent for the three month period
ended June 30, 2007. The gross margin for the three month period ended June 30,
2008 was 16.4 percent as compared to a gross margin of 68.3 percent for the
three month period ended June 30, 2007. The relatively low orders produced in
this period were mainly sample or prototype orders that have low volumes
associated with production. Efficient economies of scale would be achieved on
higher volumes.

Marketing, office and general expenses for the three month period ended June 30,
2008 increased by $148,880, or 17.7 percent, to $992,310 from $843,430 for the
three month period ended June 30, 2007. The increase is primarily due to
increases in sales and marketing salaries and wages of $93,918 as we had more
staff to support our internal sales infrastructure in preparation for the
release of our new products. Facility costs were higher over the previous period
by $64,108 as a result of low sales volumes. Administration salaries and wages
were higher by $63,190 in support of our research and development programs.
General and administration cost increased by $8,166 and investor relations
expense was higher by $2,095. These increases were offset by decreases in the
following areas. Debt accretion decreased by $44,000 as we had no outstanding
convertible debt this period and plant related expenses were lower by $38,597

Research and development expenses for the three month period ended June 30, 2008
increased by $218,880, or 128.3 percent, to $389,442 from $170,562 for the three
month period ended June 30, 2007. As planned, we continue to aggressively pursue
testing and research and development in our efforts to develop innovative
products to serve our customers and improve our product mix and profit margins.
We believe that this expenditure will result in increase orders for our
products.

Officer's compensation and director's fees for the three month period ended June
30, 2008 increased by $16,722 or 13.0 percent, to $145,722 from $129,000 for the
three month period ended June 30, 2007. The main reason for increase in
Officers' compensation and directors' fees was the addition of two new officers
in February 2008.

Consulting and professional fees for the three month period ended June 30, 2008
increased by $30,657 or 430.0 percent, to $37,787 from $7,130 for the three
month period ended June 30, 2007. The increase is mainly attributed to audit
fees and tax consulting fees.

Foreign exchange gain for the three month period ended June 30, 2008 increased
by $1,298 to $21,595 from $22,893 for the three month period ended June 30, 2007
as a result of the weakening of the Canadian Dollar to the United States Dollar.

Depreciation and amortization expense for the three month period ended June 30,
2008 increased by $15,362, or 5.6 percent to $290,148 from $274,786 for the
three month period ended June 30, 2007

Interest expense on the three notes payable was $87,702 for the three month
period ended June 30, 2008 as compared to $74,287 for the three month period
ended June 30, 2007. The Company may prepay the Consolidated Note without
penalty at any time.

                                        4
<PAGE>


COMPARISON OF SIX MONTH PERIOD ENDED JUNE 30, 2008 TO SIX MONTH PERIOD ENDED
JUNE 30, 2007

RESULTS OF OPERATIONS

Revenues for the six month period ended June 30, 2008 decreased by $6,388,781 or
97.9 percent, to $138,486 from $6,527,267 for the six month period ended June
30, 2007. The net loss for the six month period ended June 30, 2008 amounted to
$3,866,059. The revenue decline can be attributed to the fact that the previous
period included the sale of 700 shroud Scat-R-shield units to the U.S. military
which did not reoccur in the current period. In the current period the company
focused its efforts on developing the next generation of diesel catalyst
products to meet new regulations; these products are expected to generate
revenues in the latter part of 2008.

Cost of sales as a percentage of revenues for the six month period ended June
30, 2008 was 75.6 percent compared to 36.3 percent for the six month period
ended June 30, 2007. The gross margin for the six month period ended June 30,
2008 was 24.4 percent as compared to a gross margin of 63.7 percent for the six
month period ended June 30, 2007. The relatively low orders produced in this
period were mainly sample or prototype orders that have low volumes associated
with production. Efficient economies of scale would be achieved on higher
volumes.

