UNITED
      STATES


SECURITIES
      AND EXCHANGE
      COMMISSION


WASHINGTON,
      D.C. 20549





FORM
      10-KSB





(Mark
      one)


|X|
            ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934


For
      the
      fiscal year ended: October 31, 2007




or




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


For
      the
      transition period from ______________ to _____________








Commission
      File Number: 0-50089





NATIONAL
      ENERGY SERVICES COMPANY,
      INC.


(Exact
      name of small business issuer in its charter)





Nevada
            
            52-2082372(State
                or other jurisdiction of incorporation or organization)
            
            (IRS
                Employer Identification No.)3153
                Fire Road, Suite
                2C, Egg Harbor Township, NJ
            
            08234(Address
                of principal executive offices)
            
            (Zip
                Code)





Issuer's
      telephone number: (800) 758-9288





Securities
      registered pursuant to Section 12(b) of the Exchange Act: None





Securities
      registered pursuant to Section 12(g) of the Exchange Act:


Common
      Stock, $.001 par value





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act.  Yes |  |   No
      |X|





Check
      whether the issuer (1) filed all reports  required to be filed by
      Section 13 or 15(d) of the  Exchange  Act during the past 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.  Yes |X|   No
      |  |





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the  best of  registrant's  knowledge, in
      definitive proxy or information statements incorporated by reference in Part
      III
      of this Form 10-KSB or any  amendment to this Form
      10-KSB.  |   |














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





The
      issuer’s revenues for its most recent fiscal year were $2,385,384.





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked price of such common equity, as of a
      specified date within the past 60 days was $1,980,128.





The
      number of shares outstanding of the issuer’s common stock, as of January 24,
      2008 was 29,728,983.





DOCUMENTS
      INCORPORATED BY REFERENCE:  None








Transitional
      Small Business Disclosure Format (check one): Yes |  | No
      |X|



























































PART
      I





CAUTIONARY
      NOTE REGARDING
      FORWARD-LOOKING STATEMENTS





This
      Report contains certain forward-looking statements regarding National Energy
      Services, Inc., its business and its financial prospects.  These
      statements represent Management’s present intentions and its present belief
      regarding the Company’s future.  Nevertheless, there are numerous
      risks and uncertainties that could cause actual results to differ from the
      results suggested in this Report.  Among the more significant factors
      are:





Ø
            The
                Company has not been profitable in recent years. Although the Company
                implemented a number of programs to help us achieve profitability,
                it does
                not know yet whether they will be effective.


Ø
            The
                Company lacks the capital necessary to significantly expand its business.
                Unless the expansion of business is sufficient enough that the gross
                profit will exceeds administrative costs, the Company will not achieve
                profitability.


Ø
            Expansion
                of business will require that an expansion of accounting and other
                internal management systems. Such an expansion may lead to inefficiencies
                that could prevent profitability.





Because
      these and other risks may cause National Energy Services’ actual results to
      differ from those anticipated by Management, the reader should not place undue
      reliance on any forward-looking statements that appear in this
      Report.  Readers should also take note that National Energy Services
      will not necessarily make any public announcement of changes affecting these
      forward-looking statements, which should be considered accurate on this date
      only.





ITEM
                1.
            DESCRIPTION
                OF BUSINESS





Business
      of the Company





John
      Grillo, President, organized the
      predecessor to National Energy Services in 1995 to engage in the business of
      marketing aggregated energy management services to the long term care
      industry.  Mr. Grillo capitalized on his experience as an electrical
      contractor to develop a comprehensive energy management program (the “Program”)
      for the long term care industry.  In 2005 the Company’s business model
      expanded to market the Program to hospitality facilities as well as long term
      care facilities ("Facilities").  The Program features an upgrade to
      lighting fixtures, improved heating, venting and air conditioning ("HVAC")
      equipment and ozone laundry systems ("OLS").  In February of 2007, the
      Company began to offer an additional service.  It provides
      telecommunications services to further assist in reducing its’ clients'
      operating expenses.  The Company is not affiliated with any
      one-service provider and is able to quote from various sources.  This
      allows the Company to obtain the best solution for improving service quality
      for
      its customer.  The Company added two new members to its sales team to
      begin to market these services to the existing and future client
      base.








-3-





Financing
      Arrangements





The
      Company has offered the Facilities
      several financing alternatives through various lending sources.  In
      the past Facilities purchased the upgrade equipment and obtained purchase
      financing from Charter Management, LLC ("Charter").  Currently they
      may lease the equipment from U.S. Energy Capital ("US Capital").





The
      Energy Gatekeeper Program
      (“Gatekeeper”) was a combined service and equipment financing contract under
      which the Company provided the Facility with all of its energy services and
      assisted the Facility in obtaining financing from Charter for the energy
      services.  The Facility may obtain new energy-efficient lighting, an
      ozone laundry support system, HVAC systems and other energy-efficient capital
      improvements. The Gatekeeper program was priced so that the Facilities will
      cover the financing cost of the upgrades through monthly energy savings
      generated by the energy system improvements.  There are minimal or no
      out-of-pocket costs to the Facility, since the capital costs for the Gatekeeper
      were funded by Charter   and typically amortized over a
      sixty-month period during which it was projected that the energy savings will
      equal or exceed the Facility’s financing costs.





Charter
      is owned by John O'Neill and
      Deborah O’Neill, who have a controlling equity interest in National Energy
      Services as well.  In 2003 a master agreement was executed with
      Charter under which Charter offered financing for the energy upgrades and
      retrofits sold by the Company.  Charter performed a credit check and
      issued approval for the financing.  The Company signed an individual
      agreement with Charter for each loan acknowledging the Company’s responsibility
      for all loan payments in the event the Facility defaults.  The
      customer makes its monthly payments to the Company, which then remits the
      monthly loan payment to Charter.  The Company presently has
      receivables still outstanding from the Gatekeeper program, which will expire
      in
      July of 2009.  The Company discontinued this program and replaced it
      with one in which the customer/facility is directly indebted to the
      lender.





In
      2005 the Company developed
      arrangements in which US Energy Capital offers customers equipment lease
      financing for the capital equipment involved in the Program.  Under
      this program, the customer is directly indebted to the leasing
      company.





The
      Company has customers who fund these projects through their own capital
      expenditure budgets and pay the Company cash.





Principal
      Products and Services





The
      principal products and services
      offered in the Program are the Ozone Laundry System (OLS), Lighting Upgrades,
      Mechanical Systems (HVAC), Water/Sewer Conservation Methods and Energy
      Management.





Ozone
      Laundry System
      (OLS).  OLS is a system that can reduce a Facility’s laundering
      costs by more than 50%, primarily by eliminating the need for hot water during
      the washing process. The OLS injects activated oxygen (ozone) into the wash
      and
      rinse water, with the result that the laundry is cleaned and completely
      disinfected.  Ozone is a powerful oxidant that is more effective than
      chlorine, but without chlorine's dangerous properties.  Various
      studies have shown that using ozone in laundering is far more effective than
      conventional disinfectants against microorganisms and viruses. With ozone
      laundering, fewer cycles are required to clean, thus chemical use is
      reduced.  Energy bills are also greatly reduced because ozone is only
      active in cold water, eliminating the need to buy natural gas or other energy
      sources to heat the water. The savings to the Facility are substantial since
      laundering expense is one of the most significant expense items in a Facility’s
      budget.








-4-





Lighting
      Upgrades.  The Company provides Facilities with
      energy-efficient lighting upgrades or retrofits (“Lighting
      Upgrades”).  The Lighting Upgrades can reduce the Facility’s energy
      consumption and prevent pollution while delivering comparable or better
      lighting. For example, a Lighting Upgrade in a typical 120 bed nursing home
      can
      reduce energy usage by 226,666 kilowatt hours per year, resulting in an annual
      savings of approximately $20,400.  This calculation of average savings
      is based on our own engineering studies and actual results in more than 100
      installations.





Although
      a Lighting Upgrade product may
      cost slightly more than the standard lighting product it replaces, the energy
      savings are so significant that any incremental cost is rapidly recovered by
      the
      Facility.  For example, compact fluorescent light bulbs use 70 percent
      less energy than standard incandescent light bulbs. By replacing just one
      75-watt incandescent light bulb with a 20-watt CFL, a Facility saves
      approximately $14 a year, assuming the bulb is used for 5,000 hours in the
      year.  Further, compact fluorescent light bulbs last an average of
      10,000 hours, compared to only 850 hours for a standard incandescent light
      bulb.





Mechanical
      Systems/HVAC.  The installation of state-of-the-art, energy
      conserving boilers, heating and air conditioning units and other mechanical
      equipment can improve a Facility’s operating efficiency and increase its
      productivity.  Retrofitting outdated systems with new equipment not
      only saves energy dollars, but reduces repair and maintenance expense. The
      impact of environmental improvements such as improved air quality and increased
      comfort levels can make a noticeable positive impact on the Facility’s residents
      and employees.





The
      installation of ColdPlus
      Refrigerant Oil Additive in HVAC units provides highly charged molecules that
      bond themselves to the compressor bearings and the inner wall of the refrigerant
      tubing throughout the system. This one molecule thick barrier is 15 times
      slicker than compressor oil and prevents the compressor oil from baking onto
      the
      refrigerant tubing or becoming gel-like.  The inner wall of the
      tubing, now slicker and no longer constricted by the baked-on or gelled oil,
      returns to its original diameter, allowing the refrigerant to flow uninhibited
      throughout the system. The refrigerant, now in direct contact with the inner
      wall of the tubing, transfers the heat much quicker and more
      efficiently.  The free flowing mixture allows the compressor to run
      with less stress, reducing the amps required to operate the motor by 5% to
      9%.
      It even begins to run quieter.  The refrigerant, now directly touching
      and cooling the inner wall of the tubing, allows the system to achieve colder
      temperatures with less energy usage.  The compressor operates 15% to
      30% less, potentially extending its lifespan by 15% to 30%.








-5-





Water
      and Sewer
      Conservation.  The goal of an effective water conservation
      project is to reduce usage and maintain or improve the water quality and fixture
      performance.  The installation of low use, optimum performance
      fixtures is the key to an effective water conservation program. For example,
      the
      retrofit of a low-flush toilet can reduce water usage by more than 750,000
      gallons annually in the average 120 bed nursing home.  This reduction
      in usage has a significant impact on water/sewer costs. Depending on the local
      water/sewer rates, the annual savings can be as much as $5,000 per year with
      equipment life expectancy of 15 to 20 years.





Telecommunications.  The
      Company can provide a
      single turnkey program that increases operational profitability reduce operating
      expenses and improve overall quality.The Company analyzes
      its
      clients’current
      telecommunications structure and
      then works with various providers to find the best solution for improving
      service.  The Company works with various service providers to lower
      costs for local and long distance telephone
      service, internet service and
      wireless systems.  This service results in various one time
      commissions and recurring revenue paid to the Company by the providers for
      the
      life of the service contract.





Research
      & Development:  Web-Based Energy Management





The
      Company expects that before the end
      of fiscal 2008 it will introduce the next generation Wireless Energy Management
      System.  The System operates on Web Based Software and allows
      customers to be in full control of their energy
      consumption.  Customers will be able to remotely
      view,
      monitor and manage pertinent energy information concerning lighting panels,
      hot
      water heaters, HVAC equipment, pumps, fans and motors.  This system
      allows building owners to interface wirelessly with the utility
      electricmeter
      and view consumption in real
      time.  Building owners can also remotely control equipment inside the
      facility to reduce their carbon footprint.


.


Marketing,
      Sales and Distribution





The
      Company’s primary market is the
      nursing home industry.  There are approximately 17,000 nursing homes
      operating nationally, with approximately 10,000 of them in the high cost energy
      regions of the East and West coasts. Nursing homes are a fertile area for our
      energy-saving Program for several reasons:





-
            Nursing
                homes are under intense fiscal and regulatory pressures.


-
            Nursing
                homes have very few areas to conserve cash without compromising care.


-
            Utility
                costs are among the five highest line items in the operating budget.


-
            Most
                nursing homes are operating outdated HVAC and lighting systems.


-
            The
                customer is well-defined and easy to reach.


-
            Most
                long term care facilities are alike in construction, design and energy
                consumption.


-
            Data
                about nursing home energy consumption is quickly and efficiently
                obtained.


-
            The
                Medicaid utilities reimbursement structure assures a Facility’s ability to
                pay.





In
      addition to capitalizing on the Company’s track record in the skilled nursing
      facility industry, in 2007, the Company made its entry into the hospitality
      industry, with a successful test for Hilton Hotels.  As a result of
      that test, the Company is now in the process of gearing up its sales and
      marketing team in order to actively sell its Ozone Laundry System to
      Hilton.  The Company is also looking to sell its system to other hotel
      chains.   The addressable market of approximately 30,000
      hotels/motels is much larger than the skilled nursing industry. The Company
      is
      proceeding carefully, looking to field test equipment in several locations
      with
      several chains, much in the way the nursing home market was initially
      approached.  To assist in this area, the Company recently engaged a
      new salesperson, who has existing relationships in the hotel
      industry.








