FORM 10-K

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                 [X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended: December 31, 2008


                         COMMISSION FILE NUMBER 1-14244

                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.
                 ----------------------------------------------
             (Exact name of registrant as specified in its charter)


             NEVADA                                      84-1214736
      ---------------------                 -----------------------------------
    (State of Incorporation)               (I.R.S. Employer Identification No.)


    1111 EAST TAHQUITZ CANYON WAY, SUITE 110, PALM SPRINGS, CALIFORNIA 92262
    ------------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (760) 327-5284
               --------------------------------------------------
               Registrant's telephone number, including area code

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:


                                                       NAME OF EACH EXCHANGE ON
    TITLE OF EACH CLASS                                    WHICH REGISTERED
---------------------------                           --------------------------
       COMMON STOCK                                               OTC


         Indicate  by check  mark if the  registrant  is a  well-known  seasoned
issuer, as defined in Rule 405 of the Securities Act.             Yes |_| No |X|

         Indicate  by check  mark if the  registrant  is not  required  to filed
reports pursuant to Section 13 or Section 15(d) of the Act.       Yes |_| No |X|

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

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not 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-K or any
amendment to this Form 10-K.                                                 |X|


<PAGE>

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

Large accelerated filer            [___]      Accelerated filer            [___]
Non-accelerated filer              [___]      Smaller reporting company    [_X_]
(Do not check if a smaller
 reporting company)

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

         The aggregate  market value of voting stock held by  non-affiliates  of
the  registrant was  approximately  $1,199,406 as of March 31, 2009 (computed by
reference to the last sale price of a share of the registrant's  Common Stock on
that date as reported by OTC Bulletin Board).

         There were 57,310,345  shares  outstanding of the  registrant's  Common
Stock as of March 31, 2009.


<PAGE>
<TABLE>
<CAPTION>

                                                                TABLE OF CONTENTS


<S>                     <C>                                                                                                      <C>
PART 1

   ITEM 1               Business.................................................................................................  4

   ITEM 1A              Risk Factors............................................................................................. 13

   ITEM 2               Properties............................................................................................... 22

   ITEM 3               Legal Proceedings........................................................................................ 22

   ITEM 4               Submission of Matters to a Vote of Security Holders...................................................... 23

PART II

   ITEM 5               Market for Common Equity and Related Stockholder Matters................................................. 23

   ITEM 6               Selected Financial Data.................................................................................. 24

   ITEM 7               Management's Discussion and Analysis of Financial Condition and Results of Operation..................... 24

   ITEM 8               Financial Statements and Supplementary Data.............................................................. 29

   ITEM 9               Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..................... 30

   ITEM 9A(T)           Controls and Procedures.................................................................................. 30

   ITEM 9B              Other Information........................................................................................ 31

PART III

   ITEM 10              Directors, Executive Officers, and Corporate Governance.................................................. 31

   ITEM 11              Executive Compensation................................................................................... 37

   ITEM 12              Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
                        Matters.................................................................................................. 39

   ITEM 13              Certain Relationships and Related Transactions, and Director Independence................................ 41

   ITEM 14              Principal Accounting Fees and Services................................................................... 42

   ITEM 15              Exhibits, Financial Statement Schedules.................................................................. 43

SIGNATURES              ......................................................................................................... 44
</TABLE>


                                      -3-
<PAGE>

                                     PART I

       This  Annual  Report on Form  10-K  contains  forward-looking  statements
including, without limitation,  statements concerning the future of the industry
in which Environmental Service Professionals, Inc. (the "Company") operates, the
Company's product development plans,  business strategy and financial estimates,
the  continued  acceptance  of its products and its  dependence  on  significant
distributors  and  customers.  In some cases,  you can identify  forward-looking
statements by terminology such as "may," "will," "should,"  "expects,"  "plans,"
"anticipates,"  "believes," "estimated," "predicts," "potential," "continue," or
the negative of such terms or other comparable  terminology.  The Company cannot
guarantee  that it actually will achieve the plans,  intentions or  expectations
disclosed  in its  forward-looking  statements  and you should  not place  undue
reliance on the  forward-looking  statements  contained in this  document.  When
considering forward-looking statements, you should keep in mind the risk factors
and  other  cautionary  statements  made in this  Annual  Report  on Form  10-K.
Forward-looking  statements,  particularly  those concerning  anticipated events
relating  to the  development  and  marketing  of  the  Company's  products  and
services, and the timing or magnitude of those events, are inherently uncertain.
The risk factors discussed below and other  considerations noted throughout this
Annual   Report  on  Form  10-K  could  cause  its  actual   results  to  differ
significantly from those contained in any forward-looking statements.

       Although  the Company  believes  that the  expectations  reflected in the
forward-looking  statements are reasonable,  the Company cannot guarantee future
results, levels of activity,  performance, or achievements. The Company is under
no duty to update any of the  forward-looking  statements after the date of this
Annual  Report  on Form 10-K to  conform  forward-looking  statements  to actual
results.

ITEM 1. BUSINESS

GENERAL

         Environmental  Service  Professionals,  Inc. ("ESP," "we," "us," or the
"Company") is a Nevada corporation headquartered in Southern California. Through
ESP's  wholly-owned  subsidiary  Environmental  Safeguard  Professionals,   Inc.
("Safeguard"),  the  Company  offers  various  inspection  services  to  address
mandated  energy  certification,   construction  defects,   moisture  and  other
environmental  issues in commercial and  residential  buildings.  ESP's services
include the Certified Environmental Home Inspector(TM) ("CEHI") program, Healthy
Living Maintenance  Program(TM) ("HLMP"), and EcoCheck  Inspection(TM)  program.
Through  ESP's wholly owned  subsidiary  National  Professional  Services,  Inc.
("NPS"),  the Company offer annual trade memberships and management services for
industry  related  associations.  Porter  Valley  Software,  Inc.  ("PVS"),  the
nation's number one inspection software company,  will provide the core of ESP's
on-line inspection protocols.

         Safeguard has developed an all inclusive  multi-disciplined  inspection
program  focused on reducing  liabilities and mitigating  risks.  The program is
designed to protect  homeowners,  businesses  and retail  properties,  builders,
lenders, mortgage brokers/agents,  and all other real estate oriented properties
relating to state mandated energy certification,  construction defects, moisture
or other environmental issues. It is known as the EcoCheck  Inspection(TM).  The
EcoCheck   Inspection(TM)  has  developed,   based  on  standardized   training,
certification,  inspection,  and results, reporting analysis programs which form
the  foundation  of a suite of  services  that  together  are  provided by ESP's
Certified  Environmental  Home Inspector(TM)  ("CEHI").  One of the programs the
Company   provides  by  the  CEHI   program  is  the  Healthy   Home   Assurance
Certification(TM) ("HAC"). After a EcoCheck Inspection(TM) has been conducted by
one of ESP's CEHIs, a subject  property that passes  inspection  receives a HAC.
The HAC is placed in the window  closest to the main entrance of the building in
order to alert  visitors  that the subject  property  promotes a healthy  living
environment  through management of potentially harmful indoor air quality issues
and is valid for 12 months.

         Through  the  EcoCheck  Inspection(TM),  ESP also  offers a  pro-active
comprehensive  subscription based 10 year annual maintenance  process called the
Healthy Living Maintenance  Program(TM)  ("HLMP") to all residential  properties
that have received a HAC. Once a subject property receives an initial HAC, it is
eligible  to  subscribe  to  the  HLMP(TM).  Every  12  months  a  new  EcoCheck
Inspection(TM) is conducted and after any issues, if required,  are corrected, a
new HAC is  issued.  The  Company  believes  that the  HLMP(TM)  adds value to a
property and mitigates risk for the insurance,  mortgage banking, building, real

                                      -4-
<PAGE>

estate,  and  property  management  industries  by reducing  claims,  instilling
confidence  in property  safety,  and  promoting a positive  green image to both
residential and commercial clients.

         NPS is currently a conglomerate of seven  individual  associations  and
maintains annual paying members. The focus of this business unit is to establish
cross-training  on  CEHI(TM)  programs  and to  provide  information  concerning
residential  environmental issues, to establish training for underwriters,  loan
officers and appraisers,  and to educate these groups about CEHI(TM)  inspection
protocols.  Training  programs  for  insurance  companies,   underwriters,  loss
control,  and risk  management  personnel  educate and emphasize the benefits of
using  a  CEHI(TM)  on the  initial  inspection  and  then  establishing  annual
inspections.

         PVS has developed various software  programs,  which have been designed
specifically  for detailed  data  searching  and data  retention  under the name
"InspectVue(TM). InspectVue(TM) is the core component of ESP's automated on-line
EcoCheck  Inspection(TM)  protocols  that  include  the  new  energy  inspection
requirements  that are being  developed in concert with other  industry  leading
participants.

WHOLLY OWNED SUBSIDIARIES

ENVIRONMENTAL SAFEGUARD PROFESSIONALS, INC.

         OVERVIEW.  Safeguard has  developed an all inclusive  multi-disciplined
inspection process (the "EcoCheck  Inspection(TM)")  that is focused on reducing
liabilities  and  mitigating  risks to protect  homeowners,  retail  properties,
builders, lenders, and mortgage brokers/agents relating to state mandated energy
certification, construction defects, moisture and other environmental issues. It
strives to be "The Industry's Best in Class Inspection."

         The branding of this program is called the Certified Environmental Home
Inspector(TM)  program ("CEHI program").  The Company believes that the CEHI(TM)
program represents the keystone for environmental inspection services to address
mandated  energy  certification,   construction  defects,   moisture  and  other
environmental  issues in  commercial  and  residential  buildings.  The EcoCheck
Inspection(TM)  program  services  will  support  the  residential   real-estate
mortgage,  banking and  insurance  industries  in their ability to manage losses
through  moisture  related  claims.  The Company also believes that the CEHI(TM)
program  will play a  significant  role in  managing  the  health and indoor air
quality of the environments where people work and live.

         One of the  programs  the Company  provides  as a part of the  CEHI(TM)
program is ESP's Healthy Assurance  Certification(TM) ("HAC"). After an EcoCheck
Inspection(TM) has been conducted by one of ESP's CEHIs, a subject property that
passes inspection receives a HAC. The HAC is placed in the window closest to the
main  entrance  of the  building  in order to alert  visitors  that the  subject
property promotes a healthy living environment through management of potentially
harmful indoor air quality issues and is valid for 12 months.

