UNITED
STATES


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




o           TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





Commission
File Number: 000-51577




ESPRE
SOLUTIONS INC.


(Exact
name of registrant as specified in its charter)




NEVADA
            68-0576847(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)5700
      W. Plano Parkway, Suite 2600, Plano, Texas
            75093(Address
      of principal executive offices)
            (Zip
      Code)





(214)
254-3708


(Registrant’s
telephone number, including area code)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. x
Yes    o No





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):


Large
      accelerated filer o
            
            Accelerated
      filer o
            
            Non-accelerated
      filer o


x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  o Yesx  No





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date. 355,640,130 shares of Common
Stock as of August 12, 2008.







0





The
consolidated financial statements of Espre Solutions, Inc. (the “Company”)
contained in this Report on Form 10-Q have not been reviewed by the Company’s
independent public accountant in accordance with Securities and Exchange
Commission Rules 10-01(d) and 8-03.  The Company will file an amended
Report when the review by its independent public accountant using professional
standards and procedures for conducting such review has been
completed.





FORM 10-QCONTENTSPART
      I — FINANCIAL INFORMATION (Unaudited)
            
            PAGEItem
      1
            —
            Financial StatementsConsolidated
      Balance Sheets at June 30, 2008 and September 30,
      2007
            
            2Consolidated
      Statements of Operations for the three and nine months ended June 30, 2008
      and 2007
            
            3Consolidated
      Statements of Cash Flows for the nine months ended June 30, 2008 and
      2007
            
            4Selected Notes to
      Consolidated Financial Statements
            
            5Item
      2
            —
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            
            14Item
      3
            —
            Quantitative and
      Qualitative Disclosures about Market Risk
            
            18Item
      4
            —
            Controls and
      Procedures
            
            18PART
      II — OTHER INFORMATIONItem
      1
            —
            Legal
      Proceedings
            
            19Item
      1A
            —
            Risk
      Factors
            
            19Item
      2
            —
            Unregistered Sales
      of Equity Securities and Use of Proceeds
            
            19Item
      3
            —
            Defaults upon
      Senior Securities
            
            19Item
      4
            —
            Submission of
      Matters to a Vote of Security Holders
            
            19Item
      5
            —
            Other
      Information
            
            19Item
      6
            —
            List of
      Exhibits
            
            19Signature
            
            19EX-31.1
      Section 302 CertificationEX-31.2
      Section 302 CertificationEX-32.1
      Section 906 CertificationEX-32.2
      Section 906 Certification





1
 Table of Contents





PART
I — FINANCIAL INFORMATION





The
consolidated financial statements of Espre Solutions, Inc. (the "Company")
contained in this Report on Form 10-Q have not been reviewed by the Company's
independent public accountant in accordance with Securities and Exchange
Commission Rules 10-01(d) and 8-03.  The Company will file an amended
Report when the review by its independent public accountant using professional
standards and procedures for conducting such review has been
completed.





Item1 — Financial Statements





ESPRESOLUTIONS INC. AND SUBSIDIARY


Consolidated
Balance Sheets




June
      30,
            
            
            September
      30,2008
            
            
            2007(unaudited)ASSETSCurrent
      assets:Cash
            
            $
            703,033
            
            
            $
            3,850,666Accounts
      receivable
            
            
            52,750
            
            
            
            251,050Prepaid
      expenses and advances
            
            
            50,373
            
            
            
            34,564Total
      current assets
            
            
            806,156
            
            
            
            4,136,280Equipment,
      net
            
            
            348,429
            
            
            
            296,758Intangible
      assets, net
            
            
            77,121
            
            
            
            73,191Loans
      to related parties
            
            
            60,432
            
            
            
            69,432Other
      assets
            
            
            123,974
            
            
            
            97,292Total
      assets
            
            $
            1,416,113
            
            
            $
            4,672,953LIABILITIES
      AND STOCKHOLDERS’ (DEFICIT) EQUITYCurrent
      liabilities:Notes
      payable to related parties
            
            $
            25,000
            
            
            $
            1,667,944Accounts
      payable and accrued expenses
            
            
            1,303,988
            
            
            
            1,449,399Total
      current liabilities
            
            
            1,328,988
            
            
            
            3,117,343Deferred
      revenue — related party
            
            
            -
            
            
            
            1,000,000Minority
      interest
            
            
            959,334
            
            
            
            348,093Stockholders’
      (deficit) equityCommon
      shares — $0.001 par value; authorized 500,000,000 shares; and
      340,690,490  and 318,522,499 shares issued and outstanding ,
      respectively
            
            
            354,232
            
            
            
            318,522Additional
      paid-in capital
            
            
            78,712,970
            
            
            
            71,110,086Stock
      subscription receivable
            
            
            (18,500
            )
            
            $
            (190,000
            )Retained
      (deficit)
            
            
            (79,920,911
            )
            
            $
            (71,031,091
            )Total
      stockholders’ equity
            
            
            (872,209
            )
            
            
            207,517Total
      liabilities and stockholders’ (deficit) equity
            
            $
            1,416,113
            
            
            $
            4,672,953





The
accompanying notes are an integral part of these consolidated financial
statements





2
 Table of Contents





ESPRESOLUTIONS INC. AND SUBSIDIARY


Consolidated
Statements of Operations


(Unaudited)