-6-





Additionally
      the Company is starting to penetrate the warehouse, freight distribution and
      manufacturing sectors, offering the T-5 lighting system.  This is a
      relatively new way to light traditional steel pre-fabricated
      buildings.  This lighting system, which consumes 50% less energy than
      conventional metal halide and high-pressure sodium HID fixtures, also provides
      better quality of light, increased productivity, and lower maintenance
      costs.





The
      Company believes that relationships
      are the cornerstone of its marketing philosophy.  The process of
      building and maintaining working relationships requires a commitment at all
      levels of the organization.  The marketing program includes: market
      research, feasibility studies, public and industry relations, promotion,
      advertising, direct response, sales support, customer service, employee
      relations and training and education.  As a result of the complexity
      of the products offered and the market, the Company works very hard to ensure
      that its employees and representatives have a working knowledge of all products
      and processes.





Purchasing
      and Installation





The
      Company has developed solid
      relationships with major suppliers of industrial lighting, mechanical equipment
      and other energy conservation products.  The Company has preferred
      vendor or distributor status with several suppliers. This means that the Company
      enjoys the following:  (i) preferred pricing, (ii) quantity discounts,
      (iii) timely delivery, (iv) quality products, (v) exceptional warranties, (vi)
      superior customer service, (vii) product exclusivity, (viii) manufacturer
      sponsored training, and (ix) superior customer service.  The Company
      is dedicated to maintaining quality relationships with suppliers and makes
      a
      concentrated effort to expand its sphere of influence among
      manufacturers.  This allows the Company to customize product lines and
      select the materials that best fill the needs of its customers.





The
      installation of the products is the
      most delicate part of the entire process and can place enormous strain on a
      customer relationship.  The Company’s selection of the right
      contractor to carry out the installation is critical to a successful
      installation.  The Company has strict contractor criteria. The
      selected firm must have a complete understanding of what is required to work
      in
      the health care or hospitality environment and be willing to complete the
      contractor compliance paperwork.





Competition





The
      principal markets in which the
      Company competes are competitive and fragmented.  No competitor known
      to us controls more than 3% of the nursing home market for any of the several
      services provided.  There are competitors supplying energy, providing
      energy management services or financing, but few providing a total package
      deal
      with no out-of-pocket cost to the facility.  Increased competition
      could have a material adverse effect, as competitors may have far greater
      financial and other resources available to them.








-7-





Governmental
      Regulation





The
      government regulations applicable
      to the health care and hospitality industries are in many ways
      unique.  State regulations include specifications for HVAC, lighting,
      water quality and laundry equipment.  It is the Company’s
      responsibility to find supplies and equipment that meet and/or surpass the
      regulatory guidelines.  Guidelines vary from state to
      state.  It is critical to become familiar with each state’s
      regulations and policies regarding each energy conservation measure (“ECM”)
      before we start to market and install the particular ECM in any given
      state.





The
      one portion of the Company’s
      Program that is most intensely affected by government regulation is the laundry
      process.  The majority of states in which the Company markets have
      specific guidelines for laundry that is processed in an on-site
      laundry.  Typical regulations include guidelines
      mandating  separate holding areas for soiled and clean linen, linen
      cart storage, having enough clean linen on hand to adequately service the
      facility, adequate soiled and clean linen storage, an area for folding, mending
      and ironing  the clean  linen,  proper storage for
      supplies, a deep sink for soaking  and a  separate hand
      washing sink.  Policies, procedures and proper protocol to reduce
      bacteria in linens and to protect the staff and residents from infection are
      required to be written and implemented by the facility.





The
      procedures and policy section is
      what most affects the installation of the OLS. Since these procedures and
      policies are left to the individual Facility to develop, it is common practice
      to follow the “manufacturers specifications” when it comes to
      disinfection.  Because standard laundering procedures use chlorine
      bleach to disinfect the linen, the “manufacturers specifications” often require
      160 degree water because that is the water temperature in which chlorine bleach
      is most effective.  While most states do not define a minimum water
      temperature, two states have a minimum wash water temperature in their
      respective regulations:  Maryland and Massachusetts. To overcome the
      minimum wash water temperature requirements, the Company presented Maryland
      and
      Massachusetts with the merits of using ozone in the wash water to clean and
      disinfect.  The Company was successful in this endeavor and have
      received waivers from both states to install the OLS.





Compliance
      with Environmental Laws





The
      Company is in compliance with all
      relevant environmental laws.  The waste generated during a lighting
      upgrade that can be considered hazardous is the Polychlorinated Biphenyl's
      (PCBs) in the existing ballasts and the mercury in the existing fluorescent
      lamps. The Company uses federal and state licensed and fully insured recycling
      facilities and hazardous waste disposers.  This practice in some
      instances exceeds the minimum disposal requirements.  But it is the
      Company’s view that this practice will provide its clients and itself the
      greatest protection from any Super Fund or toxic waste liability
      issues.





The
      Company’s practices are required to
      comply with the federal Toxic Substance Control Act ("TSCA"), which regulates
      the disposal of PCBs.  Fully complying with the TSCA removes the risk
      of liability under the federal Comprehensive Environmental Compliance and
      Liability Act of 1980 ("CERCLA"), which is also known as the Superfund Law.
      Under this law, any release or threat of a release of a hazardous substance
      requires immediate cleanup and notification of all responsible
      parties.  The Company’s practices are also required to comply with the
      Resource Conservation and Recovery Act ("RCRA").  RCRA requires
      generators of lamps to test a sample of mercury-containing lamps to determine
      if
      they should be treated as hazardous waste.  Lamps must be managed as
      hazardous waste if the mercury concentration exceeds 0.2 mg per liter. In
      addition, lamps must be managed as hazardous waste if they are not tested and
      proven non-hazardous.  The Company treats all fluorescent lamps as
      hazardous and properly dispose and recycle them.








-8-





Employees





The
      Company employs eleven full time
      and no part time employees.  None of the Company's employees is
      represented by a labor union.  The Company believes its relationship
      with employees is excellent and does not believe that unionization is likely
      to
      happen.  The Company anticipates hiring additional employees over the
      next twelve months if it is successful in implementing its plan of
      operations.





ITEM
                2.
            DESCRIPTION
                OF PROPERTY





The
      Company currently leases its
      executive offices at 3153 Fire Road, Suite 2C, Egg Harbor Township, New Jersey
      from Knaak Family Real Estate Holdings, LLC on a yearly basis, since the four
      year lease for the premises expired last summer. The property consists of
      approximately 1,800 square feet of finished office space, for which we pay
      $1,906 per month.  It is believed that the foregoing space is adequate
      to meet current and planned operations.





ITEM
                3.
            LEGAL
                PROCEEDINGS





The
      Company is party to a legal
      proceeding in the Supreme Court of the State of New York (Onondaga County)
      titled “PPL Energy Service Holdings, LLC v. Sunnyside Care Center, LLC v.
      National Energy Services Corporation.  The Company has been named as a
      counterclaim defendant in the action, relating to an installation of energy
      upgrades in 2002.   The counterclaim plaintiff alleges that it
      was damaged in the amount of $33,495.00 by reason of the Company’s
      negligence.  The Company has answered, denying liability, and intends
      to defend the action vigorously.







ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.


PART
      II





ITEM
                5.
            MARKET
                FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
                ISSUER
                PURCHASES OF EQUITY SECURITIES.





(a)  Market
      Information.  The Company’s common stock has been quoted on the
      OTC Bulletin Board under the symbol “NEGS.OB” since September 26,
      2006.  Set forth below are the high and low bid prices for each
      quarterly period from September 26, 2006 through October 31,
      2007.  The reported bid quotations reflect inter-dealer prices without
      retail markup, markdown or commissions, and may not necessarily represent actual
      transactions.








-9-








BidHigh
            
            
            LowSept.
                26, 2006 – Oct. 31, 2006
            
            $
            .25
            
            
            $
            .22Nov.
                1, 2006 – Jan. 31, 2007
            
            $
            .24
            
            
            $
            .13Feb.
                1, 2007 – Apr. 30, 2007
            
            $
            .51
            
            
            $
            .20May
                1, 2007 – July 31, 2007
            
            $
            .38
            
            
            $
            .21Aug.
                1, 2007 – Oct. 31, 2007
            
            $
            .33
            
            
            $
            .17





(b)  Holders.  There
      are 127 holders of record of common stock.





(c)  Dividend
      Policy.  The Company has not declared or paid cash dividends or
      made distributions in the past, and does not anticipate paying cash dividends
      or
      making distributions in the foreseeable future. The Company currently intends
      to
      retain and reinvest future earnings, if any, to finance operations.





(e)  Recent
      Sales of Unregistered
      Securities.





On
      August 8, 2007, the Company executed
      an agreement to obtain the services of an investment banking/public relations
      firm.  In exchange for the firm’s one year commitment, the Company
      issued to it 85,325 shares of its common stock and options to purchase 200,000
      shares at prices ranging from $.50 to $1.50.  The sale was exempt
      pursuant to Section 4(2) of the Act since the sale was not made in a public
      offering and was made to an entity whose principals had access to detailed
      information about National Energy Services, and which was acquiring the shares
      for its own account.  There were no underwriters.




On
      August 8, 2007, the Company executed
      an agreement to obtain the services of a Consultant.  In exchange for
      the consultant’s one year commitment, the Company issued 341,297 shares of its
      common stock.  The sale was exempt pursuant to Section 4(2) of the Act
      since the sale was not made in a public offering and was made to an individual
      who had access to detailed information about National Energy Services, and
      who
      was acquiring the shares for his own account.  There were no
      underwriters.




(f)
Repurchase
      of Equity
      Securities.  The Company did not repurchase any of its equity
      securities that were registered under Section 12 of the Securities Act during
      the 4th
      quarter
      of fiscal year 2007



















-10-





ITEM
                6.
            MANAGEMENT'S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.





Results
      of Operations





The
      Company’s revenue for the year ended October 31, 2007 was 108% more then the
      revenues for the year ended October 31, 2006.  During the year ended
      October 31, 2007, the Company realized revenue from three distinct
      sources:





Equipment
      Sales.  Our revenue from sales of capital equipment was
      $2,277,028 for the year ended October 31, 2007, which is 114% higher then the
      level of equipment sales for the year ended October 31,
      2006.   The 2007 sales represent 95% of our total revenue for the
      period.





Invoice
      Management
      Fees.  Some of the Facilities that we service pay us fees for
      aggregating invoices from the utility companies and processing their
      payments.  Our revenue from invoice management services represented 1%
      of total revenue for the year ended October 31, 2007.  It is expected
      that invoice management fees will continue to make only a minor contribution
      to
      revenue, as it is the intention of the Company to limit this relatively
      labor-intense business to situations in which the services can be performed
      profitably.





Energy
      Management
      Fees.  A number of the Facilities that the Company manages pays
      fees for monitoring their utility invoices to ensure correct charges and
      appropriate tariffs. Revenue from management services represented 4% of total
      revenue for the year ended October 31, 2007.  As with invoice
      management services, the portion of revenue attributable to energy management
      fees will remain modest, as the intention is to limit this relatively
      labor-intense business to situations in which the services can be performed
      profitably.





In
      the
      beginning of the 2007 fiscal year, the Company implemented a number of
      initiatives designed to increase revenues in the coming months.  The
      Company established a relationship with an equipment leasing company, so it
      could now offer prospective clients a choice of financing options.  In
      addition, the Company revised its internal procedures for evaluation of the
      credit worthiness of potential clients in order to substantially hasten the
      process, thus enabling the sales staff to close contracts more
      efficiently.  The expectation was that these initiatives, combined
      with increased demand for services due to the recent surge in energy prices,
      would enable the Company to expand its operations in the coming
      months.  These efforts proved to be beneficial.  The Company
      doubled its revenue from equipment sales and was able to support the various
      costs associated to the start up of the new product line of
      Telecommunications.





National
      Energy has also begun to explore new markets.  To date the typical
      customer has been the long term care facility.  The Company is now
      quoting business to the warehouse, freight distribution, manufacturing and
      hospitality industries.  These new areas will take some time to
      develop.





Our
      gross margin during the year ended
      October 31, 2007 was 50%, compared to 53% gross margin for the year ended
      October 31, 2006.   In general, gross margin will depend on
      product mix and volume of business.  The Company realizes a higher
      gross profit from sales of ozone laundry systems than from upgrades to lighting
      and HVAC systems, although the profit is counterbalanced by the higher marketing
      costs attendant to sales of ozone laundry systems. The fiscal year ended 2007
      did have more lighting jobs then the previous years.