         The Company also offers a pro-active  comprehensive  subscription-based
10-year  annual  maintenance  program  called  the  Healthy  Living  Maintenance
Program(TM)  ("HLMP"),  to all residential  properties that have received a HAC.
Once a subject  property  receives an initial HAC it is eligible to subscribe to
the HLMP(TM).  Every 12 months, a new EcoCheck  Inspection(TM)  is conducted and
after any issues,  if required,  are corrected a new HAC is issued.  The Company
believes that the HLMP(TM)  adds value to a property and mitigates  risk for the
insurance,  mortgage banking,  building,  real estate,  and property  management
industries by reducing claims,  instilling  confidence in property  safety,  and
promoting a positive green image to both residential and commercial clients.

         Safeguard, while developing the CEHI(TM)program, has engaged in working
relationships  with five  industry  participants:  the National  Association  of
Moisture  Management  ("NAMM"),   Porter  Valley  Software,  Inc.,  EMLabs  P&K,
Environmental  Data Resources Inc. ("EDR"),  CMC Energy Services,  Inc. ("CMC"),
and ConSol, the nation's leading green and energy engineering company.

         By accepting (a) ConSol's  inspection  protocols for Green Building and
Energy  Certification,  (b)  NAMM's  inspection  protocols  as the basis for the
moisture  inspection,  (c) EMLabs  P&K's  MoldScore(TM)  as the prime  method of
sample  analysis and (d) by bringing it all together,  utilizing the core of the
InspectVue(TM)  application from Porter Valley as the software platform, ESP has
constructed a system that the Company  believe  produces a universally  accepted

                                      -5-
<PAGE>

standardized report for moisture related issues using the best science currently
available to determine if any mold that may be present poses a hazard.

         Safeguard's  CEHI(TM)  program,  which includes the Certified  Moisture
Inspection  and  MoldScore(TM)  analysis  meets  the  requirements  of the "mold
prevention  and  maintenance  plan ("MPMP") as defined in the "Mold Steps Toward
Clarity - A White Paper by the Mold Working Group Updated:  July 2007" published
by the Commercial Real Estate/Multifamily  Finance Board of Governors ("COMBOG")
Underwriting and Closing Committee of the Mortgage Bankers Association.

         In order to  attempt  to  attain  the  highest  level of  training  for
participants  in the  CEHI(TM)  program,  Safeguard  has  partnered  with Allied
Business Schools to enhance and deliver the required curriculum for the CEHI(TM)
program.  Allied Business Schools, Inc. is nationally accredited by the Distance
Education  and Training  Council  ("DETC").  The  Accrediting  Commission of the
Distance  Education  and Training  Council is listed by the U.S.  Department  of
Education as a  nationally-recognized  accrediting  agency.  Management believes
that this partnership provides the necessary  credentials to attract both active
duty and retired veterans in the CEHI(TM) while providing  consistent quality of
instruction to all participants.

         The CEHI(TM)  program is all about risk  management for the individual.
Management  believes  it is a  significant  tool to assess  the  health of one's
environment.  Management  believes that for the industry,  it provides an easily
understood,   standardized  way  of  assessing  the  risks  of  their  policies,
regardless of location.

         SERVICE DESCRIPTION.  The services included in the CEHI(TM) program are
comprised of what  management  believes to be highly  advanced and  standardized
on-line and automated procedural protocols developed in concert with each of the
four industry participants,  ESP, NAMM, EMLab P&K, Porter Valley Software,  EDR,
CMC, and ConSol.  It is a requirement  that all CEHIs utilize the on-line system
when delivering any of the CEHI(TM) program services. By working with nationally
recognized industry leaders,  management believes that the Company has developed
state  of  the  art  "best  in  class"  procedures   providing  the  residential
real-estate and insurance  industries the ability to manage losses through claim
reduction.

         Management  believes that clients  utilizing CEHIs, can be assured that
every  single  employee or approved  vendor who  provides  services  through the
CEHI(TM) program has obtained the industries' best training,  certifications and
equipment required to provide the CEHIs program's services.

         Management  believes  that  the  CEHI(TM)  program  also  benefits  the
individual inspector. Approved vendors of Safeguard who deliver CEHI(TM) program
services  are  anticipated  to  have  the  ability  to  deliver  more  effective
inspections and meaningful reports, as well as the ability to provide additional
environmental services (e.g.: Allergen Screening,  Energy/Environmental  reports
and Radon testing). The CEHI's ability to provide certain environmental services
may be subject state or federal law and/or additional training requirements.

NATIONAL PROFESSIONAL SERVICES, INC.

         OVERVIEW.  NPS is a management company, whose services include complete
organization,  association and administrative  management,  advisory council and
board of  director  coordination,  seminars,  conferences,  graphic  design  and
printing,  accounting  and reporting  and  consulting.  NPS  currently  provides
comprehensive  management services for seven different membership  organizations
of which  four are both  National  and  International  Organizations  and one is
non-profit.  NPS  maintains a servicing  facility  in  Phoenix,  Arizona,  which
includes a fully trained staff,  conference room,  library,  accounting services
and a computer room updated with the latest server technology.

         NPS is a full service  association  management company with the ability
to work with trade associations that have between 250 members to 50,000 members.

         DESCRIPTION OF ASSOCIATIONS.  Founded in 1966, the National Association
of Real Estate  Appraisers  ("NAREA")  is a  professional  organization  of real
estate appraisers.  NAREA is one of the largest professional associations in the
United States.  Management  believes that NAREA has earned the  credibility  and
public  trust  needed  when  affiliating   with  a  professional   organization.

                                      -6-
<PAGE>

Management   believes  that  the  Code  of  Ethics  and  Uniform   Standards  of
Professional  Appraisal  Practice  ("USPAP"),  to  which  members  must  adhere,
provides the industry  with the  assurance it needs when  accepting an appraisal
report  from a NAREA  designated  member.  Along  with  the  regular  nationwide
seminars and an annual  Appraisal Expo  Conference,  members receive  bi-monthly
newsletters, appraisal guidelines, updates on regulations, the Annual Membership
Directory, legislative monitoring of the issues affecting the appraisal industry
and much more.

         The Environmental  Assessment  Association  ("EAA") is an international
organization  dedicated to providing  members with  information and education in
the environmental  industry  relating to environmental  inspections and testing.
EAA represents thousands of environmental  professionals who provide services to
a wide  variety of  clients  including  lenders,  federal & state  agencies  and
private  companies.  EAA's  membership  consists  of  environmental  inspectors,
lenders, remediation firms and government agencies. The Environmental Assessment
Association  offers several  professional  designations  and  memberships  which
management  believes makes the  association  one of the largest in the world for
environmental   professionals.   EAA  has  worked  closely  with   Environmental
Protection  Agencies and management believes that EAA is at the forefront of the
environmental industry maintaining a well earned reputation of "being involved."

         Effective  December  1,  2008,  EAA has taken  over the  governing  and
certifying of the CEHI from Safeguard. Management believes that by achieving the
highest level  certification  under the CEHI program,  "EcoCheck  Inspector(TM)"
professional inspectors will be empowered to validate their assessment expertise
and advance their careers.  The Company believes that organizations will be able
to  be  confident  hiring  inspection   professionals   with  the  new  CEHI(TM)
certification  as it  identifies  experts  capable  of  providing  the  EcoCheck
Inspection(TM)  as protection to homeowners,  businesses and retail  properties,
builders,  lenders, mortgage brokers/agents,  and all other real estate oriented
properties  relating  to  state  mandated  energy  certification,   construction
defects, moisture, or other environmental issues.

         Management  believes that the  Association of  Construction  Inspectors
("ACI")  is  the  largest  professional   organization  for  those  involved  in
construction  inspection and construction  project  management.  Management also
believes that ACI is the leading association  providing  standards,  guidelines,
regulations,  education,  training, and professional recognition in a field that
has quickly become critical for both  residential  and commercial  construction.
Management  believes  that  members  of  ACI  provide  a  vital  service  to the
construction  industry,   providing  both  construction  inspections  (verifying
percentage of  completion  for the purpose of draw  requests)  and  construction
project  management  (providing  full  construction  monitoring,  paying  of the
contractor  and  sub-contractors,  verifying  each  stage  of  construction  and
reporting to the client).

         The  Housing  Inspection  Foundation  ("HIF")  is  an  organization  of
professionals dedicated to the promotion and development of Home Inspection. HIF
was created to provide members with information,  education,  standards, ethics,
and  professional  recognition.  Management  believes  that the home  inspection
industry is the fastest growing profession today.  Management believes that this
creates  new  opportunities  for  those  who are  involved  in the real  estate,
construction  or  environmental  fields who are  willing to learn how to perform
these vital services-including home inspectors, building inspectors, real estate
professionals, construction inspectors, and remodeling contractors.

         The  International  Real Estate  Institute  ("IREI") is a  professional
organization  founded in 1966,  making  available real estate  professionals  to
those requiring  Professional  Realty Reports.  Management believes that IREI is
one of the largest professional  associations in the world, with more members in
more  cities  than any other  organization.  Management  believes  that IREI has
earned the  credibility  and  public  trust one needs  when  affiliating  with a
professional  organization.  Management  believes  that the Code of  Ethics  and
Professional  Standards of Professional  Real Estate Practice,  to which members
must adhere,  provides the  industry  the  assurance it needs when  accepting an
appraisal  report  from  an IREI  designated  member.  Professionally  presented
education  programs enhance the member's  knowledge.  Along with weekly seminars
and  an  annual  Realtor  Expo  and  Conference,   members  receive   bi-monthly
Newsletters,  real  estate  guidelines,   updates  on  regulations,  the  Annual
Membership  Directory,  legislative  monitoring of the issues affecting the real
estate industry and much more.

         The   International   Society  of  Meeting   Planners   ("ISMP")  is  a
professional organization founded in 1966, making available professional meeting
planners.  Management  believes  that  ISMP is one of the  largest  professional
associations  in the United  States  with more  members in more  cities than any
other organization. Management believes that ISMP has earned the credibility and
public  trust one  needs  when  affiliating  with a  professional  organization.

                                      -7-
<PAGE>

Management   believes  that  the  Code  of  Ethics  and  Uniform   Standards  of
Professional Meeting Planners Practice,  to which members must adhere,  provides
the industry the assurance it needs when accepting a meeting report from an ISMP
designated  member.  Professionally  presented  education  programs  enhance the
member's  knowledge.  In addition to the weekly  seminars and an Annual Planners
Expo and Conference, members receive bi-monthly Newsletters, meeting guidelines,
updates  on  regulations,   the  Annual  Membership  Directory  and  legislative
monitoring of the issues affecting the industry.