Three
      Months Ended
            
            
            Nine
      Months EndedJune
      30,
            
            
            June
      30,2008
            
            
            2007
            
            
            2008
            
            
            2007Revenue:Software
      licensing fees
            
            $
            1,000,000
            
            
            $
            150,000
            
            
            $
            2,000,000
            
            
            $
            1,390,000Custom
      engineering fees
            
            
            1,750
            
            
            
            92,500
            
            
            
            512,742
            
            
            
            497,700Other
            
            
            0
            
            
            
            20,656
            
            
            
            27,554
            
            
            
            126,764Total
      revenue
            
            
            1,001,750
            
            
            
            263,156
            
            
            
            2,540,296
            
            
            
            2,014,464Expenses:General,
      administrative and selling expenses
            
            
            3,111,177
            
            
            
            1,535,665
            
            
            
            8,645,670
            
            
            
            3,990,052General,
      administrative and selling expenses stock based
    compensation
            
            
            -
            
            
            
            2,646,051
            
            
            
            1,891,532
            
            
            
            5,656,459Research
      and development
            
            
            664,079
            
            
            
            692,995
            
            
            
            2,487,192
            
            
            
            878,595Amortization
      and depreciation
            
            
            32,719
            
            
            
            31,615
            
            
            
            115,443
            
            
            
            78,361Total
      operating expenses
            
            
            3,807,974
            
            
            
            4,906,326
            
            
            
            13,139,836
            
            
            
            10,603,467Loss
      from operations
            
            
            (2,806,224
            )
            
            
            (4,643,170
            )
            
            
            (10,599,540
            )
            
            
            (8,589,002
            )Interest
      income
            
            
            2,661
            
            
            
            1,342
            
            
            
            42,738
            
            
            
            311Interest
      expense
            
            
            1,254
            
            
            
            1,956
            
            
            
            1,928
            
            
            
            11,640Net
      loss before minority interest
            
            
            (2,802,310
            )
            
            
            (4,639,872
            )
            
            
            (10,554,874
            )
            
            
            (8,577,052
            )Minority
      interest
            
            
            754,376
            
            
            
            68,693
            
            
            
            1,665,054
            
            
            
            129,354Net
      income (loss)
            
            $
            (2,047,934
            )
            
            $
            (4,571,179
            )
            
            $
            (8,889,820
            )
            
            $
            (8,447,698
            )Basic
      and diluted net loss per share
            
            $
            (0.01
            )
            
            $
            (0.02
            )
            
            $
            (0.03
            )
            
            $
            (0.04
            )Weighted
      average shares outstanding, basic and diluted
            
            
            342,487,914
            
            
            
            232,546,146
            
            
            
            331,337,944
            
            
            
            216,455,124





The
accompanying notes are an integral part of these consolidated financial
statements





3
 Table of Contents





ESPRESOLUTIONS INC. AND SUBSIDIARY


Consolidated
Statements of Cash Flows


Nine
Months Ended June 30


(Unaudited)




2008
            
            
            2007Cash
      flows from operating activities:Net
      income (loss) for period
            
            $
            (8,889,820
            )
            
            $
            (8,447,698
            )Adjustments
      to reconcile net loss to cash used in operating
activities:Stock
      and options issued for services
            
            
            1,356,685
            
            
            
            -Stock
      based compensation
            
            
            1,891,532
            
            
            
            5,656,459Amortization
      and depreciation
            
            
            115,443
            
            
            
            78,361Minority
      interest
            
            
            (1,665,054
            )
            
            
            (129,354
            )Changes
      in assets and liabilities:Deferred
      revenue
            
            
            (1,000,000
            )
            
            
            1,150,000Accounts
      receivable
            
            
            198,300
            
            
            
            (390,020
            )Prepaid
      expenses
            
            
            (15,809
            )
            
            
            4,399Other
      assets
            
            
            (26,682
            )
            
            
            (36,120
            )Accounts
      payable and accrued expenses
            
            
            (145,410
            )
            
            
            155,286Total
      cash used in operating activities
            
            
            (8,180,816
            )
            
            
            (1,958,688
            )Net
      cash used in investing activities:Purchase
      of equipment
            
            
            (115,213
            )
            
            
            (54,035
            )Purchase
      of intangible assets
            
            
            (55,832
            )
            
            
            (197,230
            )Loan
      to affiliate
            
            
            9,000
            
            
            
            (50,000
            )Net
      cash used in investing activities
            
            
            (162,045
            )
            
            
            (301,265
            )Cash
      flows provided by financing activities:Payments
      on notes payable to related parties
            
            
            (100,000
            )
            
            
            32,956Proceeds
      from sale of stock
            
            
            3,018,933
            
            
            
            2,455,050Minority
      capital raised
            
            
            2,276,295
            
            
            
            376,721Net
      cash provided (used in) by financing activities
            
            
            5,195,228
            
            
            
            2,864,727Net
      decrease in cash
            
            
            (3,147,633
            )
            
            
            604,775Cash,
      beginning of period
            
            $
            3,850,666
            
            
            $
            291,426Cash,
      end of period
            
            
            703,033
            
            
            
            896,201Supplemental
      disclosures of cash flow information:Cash
      paid for interest
            
            
            -
            
            
            