-11-





If
      the
      Company is successful in increasing its volume of business, gross margin should
      increase as well, for a number of reasons.  For one, each sale of
      equipment requires that field surveyors are sent to interested Facilities to
      determine the potential energy savings so that a cost proposal can be presented
      to the Facility. That expense is incurred whether the sale closes or not, and
      the expense of failed contracts burdens the gross margin that is realized from
      successful marketing efforts.  If the Company is able to close more
      contracts and at a higher success rate, the burden on gross margin of costs
      from
      failed contracts will be proportionately reduced.





Our
      operating expenses for the year
      ended October 31, 2007 totaled $1,203,145, an increase of $7,957 compared to
      the
      year ended October 31, 2006.  The Company realized a reduction of
      $47,106 in selling during the year ended October 31, 2007.  This
      resulted from management’s ongoing efforts to market more
      efficiently.  The Company also realized a reduction in administrative
      expenses.  Those improvements were more then offset by (a) the start
      up costs related to the new product line of Telecommunication of $121,723,
      (b)
      the $95,595 expense incurred as a result of issuing stock to employees and
      consultants, (c) the $49,958 expense incurred in hiring an Investor Relations
      firm, (d) and a bad debt expense in the amount of $43,489.





Interest
      expense for the year ended October 31, 2007 was $34,125, compared to interest
      expense of $37,213 incurred in the year ended October 31,
      2006.  Interest expense should continue to decrease as debt is
      amortized unless the Company secures new debt financing.





As
      a
      result of the factors listed above, the Company reported a net loss of $30,683
      for the year ended October 31, 2007, as compared to a net loss of $609,601
      for
      the year ended October 31, 2006.





Liquidity
      and Capital Resources





During
      the years prior to fiscal 2007,
      the Company’s only significant source of working capital financing was Charter
      Management, LLC, which is owned by two members of the Company’s Board of
      Directors, John O’Neill and Deborah O’Neill.    In the
      summer of 2007, the Company received its first significant “outside” financing,
      as it sold to an investor, for $270,000, 1,000,000 shares of common stock and
      warrants to purchase an additional 1,000,000 shares at prices ranging from
      $.50
      to $1.50.





During
      fiscal year 2007, the Company’s operations were cash flow positive, providing
      $130,695 in cash.  With those funds and the summer investment, the
      Company was able to support its normal operations as well as the start up of
      the
      new telecommunications product line.  The Company also began to repay
      to Charter Management the funds it previously provided for
      operations.








-12-





The
      Company’s working capital deficit decreased by $143,936 during fiscal
      2007.  Nevertheless, at October 31, 2007 the deficit was
      $878,116.  The Company has minimal liquidity and working capital is
      severely strained, as credit lines have been fully utilized.  It is
      expected that there will continue to be a working capital deficit until revenues
      increase significantly.





Working
      capital has been impaired, in part, by the nature of the Company’s business
      contracts.  In most of the sales arrangements, the Company must
      complete the job, pay for all costs incurred, and obtain a completion
      certificate before an invoice can be submitted for reimbursement to the lender
      or lessor.  Only then will the Company collect the cash payment for
      the job.  This procedure creates a delay of approximately thirty days
      before funds are received.   Until a level of operations is
      reached in which the Company is completing jobs on a consistent basis, this
      delay in receiving payment for jobs will impair the ability to fund
      operations.





In
      2004 PPL Spectrum, Inc. (“PPL”)
      terminated the arrangement under which it had previously provided equipment
      financing to the Company’s customers.  Effective March 1, 2005 the
      Company assigned to PPL all of the notes receivable that arose from customer
      financing provided by PPL.  In turn, PPL released the Company from the
      corresponding notes payable to PPL.





In
      connection with the termination of
      the lending arrangement and assignment of the notes, the Company did assume
      certain obligations to PPL:





-
            The
                Company entered into a settlement agreement with PPL for aged payables.
                In
                February 2004 the payables were consolidated into a three-year promissory
                note in the amount of $314,047, bearing interest at 18% per annum.
                Effective March 1, 2005, this note was renegotiated to bear interest
                rate
                at 8% per annum. The balance at March 1, 2005 was $219,473 payable
                over
                seven years. The balance at October 31, 2007 outstanding under this
                note
                was $99,235 of which $34,352 is reflected as current liabilities.




-
            The
                Company contracted to pay $1,400 per month toward a reserve for any
                bad
                debts among the notes it assigned to PPL. The Company has recorded
                the
                present value of that obligation on its balance sheet as a debt.
                As of
                October 31, 2007, the balance of the debt was $101,873, of which
                $11,403
                is reflected as a current liability.




-
            The
                Company also contracted to assume a contingent liability to reimburse
                PPL
                for the bad debts of certain customers if they filed for protection
                in
                bankruptcy. The contingency occurred in June 2005, and the Company
                became
                obligated to fund $140,709 over 10 years with an imputed interest
                rate of
                6%. As of October 31, 2007, the balance on this obligation was $113,074,
                of which $12,627 is reflected as current liabilities.




The
      table
      below sets forth out debt service obligations as of October 31,
      2007.










-13-








Contractual
                Obligations
            
            Total
            
            
            Less
                than
              1
                Year
            
            
            1-3
                Years
            
            
            4-5
                Years
            
            
            After
              5
                YearsLoans
                Payable – Stockholder/employee
            
            $
            19,500
            
            
            $
            19,500
            
            
            $
            0
            
            
            $
            0
            
            
            $
            0Charter
                – Notes payable
            
            $
            212,683
            
            
            $
            146,252
            
            
            $
            66,431
            
            
            $
            0
            
            
            $
            0PPL
                Promissory Note
            
            $
            99,235
            
            
            $
            34,352
            
            
            $
            64,883
            
            
            $
            0
            
            
            $
            0PPL
                Bad Debt Reserve
            
            $
            101,873
            
            
            $
            11,403
            
            
            $
            38,606
            
            
            $
            29,869
            
            
            $
            21,995PPL
                Bankruptcy Reserve
            
            $
            113,074
            
            
            $
            12,657
            
            
            $
            42,851
            
            
            $
            33,153
            
            
            $
            24,413Bank
                Note Payable
            
            $
            30,949
            
            
            $
            28,572
            
            
            $
            2,377
            
            
            $
            0
            
            
            $
            0Operating
                Leases
            
            $
            39,952
            
            
            $
            21,160
            
            
            $
            15,364
            
            
            $
            3,428
            
            
            $
            0TOTAL
            
            $
            617,266
            
            
            $
            273,896
            
            
            $
            230,512
            
            
            $
            66,450
            
            
            $
            46,408





Assets
      totaled $806,400 and $722,235 as
      of October 31, 2007 and 2006, respectively.  On both dates assets
      consisted primarily of notes receivable from our customers who financed through
      Charter Management  and accounts receivable from current
      installations.





The
      Company plans to finance our future operations through the sale of products
      and
      services.  In addition, the Company is taking steps to insure
      continued operations by trying to raise additional equity, and is also looking
      into incurring additional debt to improve cash flow.  The Company is
      also contacting local banks to obtain additional short term financing via an
      extended credit line.  To date, the Company has no commitments for
      financing from any source.  Nevertheless, it is believed that even if
      additional equity or additional debt cannot be secured, cash flow from
      operations will be sufficient to sustain operations for the next twelve months
      and the foreseeable future.





Off-Balance
      Sheet Arrangements





The
      Company does not have any
      off-balance sheet arrangements that have or are reasonably likely to have a
      current or future effect on our financial condition or results of
      operations.,





Application
      of Critical Accounting Policies





In
      preparing the financial statements the Company is required to formulate working
      policies regarding valuation of assets and liabilities and to develop estimates
      of those values.  In the preparation of the financial statements for
      fiscal year 2007, there was one estimate made which were (a) subject to a high
      degree of uncertainty and (b) material to our results.





The
      estimate was the determination, detailed in Note 10 to the Financial Statements,
      that the Company should record a valuation allowance for the full value of
      the
      deferred tax asset created by the net operating loss
      carryforward.  The primary reason for the determination was the lack
      of certainty as to whether the Company will carry on profitable operations
      in
      the future.





The
      Company made no material changes to
      critical accounting policies in connection with the preparation of financial
      statements for the year ended October 31, 2007.








-14-





Impact
      of Accounting
      Pronouncements





There
      were no recent accounting
      pronouncements that have had a material effect on the Company’s financial
      position or results of operations.  There were two accounting
      pronouncements that may have a material effect on the Company’s financial
      position or results of operations.





In
      December 2004, the FASB issued SFAS No. 123R “Share-Based Payment.” This
      Standard addresses the accounting for transactions in which a company receives
      employee services in exchange for (a) equity instruments of the company or
      (b)
      liabilities that are based on the fair value of the company’s equity instruments
      or that may be settled by the issuance of such equity instruments. This Standard
      eliminates the ability to account for share-based compensation transactions
      using Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued
      to Employees,” and requires that such transactions be accounted for using a
      fair-value-based method. The Standard is effective for periods beginning after
      June 15, 2005. The Standard may adversely affect the Company’s results of
      operations if, as the Company grows, it issues a material amount of capital
      stock to attract executives and experienced managers to the
      Company.





In
      July
      2006, the FASB issued FASB Interpretation 48 “Accounting for Uncertainty
      in Income
      Taxes”– an interpretation of FASB Statement 109 (FIN 48).  FIN
      48 clarifies the accounting for uncertainty in income taxes recognized in an
      entity’s financial statements in accordance with SFAS 109, “Accounting for Income
      Taxes.”FIN 48 prescribes a recognition threshold and
      measurement attribute for financial statement disclosure of tax positions taken,
      or expected to be taken, on a tax return.  This interpretation is
      effective for fiscal years beginning after December 15, 2006.  The
      Company has not yet analyzed the impact FIN 48 will have on its financial
      condition, results of operations, or cash flows.







ITEM
                7.
            FINANCIAL
                STATEMENTS





The
      Company’s financial statements,
      together with notes and the Report of the Independent Registered Public
      Accounting Firm, are set forth immediately following Item 14 of this
      Form     10-KSB.





ITEM
                8.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE.





Not
      applicable.





ITEM
                8A.
            CONTROLS
                AND PROCEDURES.





(a)
            Evaluation
                of disclosure
                controls and procedures.





The
      term
“disclosure controls and procedures” (defined in SEC Rule 13a-15(e)) refers to
      the controls and other procedures of a company that are designed to ensure
      that
      information required to be disclosed by a company in the reports that it files
      under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded,
      processed, summarized and reported within required time periods. The Company’s
      management, with the participation of the Chief Executive Officer and the Chief
      Financial Officer, has evaluated the effectiveness of the Company’s disclosure
      controls and procedures as of the end of the period covered by this annual
      report (the “Evaluation Date”).In
      the course of that review, the Company’s managementwere
      advised by Bagell, Josephs, Levine
      and Company, LLC, our independent registered public accounting firm, that during
      its performance ofreview
      procedures with respect to the financial statements for the period ended January
      31, 2007, and subsequent reporting periods, it identified a material weakness
      (as defined in Public Company Accounting Oversight Board Standard No. 2) in
      our
      internal control over financial reporting.








-15-





The
      material weakness identified by Bagell, Josephs, Levine and Company, LLC
      consisted of inadequate staffing and supervision within the bookkeeping and
      accounting operations of our company.  The relatively small number of
      employees who have bookkeeping and accounting functions prevents us from
      segregating duties within our internal control system.  The inadequate
      segregation of duties is a weakness because it could lead to the untimely
      identification and resolution of accounting and disclosure matters or could
      lead
      to a failure to perform timely and effective reviews.  In light of the
      advice from Bagell, Josephs, Levine and Company, LLC, management has considered
      adding personnel to the company’s bookkeeping and accounting
      operations.  However, as there has been no instance in which the
      company failed to identify or resolve a disclosure matter or failed to perform
      a
      timely and effective review, management determined that the addition of
      personnel to our bookkeeping and accounting operations is not an efficient
      use
      of our limited resources at this time.





Accordingly,
      based on their evaluation of our disclosure controls and procedures as of
      October 31 2007, the Company’s Chief Executive Officer and Chief Financial
      Officer (or persons performing similar functions) have concluded that, as of
      the
      Evaluation Date, such controls and procedures were effective.





(b)
            Changes
                in internal
                controls.





The
      term
“internal control over financial reporting” (defined in SEC Rule 13a-15(f))
      refers to the process of a company that is designed to provide reasonable
      assurance regarding the reliability of financial reporting and the preparation
      of financial statements for external purposes in accordance with generally
      accepted accounting principles. The Company’s management, with the participation
      of the Chief Executive Officer and Chief Financial Officer (or persons
      performing similar functions), has evaluated any changes in the Company’s
      internal control over financial reporting that occurred during the fourth
      quarter of the year covered by this annual report, and they have concluded
      that
      there was no change to the Company’s internal control over financial reporting
      that has materially affected, or is reasonably likely to materially affect,
      the
      Company’s internal control over financial reporting.