PORTER VALLEY SOFTWARE, INC.

         PVS has developed various software  programs,  which have been designed
specifically  for  corporate  applications  that require  highly  detailed  data
searching  and  data   retention   solutions,   including  but  not  limited  to
InspectVue(TM)  Report-Writers.  InspectVue(TM)  Report-Writers  is  a  software
application  used by  CEHIs  for both  residential  and  commercial  structural,
moisture, environmental and fireplace inspections. InspectVue(TM) Report-Writers
uses PVS' PVS Inspection Platform(TM) as its underlying technology to accumulate
and record  specific  and unique data on every  building  inspected.  In January
2005, PVS won the Innovations Award presented by The  International  Association
of  Certified  Home  Inspectors  for its  InspectVue(TM)  line  of  Professional
Report-Writers.  The Company  believes that PVS will become a core  component of
the on-line and automated procedural protocols, including but not limited to new
energy  inspection  requirements,  the Company are  developing  in concert  with
ConSol and other industry participants.

MARKET OPPORTUNITY

         ESP believes the present market for various  inspection  services to be
about 1.5 million tests per year. Because the inspection  industry is fragmented
and largely  privately held, the exact size of the market is difficult to gauge.
Sources  familiar with the testing volumes for the two largest labs that analyze
samples for mold and  allergens  indicate that their volume is more than 100,000
per month  each.  There are also  thousands  of smaller  labs around the country
analyzing microbiological and allergen samples.

         ESP believes  that the high volume of this business is supported by the
recent  acquisition  of  Aerotech  Laboratories  by EMLabs  P&K which  primarily
conducts  mold  and  allergen   screening  with  estimated  annual  revenues  of
approximately  $250 million  dollars.  Aerotech has grown from  employing  seven
people in 1997 to about 325 people prior to being sold in 2006.

         ESP is in the  process  of trying to expand  the  market by  looking to
include every home in the United States as a possible prospect. ESP's goal is to
capture  1.5  million  homes  each  year by 2011 that will  require  an  initial
inspection.   This  would  represent   approximately   10.2%  of  the  estimated
126,000,000  homes in the United States;  at an average cost of $650 per initial
inspection.

GROWTH STRATEGY

         ESP believes that currently the inspection industry, as a whole lacks a
predominant  brand,  lacks  uniform  inspection  and  reporting  protocols,  has
inconsistent  product and service  pricing,  and no consistent  public  outreach
program.  Cursory web searching  tends to confirm the  fragmented and relatively
unsophisticated  nature of the inspection  industry.  The Company  believes that
there are a few participants who are trying to build a national  presence and/or
a certified  network of  independent  inspectors,  but  management  has found no
indication  that these  participants  are very far along or well-funded in their
efforts.

         ESP's inspection  programs are all about "Risk Management".  Management
believes  that  it they  are a  significant  tool to  assess  the  health  of an
individual's  environment.  For the inspection industry,  they provide an easily
understood and standardized way of assessing risks regardless of location.

         ESP's inspection  programs are focused on the residential  real-estate,
mortgage, banking and insurance industries.

         The goals are three-fold and in order of priority:

                                      -8-
<PAGE>
1)       To gain the acceptance of the residential insurance industry to a level
         where members will consider offering a discount to their  policyholders
         if their customers receive an initial EcoCheck  Inspection(TM) and then
         participate in the pro-active comprehensive  subscription based 10-year
         annual maintenance process called the HLMP.
2)       To attract by 2013 the  approximately  5,000 existing top tier home and
         moisture  inspectors and veterans nationwide to become approved vendors
         of ESP as independent  contractors in order to deliver the CEHI program
         of services.
3)       To focus on turning every  household in America into ESP's  marketplace
         through  environmental  awareness  and  education by offering  allergen
         screening,  energy  assessments,  mold  sampling,  moisture  management
         inspections, neighborhood environmental reports and radon testing.

         a.       Implement a dedicated sales team to reach out to existing home
                  inspectors and active duty and retired veterans.
         b.       Implement ESP's national marketing campaign.

CURRENT STATE OF THE INDUSTRY

         ESP  believes   there  are  two  main   concerns  for  its   industry's
stakeholders,  which  include  the  mortgage  banking  industry,  the  insurance
industry,  the real estate industry, the building industry, and the consumer, as
it relates to moisture  intrusion  and indoor air quality and the severe  impact
that  they  can  have  on  personal  health,  on-going  maintenance  costs,  and
ultimately the value of the property:

         ESP  believes  that I  stakeholders  of the building  industry  have an
excellent  understanding  of the cause and effect of moisture to the  structural
integrity  of a building  and a strong  understanding  of the concerns of radon,
asbestos, and lead issues and a volatile organic compounds ("VOCs").

         Management  believes  that  the  solution  is to  get a  handle  on how
moisture  plays a part in indoor air  quality  and to find a  reasonable  way to
manage it by getting the industry partners to support:

         The consumer has additional issues to face while the insurance industry
tries to get a handle on how to approach moisture intrusion issues.

         According  to  KIMBERLY  LANKFORD  JUNE  9,  2006,  in a  study  by the
California  Insurance  Department,  25% of the  companies  refused  to renew the
policies of  customers  who made one or two  nonwater-damage  claims in the past
three  years and 32%  refused to renew  policies  for people who made one or two
water-loss claims in the past three years.

         According to KIMBERLY  LANKFORD JUNE 9, 2006,  "Getting dropped by your
insurance company isn't the only problem. Insurers share claims information with
each  other  through a  database  called  the  Comprehensive  Loss  Underwriting
Exchange  ("CLUE"),  and other  insurers may not want to insure you after you've
had a few small claims either, even if they were with another insurance company.
In the  California  Insurance  Department  study,  62% of the  top 13  companies
refused applicants with only one or two claims in the past three years." 2

         ESP believes  there is no reliable and  standardized  procedure to have
your property removed from the CLUE report.

         Various state  governments are  enacting legislation and publishing in-
formation on protecting buildings from moisture, mold  and related environmental
issues.  The common  thread is regular  inspections  to ensure any issues do not
become chronic one. http://www.tdi.state.tx.us/pubs/consumer/cb074.html

         The annual costs associated with the lawsuits,  additional  health care
including medical emergencies,  construction,  and remediation costs surrounding
mold and moisture issues are real and staggering.

         According to the Insurance Information Institute, "US insurers paid out
at least $3 billion in  mold-related  claims in 2002,  more than double the $1.3
billion paid the previous year due to moisture related issues."

                                      -9-
<PAGE>

         The Company is presenting to inspection industry stakeholders that they
need to understand that the pressure to address indoor air quality  concerns are
coming from the  collective  conscience of the buyers and owners who are now are
focused on  environmental  issues and demanding  "healthy" and "green" places to
work and live.
<TABLE>
<CAPTION>
<S>                                                                 <C>               <C>          <C>        <C>          <C>
                                                                    ----------------- ----------------------------------------------
         In recent  years,  media  attention  on indoor  mold has         AGE                AVERAGE PERCENT OF TIME SPENT 1,2
surged,  and this has led to rising  concern  about  mold-related   ----------------- ------------ ---------- ------------ ---------
health effects.  Mold spores primarily cause health problems when                     INSIDE THE     OTHER     OUTDOORS    INSIDE A
they are present in large  numbers and people inhale an unusually                        HOME       INDOORS                 VEHICLE
high number of them.  This occurs  primarily when there is active   ----------------- ------------ ---------- ------------ ---------
mold growth within a home, office, or school where people live or   CHILDREN              85           4           7           4
work. People can also be exposed to mold by touching contaminated   0-2
materials  and by eating  contaminated  foods.  The most  serious   ----------------- ------------ ---------- ------------ ---------
health effects of indoor mold chiefly include inflammation of the   3-5                   76           9          10           5
mucous  membranes or respiratory  tract and  infection;  however,   ----------------- ------------ ---------- ------------ ---------
allergic  symptoms are the most common  following  mold exposure.   6-11                  71          12          13           4
Typical  symptoms that  mold-exposed  persons report (alone or in   ----------------- ------------ ---------- ------------ ---------
combination)  include:  respiratory  problems,  such as wheezing,   ADULTS & TEENS        62          25           6           7
difficulty  breathing,  and shortness of breath;  nasal and sinus   ----------------------------------------------------------------
congestion;  eye irritation (burning,  watery, or reddened eyes);   1)From: STUDY OF CHILDREN'S ACTIVITY PATTERNS (Wiley ET AL.,
dry, hacking cough; nose or throat irritation; and skin rashes or   1991a, ARB Contract no. A733-149; Phillips ET AL., 1991).
irritation. The Institute of Medicine reviewed the literature and   ----------------------------------------------------------------
found evidence that mold exacerbates asthma.                        2)From: ACTIVITY PATTERNS OF CALIFORNIA RESIDENTS (Wiley ET AL.,
                                                                    1991b, ARB Contract no. A6-177-33; Jenkins ET AL., 1992a).
                                                                    ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S>            <C>                <C>              <C>            <C>            <C>
-------------- -----------------------------------------------------------------
 HEALTH END      ESTIMATED ANNUAL COSTS OF INDOOR AIR POLLUTION IN CALIFORNIA
   POINTE                                   ALONE
-------------- ------------------ --------------- --------------- --------------          As an example,  a key reason  indoor
                    HEALTH           MEDICAL           LOST             E        pollution  is so  critical  to health is that
                  VALUATION:                       PRODUCTIVITY                  Californians, like others from industrialized
                   PREMATURE         COST 1,2        COST 1,2                    nations,    spend    most   of   their   time
                   DEATH 1,2            ($              ($                       indoors-about   87%,  on   average.   So,  if
                ($ BILLIONS/YR)    BILLIONS/YR)    BILLIONS/YR)                  pollutants  are present  indoors,  there is a
-------------- ------------------ --------------- --------------- -------------- high  likelihood  that people will be exposed
Mold and             0.031             0.19             NA            0.22       to  them.  The  home is a  critical  exposure
moisture:                                                                        microenvironment  for all, and especially for
asthma and                                                                       children.
allergies
-------------- ------------------ --------------- --------------- --------------          Dampness, mold, dirty carpeting, and
Sick                  NA                NA             8.5             8.5       pest  infestations  are often  components  of
building                                                                         substandard   housing,    each   leading   to
syndrome                                                                         associated   health   problems,    especially
-------------- ------------------ --------------- --------------- -------------- allergy  symptoms and  exacerbation of asthma
TOTAL 3              0.031             0.19            8.5            8.72       attacks in  asthmatics.  Homes with  moisture
-------------------------------------------------------------------------------- and dampness  contributing to mold growth are
1.  Estimates are based on average or mid-point of incidence  rates of mortality more  likely  to be older,  poorly  insulated
and morbidity from sources  discussed in the main report.  Values are rounded to buildings.
two significant figures. 2. Original data were adjusted to year 2000 dollars and
year 2000 population.  3. Totals are rounded to two significant  figures.  These
totals  are  likely low  because  conservative  cost  estimates  were used,  and
quantitative  information  is not readily  available  for many known  impacts of
indoor air  pollution,  such as for indoor PM and many indirect  costs of health
effects.  The actual impact on the California  economy may be several times this
total amount.
--------------------------------------------------------------------------------
</TABLE>

         According to the 2002 Report to the  California  Legislature  on Indoor
Air  Pollution in  California,  "The  combined  cost of both fatal and non-fatal
impacts  due  to  indoor  air  pollution  in  California  homes,   schools,  and
non-industrial  workplaces  is  substantial:  it is estimated at $35 billion per
year.  The  quantifiable  medical costs (direct and some indirect) due to indoor
air pollution total more than $0.6 billion per year, with a large portion of the
costs attributable to mold and other moisture-related allergens."