            -Non-cash
      transactions:Issuance
      of common stock to retire debt
            
            $
            1,542,943
            
            
            $
            619,000





The
accompanying notes are an integral part of these consolidated financial
statements





4
 Table of Contents





ESPRESOLUTIONS, INC. AND SUBSIDIARY




NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





1. 
BASIS OF PRESENTATION AND CONTROLLED SUBSIDIARY




The
consolidated financial statements included herein have been prepared by the
Company, without audit, in accordance with accounting principles generally
accepted in the United States of America and pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles in the United States of
America have been condensed or omitted pursuant to such rules and regulations,
although the Company believes such disclosures are adequate to make the
information presented not to be misleading. In the opinion of management, the
amounts shown reflect all adjustments necessary to present fairly the financial
position and results of operations for the periods presented. All such
adjustments are of a normal recurring nature.





It is
suggested that the financial statements be read in conjunction with the
financial statements and notes thereto included in the Company’s Form 10/A for
the year ended September 30, 2007.





On April
27, 2007 the Company and Peter Leighton, its President (“Leighton”), founded
Blideo, Inc. (“Blideo”) each with a 40% interest. The Company and Leighton
control Blideo and it has therefore been consolidated in these condensed
consolidated financial statements.





2. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Principles
of consolidation





The
consolidated financial statements include the accounts of the Company and its
majority owned and controlled subsidiary. All intercompany transactions have
been eliminated in consolidation.




Reclassifications





Prior
year’s information is reclassified whenever necessary to conform to current
year’s presentation.





5
 Table of Contents





Stock
Based Compensation




The
Company adopted Statement of Financial Accounting Standards (SFAS) No. 123R,
“Share-Based Payment” effective July 1, 2005, which requires companies to record
compensation expense for stock options issued to employees or non-employee
directors at the fair value of the options.  SFAS NO. 123R is
effective for annual periods beginning after June 15, 2005.





The
Company has adopted SFAS No. 123R using the “modified prospective application”
and therefore, financial statements from periods ending prior to October 1,
2005 have not been restated.  The Company’s net loss for the three
months ended June 30, 2008 and 2007 was $2,047,934 and $4,571,179, respectively
higher than if it had continued to account for share-based compensation under
APB No. 25.  The Company’s net loss for the nine months ended June 30,
2008 and 2007 was $8,889,820 and $8,447,698, respectively higher than if it had
continued to account for share-based compensation under APB No. 25.




Recent
pronouncements




In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159
permits entities to choose to measure many financial assets and financial
liabilities at fair value. Unrealized gains and losses on items for which the
fair value option has been elected are reported in earnings. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007. The Company will
adopt SFAS No. 159 on October 1, 2009, and is currently evaluating the impact of
such adoption on its financial statements.




In
December 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 141 (revised 2007),
Business Combinations, which replaces SFAS No 141. The statement retains the
purchase method of accounting for acquisitions, but requires a number of
changes, including changes in the way assets and liabilities are recognized in
the purchase accounting. It also changes the recognition of assets acquired and
liabilities assumed arising from contingencies, requires the capitalization of
in-process research and development at fair value, and requires the expensing of
acquisition-related costs as incurred. SFAS No. 141R is effective for us
beginning July 1, 2009 and will apply prospectively to business combinations
completed on or after that date.





In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB 51, which changes the
accounting and reporting for minority interests. Minority interests will be
recharacterized as noncontrolling interests and will be reported as a component
of equity separate from the parent’s equity, and purchases or sales of equity
interests that do not result in a change in control will be accounted for as
equity transactions. In addition, net income attributable to the noncontrolling
interest will be included in consolidated net income on the face of the income
statement and, upon a loss of control, the interest sold, as well as any
interest retained, will be recorded at fair value with any gain or loss
recognized in earnings. SFAS No. 160 is effective for us beginning July 1, 2009
and will apply prospectively, except for the presentation and disclosure
requirements, which will apply retrospectively. We are currently assessing the
potential impact that adoption of SFAS No. 160 would have on our financial
statements.





6
 Table of Contents





In March
2008, the FASB issued SFAS No. 161, "Disclosures about
Derivative Instruments and Hedging Activities, and an amendment of FASB
Statement No. 133." SFAS No. 161 requires enhanced disclosure related to
derivatives and hedging activities and thereby seeks to improve the
transparency of financial reporting. Under SFAS No. 161, entities are
required to provide enhanced disclosures relating to: (a) how and why an
entity uses derivative instruments; (b) how derivative instruments and
related hedge items are accounted for under SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," and its related
interpretations; and (c) how derivative instruments and related
hedged items affect an entity's financial position, financial performance,
and cash flows. SFAS No. 161 must be applied prospectively to all
derivative instruments and non-derivative instruments that are designated
and qualify as hedging instruments and related hedged items accounted for
under SFAS No. 133 for all financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The Company is currently assessing the impact that SFAS No. 161
will have on its financial position and results of operations.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (SFAS 162”).  SFAS 162 identifies the sources of
accounting principles and the framework for selecting 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.  This statement shall be effective 60 days following the
SEC’s approval of the Public Company Accounting Oversight Board’s amendments to
AU section 411, The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles. The Company is in the process of evaluating the
potential effect of adoption of SFAS 162.