ITEM
                8B.
            OTHER
                INFORMATION.





None.

















-16-





PART
      III





ITEM
                9.
            DIRECTORS
                AND EXECUTIVE OFFICERS OF THE REGISTRANT





The
      officers and directors of the Company are:





Name
            
            Age
            
            Position
                with the
                Company
            
            DirectorSinceJohn
                T. O'Neill
            
            50
            
            Chairman
                of the Board, Chief Executive Officer, Director
            
            2004John
                A. Grillo
            
            46
            
            President,
                Chief Financial Officer, Director
            
            2001Deborah
                O'Neill
            
            49
            
            Secretary,
                Treasurer, Director
            
            2004Rusty
                J. Gramiak
            
            51
            
            Vice-President
                of Operations
            
            --Patricia
                A. Palmieri
            
            41
            
            Controller
            
            --





All
      directors hold office until the
      next annual meeting of shareholders and until their successors have been elected
      and qualify.  Officers serve at the pleasure of the Board of
      Directors.





John
      T.
      O'Neill.   Mr. O’Neill has been involved in the nursing
      home industry for over forty years.  For more than the past five
      years, Mr. O’Neill has been employed as CEO of O’Neill Management LLC., which is
      involved in the development, construction and operation of healthcare
      facilities.  Mr. O’Neill is also the CEO of Charter Management, LLC,
      which provides financing programs for the development of long-term care
      facilities.  Mr. O’Neill attended Bowling Green State University and
      Ohio State University, where he completed the Core of Knowledge for
      certification as a Licensed Nursing Home Administrator.  Mr. O’Neill
      is married to Deborah F. O’Neill, the Company’s Secretary and
      Treasurer.





John
      A.
      Grillo.  Mr. Grillo organized National Energy Services Company
      in 1996, and has served as its Chief Executive Officer since that
      time.  Prior to organizing National Energy Services Company, Mr.
      Grillo was employed in a number of capacities in the field of electrical
      engineering.  In 1996, Mr. Grillo conceived and co-authored the New
      Jersey Division of Medical Assistance and Health Services Energy Efficient
      Lighting System Incentive, for the long-term care industry. He is an
      Environmental Protection Agency certified lighting surveyor.  Mr.
      Grillo attended Northeastern University’s School of Electrical Engineering
      Technology from 1979 to 1983.





Deborah
      F.
      O'Neill.  Ms. O’Neill is a Certified Public Accountant with
      experience in auditing, income tax preparation and real estate
      development.  For more than the past five years, Ms. O’Neill has been
      employed by O’Neill Management LLC with responsibilities in financial
      management.  She is also employed in the financial management of
      Charter Management, LLC.  Previously, Ms. O’Neill was a founder and
      CFO of a software development company that offered turnkey accounting and
      medical computer systems to long term care facilities in Ohio, Pennsylvania,
      Connecticut and several other states.  Ms. O’Neill graduated from Kent
      State University magna cum laude with a Bachelor of Business Administration
      degree in Accounting.  Ms. O’Neill is married to John T. O’Neill, the
      Company’s Chairman.





Rusty
      J.
      Gramiak.  Mr. Gramiak has been employed as the Vice President
      of Operations of National Energy Services Company since 2000. Prior to assuming
      that position, Mr. Gramiak was involved in the Company’s sales
      operations.  From 1996 to 1998 Mr. Gramiak was employed as a lighting
      surveyor and an installer of energy efficient lighting for GEC Lighting Company
      in Margate, New Jersey.








-17-





Patricia
      A.  Palmieri.  Ms. Palmieri has been employed as the
      Company’s Controller since March 2004.  Prior to joining the Company,
      Ms.  Palmieri had 14 years of accounting-related experience in
      industries such as home mortgages and auto financing.  Specifically,
      from January 2003 until March 2004 Ms. Palmieri was an accountant for a soil
      remediation company.  Prior to 2003, Ms. Palmieri was the Assistant
      Controller for a landscaping company. Ms. Palmieri has a
      Bachelor of Arts in Accounting and a Masters in Business
      Administration.




Nominating
      and Audit Committee




The
      Board of Directors has not
      appointed an Audit Committee or a Nominating Committee.  The Board of
      Directors does not have an audit committee financial expert.  The
      Board of Directors has not been able to recruit an audit committee financial
      expert to join the Board of Directors because of the Company’s poor financial
      condition.




Code
      of Ethics




The
      Company has adopted a written code of ethics applicable to its executive
      officers.  A copy of the Code of Ethics was filed as an exhibit to the
      Company’s Annual Report on Form 10-KSB for the year ended October 31,
      2003.





Section
      16(a) Beneficial Ownership Reporting Compliance





None
      of
      the officers, directors or beneficial owners of more than 10% of the Company’s
      common stock failed to file on a timely basis the reports required by Section
      16(a) of the Exchange Act during the year ended October 31, 2007.





ITEM
                10.
            EXECUTIVE
                COMPENSATION





The
      following table sets forth all compensation awarded to, earned by, or paid
      by
      National Energy Services, Inc. to John O’Neill, its Chief Executive Officer, and
      John Grillo, its Chief Financial Officer for services rendered in all capacities
      to the Company during the years ended October 31, 2007, 2006 and
      2005.  There were no other executive officers whose total salary and
      bonus for the fiscal year ended October 31, 2007 exceeded $100,000.





CompensationYear
            
            
            Salary
            
            
            Other(1)John
                T. O’Neill
            
            2007
            
            
            $
            02006
            
            
            $
            02005
            
            
            $
            0John
                A. Grillo
            
            2007
            
            
            $
            124,677
            
            
            
            12,6862006
            
            
            $
            121,984
            
            
            
            11,1002005
            
            
            $
            121,984
            
            
            
            11,100


_______________________


(1)
            “Compensation:
                Other” includes certain health and life insurance benefits paid by the
                Company on behalf of the employee.








-18-





Employment
      Agreements





All  employment
      arrangements with  executives are on an at will basis.





Equity
      Grants





The
      following tables set forth certain information regarding the stock options
      acquired by the Company’s Chief Executive Officer during the year ended October
      31, 2007 and those options held by him on October 31, 2007.





Option
      Grants in the Last
      Fiscal Year





Number
                of securities underlying option
            
            Percent
                of total options granted to employees in fiscal
            
            Exercise
                Price
            
            Expiration
            
            Potential
                realizable value at assumed annual rates of  appreciation of for
                option termName
            
            granted
            
            year
            
            ($/share)
            
            Date
            
            5%
            
            10%John
                O’Neill
            
            0
            
            N.A.
            
            N.A.
            
            N.A.
            
            0
            
            0





Aggregated
      Fiscal Year-End
      Option Values





Name
            
            Number
                of securities underlying unexercised options at fiscal year-end (#) (All
                exercisable)
            
            Value
                of unexercised in-the-money options at fiscal year-end ($)(All exercisable)John
                O’Neill
            
            0
            
            0





Remuneration
      of Directors





None
      of the members of the Board of
      Directors receives remuneration for service on the Board.





ITEM
                11.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





The
      following table sets forth information known with respect to the beneficial
      ownership of common stock as of the date of this prospectus by the
      following:





·
            each
                shareholder known by the Company to own beneficially more than 5%
                of
                common stock;








-19-





·
            John
                T. O’Neill, Chief Executive Officer, and John A. Grillo,  Chief
                Financial Officer





·
            each
                directors; and





·
            all
                directors and executive officers as a group.





There
      are
      29,728,983 shares of common stock and no other equity securities outstanding
      on
      the date of this report.  Except as otherwise indicated, it is
      believed that the beneficial owners of the common stock listed below have sole
      voting power and investment power with respect to their
      shares,  subject to community property laws where
      applicable.  Beneficial ownership is determined in accordance with the
      rules of the Securities and Exchange Commission.





Name
                and Address of
              Beneficial
                Owner(1)
            
            Amount
                and Nature
              of
                Beneficial Ownership
            
            Aggregate
              Percent
                of ClassJohn
                & Deborah O’Neill
            
            14,151,862(2)
            
            47.6%John
                A. Grillo
            
            2,941,320
            
            9.9%Current
                executive officers and directors as a group (4 persons)
            
            17,353,182
            
            58.4%


_____________________________


(1)
            The
                address of each shareholder, unless otherwise noted, is c/o National
                Energy Services Company, Inc., 3153 Fire Road, Suite 2C, Egg Harbor
                Township, NJ 08234.


(2)
            Includes
                14,151,862 shares owned by Charter Management LLC, of which Mr. and
                Mrs.
                O’Neill are the sole members and managers.





Equity
      Compensation Plan Information





The
      information set forth in the table below regarding equity compensation plans
      (which include individual compensation arrangements) was determined as of
      October 31, 2007.





Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights
            
            Weighted
                average exercise price of outstanding options, warrants and
                rights
            
            Number
                of securities remaining available for future issuance under equity
                compensation plansEquity
                compensation plans approved by security holders
            
            0
            
            --
            
            0Equity
                compensation plans not approved by security holders
            
            0
            
            --
            
            1,158,703Total
            
            0
            
            --
            
            1,158,703





(1)
            The
                Board of Directors adopted the 2007 Equity Incentive Plan in 2007.
                The
                Plan authorizes the Board to issue up to 1,500,000 common shares
                during
                the ten year period of the Plan. The shares may be awarded to employees
                or
                directors of National Energy Services or its subsidiaries as well
                as to
                consultants to those entities. The shares may be awarded as outright
                grants or in the form of options, restricted stock or performance
                shares.
                1,158,703 shares remain available for issuance under the plan.








-20-





ITEM
                12.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE





Relater
      Party
      Transactions





None.








Director
      Independence





None
      of
      the members of our Board of Directors are independent, as “independent” is
      defined in the rules of the NASDAQ National Market System:





ITEM
                13.
            EXHIBITS





3-a
            Articles
                of Incorporation filed February 17, 1998. (1)





3-a(1)
            Certificate
                of Amendment of Articles of Incorporation filed October 29, 2001.
                (1)





3-a(2)
            Certificate
                of Amendment of Articles of Incorporation, effective as of November
                20,
                2006 – filed as an exhibit to the Current Report on Form 8-K dated
                November 20, 2006 and incorporated herein by reference.





3-b
            Bylaws.
                (1)





10-a
            Master
                Agreement with Charter Management LLC. (2)





10-b
            Sample
                funding agreement with Charter Management. (2)





14
            Code
                of Ethics and Business Conduct - Filed as an exhibit to the Company's
                Annual Report on Form 10KSB for the year ended October 31, 2003 and
                incorporated herein by reference.





31.1
            Rule
                13a-14(a) Certification – CEO





31.2
            Rule
                13a-14(a) Certification – CFO





32
            Rule
                13a-14(b) Certifications





_________________________________


(1)
            Filed
                as an exhibit to the Company's Registration Statement on Form 10-SB
                on
                November 14, 2002 and incorporated herein by reference.


(2)
            Filed
                as an exhibit to the Company's Amended Registration Statement on
                Form
                10-SB on November 6, 2003 and incorporated herein by reference.








-21-





ITEM
                14
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES





Audit
      Fees





Bagell,
      Josephs, Levine & Company,
      LLC billed $29,813 to the Company for professional services rendered for the
      audit of fiscal 2007 financial statements and review of the financial statements
      included in fiscal 2007 10-QSB filings.  Bagell, Josephs, Levine &
Company, LLC billed $32,739 to the Company for professional services rendered
      for the audit of fiscal 2006 financial statements and review of the financial
      statements included in fiscal 2006 10-QSB filings.





Audit-Related
      Fees





Bagell,
      Josephs, Levine & Company,
      LLC billed $0 to the Company during fiscal 2007 for assurance and related
      services that are reasonably related to the performance of the 2007 audit or
      review of the quarterly financial statements.  Bagell, Josephs, Levine
& Company, LLC billed $0 to the Company during fiscal 2006 for assurance and
      related services that are reasonably related to the performance of the 2006
      audit or review of the quarterly financial statements.





Tax
      Fees





Bagell,
      Josephs, Levine & Company,
      LLC billed $10,387 to the Company during fiscal 2007 for professional services
      rendered for tax compliance, tax advice and tax planning.  Bagell,
      Josephs, Levine & Company, LLC billed $4,500 to the Company during fiscal
      2006 for professional services rendered for tax compliance, tax advice and
      tax
      planning.





All
      Other Fees





Bagell,
      Josephs, Levine & Company,
      LLC billed $0 to the Company in fiscal 2007 and $5,000 in fiscal 2006 for
      services not described above.