         That same  Report  also  states that  "Finally,  proper  operation  and
maintenance of buildings is critical to achieving and maintaining  healthful air
quality in buildings.  Ventilation  systems should be maintained as intended and
filters  replaced  routinely  to  prevent  soiling  and the  growth  of mold and
bacteria in the ventilation  system and in the occupied  space.  Roof leaks that
are not repaired promptly can lead to moisture  intrusion and mold growth.  Such

                                      -10-
<PAGE>

factors not only lead to poor indoor air quality, but can also prove more costly
in the long term due to  increased  costs to remedy  the  larger  problems  that
result."

         Cal/OSHA   requires  that   workplaces  be  maintained  in  a  sanitary
condition,  and that employers  correct all types of water intrusion or leakage,
to reduce the potential for mold growth.

COMPETITION

         ESP estimates that  currently its  competition is represented by 10,000
indoor air quality experts who conduct residential  environmental screenings and
about 40,000 home  inspectors  (about 10,000  conduct  environmental  testing as
well).   Approximately   20,000  consultants   nationwide  conduct   residential
environmental testing.

         ESP believes with the exception of a handful of inspection  franchisors
with between 150 and 400 independently owned and operated offices  respectively,
the inspection industry is populated primarily by sole proprietors.

         In ESP's estimation the inspection  industry as a whole currently lacks
a predominant brand, does not have uniform  inspection and reporting  protocols,
is without consistent  product and service pricing,  and does not benefit from a
public  outreach or  awareness  program.  Cursory  web  searching  confirms  the
fragmented and relatively  unsophisticated  nature of the Industry.  While there
are a few people who are trying to build a national  presence and/or a certified
network of independent inspectors, there is no indication that they are very far
along or well-funded in their efforts.

KEY COMPETITIVE ADVANTAGES
<TABLE>
<CAPTION>
<S>      <C>                                                                       <C>
                                                                                   -------------------------------------------------
         ESP has developed a combination of standardized  proprietary  processes              KEY INTERNAL PROGRAM FEATURES
for each  aspect of the client  account  from  initial  call,  to the  dispatch,   -------------------------------------------------
through completion of every inspection.                                            >>       Standardized Training
                                                                                   >>       Standardized Certification Process
         In an effort to ensure profitability, the Company has standardized each   >>       Standardized Inspection & Report Process
of its processes and has documented a standardized  training program,  which all   >>       Standardized Result Analysis
employees/contractors  must pass. New CEHI's (including  Veteran's) are required   >>       Proprietary dispatch process
to learn the Company's  processes,  while developing working  relationships with   >>       Scripted needs assessment
administrative personal at HQ under simulated,  low-stress conditions.  Teamwork   >>       Standardized rate card
is built by fostering an understanding of all aspects of the business.             >>       Database driven trends analysis
                                                                                   >>       Scalable CEHI support systems
                                                                                   >>       Veteran Affairs approved educational
                                                                                            institution
                                                                                   -------------------------------------------------
</TABLE>

STANDARDIZED  PROCESSES AND TRAINING  CREATE A COMMUNITY  AMONG ALL COMPANY TEAM
MEMBERS, ENSURING DEDICATION TO COMMON GOALS OF HIGH QUALITY AND EFFICIENCY

EMPLOYEES

         The Company  currently employs nine full-time  individuals,  all of who
are working at the  Company's  offices at 1111 East Tahquitz  Canyon Way,  Suite
110, Palm Springs, California 92262. Of those nine full-time employees, five are
employed in administrative,  marketing,  and sales positions,  and the remaining
four are technical  employees  employed in research,  development and production
positions.  The Company  projects that during the next 12 months,  the Company's
workforce is likely to increase.

         To support the Company's need for technical  staffing,  the Company has
established   relationships   with   technical   staffing   organizations   that
continuously offer highly qualified  personnel to meet the Company's needs, both
locally and from out of the area.

                                      -11-
<PAGE>

INTELLECTUAL PROPERTY MATTERS

         All of the Company's  employees  have executed  agreements  that impose
nondisclosure obligations on the employee and in which the employee has assigned
to the Company (to the extent permitted by Federal law) all copyrights and other
inventions  created by the employee  during  employment  with the  Company.  The
rights underlying the application for the patent of the ESP technology have been
assigned to the  Company.  The Company  has in place a trade  secret  protection
policy  that the  Company's  management  believes  to be adequate to protect the
Company's intellectual property and trade secrets.

         Establishing  or acquiring  strong brand identity is important to ESP's
plans to recruit the required  independent  contractors  and  establish a strong
presence in local,  regional  and  national  markets.  We are working with ESP's
intellectual  property  counsel  to  register a number of names for us to use in
developing  external brand identity.  In addition,  management is impressed with
the number of small operators who have developed  significant  brand  acceptance
and  recognition  in their  geographic  area. We believe that these brand assets
could be leveraged in much larger  geographic  areas with  substantially  larger
market share. We are pursuing  opportunities to expand ESP's brand identity with
such small  operators  having  significant  brand  acceptance in three ways: (1)
through an affiliate  relationship;  (2)  licensing  for  expanded  territories;
and/or (3) acquisition potential, where appropriate.

         Currently, ESP owns the following registered trademarks/service marks:

         1.       Environmental  Sampling  Professionals,  Inc(R),  registration
                  number 2721471;

         2.       ESP and Design(R), registration number 2788620;

         3.       Allstate Home Inspection & Household Environmental Testing(R),
                  registration number 2509084; and

         4.       Advance Look(R), registration number 3035162.


         The Company has submitted  applications  for  registering the following
         trademarks/service marks:

         1.       EcoCheck Inspection and design

         2.       EcoCheck Inspector and design

         3.       CEHI (Certified Environmental Home Inspector and design)

         4.       HLMP (Healthy Living Maintenance Program and design)

SEASONALITY

         ESP's  operations  are  expected  to be  somewhat  affected by seasonal
fluctuations due to the rainy and wetter  conditions  during the fall and winter
months,  as opposed to the drier  conditions  during  spring and summer  months.
Management does not, however,  expect the disparity in cash flow from summer and
winter to be detrimental to the operation of the Company and its subsidiaries on
an overall basis.

GOVERNMENT REGULATION

         ESP and its affiliates are subject to various federal,  state and local
laws affecting  regulation of the indoor air quality  testing  industry.  ESP is
also  subject to  government  laws and  regulations  governing  health,  safety,
working conditions,  employee relations, wrongful termination,  wages, taxes and
other  matters  applicable  to  businesses  in general.  Labor laws apply to the
employment of workers.  Furthermore,  ESP and its affiliates will be required to
obtain  business  licenses from state and local  governments in order to operate
its facilities. ESP and its affiliates must also obtain certifications for their
Certified  Industrial  Hygienists from the local or state jurisdictions when ESP
and its affiliates decide to operate in other states.

OTHER GOVERNMENT REGULATIONS

         ESP  believes  that  the  current   administration  will  either  enact
legislation or establish  policies for the  establishment of national  standards
for residential and commercial building inspections and a requirement for annual
inspections  for all federally  insured  mortgages  (covering  Housing and Urban

                                      -12-
<PAGE>

Development, Federal Housing Authority and Ginnie Mae), mortgages securitized by
government  sponsored  enterprises  (Freddie Mac and Fannie  Mae),  mortgages by
lending  institutions  or properties  insured by  institutions  receiving  funds
through the Emergency  Economic  Stabilization  Act of 2008,  and all properties
leased  and/or owned by the U.S.  Government  will may result in  immediate  and
sustainable benefits. These benefits may include, but are not limited to:

>>       Reduction in financial risk of and preservation of hundreds of billions
         of dollars  of  economic  value for all U.S.  Government  directly  and
         indirectly backed mortgages,

>>       Amelioration  of  financial  risks to lending  institutions  across the
         nation,

>>       Annual inspections assist in preventing moisture related issues thereby
         protecting the value of the property and the health of the occupant.

>>       Reduction in insurance claims and lawsuits for construction defects and
         accidental property damage,

>>       Elimination of uninhabitable,  uninsurable,  and unsalable or condemned
         properties,

>>       Stabilization  and subsequent  growth of the local property tax base in
         all states and communities,

>>       Creation of 200,000 to 300,000 jobs industry related nationwide with an
         emphasis on providing job training for veterans

>>       Establishment and maintenance of environmentally  healthy buildings for
         employees, families, and visitors.

>>       The Public will benefit the most from this stimulus action.

ITEM 1A. RISK FACTORS

WE HAVE A LIMITED OPERATING HISTORY, WHICH COULD MAKE IT DIFFICULT TO ACCURATELY
EVALUATE OUR BUSINESS AND PROSPECTS.