Marketing, office and general expenses for the six month period ended June 30,
2008 increased by $173,354, or 9.4 percent, to $2,015,693 from $1,842,339 for
the six month period ended June 30, 2007. The increase is primarily due to
increases in sales and marketing salaries and wages of $245,398 as we had more
staff to support our internal sales infrastructure in preparation for the
release of our new products. As well we participated in industry trade shows.
Facility costs were higher over the previous period by $139,102 as a result of
low sales volumes. Administration salaries and wages were higher by $40,685 in
support of our research and development programs. These increases were offset by
decreases in the following areas. Debt accretion decreased by $88,000 as we had
no outstanding convertible debt this period and plant related expenses were
lower by $88,290 as a result of lower sale volumes, general and administration
cost reduced by $10,287 and investor relations expense was lower by $65,254

Research and development expenses for the six month period ended June 30, 2008
increased by $550,223 or 187.7 percent, to $843,292 from $293,069 for the six
month period ended June 30, 2007. As planned, we continue to aggressively pursue
testing and research and development in our efforts to develop innovative
products to serve our customers and improve our product mix and profit margins.
We believe that this expenditure will result in increase orders for our
products.

Officer's compensation and director's fees for the six month period ended June
30, 2008 decreased by $669,923 or 69.3 percent, to $296,312 from $966,235 for
the six month period ended June 30, 2007. The main reason for the decrease in
Officers' compensation and directors' fees was Stock based compensation expense
which amounted to $9,773 in the current period compared to $710,330 in the prior
period offset by a marginal increase due to the addition of two new officers in
February 2008.

                                        5
<PAGE>


Consulting and professional fees for the six month period ended June 30, 2008
increased by $60,606 or 206.4 percent, to $89,973 from $29,367 for the six month
period ended June 30, 2007. The increase is mainly attributed to audit fees, tax
consulting fees and fees related to compliance activities for requirements of
Section 404 of the Sarbanes-Oxley Act of 2002.

Foreign exchange gain for the six month period ended June 30, 2008 increased by
$32,343 to $57,446 from $25,103 for the six month period ended June 30, 2007 as
a result of the weakening of the Canadian Dollar to the United States Dollar.

Depreciation and amortization expense for the six month period ended June 30,
2008 increased by $32,593, or 6.1 percent to $570,120 from $537,527 for the six
month period ended June 30, 2007

Interest expense on the three notes payable was $161,990 for the six month
period ended June 30, 2008 as compared to $134,074 for the six month period
ended June 30, 2007. The Company may prepay the Consolidated Notes without
penalty at any time.

LIQUIDITY AND CAPITAL RESOURCES

Prior to 2007, our principal sources of operating capital have been the proceeds
from our various financing transactions. In 2007 we generated cash from
operations. In the first two quarters of 2008 we used a substantial amount of
cash as our sales were unusually low. As of June 30, 2008, the Company had cash
and cash equivalents of $ 154,417.

Net Cash used in operating activities for the six month period ended June 30,
2008 amounted to $2,824,863. This amount was attributable to the loss of
3,866,059, plus non cash expenses such as depreciation, amortization, and others
of $808,959, and a increase in net operating assets and liabilities of $232,237.

Net Cash used in investing activities was $324,736 for the six month period
ended June 30, 2008 as compared to $425,693 for the six month period ended June
30, 2007. The capital expenditures this year were primarily dedicated to
enhancement of our production capabilities to meet requirements of our new
products currently being developed.

Net cash provided by financing activities totalled $494,260 for the six month
period ended June 30, 2008 as compared to $719,692 provided by financing
activities for the six month period ended June 30, 2007. In the current period
the company received $500,000 under a Credit Facility Agreement with a director
and shareholder of the Company and repaid $5,740 under its capital lease
obligation.

In 2007, our subsidiary, ESW Canada entered into a $2.5 Million revolving credit
facility with Royal Bank of Canada, to finance orders on hand. This credit line
will provide us with the working capital to complete larger contracts. On
November 2, 2007 the credit facility, which originally had an expiry date of
November 30, 2007, has been extended to June 30, 2008. As this facility is
designed specifically to finance material and labor costs associated with orders
and the line is dependant on those open orders, currently we are in negotiations
with RBC for the extension and the size of the facility.