It
      is the policy of the Company’s
      Board of Directors that all services, other than audit, review or attest
      services, must be pre-approved by the Board of Directors, acting in lieu of
      an
      audit committee.  All of the services described above were approved by
      the Board of Directors.




























-22-








INDEX
      TO FINANCIAL STATEMENTS





PageReport
                of Independent Registered Public Accounting Firm
            
            F-1Consolidated
                Balance Sheets – Years Ended October 31, 2007 and 2006
            
            F-2Consolidated
                Statements of Operations – Years Ended October 31, 2007 and
                2006
            
            F-3Consolidated
                Statements of Changes in Stockholders Deficit – Years Ended October 31,
                2007 and 2006
            
            F-4Consolidated
                Statements of Cash Flows – Years Ended October 31, 2007 and
                2006
            
            F-5Notes
                to Consolidated Financial Statements
            
            F-7















































-23-





BAGELL,
      JOSEPHS, LEVINE & COMPANY, L.L.C.


Certified
      Public Accountants


406
      Lippincott Drive


Suites
      J


Marlton,
      New Jersey 08053


(856)
      346-2828   Fax (856) 396-0022





REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





The
      Board
      of Directors and Stockholders


National
      Energy Services Company, Inc.


Egg
      Harbor Township, New Jersey





We
      have
      audited the accompanying consolidated balance sheets of National Energy Services
      Company, Inc., as of October 31, 2007 and 2006 and the related consolidated
      statements of operations, changes in stockholders’ deficit and cash flows for
      the years then ended.  These consolidated financial statements are the
      responsibility of the Company’s management.  Our responsibility is to
      express an opinion on these consolidated financial statements based on our
      audits.





We
      conducted our audits in accordance with standards of the Public Company
      Accounting Oversight Board (United States).  Those standards require
      that we plan and perform the audits to obtain reasonable assurance about whether
      the consolidated financial statements are free of material
      misstatement.  The Company is not required to have, nor were we
      engaged to perform, an audit of its internal control over financial
      reporting.  Our audits included consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting.  Accordingly, we express no such opinion.  An
      audit also includes examining, on a test basis, evidence supporting the amounts
      and disclosures in the consolidated financial statements, assessing the
      accounting principles used and significant estimates made by management, as
      well
      as evaluating the overall financial statement presentation.  We
      believe that our audits provide a reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of National Energy Services
      Company, Inc., as of October 31, 2007 and 2006 and the consolidated results
      of
      its operations and its cash flows for the years then ended in conformity with
      accounting principles generally accepted in the United States.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern.  As discussed in Note 11
      to the consolidated financial statements, the Company has experienced
      substantial net losses for the years ended October 31, 2007 and 2006 that has
      resulted in substantial accumulated deficits.  The Company’s financial
      position and operating results raise substantial doubt about its ability to
      continue as a going concern.  Management’s plans with regard to these
      matters are also described in Note 11.  The consolidated financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.










Bagell
      Josephs, Levine & Company, LLC




Bagell
      Josephs, Levine & Company, LLC


Marlton,
      New Jersey





January
      5, 2008








F-1





NATIONAL
      ENERGY SERVICES COMPANY, INC.


CONSOLIDATED
      BALANCE SHEETS


OCTOBER
      31, 2007 AND 2006





ASSETS2007
            
            
            2006Current
                Assets:Cash
                and cash equivalents
            
            $
            282,567
            
            
            $
            16,521Accounts
                receivable, net
            
            
            265,737
            
            
            
            93,311Notes
                receivable - related parties
            
            
            -
            
            
            
            3,296Notes
                receivable - other, current portion
            
            
            146,252
            
            
            
            353,124Prepaid
                expenses and other current assets
            
            
            18,363
            
            
            
            13,901Total
                current assets
            
            
            712,919
            
            
            
            480,153Fixed
                assets, net of depreciation
            
            
            27,050
            
            
            
            5,737Notes
                receivable - other, net of current
            
            
            66,431
            
            
            
            236,345TOTAL
                ASSETS
            
            $
            806,400
            
            
            $
            722,235LIABILITIES
                AND
                STOCKHOLDERS' DEFICITLIABILITIESCurrent
                Liabilities:Long-term
                debt - current portion
            
            $
            86,984
            
            
            $
            79,071Notes
                payable - other, current portion
            
            
            146,252
            
            
            
            353,124Notes
                payable - related parties
            
            
            954,808
            
            
            
            944,129Accounts
                payable and accrued expenses
            
            
            295,621
            
            
            
            125,881Deferred
                revenue
            
            
            82,370
            
            
            
            -Liability
                for stock to be issued
            
            
            25,000
            
            
            
            -Total
                current liabilities
            
            
            1,591,035
            
            
            
            1,502,205Long-term
                liabilities:Long-term
                debt, net of current portion
            
            
            258,147
            
            
            
            395,800Notes
                payable - other, net of current portion
            
            
            66,431
            
            
            
            236,345Total
                long-term liabilities
            
            
            324,578
            
            
            
            632,145Total
                liabilities
            
            
            1,915,613
            
            
            
            2,134,350STOCKHOLDERS'
                DEFICITPreferred
                stock, Series A, $.001 Par Value, 500,000 shares authorized,
              0
                shares and 187,389 shares issued and outstanding at October 31, 2007
                and
                2006, respectively.
            
            
            -
            
            
            
            187Common
                Stock, $.001 Par Value; 150,000,000 shares authorized;
              29,424,698
                and 16,808,014  shares issued and outstanding at October 31,
                2007 and 2006 respectively
            
            
            29,424
            
            
            
            16,808Additional
                Paid-in-Capital
            
            
            2,989,781
            
            
            
            2,652,108Additional
                Paid-in-Capital - Warrants
            
            
            133,483
            
            
            
            -Prepaid
                consulting fees
            
            
            (150,000
            )
            
            
            -Accumulated
                deficit
            
            
            (4,111,901
            )
            
            
            (4,081,218
            )Total
                Stockholders' Deficit
            
            
            (1,109,213
            )
            
            
            (1,412,115
            )TOTAL
                LIABILITIES AND STOCKHOLDERS' DEFICIT
            
            $
            806,400
            
            
            $
            722,235




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





F-2





NATIONAL
      ENERGY SERVICES COMPANY, INC.


CONSOLIDATED
      STATEMENTS OF OPERATIONS


FOR
      THE YEARS ENDED OCTOBER 31, 2007 AND 2006





2007
            
            
            2006OPERATING
                REVENUESEquipment
                sales
            
            $
            2,277,028
            
            
            $
            1,065,003Management
                revenue
            
            
            21,604
            
            
            
            17,763Energy
                management revenue
            
            
            86,752
            
            
            
            66,687Total
                Operating Revenues
            
            
            2,385,384
            
            
            
            1,149,453COST
                OF SALES
            
            
            1,193,134
            
            
            
            538,048GROSS
                PROFIT
            
            
            1,192,250
            
            
            
            611,405OPERATING
                EXPENSESSelling
                expenses
            
            
            258,937
            
            
            
            211,831General
                and administrative expenses
            
            
            939,892
            
            
            
            980,234Depreciation
                and amortization
            
            
            4,316
            
            
            
            3,123Total
                Operating Expenses
            
            
            1,203,145
            
            
            
            1,195,188LOSS
                BEFORE OTHER INCOME (EXPENSE)
            
            
            (10,895
            )
            
            
            (583,783
            )OTHER
                INCOME (EXPENSE)Miscellaneous
                income
            
            
            14,337
            
            
            
            11,395Interest
                expense
            
            
            (34,125
            )
            
            
            (37,213
            )Total
                Other Income (Expense)
            
            
            (19,788
            )
            
            
            (25,818
            )LOSS
                BEFORE PROVISION FOR INCOME TAXES
            
            
            (30,683
            )
            
            
            (609,601
            )Provision
                for Income Taxes
            
            
            -
            
            
            
            -NET
                INCOME APPLICABLE TO COMMON SHARES
            
            $
            (30,683
            )
            
            $
            (609,601
            )NET
                INCOME (LOSS) PER BASIC AND DILUTED SHARES
            
            $
            (0.00
            )
            
            $
            (0.04
            )WEIGHTED
                AVERAGE NUMBER OF BASIC AND DILUTED COMMON SHARES
                OUTSTANDING
            
            
            26,839,400
            
            
            
            15,805,110






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





F-3





NATIONAL
      ENERGY SERVICES COMPANY, INC


STATEMENTS
      OF CHANGES IN STOCKHOLDERS' DEFICIT


FOR
      THE YEARS ENDED OCTOBER 31, 2007 AND
      2006




Preferred
                  Stock
              
              
              Common
                  Stock
              
              
              Additional
                Paid
                  -in
              
              
              Additional
                Paid
                  -in Capital
              
              
              Prepaid
              
              
              AccumulatedDescription
              
              Shares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Capital
              
              
              Warrants
              
              
              Consulting
              
              
              Deficit
              
              
              TotalBalance,
                  October 31, 2004
              
              
              187,389
              
              
              $
              187
              
              
              
              15,698,014
              
              
              $
              15,698
              
              
              $
              2,453,418
              
              
              $
              -
              
              
              $
              -
              
              
              $
              (2,764,511
              )
              
              $
              (295,208
              )Net
                  loss for the year
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (707,106
              )
              
              
              (707,106
              )Balance,
                  October 31, 2005
              
              
              187,389
              
              
              
              187
              
              
              
              15,698,014
              
              
              
              15,698
              
              
              
              2,453,418
              
              
              
              -
              
              
              
              -
              
              
              
              (3,471,617
              )
              
              
              (1,002,314
              )Issuance
                  of common stock for services
              
              
              -
              
              
              
              -
              
              
              
              250,000
              
              
              
              250
              
              
              
              44,750
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              45,000Issuance
                  of common stock for compensation
              
              
              -
              
              
              
              -
              
              
              
              860,000
              
              
              
              860
              
              
              
              153,940
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              154,800Net
                  loss for the year
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (609,601
              )
              
              
              (609,601
              )Balance,
                  October 31,2006
              
              
              187,389
              
              
              $
              187
              
              
              
              16,808,014
              
              
              $
              16,808
              
              
              $
              2,652,108
              
              
              $
              -
              
              
              $
              -
              
              
              $
              (4,081,218
              )
              
              $
              (1,412,115
              )Conversion
                  of preferred stock
              
              
              (187,389
              )
              
              
              (187
              )
              
              
              10,868,562
              
              
              
              10,868
              
              
              
              (10,681
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Issuance
                  of common stock for services
              
              
              -
              
              
              
              -
              
              
              
              356,297
              
              
              
              356
              
              
              
              104,444
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              104,800Issuance
                  of common stock for compensation
              
              
              -
              
              
              
              -
              
              
              
              6,500
              
              
              
              7
              
              
              
              2,033
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,040Issuance
                  of common stock for subscription agreement
              
              
              -
              
              
              
              -
              
              
              
              1,000,000
              
              
              
              1,000
              
              
              
              158,462
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              159,462Warrants
                  issued for subscription agreement
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              110,538
              
              
              
              -
              
              
              
              -
              
              
              
              110,538Warrants
                  issued for services to be performed
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              22,945
              
              
              
              -
              
              
              
              -
              
              
              
              22,945Issuance
                  of common stock for services to be performed
              
              
              -
              
              
              
              -
              
              
              
              385,325
              
              
              
              385
              
              
              
              99,615
              
              
              
              -
              
              
              
              (225,000
              )
              
              
              -
              
              
              
              (125,000
              )Amortization
                  of prepaid consulting fees
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              75,000
              
              
              
              -
              
              
              
              75,000Issuance
                  costs incurred with warrants
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (16,200
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (16,200
              )Net
                  loss for year ended October 31, 2007
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (30,683
              )
              
              
              (30,683
              )Balance
                  October 31, 2007
              
              
              -
              
              
              $
              -
              
              
              
              29,424,698
              
              
              $
              29,424
              
              
              $
              2,989,781
              
              
              $
              133,483
              
              
              $
              (150,000
              )
              
              $
              (4,111,901
              )
              
              $
              (1,109,213
              )





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





F-4





NATIONAL
      ENERGY SERVICES COMPANY, INC.