7
 Table of Contents





3. 
GOING CONCERN AND MANAGEMENT’S PLAN




The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern. The Company has incurred significant
and recurring losses and negative cash flow from operations which raises
substantial doubt about its ability to continue as a going concern. The
Company’s continued existence is dependent upon its ability to achieve
profitability and to generate cash either from operations or
financing.


Management’s
plan is as follows:





For the
remainder of 2008 and beyond we will focus on completing the shift from
licensing markets and territory licenses, to completing the development and
launching VUELIVE services.




VUELIVE
will deliver live interactive services targeted at specific verticals in a
subscription model.




Remote
consultations – Medical


Remote
Depositions – Legal


Remote
Maintenance – Industrial


Online
Advertising – Visual collaboration




VUEChat transforms the camera
on any device into a broadcast feed that can be viewed, live or on-demand, to
anyone on the web with a browser.
  Multi-party
video-communication(up to 7-way): the
ability for a subscriber to communicate through video with anyone else in the
community
  Additionally
there will be specific focus on live event broadcasting, including sports and
breaking news through our service offering VUECAST.




VUECAST transforms the camera
on any device into a broadcast feed that can be viewed, live or on-demand, to
anyone on the web with a browser.




Panel
Broadcasts(up to 3 panelists): a
broadcast is enhanced by a “panel” of commentators or guests


Selective
Broadcasts: the ability to broadcast live or pre-recorded content to a
selected, limited number of subscribers.


User Generated
Broadcasts: the ability for a subscriber to broadcast their own live or
pre-recorded content


Multi-party
video-communication(up to 4-way): the
ability for a subscriber to communicate through video with anyone else in the
community





●
            Engage in partnerships with firms
      in key vertical markets. These partners will be market experts and have
      well defined application strategies that require VueLive application
      services.





●
            Establish
      independent sales agreements with representatives to sell VueLive
      services. The Company will actively pursue the engagement of additional
      independent sales representatives who can distribute the Company’s
      existing video products and services both domestically and
      internationally.





Foster
partnerships with leading technology providers that want to add live video
elements to their existing product portfolio, thereby leveraging their existing
install bases.


Obtain
additional debt or equity financing to fund the deployment and operation of the
VueLive service.




8
 Table of Contents





In the
period from inception to June 30, 2008 the Company has transacted a substantial
amount of its business with related parties. The Company continues to be
dependent on revenues from these related parties. The achievement of
profitability and the ability to generate cash flows from operations is
dependent upon, amongst other things, the acceptance of the Company’s products
and services, competition from other products and the deployment of video
applications by our customers. There is no assurance that management’s plan will
be successful. Accordingly, substantial doubts exist about the Company’s ability
to continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.




4. 
CASH




At June
30, 2008 the Company had $280,500 in cash (excluding Blideo’s cash of
$422,533, over which we exercise no control) compared with $3,352,414 (excluding
Blideo’s cash of $498,252) at September 30, 2007.




5. 
INVESTMENT IN AND LOANS TO RELATED PARTIES





Blideo
Inc.




On April
24, 2007, prior to joining the Company, Leighton founded Blideo Inc. (“Blideo”)
and invested $200,000 in May 2007 and $300,000 in July 2007. The Company
invested the same amounts in the same time periods. In May of 2007, Blideo
acquired an exclusive license from Media Distribution Solutions. LLC (“MDS”), a
customer of the Company since April 2006, for the distribution and use of MDS’s
software in any social networking application for $175,000 plus certain
ongoing royalties. In September 2007, Espre’s Vice President — Sales invested
$125,000 in Blideo. Certain former officers and employees of the Company are now
officers and employees of Blideo. Subsequent to year end, on October 31, 2007,
the Company licensed ESPRE Live on a non-exclusive basis to Blideo for five (5)
years for a one time license fee of $1,000,000 plus 1% of gross
revenues.




As an
integral part of this agreement, Blideo agreed to pay the Company $700,000 for
engineering and design services to build the Blideo Application Release 1.0 from
September 1, 2007 to March 31, 2008. The $700,000 contract engineering fees paid
for core technology development will decrease the license fee. As part of this
license the Company has agreed not to contract with any application service
provider that plans to launch a service competitive to Blideo’s for one year
following the acceptance by Blideo of the application the Company is designing
and building. In addition, Blideo is obligated to pay the Company a product
maintenance fee for the application the Company is building for Blideo of
$70,000 for the first year commencing September 2007 and thereafter at a rate to
be negotiated. In addition, until April 1, 2008 the Company provided office
accommodation to Blideo for $2,000 per month.  On April 1, 2008,
Blideo sublet offices from an independent third party and moved its entire staff
to them.  The Company provided accounting services to Blideo for $500
per month through May 2008. The Company believes all related party transactions
have been consummated on terms equivalent to those that prevail in arms’- length
transactions.




9
 Table of Contents




The
assets of Blideo are not available to the Company other than through the
contractual agreements more fully described above.