         We  began   offering   our   environmental   inspection   services   as
Environmental  Service  Professionals,  Inc. in October 2006 and our association
management  services  in July  2007.  Accordingly,  we have a limited  operating
history  and, as a result,  we have limited  financial  data that you can use to
evaluate our business and  prospects.  Our business model is evolving and it may
not be successful.  As a result of these factors,  the future revenue and income
potential of our business is uncertain. Although we have experienced significant
revenue growth in recent periods, we may not be able to sustain this growth. Any
evaluation  of our business and our  prospects  must be  considered  in light of
these factors and the risks and uncertainties  often encountered by companies in
our state of development.  Some of these risks and  uncertainties  relate to our
ability to do the following:

o        Maintain  and  expand  our  current  relationships,   and  develop  new
         relationships with state, federal and environmental regulatory bodies
o        Gain  the  acceptance  of  the  commercial  and  residential  insurance
         industry  to a level  where they will  consider  offering a discount to
         their policyholders,  if their  customers/insured's  receive an initial
         inspection  services  and  then  participate  in an  annual  inspection
         program
o        Maintain  and  expand  our  current  relationships,   and  develop  new
         relationships  with  the  industry  stakeholders  including  insurance,
         mortgage,  and  banking  businesses,  and  realtors,   builders,  asset
         managers and the consumer
o        Continue to grow our revenue and meet anticipated growth targets
o        Manage  our  expanding   operations   and  implement  and  improve  our
         operational,  financial,  and management controls o Respond effectively
         to competition
o        Implement ESP's national marketing campaign
o        Attract and retain qualified management and employees
o        Attract the existing top tier home and moisture  inspectors  nationwide
         and to become approved  vendors as independent  contractors in order to
         deliver the CEHI Program of services

If we are unable to address these risks, our business, results of operation, and
prospects could suffer.

                                      -13-
<PAGE>

LACK OF PUBLIC ACCEPTANCE OF OUR SERVICES WOULD HAVE A NEGATIVE IMPACT OUR SALES
AND PROFITABILITY.

         Our business is  speculative  and dependent  upon the acceptance of our
services as an effective and reliable  method to perform  indoor air quality and
energy use inspections.  Our business is also dependent on the  effectiveness of
our marketing program to convince  potential  clients and potential  independent
contractors to utilize our services so that we will become profitable. We cannot
assure  that the public or  industry  stakeholders  will  accept our  inspection
services,  or that we will be  successful  or that our  business  will  earn any
profit.  We cannot assure that we will earn any revenues or that  investors will
not lose their  entire  investment.  We cannot  assure that we will  operate our
business successfully or that our common stock will have value. A failure of our
marketing  campaign  would  have a  material  adverse  impact  on its  operating
results, financial condition and business performance.

WE MAY RISK EXPOSURE FROM LIABILITY CLAIMS.

         Environmental  inspectors face the risk of exposure to liability claims
in the  event  that  the use of  analysis  reports  or  reliance  on  inspection
protocols cause property damage,  injury or illness as a result of contamination
from  environmental  hazards  that were  included in such  analysis,  inspection
protocols,  or  otherwise.  We expect to maintain  sufficient  primary or excess
umbrella  liability  insurance.  However,  such insurance may not continue to be
available at a reasonable  cost, or, if available,  may not be adequate to cover
all  liabilities.  Although we intend to seek  contractual  indemnification  and
insurance coverage from parties supplying its services,  such indemnification or
insurance coverage is limited, as a practical matter, to the creditworthiness of
the  indemnifying  party and the  insured  limits of any  insurance  provided by
suppliers.  If we do not have adequate insurance or contractual  indemnification
available,  product  liability  relating to defective  products could materially
reduce our future net earnings and earnings per share.

WE MAY BE HARMED  BY  ACTIONS  TAKEN BY OUR  ENVIRONMENTAL  INSPECTORS  THAT ARE
OUTSIDE OUR CONTROL.

         A significant  portion of our environmental  inspectors are independent
contractors  and are not our employees.  We provide  training and support to the
environmental inspectors,  but the quality of their operations may be diminished
by any number of factors  beyond our control.  Consequently,  our  environmental
inspectors  may  not  successfully  operate  in a  manner  consistent  with  our
standards and requirements,  or may not hire and train qualified personnel.  Our
image  and  reputation,  and the  image and  reputation  of other  environmental
inspectors,  may suffer  materially and  system-wide  sales could  significantly
decline if our environmental inspectors do not operate successfully.

WE MAY  BECOME  RELIANT ON  TECHNOLOGY  FOR  EFFICIENT  OPERATIONS  WHICH  COULD
INCREASE  OUR  OPERATING  COSTS IN THE  SHORT  TERM AND  MAKE US  VULNERABLE  TO
DISRUPTIONS.

         The need to synchronize data and the related  information  which is key
to our on-line work flow system.  Global trends are moving toward developing and
adopting standardized protocols for data synchronization.  The implementation of
these  protocols  will be an added  expense  encountered  by us in executing our
business strategy. One of the greatest coordination  challenges for us is having
inspectors utilize on-line work flow systems effectively to ensure efficient and
effective  service to our clients and to capture the mission  critical data post
inspection.  The  Internet is playing a growing  role in  creating an  automated
communications  network for  presenting,  tracking,  and capturing  this mission
critical  information.  We  believe  that we will need to  develop a network  to
enable  the  on-line  work  flow  system  on the  Internet  in order to  operate
profitability, which could increase our operating costs in the short term.

         Our ability to reduce costs in the long term and increase  profits,  as
well as our  ability  to serve  customers  most  effectively,  may depend on the
reliability  of our  technology  network.  We expect to use  software  and other
technology  systems  to  dispatch  inspectors  in the most  efficient  manner to
optimize the use of standardized  inspection and analysis protocols and minimize
the time spent at each stop.  Any  disruption to these  computer  systems in the
future could adversely impact our customer  service,  decrease the volume of our
business, and result in increased costs. While we expect to invest in technology
security  initiatives  and disaster  recovery  plans,  we  recognize  that these
measures cannot fully insulate us from  technology  disruption that could result
in adverse effects on operations and profits.

                                      -14-
<PAGE>

OUR BUSINESS STRATEGY,  IN PART, DEPENDS UPON OUR ABILITY TO COMPLETE AND MANAGE
ACQUISITIONS OF OTHER COMPANIES.

         Our  primary  strategy is to achieve  growth  through  acquisitions  of
businesses.  We may  not be  able to make  acquisitions  in the  future  and any
acquisitions we do make may not be successful.  Furthermore, future acquisitions
may have a material adverse effect upon our operating  results,  particularly in
periods  immediately  following the consummation of those transactions while the
operations of the acquired businesses are being integrated into our operations.

      Achieving the benefits of  acquisitions  depends on the timely,  efficient
and  successful  execution  of a number of  post-acquisition  events,  including
integrating the business of the acquired company into our operations,  marketing
programs,  and  reporting  and  information  systems.  We  may  not be  able  to
successfully  integrate  the acquired  company's  operations  or  personnel,  or
realize the anticipated  benefits of the  acquisition.  Our ability to integrate
acquisitions may be adversely affected by many factors, including the relatively
large size of a business and the allocation of our limited management  resources
among various integration efforts.

         In connection with the acquisitions of businesses in the future, we may
decide to consolidate the operations of any acquired  business with our existing
operations  or make other changes with respect to the acquired  business,  which
could result in special  charges or other  expenses.  Our results of  operations
also may be adversely affected by expenses we incur in making  acquisitions,  by
amortization of acquisition-related intangible assets with definite lives and by
additional  depreciation  attributable to acquired assets. Any of the businesses
we acquire may also have liabilities or adverse operating issues, including some
that we fail to discover  before the  acquisition,  and our  indemnity  for such
liabilities  typically  has  been  limited  and  may,  with  respect  to  future
acquisitions, also be limited.

         Additionally,  our ability to make any future  acquisitions  may depend
upon obtaining  additional  financing.  We may not be able to obtain  additional
financing on  acceptable  terms or at all. To the extent that we seek to acquire
other  businesses  in exchange for our common stock,  fluctuations  in our stock
price  could  have  a  material  adverse  effect  on  our  ability  to  complete
acquisitions.

WE HAVE NO ASSURANCE THAT OUR PROPOSED ACQUISITIONS WILL BE COMPLETED.

         Our business  strategy,  in part, is to expand our  operations  through
strategic acquisitions. We have not entered into any agreements, arrangements or
understandings to acquire any operating companies, and we cannot assure that any
acquisition will be completed for any number of reasons.  These reasons include,
but are not limited to, our ability to obtain  funding,  complete the  necessary
due  diligence to our  satisfaction,  agree on all material  terms of definitive
purchase  agreements,  obtain audited financial  statements  consistent with the
unaudited financial  statements,  or otherwise consummate the acquisition of any
or all of such entities.

WE MAY NOT BE ABLE TO MANAGE PROPOSED ACQUISITIONS AND ACHIEVE PROFITABILITY.

         In the  event  that we are  able to  complete  any  acquisitions,  such
acquisitions would present numerous challenges to us. These include, but are not
limited  to, the  integration  of the  acquired  entities  with our  operations,
technologies  and  management  and the  attendant  risks  associated  with  such
acquisitions, including, but not limited to, possible unanticipated liabilities,
unanticipated costs, and diversion of management attention or loss of personnel.

         We cannot assure you that we will successfully  integrate or profitably
manage any acquired  businesses,  that our continued business will achieve sales
levels, profitability,  efficiencies or synergies that justify the acquisitions,
or that the acquisitions will result in increased  earnings for us in any future
period.  Successful  integration of our  operations  will depend on, among other
things,  our ability to attract,  hire and retain  skilled  management and other
personnel,  none of which can be assured. To manage growth effectively,  we will
need to invest in development of  enhancements to existing  services,  implement
operational,  financial  and  management  information  systems,  procedures  and
controls,  and integrate our personnel and operations  with those of an acquired
company. We cannot assure that we will be able to manage the combined operations
effectively,  and failure to do so could have a material  adverse  effect on our
business, financial condition and/or operating results.

                                      -15-
<PAGE>

WE MAY  BECOME  SUBJECT  TO  UNDISCLOSED  LIABILITIES  AS A RESULT  OF  PROPOSED
ACQUISITIONS.

         While we will conduct  whatever due diligence we can with regard to all
acquisitions,  there may be significant  undisclosed liabilities associated with
an entity that might not be known to us prior to an acquisition. The indemnities
and warranties that we will receive in connection with the proposed acquisitions
might not fully  cover such  liabilities,  in which case our  operations  may be
adversely affected.

WE MAY NOT BE ABLE TO SUCCESSFULLY  COMPETE AGAINST COMPANIES WITH SUBSTANTIALLY
GREATER RESOURCES.