                                        6
<PAGE>


The global emissions industry is highly competitive; winning and maintaining new
business requires suppliers to rapidly produce new and innovative products on a
cost-competitive basis. Because of the heavy capital and engineering investment
needed to maintain this competitiveness, the investments made in 2006 and 2007
should help us to capitalize on the numerous supply opportunities considered to
be the core to our future success.

The expansion focused on increasing production capacity, expanding our research
and development facility, and a commitment to develop new products and improving
customer service. In addition, the expansion and capital expenditures made and
our intent to capitalize on an anticipated increase in demand for our products
are the steps that we have taken to become profitable and generate positive cash
flow. Based on our current operating plan, management believes that at June 30,
2008 anticipated cash flows from operating activities and the appropriate
borrowings under our credit facility and other available financing sources, such
as the issuance of debt or equity securities, will be sufficient to meet our
working capital needs on a short-term basis. Overall, capital adequacy is
monitored on an ongoing basis by our management and reviewed quarterly by the
Board of Directors.

Our industry is capital intensive and there is a timing issue bringing product
to market which is considered normal for our industry. We continue to spend
money on research and development to prove up our technologies and bring them to
the point where our customers have a high confidence level allowing them to
place larger orders. The length of time a customer needs to build confidence in
our technologies cannot be exactly predetermined and as a result, during the
first two quarters of 2008, we sustained an operating loss as a result of not
generating sufficient sales to generate a profit from operations. Although this
indicated a potential working capital deficiency and a possibility of the
Company's ability to continue to operate as going concern, management does not
believe that this is of a substantial financial concern as we have a good
history of receiving capital infusion when needed. The Company is presently
pursuing various financing initiatives. There is no assurance that the Company
will be successful in its financing efforts and in achieving sufficient cash
flow from operation. However, more significantly, we believe that the revenue
will increase once we obtain verification on certain products that are currently
in the testing stages and we believe will be verified by CARB, MSHA and the EPA
during 2008.

Our principal source of liquidity in 2007 was cash provided from prior financing
activities along with a small amount contributed from operations. In 2007, we
also received funds from the exercise of options and warrants. It is anticipated
that we may produce cash from operations in 2008 to support our expenditures, if
not, we will continue to draw on our credit facility or raise funds in order to
support our operations. Our principal use of liquidity will be to finance any
further capital expenditures needed and to provide working capital availability.
We do not anticipate having any major capital expenditures in 2008 related to
the general operation of our business, however should the need arise for further
tooling or equipment as a result of specific orders or the introduction of new
product lines, we would evaluate the need and make provisions as necessary. Our
Board of Directors may explore alternative listings of our Common Stock if
deemed beneficial to our shareholders. If we were to seek an alternative listing
of our Common Stock, we may incur significant capital expenditures beyond those
anticipated for our general business operations. Disciplined capital expenditure
decisions, focused on investments made for maintaining high quality service,
cost structure improvement, and cash flow generation are essential. We do not
expect that total capital expenditures for 2008 will amount to more than
$500,000.

                                        7
<PAGE>


Should we not be profitable, we will need to finance our operations through
other capital financings. We continue to seek equity and/or debt financing in
the form of private placements at favourable terms, or the exercise of currently
outstanding options or warrants that would provide additional capital. However,
such additional financing may not be available to us, when and if needed, on
acceptable terms or at all. We intend to retain any future earnings to retire
debt, finance the expansion of our business and any necessary capital
expenditures, and for general corporate purposes.

Our operating profitability requires that we increase our sales and lower our
overall cost to manufacture our products and improve both sales and
administrative productivity through process and system enhancements. This will
be largely dependent on the success of our initiatives to streamline our
infrastructure and drive our operational efficiencies across our company. Our
failure to successfully implement these initiatives, or the failure of such
initiatives to result in improved profit margins, could have a material adverse
effect on our liquidity, financial position, and results of operations.