6. 
NOTES PAYABLE TO RELATED PARTIES





Notes
payable —consisted of the following:





June
      30,
            
            
            September
      30,2008
            
            
            2007Contingent
      repurchase agreement to Video Software Partners, secured by certain
      software products, payable on February 1, 2008, interest imputed at
      10%
            
            $
            -
            
            
            $
            1,642,944Note
      payable to a related individual, at 10%, due November 25, 2004, extended
      year to year, unsecured
            
            
            25,000
            
            
            
            25,000$
            25,000
            
            
            $
            1,667,944




7.  ACCOUNTS
PAYABLE AND ACCRUED EXPENSES





Accounts
payable and accrued expenses consisted of the following at:







June 30, 2008
            
            
            September 30, 2007Accounts
      payable - trade
            
            $
            1,024,577
            
            
            $
            543,485Accrued
      expenses
            
            
            64,490
            
            
            
            242,151Due
      to investment banker
            
            
            -
            
            
            
            139,825Accrued
      vacation pay
            
            
            129,673
            
            
            
            76,640Accrued
      payroll and payroll taxes
            
            
            85,248
            
            
            
            297,298Customer
      advances
            
            
            -
            
            
            
            150,000$
            1,303,988
            
            
            $
            1,449,399






8.  OTHER
RELATED PARTY TRANSACTIONS




The
Company regularly engages the services of a related vendor.  The
vendor became related when its principals purchased restricted common stock from
the Company.  In the three and nine month periods ending June 30, 2008
the Company incurred $219,417 and $619,075, respectively, in Product Development
and Consulting expenses and $1,967 in General, Sales and Administrative expenses
from this vendor.





The
Company sold a license to a related customer.  The customer became
related when its principals purchased restricted common stock from the
Company.  In the three and nine month periods ending June 30, 2008 the
Company licensed $0 and $2,000,000, respectively, in software license fee from
this customer.





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9. 
STOCKHOLDERS’ EQUITY





Common
stock





Payments
for Services




In the
nine months ended June 30, 2008, the Company issued a total of 7,676,719 shares
of common stock for consulting, advisory and other services recorded at market
values ranging between of $0.13 and $0.26 per share or
$1,524,394.  For the same period in the previous fiscal year the
Company issued 4,438,462 shares at  market values ranging between
$0.05 and $0.13 per share or $482,500 for consulting and advisory
services
 
 Capital
Raises
 
 In the
nine months ended June 30, 2008, the Company issued 27,385,412 shares of
restricted common stock with no demand or piggy-back registration rights to
accredited investors for $2,746,886. The Company paid fees of $175,242 in
connection with the sale of these common shares.
  10. 
STOCK OPTIONS
  The
Company's 2004 Equity Incentive Plan (, the "Stock Option Plan") provides that
employees, consultants and directors can be granted options to purchase shares
of the Company's common stock, including incentive stock options ("ISOs"). 
The maximum aggregate number of shares of common stock available for award under
the Stock Option Plan is 100,000,000, and is subject to adjustment as set forth
therein.  Under the plan, ISOs may not be vested until a date, or dates,
subsequent to their date of grant, or until the occurrence of on or more
specified events annually.   At June 30, 2008, the Company had granted
74,014,634 ISOs.  Of the granted ISOs, 61,600,000 vest on the anniversary
of the date of grant equally over three years; 9,039,634 vested immediately; and
3,375,000 vest completely eighteen months after the date of grant.  All
ISOs expire no later than ten years from the date of grant for participants that
own no more than ten percent of all classes of voting stock of the Company
and its subsidiaries.  The expiration for participants that own more
than ten percent of all voting classes of stock of the Company and its
subsidiaries is five years from the date of grant.
 
 The
exercise price for the ISOs is not to be less than the fair market value of the
common stock of the Company at the date of grant for participants owning less
than ten percent of all voting classes of stock in the Company and its
subsidiaries and not less than 110% of the fair market value of the common stock
of the Company at the date of grant for participants owning more than ten
percent of all classes of voting stock in the Company and its
subsidiaries.




11
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Outstanding Stock Options
            
            
            Exercisable Stock OptionsShares
            
            
            Weighted Average exercise
    Price
            
            
            Shares
            
            
            Weighted Average exercise
    PriceOutstanding
      at September 30, 2007
            
            
            66,814,634
            
            
            $
            0.10
            
            
            
            18,986,301
            
            
            $
            0.12Granted
      during period
            
            
            29,200,000
            
            
            $
            0.09
            
            
            
            10,053,975
            
            
            $
            0.09Outstanding
      at June 30, 2008
            
            
            96,014,634
            
            
            $
            0.10
            
            
            
            29,040,275
            
            
            $
            0.11




At June
30, 2008, summarized stock options outstanding and exercisable
were:







Outstanding Stock Options
            
            
            Exercisable Stock OptionsExercise Price Range
            
            Shares
            
            
            Life
            
            
            Weighted Average exercise
    Price
            
            
            Shares
            
            
            Life
            
            
            Weighted Average exercise
    Price$0.010
      - $0.085
            
            
            48,239,634
            
            
            
            8.23
            
            
            $
            0.08
            
            
            
            12,156,942
            
            
            
            8.25
            
            
            $
            0.07$0.100
      - $0.200
            
            
            45,855,000
            
            
            
            7.74
            
            
            $
            0.10
            
            
            
            15,123,333
            
            
            
            6.60
            
            
            $
            0.10$0.210
      - $1.333
            
            
            1,920,000
            
            
            
            6.94
            
            
            $
            0.48
            
            
            
            1,760,000
            
            
            
            6.94
            
            
            $
            0.5096,014,634
            
            
            
            
            
            
            
            
            
            
            
            29,040,275




The
weighed average fair value of each option has been approximated on the date of
grant using the Black-Scholes option-pricing model with the following weighted
average assumptions used for grants; no dividend yield, volatility of 200%, risk
free interest rate of 3.47%, and an expected term of five years.