         The indoor air quality testing industry is extremely  competitive.  Our
principal  competitors  include  other  indoor air  quality  testers,  certified
industrial hygienists, home inspectors,  termite inspectors, and remediation and
abatement  companies.  These  competitors may have longer  operating  histories,
greater name  recognition,  larger installed  customer bases, and  substantially
greater  financial  and  marketing  resources  than  ESP.  We  believe  that the
principal  factors  affecting  competition in this proposed  market include name
recognition,  and the ability to receive referrals based on client confidence in
our  services.  There are no  significant  barriers  of entry  that  could  keep
potential   competitors   from  opening   similar  indoor  air  quality  testing
facilities.  Our ability to compete  successfully in the industry will depend in
large part upon our  ability to market and sell our indoor air  quality  testing
services and to respond effectively to changing insurance industry standards and
methodology.  We cannot assure that ESP will be able to compete  successfully in
the indoor air quality testing  industry,  or that future  competition  will not
have a material adverse effect on our business, operating results, and financial
condition.

WE MAY FROM TIME TO TIME BE SUBJECT  TO  DISPUTES  WITH  CUSTOMERS  AND  VENDORS
RELATING TO AMOUNTS  INVOICED FOR SERVICES  PROVIDED WHICH WE MAY NOT BE ABLE TO
RESOLVE IN OUR FAVOR.

         It is not unusual in our industry to  occasionally  have  disagreements
with  vendors  relating  to amounts  billed for  services  provided  between the
recipient  of the  services  and the  vendor.  To the  extent  we are  unable to
favorably  resolve these disputes,  our revenues,  profitability  or cash may be
adversely affected.

OUR ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY IS UNCERTAIN.

         We rely on  know-how  and trade  secrets to  maintain  our  competitive
position.  Confidentiality  agreements or other  agreements  with our employees,
consultants  and advisors may not be enforceable  or may not provide  meaningful
protection for our proprietary  technology,  know-how,  trade secrets,  or other
proprietary  information in the event of  misappropriation,  unauthorized use or
disclosure or other breaches of the agreements,  or, even if such agreements are
legally  enforceable,  we may not have  adequate  remedies  for breaches of such
agreements.  The failure of our agreements to protect our proprietary technology
could result in significantly lower revenues,  reduced profit margins or loss of
market share.

         The market for our  services  depends to some extent upon the  goodwill
associated  with our trademarks  and service marks.  We own, or have licenses to
use, the material  trademarks,  service marks and trade names used in connection
with the  marketing and  performance  of our services in the markets where those
services are sold. Therefore, trademark protection is important to our business.
Although our  trademarks  and service marks are registered in the United States,
we may not be successful in asserting  trademark  protection.  In addition,  the
laws of certain  foreign  countries  may not protect our  trademarks  or service
marks  to the  same  extent  as the  laws  of the  United  States.  The  loss or
infringement  of our  trademarks  or service  marks  could  impair the  goodwill
associated  with our brands,  harm our  reputation  and have a material  adverse
effect on our financial results.

WE EXPECT TO CONTINUE TO INCUR LOSSES FOR THE NEAR FUTURE.

         We  project   that  we  will   continue   to  incur   development   and
administrative  expenses  and  operate at a loss for up to the next three  years
unless we are able to complete  several  acquisitions  or  generate  substantial
revenues from inspection and membership  services.  We cannot be certain whether
or when we will be able to  achieve  profitability  because  of the  significant
uncertainties with respect to our business.

                                      -16-
<PAGE>

OUR CURRENT  CAPITALIZATION  IS  INADEQUATE  AND WE MAY NOT BE ABLE TO RAISE THE
REQUIRED CAPITAL TO CONDUCT OUR OPERATIONS.

         We have incurred  substantial  indebtedness  through  short-term bridge
loans  and  other  short  term  loans  made to us  during  the past 12 months by
investors and lenders.  These loans have maturity dates  occurring in the second
quarter of 2008. We must raise substantial  equity capital in order to refinance
these short-term loans because our businesses do not have sufficient  revenue to
service the debt.  We cannot  assure that we will be able to raise the necessary
capital to repay our debt. If we default on the debt, a  significant  portion of
which is secured by our assets,  then we could lose our  businesses  and related
assets, causing investors to lose their entire investment in us. Furthermore, we
cannot  assure  that we will not  incur  debt in the  future,  that we will have
sufficient funds to repay our  indebtedness,  or that we will not default on our
debt, jeopardizing our business viability. We may not be able to borrow or raise
additional  capital in the future to meet our needs or to otherwise  provide the
capital necessary to conduct our business.

         We will require additional capital resources including, but not limited
to,  exercise of  outstanding  warrants,  in order to conduct our operations and
raise  sufficient  working  capital,  as well as in order to grow and expand our
business. Future events may lead to increased costs that could make it difficult
for us to  succeed.  To raise  additional  capital,  we may be  required to sell
additional  equity  securities,  or accept debt  financing  or obtain  financing
through a bank or other  entity.  If  additional  funds are raised  through  the
issuance of additional stock,  there may be a significant  dilution in the value
of our  outstanding  common  stock.  We may not have binding  arrangements  with
respect to  additional  financings,  even though we have signed  investment  and
financing commitments.  If we so require,  future financing may not be available
to us on  commercially  reasonable  terms,  or at all. We cannot assure that any
additional  financings  will be available to us, which we will be able to obtain
additional  loans,  or that adequate funds for our operations  will otherwise be
available  when needed or on terms that are  acceptable  to us. The inability to
secure  additional  financing would prevent us from achieving  profitability and
would have a material  adverse  effect upon us,  which may result in the loss of
your investment in ESP.

OUR INDUSTRY IS SUBJECT TO REGULATION THAT COULD ADVERSELY IMPACT OUR BUSINESS.

         Our business is subject to various  federal,  state and local laws that
govern indoor air quality  assessors and  hygienists,  business  licensing,  and
those   governing   health,   safety,   the  rights  of  employees,   employment
discrimination,  wrongful termination,  wages, hours, taxes, quality of service,
and other matters. A failure by us or our independent  environmental  inspectors
to  comply  with  applicable   government   regulations  or  insurance   company
requirements could have a material adverse effect on our financial condition and
business operations.

OUR FINANCIAL  STATEMENTS HAVE BEEN PREPARED ASSUMING THAT WE WILL CONTINUE AS A
GOING CONCERN.

         The accompanying financial statements to this filing have been prepared
assuming  that we will continue as a going  concern.  As discussed in Note 10 to
the  financial  statements,  we generated net losses of  $31,237,703  during the
period from  September 29, 1992  (inception)  through  December 31, 2008.  These
conditions  raise  substantial  doubt  about our  ability to continue as a going
concern. Our continuation as a going concern is dependent on our ability to meet
our  obligations,  to  obtain  additional  financing  as  may be  required,  and
ultimately to attain profitability. The consolidated financial statements do not
include any adjustments that might result from the outcome of this  uncertainty.
Management plans to raise additional funds through debt or equity offerings.  We
are insolvent unless and until we raise adequate capital to repay our short-term
indebtedness which is in default.  There is no guarantee that we will be able to
raise any capital through any type of offerings.

WE ARE CURRENTLY IN DEFAULT ON OUR BRIDGE LOANS.

         We have failed to repay our bridge loans on a timely basis.  Currently,
our bridge loan lenders are  exercising  forbearance  on a voluntary  day-to-day
basis.  We  cannot  assure  that our  lenders  will  continue  to  refrain  from
enforcement  and  foreclosure  on  their  loans.  If we are not able to repay or
refinance  bridge  loans,  we may  experience  foreclosure  on our  assets and a
cessation  of our  business.  In such  circumstances  you may lose  your  entire
investment in ESP.

                                      -17-
<PAGE>

WE HAVE AN OBLIGATION TO REPURCHASE STOCK ISSUED TO CERTAIN BRIDGE LOAN LENDERS.

         We have an obligation to repurchase stock issued to certain bridge loan
lenders.  We cannot assure that we will have sufficient  funds to repurchase the
stock and we may default on this obligation. Currently, we have an obligation to
repurchase 215,321 shares of our common stock at a price of $1.00 per share.

OUR  BUSINESS  MAY BE SUBJECT TO  FLUCTUATIONS  IN THE ECONOMY AND  GEOPOLITICAL
EVENTS.

         Our business could be affected by general economic conditions and those
specific to the inspection,  real-estate and energy  management  industries.  In
addition,  our business  could be affected by  geopolitical  events such as war,
threat of war or terrorist  actions.  Such an economic  downturn or geopolitical
event  could   materially  and  adversely  affect  our  business  and  financial
condition.

IF WE WERE TO LOSE  THE  SERVICES  OF OUR KEY  PERSONNEL,  WE MAY NOT BE ABLE TO
EXECUTE OUR BUSINESS STRATEGY.

         Our  success  is  substantially  dependent  on the  performance  of our
executive officers and key employees. Given our early stage of operation, we are
dependent on our ability to retain and motivate high quality personnel. Although
we believe we will be able to engage qualified  personnel for such purposes,  an
inability to do so could  materially  adversely affect our ability to market and
perform  our  services.  The  loss of one or more  of our key  employees  or our
inability to hire and retain  other  qualified  employees  could have a material
adverse effect on our business

IF WE ARE UNABLE TO HIRE, RETAIN OR MOTIVATE QUALIFIED  PERSONNEL,  CONSULTANTS,
INDEPENDENT CONTRACTORS AND ADVISORS, WE MAY NOT BE ABLE TO GROW EFFECTIVELY.

         Our performance will be largely dependent on the talents and efforts of
highly skilled individuals. Our future success depends on our continuing ability
to identify,  hire, develop,  motivate and retain highly qualified personnel for
all areas of our  organization.  Competition  for such  qualified  employees  is
intense. If we do not succeed in attracting  excellent personnel or in retaining
or  motivating  them,  we may be unable to grow  effectively.  In addition,  our
future  success  will  depend  in  large  part  on our  ability  to  retain  key
consultants  and advisors.  We cannot assure that any skilled  individuals  will
agree to become an employee,  consultant or  independent  contractor of ESP. Our
inability to retain their services could negatively  impact our business and our
ability to execute our business strategy.

DIRECTORS AND OFFICERS HAVE LIMITED LIABILITY.

         As permitted by the Nevada General  Corporation Law, our certificate of
incorporation  and by-laws  limit the personal  liability of our  directors  and
stockholders  for monetary damages for breach of fiduciary duty as a director or
stockholder,  but such  provision does not eliminate or limit the liability of a
director in certain circumstances, such as for: (i) any breach of the director's
duty of  loyalty  to the  corporation  or its  stockholders;  (ii)  for  acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) under Section 174 of the Nevada  General  Corporate Law;
or (iv) for any transaction from which the director derived an improper personal
benefit. If we were called upon to perform under our indemnification  agreement,
then the portion of our assets expended for such purpose would reduce the amount
otherwise available for our business.