We believe the success of our newly developed products will continue to motivate
others to develop similar designs, many of the same functional and physical
characteristics as our product. We have patents covering the technology embodied
in our products, and intend to enforce those patents as appropriate. If we are
not successful in enforcing our patents, competition from such products could
adversely affect our market share and prices for our products. Although overall
pricing has been stable recently, the average price of our products may decline
in the future. There is no assurance that our current or future products will be
able to successfully compete with products developed by others.

DEBT STRUCTURE

During the fiscal year 2006, we issued three unsecured subordinated promissory
notes of $0.5 million, $1 million, and $1.2 million totalling $2.7 million to a
company controlled by a trust to which a director and shareholder of our Company
is the beneficiary. The notes bear interest at 9% per annum. The holder of the
$1 million and $1.2 million notes issued on August 29, 2006 and June 26, 2006
respectively, has the option to receive payment of principal and all accrued
interest in the form of restricted shares of the Company's common stock, par
value ($0.001) with cost free piggyback registration rights. Under this
repayment option, interest will be calculated at 12% per annum. On January 9,
2007, the Company paid back the $0.5 million subordinated promissory note it had
previously issued on November 13, 2006 in the principal amount of $500,000 by
paying the Holder the sum of $506,780 in cash, representing $500,000 principal
and $6,780 interest. Subsequently, On February 9, 2007, the above two unsecured
subordinated promissory notes in the principal amount of $1.0 million and $1.2
million were consolidated into one unsecured subordinated demand note with
principal amount of $2,308,148. This Consolidated Note, is due and payable to
Holder upon demand. As with the original Promissory Notes, the Consolidated Note
will continue to bear interest at a rate of 9% per annum if principal and
interest are paid by the Company in cash, or if principal and interest are paid
in shares of restricted common stock of the Company, the Consolidated Note will
bear interest at a rate of 12% per annum. The Company may prepay the
Consolidated Note without penalty at any time.

                                        8
<PAGE>


On February 15, 2007 the Company issued a $500,000 unsecured subordinated demand
promissory note to a member of the Company's Board of Directors. This Note also
bears interest at 9% per annum and is payable upon demand. Subsequently, on
March 7, 2007, the Company entered into an agreement whereby it borrowed an
additional sum of $500,000 from a member of the Company's Board of Directors and
consolidated this sum with the principal and accrued interest of the $500,000
unsecured demand promissory note previously issued on February 15, 2007. This
Consolidated Note is in the principal amount of $1,002,589 and bears interest at
a rate of 9% per annum and is payable upon demand. The Company may prepay the
Consolidated Note without penalty at any time. As at June 30, 2008 $417,299 of
interest payable on the $1,002,589, and the $2,308,147 promissory notes has been
accrued. We believe that the terms of the promissory notes are fair and
reasonable and have been negotiated as arms length transactions.

Effective June 2, 2008, the Company entered into a Credit Facility Agreement
with Bengt Odner a director and shareholder of the Company. Pursuant to the
Agreement, the Company can request draw down(s) under the Facility of up to
$1,500,000 in the aggregate with funds to be used for general working capital
purposes. All request(s) to draw down under the Facility are subject to Mr.
Odner's consent and approval. An approved draw down by the Company under the
Facility will be represented by a 9% unsecured subordinated demand promissory
note issued by the Company to Mr. Odner or his designee. The Company may repay
the Note at anytime without penalty. At the option of the Note holder, in lieu
of cash, principal and interest earned on the Note can be repaid in restricted
common stock of the Company. Should the Note holder elect to receive stock of
the Company, interest on principal will be calculated at a rate of 12% per
annum. The number of shares of Common Stock to be issued in satisfaction of
interest and principal shall be determined by dividing the principal and accrued
interest by the greater of 105% of the twenty (20) day average closing price of
the Company's Common Stock immediately preceding the date the Note holder elects
to have the Note satisfied with Common Stock, or the Closing Price on that date.
Under no circumstance can the conversion price be below the fair market price of
the Company's Common Stock on the date the Note holder elects to have the Note
satisfied with Common Stock. The Company may request draw down(s) under the
Facility through December 31, 2008.