As of
June 30, 2008, there was approximately $6.8 million of unrecognized compensation
cost related to unvested share-based compensation arrangements granted under the
Stock Option Plan.  This expense will be recognized on a straight-line
basis over the remaining requisite service period, currently through December
2010.





12
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11. 
WARRANTS





Transactions
and other information relating to warrants are summarized as
follows:





Outstanding Warrants
            
            
            Exercisable WarrantsWeighted
            
            
            
            
            
            WeightedAverage
            
            
            
            
            
            AverageExercise
            
            
            
            
            
            ExerciseShares
            
            
            Price
            
            
            Shares
            
            
            PriceOutstanding
      at October 1, 2007
            
            
            44,019,716
            
            
            $
            0.10
            
            
            
            44,019,716
            
            
            
            0.10Granted
      during period
            
            
            6,938,272
            
            
            
            0.10
            
            
            
            6,938,272
            
            
            
            0.10Exercised
      during the period
            
            
            (2,892,858
            )
            
            
            0.10
            
            
            
            (2,892,858
            )
            
            
            0.10Outstanding
      at June 30, 2008
            
            
            48,065,130
            
            
            $
            0.10
            
            
            
            48,065,130
            
            
            $
            0.10





12. 
CONCENTRATION OF CREDIT RISK AND DEPENDENCY





For the
nine months ended June 30, 2008 the Company had one sale to a customer that
individually accounted for more than 79% of the total gross sales for that
period. For the nine months ended June 30, 2007, the Company had sales to one
customer that accounted for more than 57% of the Company’s total gross sales for
that period.
  For the
nine months ended June 30, 2008 the Company purchased services from one supplier
that individually accounted for 17% percent of the Company’s total product and
development and consulting fees for the period.
  The
Company maintains deposits in a financial institution that at times exceed
amounts covered by the insurance provided by the U.S. Federal Deposit Insurance
Corporation. The Company believes that there is no significant risk with respect
to these deposits.




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13. 
DEFERRED INCOME TAXES





The
Company reduced the deferred tax asset resulting from its tax loss carry
forwards by a valuation allowance of an equal amount to the deferred asset as
the realization of the deferred tax asset is uncertain. Deferred tax assets are
as follows:




2007
            
            
            2006Net
      operating losses
            
            $
            19,624,000
            
            
            $
            19,239,000In-
      process research and development
            
            
            1,329,000
            
            
            
            1,528,000Stock
      based compensation
            
            
            587,000
            
            
            
            1,386,000Transition
      adjustment
            
            
            217,000
            
            
            
            217,00021,757,000
            
            
            
            22,370,000Less
      valuation
            
            
            (21,757,000
            )
            
            
            (22,370,000
            )Net
      deferred tax assets
            
            $
            -
            
            
            $
            -







Item2.  Management’s Discussion and Analysis of Financial
Condition and Results of Operations





The
consolidated financial statements of Espre Solutions, Inc. (the “Company”)
contained in this Report on Form 10-Q have not been reviewed by the Company’s
independent public accountant in accordance with Securities and Exchange
Commission Rules 10-01(d) and 8-03.  The Company will file an amended
Report when the review by its independent public accountant using professional
standards and procedures for conducting such review has been
completed.




Results
of Operations for the nine months ended June 30, 2008





During
the nine months ended June 30, 2008, we generated revenues of $2,540,296
(compared with $2,014,464 in the same period last year, or an increase of 26%).
The major components of revenue were:




●
            Revenues
      were $1,001,750 for the three months ended June 30, 2008 (compared with
      $263,156 for the same period last year, or an increase of
      280%).




●
            In
      April 2007 we entered into a license agreement for the exclusive right to
      use our technology license for the entertainment market for an initial
      amount of $1,000,000 and a further $450,000 contingent on our delivering
      certain design proofs of concept. The license agreement granted the
      license holder a put option which could have required us to repurchase the
      license for $2,000,000 at any time after January 31, 2008, and before
      April 31, 2010. The revenue from this license was deferred and is included
      on our balance sheet as deferred revenue at September 30, 2007. In
      December 2007, we concluded an agreement with the licensee to waive the
      put option in return for a waiver of the balance due under the license of
      $450,000, and accordingly we recorded the full license fee of $1,000,000
      in the quarter ended December 31,
2007.




●
            $453,000
      for the design of our customers’ applications, including a major US
      telecommunications carrier. We expect continued engineering revenues if
      and when these customers successfully deploy their product and/or service
      offerings.