UNTIL  OCTOBER  2006,  WE WERE A PUBLIC SHELL  COMPANY.  THERE ARE CERTAIN RISKS
ASSOCIATED WITH  TRANSACTIONS WITH PUBLIC SHELL COMPANIES  GENERALLY,  INCLUDING
INCREASED SECURITIES AND EXCHANGE COMMISSION SCRUTINY AND REGULATION AND LACK OF
ANALYST COVERAGE.

         Prior to October 2006, we were  effectively a public shell company with
no  material  assets or  operations  and our only  value was that we  maintained
current filings with the Securities and Exchange  Commission ("SEC") and a class
of securities that was traded on the OTC Bulletin Board.  Substantial additional
risks are associated with a public shell merger  transaction such as the absence
of  accurate  or  adequate  public  information  concerning  the  public  shell;
undisclosed liabilities;  improper accounting;  claims or litigation from former
officers,  directors,   employees  or  stockholders;   contractual  obligations;
regulatory  requirements and others. Although management performed due diligence
on the public shell  company,  there can be no assurance  that such risks do not

                                      -18-
<PAGE>

occur.  The occurrence of any such risk could  materially  adversely  affect our
results of operations, financial condition and stock price. Security analysts of
major brokerage firms may not provide  coverage of us. No assurance can be given
that brokerage firms will want to conduct any secondary  public offerings on our
behalf or make a market in our stock in the future.

OUR COMMON STOCK MAY BE CONSIDERED A "PENNY STOCK" AND MAY BE DIFFICULT TO SELL.

         The SEC has adopted regulations which generally define "penny stock" to
be an equity security that has a market price of less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to specific exemptions. The
market price of our common stock is less than $5.00 per share and  therefore may
be  designated  as a "penny  stock"  according  to SEC rules.  This  designation
requires  any broker or dealer  selling  these  securities  to disclose  certain
information  concerning  the  transaction,  obtain a written  agreement from the
purchaser  and determine  that the purchaser is reasonably  suitable to purchase
the  securities.  These rules may  restrict the ability of brokers or dealers to
sell our  common  stock and may affect the  ability of  investors  to sell their
shares.  In addition,  since our common stock is currently  traded on the NASD's
OTC  Bulletin  Board,  investors  may  find  it  difficult  to  obtain  accurate
quotations  of our common stock and may  experience a lack of buyers to purchase
such stock or a lack of market makers to support the stock price.

OUR PRINCIPAL  SHAREHOLDERS  HAVE SIGNIFICANT  VOTING POWER AND MAY TAKE ACTIONS
THAT MAY NOT BE IN THE BEST INTEREST OF OTHER SHAREHOLDERS.

         As of March 31, 2009, our executive officers,  directors, and principal
shareholders  who hold 5% or more of our outstanding  common stock  beneficially
owned,  in the aggregate,  approximately  57% of our  outstanding  common stock.
These  shareholders  are able to exercise  significant  control over all matters
requiring shareholder approval, including the election of directors and approval
of significant corporate transactions.  This concentration of ownership may have
the effect of delaying  or  preventing  a change in control and might  adversely
affect the market price of our common stock. This concentration of ownership may
not be in the best interests of all our shareholders.

WE CAN  PROVIDE  NO  ASSURANCE  THAT OUR  INTERNAL  CONTROL  OVER OUR  FINANCIAL
REPORTING WILL BE EFFECTIVE UNDER SECTION 404 OF THE SARBANES-OXLEY ACT OF 2002.

         Given the complexities and inherent risks associated with the operation
of internal control over financial  reporting,  we can provide no assurance that
our internal  control over financial  reporting will be effective  under Section
404 of the  Sarbanes-Oxley  Act of 2002  ("SOX").  Moreover,  we can  provide no
assurance  as to  any  matters  that  might  be  reported  in  our  management's
assessment of our internal  control over financial  reporting or our independent
registered  public  accounting  firm's  audit  report.  If we are  not  able  to
implement  the  requirements   relating  to  internal  controls  and  all  other
provisions  of Section 404 in a timely  fashion or achieve  adequate  compliance
with these requirements or other requirements of SOX, we might become subject to
sanctions or  investigation  by  regulatory  authorities  such as the SEC or the
Financial Industry Regulatory  Authority,  Inc.  ("FINRA").  Any such action may
materially adversely affect our reputation, financial condition and the value of
our securities,  including our common stock. Additionally,  ineffective internal
control over financial reporting could cause investors to lose confidence in our
reported financial information and could result in a lower trading price for our
securities.

THE TRADING PRICE OF OUR COMMON STOCK HAS BEEN, AND IS LIKELY TO CONTINUE TO BE,
VOLATILE WITH LIMITED LIQUIDITY.

         The trading  prices of our common stock and the  securities  of service
companies generally have been highly volatile. Trading volume has been extremely
light and may not increase, resulting in limited liquidity for stockholders. The
trading  price of our common  stock may decline or fail to  appreciate.  Factors
affecting the trading price of our common stock will include:

o        variations in our operating results;
o        announcements  of  technological  innovations,  new services or service
         enhancements, strategic alliances or significant agreements by us or by
         our competitors;
o        recruitment or departure of key personnel;

                                      -19-
<PAGE>

o        changes  in the  estimates  of our  operating  results  or  changes  in
         recommendations  by any  securities  analysts  that elect to follow our
         common stock;
o        developments or disputes concerning our intellectual  property or other
         proprietary rights;
o        the gain or loss of significant customers;
o        market  conditions in the  inspection  industry,  the industries of our
         customers, and the economy as a whole; and
o        adoption  or  modification  of  regulations,  policies,  procedures  or
         programs applicable to our business.

         In  addition,  if the market for  service  company  stocks or the stock
market in general experiences loss of investor confidence,  the trading price of
our common stock could decline for reasons unrelated to our business,  operating
results or financial condition. The trading price of our common stock might also
decline in reaction to events that affect other  companies in our industry  even
if these events do not directly affect us.

THERE IS NO ASSURANCE OF AN ESTABLISHED  PUBLIC TRADING MARKET,  AND THE FAILURE
TO ESTABLISH  ONE WOULD  ADVERSELY  AFFECT THE ABILITY OF OUR  INVESTORS TO SELL
THEIR SECURITIES IN THE PUBLIC MARKET.

         At present,  there is minimal trading of our securities,  and there can
be no assurance that an active trading market will develop.  Our common stock is
traded on the OTC Bulletin  Board.  The OTC Bulletin  Board is an  inter-dealer,
over-the-counter  market that provides significantly less liquidity than FINRA's
automated  quotation system, or NASDAQ Stock Market.  Quotes for stocks included
on the OTC Bulletin Board are not listed in the financial sections of newspapers
as are those for the NASDAQ  Stock  Market.  Therefore,  prices  for  securities
traded  solely on the OTC Bulletin  Board may be difficult to obtain and holders
of  common  stock may be unable to  resell  their  securities  at or near  their
original price or at any price.

TRADING ON THE OTC BULLETIN BOARD MAY BE DETRIMENTAL TO INVESTORS.

         Securities  traded on the OTC  Bulletin  Board  generally  have limited
trading  volume and exhibit a wide spread  between  the bid/ask  quotations.  We
cannot predict whether a more active market for our common stock will develop in
the  future.  In the absence of an active  trading  market,  investors  may have
difficulty  buying and selling our common stock or obtaining market  quotations,
market visibility for our common stock may be limited,  and a lack of visibility
for our common  stock may have a  depressive  effect on the market price for our
common stock.

IF WE FAIL TO MAINTAIN EFFECTIVE INTERNAL CONTROLS OVER FINANCIAL REPORTING, THE
PRICE OF OUR COMMON STOCK MAY BE ADVERSELY AFFECTED.

         We are required to establish and maintain appropriate internal controls
over financial reporting. Failure to establish those controls, or any failure of
those controls once established,  could adversely impact our public  disclosures
regarding  our  business,  financial  condition  or  results of  operations.  In
addition,  management's assessment of internal controls over financial reporting
may identify weaknesses and conditions that need to be addressed in our internal
controls over  financial  reporting or other matters that may raise concerns for
investors.  Any actual or perceived  weaknesses and  conditions  that need to be
addressed  in our internal  control  over  financial  reporting,  disclosure  of
management's  assessment of our internal  controls over  financial  reporting or
disclosure  of  our  public  accounting  firm's  attestation  to  or  report  on
management's  assessment of our internal  controls over financial  reporting may
have an adverse impact on the price of our common stock.

WE DO NOT FORESEE PAYING CASH DIVIDENDS IN THE FORESEEABLE FUTURE.

         We have not paid  cash  dividends  on our  stock and do not plan to pay
cash dividends on our common stock in the foreseeable future.

WE MAY USE OUR PREFERRED STOCK AS AN ANTI-TAKEOVER DEVICE.

         We are authorized to issue up to 5,000,000  shares of preferred  stock,
$0.001 par value.  The preferred stock may be issued in series from time to time
with such designation,  voting and other rights,  preferences and limitations as
our Board of  Directors  may  determine  by  resolution.  Unless the nature of a
particular  transaction and applicable statutes require such approval, the Board

                                      -20-
<PAGE>

of  Directors  has the  authority  to issue  these  shares  without  stockholder
approval subject to approval of the holders of our preferred stock. The issuance
of  preferred  stock may have the effect of delaying or  preventing  a change in
control of ESP without any further action by our stockholders.

WE ARE  SUBJECT  TO  CRITICAL  ACCOUNTING  POLICIES,  AND WE  MAY  INTERPRET  OR
IMPLEMENT REQUIRED POLICIES INCORRECTLY.

         We will follow generally accepted accounting principles for the U.S. in
preparing our financial  statements.  As part of this process, we must make many
estimates  and  judgments  about  future  events.  These affect the value of the
assets and  liabilities,  contingent  assets and  liabilities,  and  revenue and
expenses that we report in our financial statements.  We believe these estimates
and judgments are reasonable, and we make them in accordance with our accounting
policies based on  information  available at the time.  However,  actual results
could differ from our estimates, and this could require us to record adjustments
to expenses or revenues  that could be material to our  financial  position  and
results of operations in future periods.