On June 2, 2008, concurrent with entering into the Credit Facility Agreement,
the Company issued a Request for Issuance pursuant to the terms of the Facility
for the sum of $500,000 with said funds to be used for general working capital.
The Request for Issuance was approved and the Company issued a $500,000 Note in
favour of Mr. Odner. As at June 30, 2008 $3,575 of interest payable on the
$500,000 promissory note has been accrued.

Effective July 17, 2008 the Company completed a second drawdown in the sum of
$300,000 under this Credit Facility Agreement with Mr. Bengt Odner. Pursuant to
the Agreement, the Company requested drawdown(s) under the Facility of $300,000
for general working capital purposes. The drawdown under the facility was
approved and was provided for in the sum of $150,000 each from Mr. Odner and Mr.
Louis Edmondson also a shareholder of the Company who by separate agreement with
Mr. Odner and the Company agreed to provide funding to the Company under the
Facility in connection with the drawdown(s).The sums received by the Company in
connection with the drawdowns are represented by 9% unsecured subordinated
demand promissory notes issued by the Company to Mr. Odner and Mr. Edmondson
each in the amount of $150,000 pursuant to the Facility.

                                        9
<PAGE>

In a separate Agreement, Mr. Edmondson also advanced the Company's wholly owned
subsidiary ESW America the sum of $125,000 in connection with research cost
incurred. ESW America has assigned its interest to Mr. Edmondson in grant moneys
up to $125,000 anticipated to be awarded to it for said research.

Our ability to service our indebtedness in cash will depend on our future
performance, which will be affected by prevailing economic conditions,
financial, business, regulatory and other factors. Certain of these factors are
beyond our control. We believe that, based upon our current business plan, we
will be able to meet our debt service obligations when due. Significant
assumptions underlie this belief, including, among other things, that we will be
successful in implementing our business strategy, that some of our new products
receive verification from the appropriate regulatory authorities, and that there
will be no material adverse developments in our business, liquidity or capital
requirements. If we cannot generate sufficient cash flow from operations to
service our indebtedness and to meet our other obligations and commitments, we
might be required to refinance our debt or to dispose of assets to obtain funds
for such purpose. There is no assurance that refinancing or asset dispositions
could be effected on a timely basis or on satisfactory terms, if at all, or
raise funds through asset sales, sales of equity or otherwise, our ability to
pay principal and interest on our debt would be impaired. On such circumstance,
we would have to issue shares of our common stock as repayment of this debt,
which would be of a dilutive nature to our present shareholders.

NEW ACCOUNTING PRONOUNCEMENTS

In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
163, "Accounting for Financial Guarantee Insurance Contracts - An interpretation
of FASB Statement No. 60". SFAS 163 requires that an insurance enterprise
recognize a claim liability prior to an event of default when there is evidence
that credit deterioration has occurred in an insured financial obligation. It
also clarifies how Statement 60 applies to financial guarantee insurance
contracts, including the recognition and measurement to be used to account for
premium revenue and claim liabilities, and requires expanded disclosures about
financial guarantee insurance contracts. It is effective for financial
statements issued for fiscal years beginning after December 15, 2008, except for
some disclosures about the insurance enterprise's risk-management activities.
SFAS 163 requires that disclosures about the risk-management activities of the
insurance enterprise be effective for the first period beginning after issuance.
Except for those disclosures, earlier application is not permitted. The Company
is currently evaluating the impact of SFAS No. 163 on its financial statements,
and the adoption of this statement is not expected to have a material effect on
the Company's financial statements.