14
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For the
nine months ended June 30, 2008, our total operating expenses were $13,139,836
(compared to $10,603,467 the same period last year). Product development and
consulting expenses amounted to $2,487,192 (compared to $878,595 in in the
comparable period in 2007 last year, or an increase of 183%).This substantial
increase is primarily attributable to an increase in outsource engineering costs
incurred in the development of ESPRE Live, the design of Blideo’s application
and the provision of engineering services to third parties. For the nine months
ended June 30, 2008, our general, administrative and selling expenses were
$8,645,670 (compared to $3,990,052 in the comparable period last year, or an
increase of 116%). General, administrative and selling expenses incurred for the
nine months ended June 30, 2008, attributable to the non-cash expenses from the
Company’s incentive stock option plan were $1,891,532 (compared to $5,656,459 in
the comparable period last year, or a decrease of 66%).  We incurred
increased salary expenses related to our sales and marketing program and legal
and accounting expenses relating to our becoming a fully reporting
company.





Liquidity
and Capital Resources





The
accompanying consolidated financial statements have been prepared assuming we
will continue as a going concern. We sustained substantial and recurring losses
for the period December 22, 2003 (inception), through June 30, 2008. At June 30,
2008, we had $280,500 in cash (excluding Blideo’s cash of $422,533, over which
we exercise no control) compared with $3,352,414 (excluding Blideo’s cash of
$498,251) at September 30, 2007. However, our continued existence is dependent
upon our ability to achieve profitability and to generate cash either from
operations or financing.




Management’s
financial plan is as follows:




●
            For
      the remainder of 2008 and beyond we will focus on completing the shift
      from licensing markets and territory licenses, to completing the
      development and launching VUELIVE
services.




VUELIVE will deliver live interactive video
services targeted at specific verticals in a subscription model.




Remote
consultations – Medical


Remote
Depositions – Legal


Remote
Maintenance – Industrial


Online
Advertising – Visual collaboration




VUEChat transforms the camera
on any device into a broadcast feed that can be viewed, live or on-demand, to
anyone on the web with a browser.
  Multi-party
video-communication(up to 7-way): the
ability for a subscriber to communicate through video with anyone else in the
community
  Additionally
there will be specific focus on live event broadcasting, including sports and
breaking news through our service offering VUECAST.


VUECAST transforms the camera on any device
into a broadcast feed that can be viewed, live or on-demand, to anyone on the
web with a browser.




–
            Panel Broadcasts (up
      to 3 panelists): a broadcast is enhanced by a “panel” of commentators or
      guests




–
            Selective Broadcasts:
      the ability to broadcast live or pre-recorded content to a selected,
      limited number of subscribers.




15
 Table of Contents




–
            User Generated
      Broadcasts: the ability for a subscriber to broadcast their own
      live or pre-recorded content




–
            Multi-party
      video-communication (up to 7-way): the ability for a subscriber to
      communicate through video with anyone else in the community (Take
      questions from the audience)






●
            Engage
      in partnerships with firms in key vertical markets. These partners will be
      market experts and have well-defined application strategies that require
      VueLive to deliver them. Potential customers have been identified and we
      are in active negotiations with them. No assurance can be given however
      that we will be successful in entering into satisfactory commercial
      arrangements with these or other
customers.




●
            Establish
      independent sales agreements with representatives to sell our VueLive
      services into the enterprise market. We will actively pursue the
      engagement of additional independent sales representatives that can
      distribute the Company’s existing video products and services both
      domestically and internationally. Potential partners have been identified
      and we are in active negotiations with them. No assurance can be given
      however that we will be successful in entering into satisfactory
      commercial arrangements with these or other
  partners.




●
            Foster
      and build relationship with technology partners that want to add live
      video to their product portfolio thereby leveraging their existing
      customer bases. Potential partners have been identified and we are in
      active negotiations with them. No assurance can be given however that we
      will be successful in entering into satisfactory commercial arrangements
      with these or other partners.




●
            Obtain
      additional debt and equity
financing.





For
the nine months ended June 30, 2008 and June 30, 2007, we used net cash of
$8,180,816 and $1,958,688, respectively, for operations, we used net cash of
$162,045 and $301,265, respectively, for investing, and realized net cash of
$5,195,228 and $2,864,727, respectively from financing activities, primarily
from the sale of our common stock and receipts of stock subscription
receivables. The achievement of profitability and the ability to generate cash
flows from operations will depend on, among other things, the acceptance of our
products and services, competition, and the deployment of video applications by
our customers. These matters by their nature contain uncertainties and our
financial statements do not include any adjustments that might occur from future
efforts. There is therefore substantial doubt about our ability to continue as a
going concern.




16
 Table of Contents





Our
current cash requirements are approximately $1,150,000 per month, principally
for salaries, professional services and office expenses. Included in these
expenditures is approximately $400,000 of development expense for the design and
deployment of Blideo’s application, VUELIVE and other customers. As Blideo’s
application and VUELIVE design and development near completion we project our
cash requirements per month to decrease and approach $500,000.  Our
capital expenditures (depending on our hiring program), which principally
consist of computer equipment, test equipment and office requirements, are
approximately $15,000 per month. Based on our cash flow projections, we expect
that while our cash requirements will continue at their current rate for the
foreseeable future, we will be able to meet a portion of our cash requirements
from the proceeds of agreements for our services and the sale of our products.
We have been and expect to remain cash flow negative for calendar year 2008, and
will therefore be dependent on the proceeds of the sale of our equity
securities.
  As with
any company engaged in the development of new technology, we have constantly
been challenged by the need to find continuing and new sources of capital to
meet our operating expenses. There can be no assurance that we will continue to
be successful in obtaining financing, or that we will, as we now anticipate, be
able to generate significant revenues from operations in calendar 2008, in which
event we may be unable to proceed with our business operations. Substantial
doubt exists about our ability to continue as a going concern if we do not
generate significant revenues from operations.