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


FOR
      THE YEARS ENDED OCTOBER 31, 2007 AND 2006





2007
            
            
            2006CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (30,683
            )
            
            $
            (609,601
            )Adjustments
                to reconcile net loss to net cash provided by (used in) operating
                activitiesDepreciation
                and amortization
            
            
            4,316
            
            
            
            3,123Common
                stock issued for services
            
            
            229,800
            
            
            
            45,000Common
                stock issued for compensation
            
            
            2,040
            
            
            
            154,800Amortization
                of prepaid consulting fees
            
            
            75,000
            
            
            
            -(Increase)
                in prepaid consulting fees
            
            
            (225,000
            )
            
            
            -Changes
                in assets and liabilities(Increase)
                Decrease  in accounts receivable
            
            
            (172,426
            )
            
            
            (6,330
            )(Increase)
                in prepaid expenses and other current assets
            
            
            (4,462
            )
            
            
            (2,474
            )Increase
                (Decrease) in accounts payable and accrued expenses
            
            
            169,740
            
            
            
            (35,291
            )Increase
                (Decrease) in deferred revenues
            
            
            82,370
            
            
            
            -Total
                adjustments
            
            
            161,378
            
            
            
            158,828Net
                cash provided by (used in) operating activities
            
            
            130,695
            
            
            
            (450,773
            )CASH
                FLOWS FROM INVESTING ACTIVITIESAcquisition
                of fixed assets
            
            
            (25,629
            )
            
            
            (1,500
            )Net
                proceeds from advances from employees
            
            
            3,296
            
            
            
            99,007Net
                proceeds from notes receivable - related party
            
            
            10,679
            
            
            
            345,072Net
                cash provided by (used in) investing activities
            
            
            (11,654
            )
            
            
            442,579CASH
                FLOWS FROM FINANCING ACTIVITESPrincipal
                payment on note payable - bank
            
            
            (28,324
            )
            
            
            (21,429
            )Principal
                payment on long term debt
            
            
            (101,416
            )
            
            
            (384,284
            )Proceeds
                from notes receivable
            
            
            376,786
            
            
            
            378,603Reduction
                of notes payable
            
            
            (376,786
            )
            
            
            -Increase
                in liability of stock to be issued
            
            
            25,000
            
            
            
            -Issuance
                costs
            
            
            (16,200
            )
            
            
            -Proceeds
                from issuance of stock  and warrants
            
            
            267,945
            
            
            
            -Net
                cash provided by (used in) financing activities
            
            
            147,005
            
            
            
            (27,110
            )NET
                INCREASE  (DECREASE) IN CASH AND CASH
                EQUIVALENTS
            
            
            266,046
            
            
            
            (35,304
            )CASH
                AND CASH EQUIVALENTS - BEGINNING OF YEAR
            
            
            16,521
            
            
            
            51,825CASH
                AND CASH EQUIVALENTS - END OF YEAR
            
            $
            282,567
            
            
            $
            16,521








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





F-5





NATIONAL
      ENERGY SERVICES COMPANY, INC.


CONSOLIDATED
      STATEMENTS OF CASH FLOWS (CONTINUED)


FOR
      THE YEARS OCTOBER 31, 2007 AND 2006









2007
            
            
            2006SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:CASH
                PAID DURING THE YEAR FOR:Interest
                expense
            
            $
            30,767
            
            
            $
            37,213Income
                taxes
            
            $
            -
            
            
            $
            -SUPPLEMENTAL
                DISCLOSURE OF NONCASH ACTIVITIES:Preferred
                stock converted to common stock
            
            $
            10,868
            
            
            $
            -Common
                stock issued for services
            
            $
            229,800
            
            
            $
            45,000Common
                stock issued for compensation
            
            $
            2,040
            
            
            $
            154,800Warrants
                issued for services
            
            $
            22,945
            
            
            $
            -Warrants
                issued for subscription agreement
            
            $
            110,538
            
            
            $
            -















































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








F-6





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS


OCTOBER
      31, 2007 AND 2006








NOTE
                1 -
            NATURE
                OF
                BUSINESS





National
      Energy Services Company, Inc. (“NES”) was incorporated on February 17, 1998 in
      Nevada as Coastal Enterprises, Inc. to engage in an internet-related business.
      The Company and National Energy Services Company, Inc., an unaffiliated New
      Jersey corporation formed in late 1995 ("NESNJ"), entered into an Agreement
      and
      Plan of Share Exchange, dated October 19, 2001, pursuant to which the
      shareholders of NESNJ on October 19, 2001 were issued 10,000,000 shares of
      common stock of NES, par value $0.001 in exchange for one hundred percent (100%)
      of the issued and outstanding shares of NESNJ, which became a wholly owned
      subsidiary of the Company. For accounting purposes, the transaction was
      accounted for as a reverse acquisition under the purchase method of
      accounting.




The
      Company is engaged in the business of marketing a comprehensive energy
      management program for long- term care and hospitality
      facilities.  The program features an upgrade to lighting fixtures,
      improved heating, venting and air conditioning ("HVAC") equipment, ozone laundry
      support systems ("OLSS”).  The facilities generally recover the cost
      of these renovations through the monthly energy savings, resulting in no
      out-of-pocket costs to the facility.




In
      February of 2007, the Company began to offer an additional
      service.  It provides telecommunications services to further assist in
      reducing its’ clients' operating expenses.  The Company is not
      affiliated with any one-service provider and is able to quote from various
      sources.  This allows the Company to obtain the best solution for
      improving service quality for its’ customer.  The Company added two
      new members to its’ sales team to begin to market these services to the existing
      and future client base.








NOTE 2 -
            SUMMARY
                OF SIGNIFICANT
                ACCOUNTING POLICIES





Principles
      of
      Consolidation




The
      consolidated financial statements include the accounts of the Company and its
      wholly owned subsidiary. All significant inter-company accounts and transactions
      have been eliminated in consolidation.




Use
      of
      Estimates




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosures of contingent assets and liabilities at the date
      of
      the consolidated financial statements and the reported amounts of revenues
      and
      expenses during the reporting period. Actual results could differ from those
      estimates.










F-7





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE 2
                -
            SUMMARY
                OF SIGNIFICANT
                ACCOUNTING POLICIES (CONTINUED)





Revenue
      Recognition




The
      Company’s first program was an  Energy Gatekeeper Program which is a
      combined service and financing agreement whereby the facility has all of its
      energy services managed by the Company and its energy solutions partner. The
      customer obtains new energy efficient lighting, HVAC equipment and OLSS systems.
      All equipment is amortized over a 60- month period, with current standard
      contracts specifying a minimum of 36 to 60 months. Additionally, the Company
      contracts carry a 24-month renewal period.




The
      Company has signed a master agreement with Charter Management LLC for the
      purpose of obtaining financing from Charter for the Company’s
      projects.  Once a contractual agreement is reached between the Company
      and the customer facility, upon credit approval, Charter provides financing
      for
      energy upgrade and retrofit projects to be paid back over a 5 year period,
      which
      is negotiated at the time of contract signing. This term equals the term of
      the
      service contract.  Each time a project is funded, the Company signs a
      separate Project Loan Agreement with Charter acknowledging responsibility for
      all loan payments in the event of default by the facility. The Company presently
      has notes receivables still outstanding from the Gatekeeper program, which
      will
      expire in July of 2009.  The Company discontinued this program as of
      January 2005.




Under
      the
      Energy Gatekeeper Program, the Company becomes the energy manager and receives
      the facility's energy bills directly from the energy suppliers and transporters.
      Upon receiving the energy bills for a facility, the Company consolidates all
      of
      the facility's energy bills (combining the natural gas, electricity, water
      and
      sewer bills) into one invoice. The equipment financing payment due to Charter
      is
      added into the monthly utility bill that the customer receives.




After
      the
      different utility costs and the financing costs have been combined into one
      consolidated energy invoice, that invoice is sent to the facility and payment
      from the facility is remitted to the Company. Upon receipt of payment for the
      consolidated energy invoice, the Company forwards payment to the individual
      energy suppliers for the actual cost of energy and makes the payment to Charter
      or any other financing institution that supplied the capital for the
      installation of the energy efficient upgrades.




In
      November 2002, the Financial Accounting Standards Board issued EITF 00-21,
      "Revenue Arrangements with Multiple Deliverables", which focuses on the
      separation and allocation of the arrangement fee for revenue arrangements with
      multiple deliverables.  The Company’s Gatekeeper Program, in which the
      Company bundles its energy management service package with an installation
      agreement, is such an arrangement.  Accordingly, the Company adopted
      the principles set forth in EITF 00-21 on November 1, 2003 with respect to
      the
      fiscal year that commenced on that date.  The adoption of the
      principles of EITF 00-21 has not had a material effect on the Company’s
      financial statements, since it was










F-8





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE 2
                -
            SUMMARY
                OF SIGNIFICANT
                ACCOUNTING POLICIES (CONTINUED)





Revenue
      Recognition (Continued)




the
      Company’s policy prior to implementation of EITF 00-21 that the Company bills
      separately for the energy management services and the installation, and that
      one
      service is not contingent on the other.




Certain
      fees the Company will receive are not necessarily provided for in a separate
      agreement, such as management revenue, rather they are bundled in the same
      agreement entered into for the initial equipment sale. However, the Company
      values each element in accordance with the provisions of the Statement of
      Financial Concepts No. 5 (SFAC), “Recognition and Measurement in Financial
      Statements of Business Enterprises.”





Under
      SFAC 5, the Company recognizes revenue for each of its components when the
      revenue is realized or realizable and earned when persuasive evidence of an
      arrangement exists; delivery has occurred or services have been rendered; the
      price is fixed or determinable; and collectibility is reasonably assured. When
      considering the types of arrangement the Company enters into, all of the
      criteria are present, and therefore, are recorded in accordance with the
      authoritative literature.





Presently,
      the Company recognizes revenue from equipment sales upon
      installation.  Management revenues and management energy revenues are
      recognized and billed monthly as earned, or as commissions when the equipment
      sales are final at the time of installation, which is the time the earnings
      process is completed. Management revenue includes fees earned for processing
      rebate claims for customers. Energy management revenue is a fee charged the
      customer to ensure that the customer is being billed correct rates and tariffs
      by the utilities. Energy sales occur when the Company purchases energy directly
      from a utility provider and resells it to a user.





On
      March
      16, 2000, the Emerging Issues Task Force issued EITF 99-19 “Recording Revenue as a Principal
      versus Net as an Agent” which addresses the issue of how and when
      revenues should be recognized on a Gross or Net method as the title
      implies.  The Company has applied the principles set forth in EITF
      99-19 and determined that all of its revenue should be recognized on a gross
      basis.





Cash
      and Cash
      Equivalents





The
      Company considers all highly liquid debt instruments and other short-term
      investments with an initial maturity of three months or less to be cash
      equivalents. The Company maintains cash and cash equivalent balances at several
      financial institutions that are insured by the Federal Deposit Insurance
      Corporation up to $100,000.  As of October 31, 2007 and 2006, the
      Company had $210,458 and $0   cash or cash equivalents in excess
      of the federally insured limits.








F-9





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE 2
                -
            SUMMARY
                OF SIGNIFICANT
                ACCOUNTING POLICIES (CONTINUED)





Property
      and
      Equipment




All
      property and equipment are recorded at cost and depreciated over their estimated
      useful lives, generally three, five or seven years, using the straight-line
      method. Upon sale or retirement, the costs and related accumulated depreciation
      are eliminated from their respective accounts, and the resulting gain or loss
      is
      included in the results of operations.  Repairs and maintenance
      charges, which do not increase the useful lives of the assets, are charged
      to
      operations as incurred.





Income
      Taxes




The
      income tax benefit is computed on the pretax loss based on the current tax
      law.
      Deferred income taxes are recognized for the tax consequences in future years
      of
      differences between the tax basis of assets and liabilities and their financial
      reporting amounts at each year-end based on enacted tax laws and statutory
      tax
      rates.





Loss
      Per Share of Common
      Stock




Historical
      net loss per common share is computed using the weighted average number of
      common shares outstanding. Diluted earnings per share (EPS) include additional
      dilution from common stock equivalents, such as stock issuable pursuant to
      the
      exercise of stock options and warrants. Common stock equivalents are not
      included in the computation of diluted earnings per share when the Company
      reports a loss because to do so would be anti-dilutive for the periods
      presented.




The
      following is a reconciliation of the computation for basic and diluted
      EPS:





October
                31,
            
            
            October
                31,2007
            
            
            2006Net
                Loss
            
            $
            (30,683
            )
            
            $
            (609,601
            )Weighted-average
                common shares outstanding (Basic)
            
            
            26,839,400
            
            
            
            15,805,110Weighted-average
                common stock equivalents:Stock
                options and warrants
            
            
            -
            
            
            
            -Weighted-average
                common shares outstanding (Diluted)
            
            
            26,839,400
            
            
            
            15,805,110








F-10





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE 2
                -
            SUMMARY
                OF SIGNIFICANT
                ACCOUNTING POLICIES (CONTINUED)




Loss
      Per Share of Common
      Stock (Continued)




Options
      and warrants outstanding to purchase stock were not included in the computation
      of diluted EPS in 2007 and 2006 because inclusion would have been anti-dilutive.
      There were 1,200,000 and -0- options and warrants available at October 13,
      2007
      and 2006 respectively.