                                       10
<PAGE>



In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles". SFAS 162 identifies the sources of accounting principles
and the framework for selecting the principles to be used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with generally accepted accounting principles in the United States.
It is effective 60 days following the SEC's approval of the Public Company
Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present
Fairly in Conformity With Generally Accepted Accounting Principles". The Company
is currently evaluating the impact of SFAS No. 162 on its financial statements,
and the adoption of this statement is not expected to have a material effect on
the Company's financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures About Derivative
Instruments and Hedging Activities, an Amendment of FASB Statement No. 133
("SFAS 161"). SFAS 161 changes the disclosure requirements for derivative
instruments and hedging activities. Entities are required to provide enhanced
disclosures about (1) how and why an entity uses derivative instruments, (2) how
derivative instruments and related hedged items are accounted for under SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"),
and its related interpretations, and (3) how derivative instruments and related
hedged items affect an entity's financial position, financial performance, and
cash flows. SFAS 161 is effective for fiscal years beginning after November 15,
2008. We will be required to adopt SFAS 161 in the first quarter of 2009. We
currently do not have any derivative financial instruments subject to accounting
or disclosure under SFAS 133; therefore, we do not expect the adoption of SFAS
161 to have any effect on our consolidated statement of financial position,
results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations" ("SFAS 141R"). SFAS 141R establishes principles and requirements
for how a company recognizes assets acquired, liabilities assumed, contractual
contingencies and contingent consideration measured at fair value at the
acquisition date. The Statement also establishes disclosure requirements which
will enable users to evaluate the nature and financial effect of the business
combination. SFAS 141R is effective for fiscal years beginning after December
15,2 008. We will consider the effect of SFAS 141 and its impact on any future
acquisitions.

In December 2007, the FASB issued SFAS No. 160 "Noncontrolling Interests in
Consolidated Financial Statements -- an amendment of ARB No. 51" (SFAS 160").
SFAS 160 establishes accounting and reporting standards for ownership interests
in subsidiaries held by parties other than the parent, the amount of
consolidated net income attributable to the parent and to the noncontrolling
interest, changes in a parent's ownership interest and the valuation of retained
noncontrolling equity investments when a subsidiary is deconsolidated. The
Statement also establishes reporting requirements that provide sufficient
disclosures that clearly identify and distinguish between the interest of the
parent and the interest of the noncontrolling owners. SFAS 160 is effective for
fiscal years beginning after December 15, 2008. The Company does not expect the
adoption of SFAS 160 to have any impact on its financial position, results of
operation or cash flows.

                                       11
<PAGE>


In February 2007, the Financial Accounting Standards Board FASB) issued
Statement of Financial Accounting Standards )SFAS) No. 159, "The Fair Value
Option for Financial assets and Financial Liabilities -- including an amendment
of FASB Statement No. 115," (SFAS 159). SFAS 159 permits entities to choose to
measure many financial instruments and certain other assets and liabilities at
fair value on an instrument-by-instrument basis (the fair value option)> SFAS
159 becomes effective for the Company on January 1, 2008. The Company has
evaluated the adoption of this bulletin and concluded that it did not have any
material impact on the financial statements.

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

Our significant accounting policies are summarized in Note 2 to the Consolidated
Financial Statements included in our 2007 Annual Report to Shareholders. In
preparing our financial statements, we make estimates and assumptions that
affect the expected amounts of assets and liabilities and disclosure of
contingent assets and liabilities. We apply our accounting policies on a
consistent basis. As circumstances change, they are considered in our estimates
and judgments, and future changes in circumstances could result in changes in
amounts at which assets and liabilities are recorded.

FOREIGN CURRENCY TRANSACTIONS

The results of operations and the financial position of our operations in Canada
is principally measured in Canadian currency and translated into U.S. dollars.
The future effects of foreign currency fluctuations between U.S. dollars and
Canadian dollars will be somewhat mitigated by the fact that certain expenses
will be generally incurred in the same currency in which revenues will be
generated. The future reported income of our Canadian subsidiary would be higher
or lower depending on a weakening or strengthening of the U.S. dollar against
the Canadian currency. The Company has a net gain on foreign exchange due the
weakening of the Canadian dollar to the U.S. Dollar during the first six months
of 2008.