Critical
Accounting Policies and Recent Accounting Pronouncements





The
Company’s significant accounting policies are set forth in Note 1 of Notes to
Consolidated Financial Statements in the company’s report on Form 10/A dated
February 4, 2008. A discussion of those policies that require management
judgment and estimates and are most important in determining the Company’s
operating results and financial condition appears in Management’s Discussion and
Analysis of Financial Condition and Results of Operations contained in the
company’s report on Form 10/A dated February 4, 2008. The Financial Accounting
Standards Board issues, from time to time, new financial accounting standards,
staff positions and emerging issues task force consensus. See Note 2 of Notes to
Condensed Consolidated Financial Statements for a discussion of these
matters.




Forward-Looking
Statements





All
statements other than statements of historical fact included in this report,
including without limitation statements regarding the Company’s financial
position, business strategy, and the plans and objectives of the Company’s
management for future operations, are forward-looking statements. When used in
this report, words such as “anticipate,” “believe,” “estimate,” “expect,”
“intend” and similar expressions, as they relate to the Company or its
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of the Company’s management, as well as assumptions
made by and information currently available to the Company’s management. Actual
results could differ materially from those contemplated by the forward-looking
statements as a result of certain factors, including, but not limited to,
general business and economic conditions, including, results of integrating
acquired businesses into existing operations, competitive factors and pricing
pressures in the technology and development of video delivery over internet
protocol.  Such statements reflect the views of the Company with
respect to future events and are subject to these and other risks, uncertainties
and assumptions relating to the operations, results of operations, growth
strategy and liquidity of the Company as previously disclosed in the Company’s
report on Form 10/A dated March 31, 2008. Readers are cautioned not to place
undue reliance on these forward-looking statements. The Company does not
undertake any obligation to release publicly any revisions to these
forward-looking statements to reflect future events or circumstances or to
reflect the occurrence of unanticipated events.




17
 Table of Contents





Item3.  Quantitative and Qualitative Disclosure About Market
Risk





Management
does not believe that there is any material market risk exposure with respect to
derivative or other financial instruments that is required to be
disclosed







Item4.  Controls and Procedures





The
Company has carried out an evaluation under the supervision and with the
participation of its management as to the effectiveness of the design and
operation of its disclosure controls and procedures. The evaluation examined the
Company’s disclosure controls and procedures as of June 30, 2008, the end
of the period covered by this report pursuant to Rule 13a-15(b) under the
Securities Exchange Act of 1934, as amended. Based on that evaluation, such
officers have concluded that, as of June 30, 2008, the Company’s disclosure
controls and procedures were effective to ensure that information required to be
disclosed by the Company in the reports filed or submitted by it under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the time period specified in the rules and forms of the
Securities and Exchange Commission, and include controls and procedures designed
to ensure that information required to be disclosed by the Company in such
reports is accumulated and communicated to management, including the Company’s
Chief Executive Officer and the Company’s Chief Financial Officer, as
appropriate to allow timely decisions regarding required
disclosures.
  During
the period covered by this report, there were no changes in the company’s
internal control over financial reporting which materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.




Limitations on the
Effectiveness of Controls





The
Company believes that a control system, no matter how well designed and
operated, cannot provide absolute assurance that the objectives of the control
system are met, and no evaluation of controls can provide absolute assurance
that all controls issues and instances of fraud, if any, within a company have
been detected. The Company’s disclosure controls and procedures are designed to
provide reasonable assurance of achieving their objectives and the company’s
President and CFO have concluded that such controls and procedures are effective
at the “reasonable assurance” level.





18
 Table of Contents




PART
II — OTHER INFORMATION





Item1.  Legal
Proceedings





None


Item1A.  Risk
Factors




There
have been no material changes from the risk factors disclosed in Item 1A to Part
I in the Company’s Report on Form 10/A dated March 31, 2008, for the year ended
September 30, 2007.





Item2.  Unregistered Sales of Equity
Securities and Use of Proceeds





In the
nine months ended June 30, 2008, the Company issued 27,385,412 shares of
restricted common stock to accredited investors for cash with no demand or
piggy-back registration rights. These securities were sold pursuant to the
exemption from registration provided by Section 4(2) of the Securities Act of
1933 and Regulation D, Rule 506, promulgated thereunder.




Item3.  Defaults upon Senior
Securities





None





Item4.  Submission of Matters to a
Vote of Security Holders





None





Item 5.  Other
Information





None





Item6.  Exhibits


Exhibit 31.1 — Section 302 Certificate of Chief Executive
Officer


Exhibit 31.2— Section 302 Certificate of Chief Financial
Officer


Exhibit 32.1 — Section 906 Certificate of Chief Executive
Officer


Exhibit 32.2 — Section 906 Certificate of Chief Financial
Officer








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 thereto
duly authorized.




ESPRE SOLUTIONS,
INC.


Registrant






Date
            
            
            Date/s/ Peter Leighton
            August 14,
      2008
            
            /s/ BG Moore
            August 14,
      2008Peter
      Leighton
            
            
            BG
      MoorePresident
            
            
            Chief
      Financial Officer






19