On
      July
      6, 2007, the Company entered into a subscription agreement and received $270,000
      in cash for stock and warrants to purchase 1 million shares of the Company’s
      common stock.




In
      2006,
      the Company had 187,389 shares of preferred stock convertible into 10,868,562
      shares of common.  These shares can be converted to 10,868,562 shares
      of common stock, based on a conversion ratio of 58:1.




As
      of
      November 27, 2006, Charter Management, LLC, the sole holder of the preferred
      stock, completed the process of conversion of 187,389 shares of preferred stock
      to 10,868,562 shares of common stock.




On
      August
      8, 2007, the Company entered into a consulting services agreement and part
      of
      the compensation was the issuance of 200,000 options to purchase the Company
      stock.





Fair
      Value of Financial
      Instruments





The
      carrying amount reported in the consolidated balance sheets for cash and cash
      equivalents, accounts receivable, notes receivable, accounts payable, accrued
      expenses and notes payable approximate fair value because of the immediate
      or
      short-term maturity of these financial instruments.




Advertising




Costs
      of
      advertising and marketing are expensed as incurred. Advertising and marketing
      costs were $15,916 and $1,242 for the years ended October 31, 2007 and 2006,
      respectively.




Stock-Based
      Compensation




Through
      the end of fiscal 2005, the Company has elected to follow Accounting Principles
      Board Opinion No. 25, “Accounting for Stock Issued
      to
      Employees” (APB No. 25), and related interpretations, in accounting for
      their employee stock options rather than the alternative fair value accounting
      allowed by SFAS No. 123, “Accounting for Stock-Based
      Compensation”, and has adopted the enhanced disclosure provisions of SFAS
      No. 148, “Accounting for Stock
      Based Compensation – Transition and Disclosures”, an amendment of SFAS
      No. 123. APB No. 25 provides that the compensation expense relative to the
      Company’s employee
      stock options is measured based on the intrinsic value of the stock option.  SFAS
      No. 123 requires companies that continue to follow APB No. 25 to provide a
      pro-forma disclosure of the impact of applying the fair value method of SFAS
      No.
      123.








F-11





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE 2
                -
            SUMMARY
                OF SIGNIFICANT
                ACCOUNTING POLICIES (CONTINUED)




Stock-Based
      Compensation




In
      December 2004, the FASB issued Financial Accounting Standards No. 123 (revised
      2004) (FAS 123R), “Share-Based Payment.”  FAS 123R replaces FAS No.
      123, “Accounting for Stock-Based Compensation,” and supersedes APB Opinion No.
      25, “Accounting for Stock Issued to Employees.”  FAS 123R requires
      compensation expense related to share-based payment transactions, measured
      as
      the fair value at the grant date, to be recognized in the financial statements
      over the period that an employee provides service in exchange for the
      award.  The Company intends to adopt FAS 123R using the “modified
      prospective” transition method, as defined in FAS 123R.  Under the
      modified prospective method, companies are required to record compensation
      cost
      prospectively for the unvested portion, as of the date of adoption, of
      previously issued and outstanding awards over the remaining vesting period
      of
      such awards.  FAS 123R is effective January 1, 2006.  The
      implementation of this standard did not have a material impact on its financial
      position, results of operations, or cash flows.





The
      Company measures compensation expense for its non-employee stock-based
      compensation under the Financial Accounting Standards Board (FASB) Emerging
      Issues Task Force (EITF) Issue No. 96-18, “Accounting for Equity Instruments
      that are Issued to Other Than Employees for Acquiring, or in Conjunction with
      Selling Goods or Services”.  The fair value of the option
      issued is used to measure the transaction, as this is more reliable than the
      fair value of the services received.  The fair value is measured at
      the value of the Company’s common stock on the date that the commitment for
      performance is complete.  The fair value of the equity instrument is
      charged directly to compensation expense and additional
      paid-in-capital.


















F-12





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE 2
                -
            SUMMARY
                OF SIGNIFICANT
                ACCOUNTING POLICIES (CONTINUED)




Provision
      for Bad
      Debt




The
      Company reports receivables at their outstanding principal balance, adjusted
      for
      any charge-offs, allowances for losses or doubtful accounts, any deferred fees
      or costs on originated loans, and any unamortized premium or discount on
      purchased loans.





The
      Company provides for allowances for bad debts based on the past history of
      uncollectible accounts. All debts are written off when all measures have been
      exhausted for collection.




Recent
      Accounting
      Pronouncements




On
      December 16, 2004, FASB issued Financial Accounting Standards No. 153, Exchanges
      of Non-monetary Assets, an amendment of APB Opinion No. 29, Accounting for
      Non-monetary Transactions ("FAS 153"). This statement amends APB Opinion 29
      to
      eliminate the exception for non-monetary exchanges of similar productive assets
      and replaces it with a general exception for exchanges of non-monetary assets
      that do not have commercial substance. Under FAS 153, if a non-monetary exchange
      of similar productive assets meets a commercial-substance criterion and fair
      value is determinable, the transaction must be accounted for at fair value
      resulting in recognition of any gain or loss. FAS 153 is effective for
      non-monetary transactions in fiscal periods that begin after June 15,
      2005.  The implementation of this standard did not have a material
      impact on its financial position, results of operations or cash
      flows.





In
      May 2005, the FASB issued SFAS
      No. 154, “Accounting Changes and Error Corrections.” SFAS No. 154
      replaces Accounting Principles Board (“APB”) Opinion No. 20, “Accounting
      Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial
      Statements.” SFAS No. 154 requires retrospective application to prior
      periods’ financial statements of a voluntary change in accounting principle
      unless it is impracticable. APB No. 20 previously required that most
      voluntary changes in accounting principle be recognized by including the
      cumulative effect of changing to the new accounting principle in net income
      in
      the period of the change. SFAS No. 154 is effective for accounting changes
      and corrections of errors made in fiscal years beginning after December 15,
      2005. The adoption of SFAS No. 154 did not have a material impact on the
      Company’s financial position, results of operations, or cash
      flows.









F-13





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE 2
                -
            SUMMARY
                OF SIGNIFICANT
                ACCOUNTING POLICIES (CONTINUED)




Recent
      Accounting
      Pronouncements





In
      February 2006, the FASB issued
      SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments, an
      amendment of FASB Statements No. 133 and 140.” SFAS No. 155 resolves
      issues addressed in SFAS No. 133 Implementation Issue No. D1,
“Application of Statement 133 to Beneficial Interests in Securitized Financial
      Assets,” and permits fair value re-measurement for any hybrid financial
      instrument that contains an embedded derivative that otherwise would require
      bifurcation, clarifies which interest-only strips and principal-only strips
      are
      not subject to the requirements of SFAS No. 133, establishes a requirement
      to evaluate interests in securitized financial assets to identify interests
      that
      are freestanding derivatives or that are hybrid financial instruments that
      contain an embedded derivative requiring bifurcation, clarifies that
      concentrations of credit risk in the form of subordination are not embedded
      derivatives and amends SFAS No. 140 to eliminate the prohibition on a
      qualifying special-purpose entity from holding a derivative financial instrument
      that pertains to a beneficial interest other than another derivative financial
      instrument. SFAS No. 155 is effective for all financial instruments
      acquired or issued after the beginning of the first fiscal year that begins
      after September 15, 2006. The adoption ofFAS 155did not have a material
      impact on the
      Company’s financial position, results of operations, or cash
      flows.





In
      March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of
      Financial Assets, an amendment of FASB Statement No. 140.” SFAS
      No. 156 requires an entity to recognize a servicing asset or liability each
      time it undertakes an obligation to service a financial asset by entering into
      a
      servicing contract under a transfer of the servicer’s financial assets that
      meets the requirements for sale accounting, a transfer of the servicer’s
      financial assets to a qualified special-purpose entity in a guaranteed mortgage
      securitization in which the transferor retains all of the resulting securities
      and classifies them as either available-for-sale or trading securities in
      accordance with SFAS No. 115, “Accounting for Certain Investments in Debt
      and Equity Securities” and an acquisition or assumption of an obligation to
      service a financial asset that does not relate to financial assets of the
      servicer or its consolidated affiliates. Additionally, SFAS No. 156
      requires all separately recognized servicing assets and servicing liabilities
      to
      be initially measured at fair value, permits an entity to choose either the
      use
      of an amortization or fair value method for subsequent measurements, permits
      at
      initial adoption a one-time reclassification of available-for-sale securities
      to
      trading securities by entities with recognized servicing rights and requires
      separate presentation of servicing assets and liabilities subsequently measured
      at fair value and additional disclosures for all separately recognized servicing
      assets and liabilities. SFAS No. 156 is effective for transactions entered
      into after the beginning of the first fiscal year that begins after
      September 15, 2006. The adoption of FAS 156 did not have a material impact
      on the Company’s financial position or results of operations.















F-14





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE 2
                -
            SUMMARY
                OF SIGNIFICANT
                ACCOUNTING POLICIES (CONTINUED)




Recent
      Accounting
      Pronouncements




In
      September 2006, The Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value
      Measurement" ("SFAS No. 157"). This standard provides guidance for using fair
      value to measure assets and liabilities. SFAS No. 157 applies whenever other
      standards require (or permit) assets or liabilities to be measured at fair
      value
      but does not expand the use of fair value in any new circumstances. Prior to
      SFAS No. 157, the methods for measuring fair value were diverse and
      inconsistent, especially for items that are not actively traded. The standard
      clarifies that for items that are not actively traded, such as certain kinds
      of
      derivatives, fair value should reflect the price in a transaction with a market
      participant, including an adjustment for risk, not just the company's
      mark-to-model value. SFAS No. 157 also requires expanded disclosure of the
      effect on earnings for items measured using unobservable data. SFAS No. 157
      is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years. The Company
      is
      currently evaluating the impact of this statement on its financial
      statements.




In
      July
      2006, the FASB issued FASB Interpretation 48 “Accounting for Uncertainty
      in Income
      Taxes”– an interpretation of FASB Statement 109 (FIN 48).  FIN
      48 clarifies the accounting for uncertainty in income taxes recognized in an
      entity’s financial statements in accordance with SFAS 109, “Accounting for Income
      Taxes.”FIN 48 prescribes a recognition threshold and
      measurement attribute for financial statement disclosure of tax positions taken,
      or expected to be taken, on a tax return.  This interpretation is
      effective for fiscal years beginning after December 15, 2006.  The
      Company has not yet analyzed the impact FIN 48 will have on its financial
      condition, results of operations, or cash flows.




The
      FASB
      also issued in September 2006 Statement of Financial Accounting Standards
      No. 158, Employers’ Accounting for Defined Benefit Pension and Other
      Postretirement Plans — an amendment of FASB Statement No. 87, 88, 106 and
      132(R), (“FAS 158”). This Standard requires recognition of the funded status of
      a benefit plan in the statement of financial position. The Standard also
      requires recognition in other comprehensive income certain gains and losses
      that
      arise during the period but are deferred under pension accounting rules, as
      well
      as modifies the timing of reporting and adds certain disclosures. FAS 158
      provides recognition and disclosure elements to be effective as of the end
      of
      the fiscal year after December 15, 2006 and measurement elements to be
      effective for fiscal years ending after December 15, 2008. The Company has
      not yet analyzed the impact FAS 158 will have on its financial condition,
      results of operations, cash flows or disclosures.












F-15





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE
                3-
            FIXED
                ASSETS




Fixed
      assets consist of the following at October 31, 2007 and 2006:





2007
            
            
            2006Office
                equipment
            
            $
            56,922
            
            
            $
            31,293Furniture
                and fixtures
            
            
            2,107
            
            
            
            2,107Leasehold
                improvements
            
            
            2,900
            
            
            
            2,90061,929
            
            
            
            36,300Accumulated
                Depreciation
            
            
            (34,879
            )
            
            
            (30,563
            )Total
            
            $
            27,050
            
            
            $
            5,737





Depreciation
      expense was $4,316 and $3,123 for the years ended October 31, 2007 and
      2006.




NOTE
                4-
            ACCOUNTS
                RECEIVABLE




Accounts
      receivable represent amounts
      due the Company for the sales of the equipment.  At October 31, 2007
      and 2006, the Company has receivables in the amount of $265,737 and $93,311,
      respectively.




NOTE
                5-
            NOTES
                RECEIVABLE –
                EMPLOYEES




Prior
      to
      2002,the Company
      entered into lending arrangements with a number of employees, officers and
      directors, and received notes for the amounts advanced by it.  The
      notes do not stipulate a repayment date.  Therefore management of the
      Company has treated them as due on demand, and has classified the notes as
      current assets. These notes receivable carry no stated interest rate. The notes
      receivable – related parties due the Company at October 31, 2007 and 2007 are $0
      and 3,296, respectively.