A portion of our assets are based in its foreign operation and are translated
into U.S. dollars at foreign currency exchange rates in effect as of the end of
each period, Accordingly, our consolidated stockholders' investment will
fluctuate depending upon the weakening or strengthening of the Canadian currency
against the U.S. dollar.

Adjustments resulting from our foreign subsidiaries' financial statements are
included as a component of other comprehensive income within stockholders equity
because the functional currency of subsidiaries are non-USD.

Our strategy for management of currency risk relies primarily upon conducting
our operations in the countries' respective currency and we may, from time to
time, engage in hedging intended to reduce our exposure to currency
fluctuations. At June 30, 2008, we had no outstanding forward exchange
contracts.

                                       12
<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURE

EVALUATION OF THE COMPANY'S DISCLOSURE AND INTERNAL CONTROLS

The Company evaluated the effectiveness of the design and operation of its
"disclosure controls and procedures" as of the end of the period covered by this
report. This evaluation was done with the participation of management, under the
supervision of the Chief Executive Officer ("CEO") and Chief Accounting Officer
("CAO").

LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS

A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management
override of the control. The design of any system of controls also is based in
part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions; over time, control may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a cost
effective control system, misstatements due to error or fraud may occur and not
be detected. The Company conducts periodic evaluations of its internal controls
to enhance, where necessary, its procedures and controls.

CONCLUSIONS

Based on our evaluation, the CEO and CAO concluded that the registrant's
disclosures, controls and procedures are effective to ensure that information
required to be disclosed in reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the Security Exchange Commission rules and forms.

(b) CHANGES IN INTERNAL CONTROLS

Not applicable.

                                       13
<PAGE>



                            PART II OTHER INFORMATION

ITEM 1A. RISK FACTORS.

In evaluating an investment in our common stock, investors should consider
carefully, among other things, the risk factors previously disclosed in Part I,
Item 1 of our Annual Report to the Securities and Exchange Commission for the
year ended December 31, 2007, as well as the information contained in this
Quarterly Report and our other reports and registration statements filed with
the Securities and Exchange Commission. There have been no material changes in
the risk factors as previously disclosed under "Risk Factors" in Part I, Item 1
of our Annual Report to the Securities and Exchange Commission for the year
ended December 31, 2007.

ITEM 5. OTHER INFORMATION

On May 13, 2008, the Company filed a Current Report on Form 8-K dated May 13,
2008 reporting that effective May 12, 2008 it has retained the services of
Mellon Investor Services LLC, as its new transfer agent.

On July 18, 2008 the Company filed a Current Report on Form 8-K dated July 18,
2008 reporting that the Company completed a drawdown of the sum of $ 300,000
under its previously reported Credit Facility Agreement. Concurrent with the
drawdown under the facility, the Company's wholly owned subsidiary ESW America
received the sum of $125,000 in connection with research cost incurred.

ITEM 6. EXHIBITS

EXHIBITS:

31.1 Certification of Chief Executive Officer and President pursuant to the
Sarbanes-Oxley Act of 2002.

31.2 Certification of Chief Financial Officer, pursuant to the Sarbanes-Oxley
Act of 2002.

32.1 Certification pursuant to 18 U.S.C. Section 1350, as amended pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification pursuant to 18 U.S.C. Section 1350, as amended pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

                                       14
<PAGE>


                                    SIGNATURE

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

DATED: AUGUST 14, 2008
Concord, Ontario Canada

                                      ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.

                                      BY: /S/ DAVID J. JOHNSON
                                          --------------------
                                      DAVID J. JOHNSON
                                      CHIEF EXECUTIVE OFFICER AND PRESIDENT