F-16





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE
                6-
            LONG-TERM
                DEBT




The
      Company has a $200,000 note, which carries an interest rate of the issuing
      bank’s prime rate plus 1% (9.25% at October 31, 2007). The loan was originally a
      line of credit when acquired in February 2004, but was subsequently refinanced
      November 2004, and converted into a 4-year loan.  As of October 31,
      2007 and 2006, the balance was $30,949 and $59,521 of which $28,572 and $28,572
      is classified as current, respectively.  The loan is secured by
      substantially all corporate assets and a shareholder/officer
      guarantee.




Long-term
      debt also consists of residual liabilities arising from the Company’s
      now-terminated financing arrangements with PPL Spectrum, Inc.
      (“PPL”).  In prior fiscal years, PPL provided financing to the
      Company’s clients in connection with the Company’s Energy Gatekeeper
      Program.  Under its arrangement with PPL, the Company executed notes
      payable to PPL for the amount of the financing, and   took notes
      receivable from the client in like amount.




Effective
      March 1, 2005, the Company entered into an agreement with PPL in which the
      Company assigned the client notes to PPL, and PPL released the Company from
      liability under its notes to PPL.  That transaction reduced the
      Company’s assets by $3,062,257, the amount of the notes assigned to PPL, and
      reduced the Company’s liabilities by the same amount, representing the Company’s
      obligation on the note released by PPL.  At the same time, however,
      the Company contracted to pay $1,400 per month toward a reserve for any bad
      debts among the notes it assigned to PPL.  The Company has recorded
      the present value of that obligation on its balance sheet as a
      debt.  As of October 31, 2007 and 2006, the balance of the debt was
      $101,873 and $112,614, of which $11,403 and $10,741 is reflected as a current
      liability, respectively.




Additionally,
      the Company has also contracted to fund a contingent liability to reimburse
      PPL
      for bad debts of certain customers should the customer file for protection
      in
      bankruptcy.  The agreement was consummated in June 2005, and the
      Company became obligated to fund $140,709 over a ten (10) year
      period.  This obligation carries an imputed interest rate of
      6%.  As of October 31, 2007 and 2006, the balance was $113,074 and
      $124,996 of which $12,657 and $11,921 is classified as a current obligation,
      respectively.










F-17





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE
                6-
            LONG-TERM
                DEBT
                (CONTINUED)




During
      its 2004 fiscal year, the Company entered into a settlement agreement with
      PPL
      with respect to certain aged obligations from the Company to PPL.  The
      payables were consolidated into a three-year promissory note in the amount
      of
      $314,047 bearing interest at 18% per annum.   Effective March 1,
      2005, this note was renegotiated to lower the interest rate to
      8%.  The balance due on the note at March 1, 2005 was $219,473 payable
      over seven years. The balances at October 31, 2007 and 2006 outstanding under
      this note were $99,235 and 177,740 respectively of which $34,352 and $27,837
      are
      classified as current.  The Company made a principal payment of
      $50,000 in August 2007.




During
      the year ended October 31, 2007, the cumulative effect of the Company’s
      obligations to PPL on the Company’s consolidated statement of operations was
      represented by an interest expense of $26,185.





Current
      maturities of all long-term debt consisted of the following as of October 31,
      2007:




2007
            
            $
            86,9842008
            
            
            65,1252009
            
            
            54,8002010
            
            
            28,7932011
            
            
            30,569Thereafter
            
            
            78,860$
            345,131





NOTE
                7-
            RELATED
                PARTY
                TRANSACTIONS




Advances




Charter
      Management, LLC has funded the operations of the Company. Charter is related
      to
      the Company through common ownership. The balance of the payable to Charter
      is
      $935,308 and $924,629 as of October 31, 2007 and 2006,
      respectively.












F-18





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE
                7-
            RELATED
                PARTY
                TRANSACTIONS (Continued)




In
      addition, Charter Management, LLC has provided financing for the Company’s
      various customers.  The Company records the various receivables from
      the customers and a corresponding payable to the related party and acted as
      an
      agent for collection and payment for/to the related party.  Initially,
      the Company had consulted FIN 45 for clarification as to the proper recording
      and inclusion of these amounts in the financial statements.  However,
      the Company had signed separate financing agreements with the related party,
      thereby negating the exception for exclusion of the amounts.  These
      notes receivable/payable range from between 4 and 5 years with an interest
      rate
      between 8% and 9%.  The outstanding balance at October 31, 2007 and
      2006 is $212,683 and $589,469.  Principle maturity of these loans for
      the next three years is as follows:




2007
            
            $
            146,2522008
            
            
            64,1502009
            
            
            2,281Total
            
            $
            212,683





In
      addition, the Company has a note payable with a stockholder of the Company
      in
      the amount of $19,500 at October 31, 2007 and 2006. This note has no stated
      interest rate or repayment terms.  Therefore, the Company has
      classified it as a current liability.





NOTE
                8-
            STOCKHOLDERS’
                DEFICIT





As
      of
      October 31, 2007, the Company had 500,000 authorized shares of $0.001 par value
      Series A preferred stock and zero shares outstanding. The Series A preferred
      shares convert at a ratio of 58:1 into shares of common stock.  In
      addition, the Company had 150,000,000 shares authorized of $0.001 par value
      common stock and 29,424,698 shares issued and outstanding.




During
      the year ending October 31, 2007, the following transactions
      occurred:




On
      November 27, 2006, Charter Management, LLC, the sole holder of the preferred
      stock, converted all 187,389 outstanding shares of preferred stock into
      10,868,562 of common shares.




On
      February 23, 2007, the Company issued 15,000 shares, with a fair market value
      of
      $4,800, to an investor relation agent for services to be performed over one
      year.












F-19





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE
                8-
            STOCKHOLDERS’
                (DEFICIT) (cont.)





On
      March
      28, 2007, the Company issued 1,500 shares, with a fair market value of $540,
      to
      a former employee as previous compensation earned, but not
      recorded.  The expense was charged to current operations.




On
      May
      29, 2007,the Company
      entered into a one year contract with a public relations firm by issuing 300,000
      shares of stock at $0.25 per share for a total of $75,000.





On
      July
      6, 2007, the Company received $270,000 for 1,000,000 shares of common stock
      and
      warrants to purchase an additional 1,000,000 shares of common stock for exercise
      prices ranging from $.50 per share to $1.50 per share.  The bifurcated
      value of the warrants was $110,430 and was charged to Additional paid-in capital
      – Warrants.  The Company paid an issuance cost of $16,200, which was
      applied against additional paid-in capital.  The common stock was not
      issued until August 2007.  This has been charged to Liability for
      Stock to be issued on the balance sheet.





On
      July
      19, 2007, the Company issued 5,000 shares, with a fair market value of $1,500,
      to an employee as compensation.




On
      August
      8, 2007, the Company executed an agreement to obtain the services of an
      investment banking/public relations firm.  In exchange for the firm’s
      one year commitment, the Company issued to it 85,325 shares, with a fair market
      value of $25,000 and options to purchase 200,000 shares at prices ranging from
      $.50 to $1.50.




On
      August
      8, 2007, the Company executed an agreement to obtain the services of a
      Consultant.  In exchange for the consultant’s one year commitment, the
      Company issued 341,297 shares, with a fair market value of
      $100,000.




During
      the year ending October 31, 2006, the following transactions
      occurred:




As
      of
      October 31, 2006, the Company had 500,000 authorized shares of $0.001 par value
      Series A preferred stock. At October 31, 2006 and 2005, the Company had 187,389
      shares of preferred stock issued and outstanding, respectively. The Series
      A
      preferred shares convert at a ratio of 58:1 into shares of common
      stock.




On
      November 27, 2006, Charter Management, LLC, the sole holder of the preferred
      stock, completed the conversion process of 187,389 shares of preferred stock
      to
      10,868,562 of common shares.




On
      September 26, 2006, the Board authorized an additional 1,000,000 shares of
      $0.001 par value preferred stock.  An 8K report was filed with the SEC
      on November 20, 2006.







F-20





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE
                8-
            STOCKHOLDERS’
                (DEFICIT) (cont.)





On
      September 26, 2006, the Board authorized an additional 130,000,000 shares of
      $0.001 par value common stock.  An 8K report was filed with the SEC on
      November 20, 2006.




In
      the
      fourth quarter of fiscal 2006, the Company issued 250,000 shares of common
      stock
      for services rendered. The value of the issuance of these shares was
      $45,000.   In addition, the Company issued 860,000 shares as
      compensation to various employees.  These shares had a market value of
      $154,800.




There
      were no options or warrants granted, exercised or expired by the Company for
      the
      years ended October 31, 2006 and 2005.  The Company does not have any
      options or warrants outstanding.




NOTE
                9-
            COMMITMENTS




Leases
      -
      Office




The
      Company currently leases its New Jersey office space under a lease that expired
      in May 2003, and was renewed on a month-to-month basis. Payments under this
      lease were $22,692 and $22,512 for the years ended October 31, 2007 and 2006,
      respectively.





Leases
      -
      Equipment




The
      Company also has various lease agreements for certain office equipment, expiring
      in 2012. Payments under this lease were $7,269 and $5,231 for the years ended
      October 31, 2007 and 2006, respectively.





Future
      lease commitments at October 31, 2007:





2007
            
            
            21,1602008
            
            
            6,0142009
            
            
            4,6752010
            
            
            4,6752011
            
            
            3,428Total
                lease costs
            
            $
            39,952








F-21





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE
                10
            PROVISION
                FOR INCOME
                TAXES




Deferred
      income taxes will be determined using the liability method for the temporary
      differences between the financial reporting basis and income tax basis of the
      Company’s assets and liabilities.  Deferred income taxes will be
      measured based on the tax rates expected to be in effect when the temporary
      differences are included in the Company’s consolidated tax
      return.  Deferred tax assets and liabilities are recognized based on
      anticipated future tax consequences attributable to differences between
      financial statement carrying amounts of assets and liabilities and their
      respective tax bases.




At
      October 31, 2007 and 2006, deferred tax assets consisted of the
      following:





2007
            
            
            2006Deferred
                tax assets
            
            $
            1,356,000
            
            
            $
            1,347,000Less:  valuation
                allowance
            
            
            (1,356,000
            )
            
            
            (1,347,000
            )Net
                deferred tax assets
            
            $
            -0-
            
            
            $
            -0-





At
      October 31, 2007 and 2006, the Company had a federal net operating loss carry
      forward in the approximate amounts of $4,111,000 and $4,081,000, respectively,
      available to offset future taxable income.  The Company established
      valuation allowances equal to the full amount of the deferred tax assets due
      to
      the uncertainty of the utilization of the operating losses in future
      periods.




NOTE
                11-
            GOING
                CONCERN




As
      shown
      in the accompanying consolidated financial statements, the Company incurred
      substantial net losses for the years ended October 31, 2007 and 2006 and has
      sustained large accumulated deficits that raise substantial doubt about the
      Company’s ability to continue as a going concern.





The
      Company’s future success is dependent upon its ability to achieve profitable
      operations and management states that they are confident that they can improve
      operations and raise the appropriate funds needed through the advancements
      in
      energy conservation over the past year. There is no guarantee whether the
      Company will be able to generate enough revenue and/or raise capital to support
      those operations





The
      consolidated financial statements do not include any adjustments that might
      result from the outcome of these uncertainties.








F-22





NATIONAL
      ENERGY SERVICES COMPANY, INC.


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


OCTOBER
      31, 2007 AND 2006








NOTE
                  12 -
              LEGAL




The
      Company has been named as a counterclaim defendant in a lawsuit in New York
      sate
      relating to an installation of energy upgrades in 2002.   The
      outcome of the litigation is uncertain.  However, the Company intends
      to defend any negative ruling in its’ adjudication of the
      litigation.





NOTE
                13-
            SUBSEQUENT
                EVENTS




In
      November 2007 and January 2008, the Company issued a total of 150,000 shares
      of
      common stock to a new employee as part of his initial employment
      agreement.




In
      January 2008, the Company issued 15,000 shares of common stock for services
      to
      an Investor Relations consultant.




In
      January 2008, the Company issued
      139,285 shares of common stock to a related party for the relief of debt on
      the
      balance sheet



















































F-23





SIGNATURES





In
      accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
      caused this report to be signed on its behalf by the undersigned, thereunto
      duly
      authorized.





National
                Energy Services Company, Inc.By:/s/
                John T.
                O’NeillJohn
                T. O’Neill, Chief Executive Officer





In
      accordance with the Exchange Act, this Report has been signed below on January
      29, 2008 by the following persons, on behalf of the Registrant and in the
      capacities and on the dates indicated.








/s/
      John T.
      O’Neill


John
      T.
      O’Neill, Director,


Chief
      Executive Officer,








/s/
      John A.
      Grillo


John
      A.
      Grillo, Director,


Chief
      Financial Officer,








/s/
      Deborah
      O’Neill


Deborah
      O’Neill, Director