FUTURE POTENTIAL LITIGATION

         The Company and its  affiliates  may in the future  become  involved in
litigation.  The results of litigation,  if any,  could have a material  adverse
impact  on the  Company  and its  business,  operating  results,  and  financial
condition.  There is no  assurance  that the  Company  will  not be  subject  to
litigation or will prevail in any  litigation,  or that the litigation  will not
result in a material loss to the Company.

INADEQUACY OF COMPANY FUNDS

         The Company  has  limited  capital  available  to it. If the  Company's
entire  capital is fully  expended  and  additional  costs cannot be funded from
borrowings  or  capital  from  other  sources,   then  the  Company's  financial
condition,  results of operations and business  performance  would be materially
adversely  affected.  There is no assurance  that the Company will have adequate
capital to conduct its business.

NO ASSURANCE OF PROFIT

         The Company's  business is speculative and dependent upon the Company's
ability to market and sell its  environmental  inspection  services  and related
products and services, of which there is no assurance.  The Company has incurred
operating  losses since inception and may incur operating  losses in the future.
There is no  assurance  as to whether the  Company  will be  successful  or earn
profits. There is no assurance that the Company will earn significant revenues.

DETERMINATION OF CONSIDERATION TO MANAGEMENT

         The Common  Stock and cash  consideration  being paid by the Company to
its management and its affiliates has not been  determined  based on arms length
negotiation.  While management  believes that the  consideration is fair for the
work being performed, there is no assurance that the consideration to management
reflects the true market value of its services.

OPERATIONS - POSSIBLE LIENS

         If the Company fails to pay for materials and services for its business
on a timely  basis,  the  Company's  assets could be subject to material men and
workmen's liens. The Company may also be subject to bank liens in the event that
it defaults on loans from banks, if any.

CONFLICTS OF INTEREST

         The  relationship of management and its affiliates to the Company could
create  conflicts  of interest.  While  management  has a fiduciary  duty to the
Company,  it also  determines  its  compensation  from the  Company.  Management
believes  that it will have the  resources  necessary to fulfill its  management
obligations  to  all  entities  for  which  it  is   responsible.   Management's
compensation  from the Company has not been determined  pursuant to arm's-length
negotiation.

                                      -21-
<PAGE>

RISKS ASSOCIATED WITH POSSIBLE NONCOMPLIANCE WITH SECURITIES LAWS

         There  is no  assurance  that  in the  course  of  prior  offerings  of
securities  made  by the  Company,  inadvertent  noncompliance  with  applicable
federal or state  securities laws has not occurred.  If a security holder in the
Company asserts a claim based on an alleged  violation of securities laws, or if
a government agency makes such a charge,  the Company may not have the necessary
resources to repurchase the security,  if a right of rescission is involved,  or
to otherwise settle the claim.

WE MUST RESTATE CERTAIN OF OUR FINANCIAL STATEMENTS,  WHICH MAY ADVERSELY AFFECT
THE TRADING PRICE OF OUR COMMON STOCK.

         We must  restate our  financial  statements  for the fiscal years ended
December  31,  2006 and 2007,  as well as for the three  months  ended March 31,
2007,  June 30,  2007,  September  30,  2007,  March 31,  2008,  June 30,  2008,
September  30, 2008 to reflect the Security and Exchange  Commission's  concerns
regarding our prior  accountant's  treatment of our business  combination  which
closed in October 2006. We do not  anticipate  that the changes to our financial
statements will be material or that they will have a material  adverse effect on
our business,  but we cannot  assure that the changes will not adversely  affect
the trading price of our common stock.

         WE DID NOT TIMELY FILE WITH THE SEC OUR FORM 10-KSB FOR THE FISCAL YEAR
ENDED  DECEMBER 31, 2007. AS A RESULT OF THIS DELAYED  FILING,  WE ARE CURRENTLY
INELIGIBLE   TO  USE  FORM  S-3  TO   REGISTER   SECURITIES   WITH  THE  SEC  IN
CAPITAL-RAISING  TRANSACTIONS,  WHICH MAY  ADVERSELY  AFFECT  OUR COST OF FUTURE
CAPITAL.

         We did not timely file with the SEC our Form 10-KSB for the fiscal year
ended December 31, 2007.  Although the filing of this  Quarterly  Report on Form
10-Q will bring us current in our filings with the SEC,  because our Form 10-KSB
was not filed  within the  deadline  promulgated  by the SEC, the filing was not
timely under applicable SEC rules. As a result of the delayed filing of our Form
10-KSB, we are ineligible to use a "short form"  registration  statement on Form
S-3 to  register  securities  for sale by us or for  resale  by  other  security
holders,  in  capital  raising  transactions,  until we have  timely  filed  all
periodic  reports  under  the  Securities  Exchange  Act of 1934 for at least 12
calendar months.  In the meantime,  for capital raising  transactions,  we would
need to use Form  S-1 to  register  securities  with  the  SEC,  or  issue  such
securities in a private  placement,  which could increase the time and resources
required to raise capital during this period.


ITEM 2. PROPERTIES

         ESP currently leases approximately 4,433 square feet of office space at
a rental rate of  approximately  $6,000 per month  pursuant to a  month-to-month
lease, which commenced in August 2006 at 1111 E. Tahquitz Canyon Way, Suite 110,
Palm Springs, California 92262.

         As of  March  31,  2009,  the  Company  has  consolidated  all  of  its
operations into its headquarters at 1111 E. Tahquitz Canyon Way, Suite 110, Palm
Springs, California 92262.

ITEM 3. LEGAL PROCEEDINGS

         The Company may be involved in legal actions and claims  arising in the
ordinary  course of business,  from time to time,  none of which at this time is
considered to be material to the Company's business or financial condition.

         JOHN COOLEY V. PACIFIC  ENVIRONMENTAL  SAMPLING,  INC.  ETC., ET AL. On
December 6, 2006, John Cooley filed a civil complaint in Ventura County alleging
breach of  fiduciary  duty and fraud  regarding  the  restructuring  of  Pacific
Environmental  Sampling, Inc. on March 25, 2006. On December 12, 2006, a hearing
before  the Court was held on the  application  for  injunctive  relief  and for
appointment of a receiver.  Both of Cooley's  requests were denied by the Court.
ESP and its  affiliates  subsequently  filed a  demurrer  challenging  the legal
sufficiency  of the fraud  claim and the  demurrer  was  sustained.  Cooley  was
permitted by the Court to file a First  Amended  Complaint to attempt to correct
deficiencies.  With an extension, the First Amended Complaint was filed on March

                                      -22-
<PAGE>

27, 2007.  Subsequently,  this First  Amended  Compliant was rejected as was the
Second  Amended  Complaint.  On  April 4,  2008 a  hearing  for a Third  Amended
Complaint was held before the court and we were granted all submitted  demurrers
and Motions to Strike.  On April 25,  2008,  Cooley  submitted a Fourth  Amended
Complaint.  A tentative  hearing date has been set for May 30, 2008.  On July 3,
2008, a hearing regarding  plaintiff  Cooley's fourth amended complaint was held
before the Court and the Company was granted all submitted demurrers and Motions
to Strike. On July 29, 2008, plaintiff Cooley advised that he does not intend to
file a fifth amended complaint.  A Case Management Conference was held March 30,
2009 at which time another Case Management  Conference was scheduled for August,
2009. As of the date of this report,  ESP and its affiliates  cannot predict the
outcome of this  case.  ESP and its  affiliates  believe  they have  meritorious
defenses and are vigorously defending the action.

         STEINER V. KEITH SWIFT, JACKI SWIFT, INDIVIDUALS, ENVIRONMENTAL SERVICE
PROFESSIONALS,  INC. On December 9, 2008,  Lorne Steiner filed a cross complaint
in Los Angeles  County naming  Environmental  Service  Professionals,  Inc. as a
Cross-Defendant  in response  to a civil  complaint  filed  against him by Keith
Swift and Jacki Swift.  Steiner's  allegation against the Company are for breach
of contract,  fraud, abuse of legal process and indemnification as it relates to
the stock  purchase  agreement of Porter  Valley  Software,  Inc. On January 23,
2009, Steiner filed for a default judgment on the Company, this was subsequently
denied. On March 20, 2009,  Steiner applied for a Writ of Attachment against the
Company's assets,  which was subsequently  denied.  The Company has provided all
responses  required.  ESP and  its  affiliates  believe  they  have  meritorious
defenses and are vigorously defending the action.


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

         No matters were submitted  during the fourth quarter of the fiscal year
covered by this report to a vote of security holders.

         Effective  on February 19, 2009,  holders of  31,541,483  shares of the
Company's  common  stock,  or  approximately  60.0%  of  the  total  issued  and
outstanding  common  stock  of  the  Company,   voted  to  amend  the  Company's
Certificate  of  Incorporation  in order to  increase  the number of  authorized
shares of  common  stock  from  100,000,000,  par value  $0.001  per  share,  to
295,000,000, par value $0.001 per share and to increase the number of authorized
shares of  preferred  stock  from  1,000,000,  par value  $0.01  per  share,  to
5,000,000,  par value  $0.001 per share.  The Board of  Directors of the Company
voted unanimously to implement this shareholder action.


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

COMMON STOCK

         The  Company's  common stock  trades on the OTC  Bulletin  Board Market
under  the  symbol  "EVSP."  The range of high and low bid  quotations  for each
fiscal  quarter  within the last two fiscal years as reported by Yahoo!  Finance
was as follows.

------------------ -------- ---------- ------------------- ------------ --------
      2007          HIGH       LOW            2008            HIGH          LOW
------------------ -------- ---------- ------------------- ------------ --------
First Quarter       $1.25     $0.52     First Quarter         $0.25        $0.14
Second Quarter      $1.40     $0.51     Second Quarter        $0.23        $0.08
Third Quarter       $2.20     $0.40     Third Quarter         $0.15        $0.06
Fourth Quarter      $0.76     $0.15     Fourth Quarter        $0.08        $0.01
------------------ -------- ---------- ------------------- ------------ --------

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

         The  above  quotations  reflect  inter-dealer  prices,  without  retail
markup,  mark-down,  or  commission  and may not  necessarily  represent  actual
transactions.

                                      -23-
<PAGE>

         There is currently minimal trading volume for the Company's securities.
During the period from  January 1, 2007  through  March 31,  2009,  ESP's common
stock traded at a high of $2.20 and a low of $0.01.

         As of March 31, 2009,  there were  approximately  250 record holders of
the  Company's  common  stock,  not  including  shares held in "street  name" in
brokerage  accounts,  which  is  unknown.  As of  March  31,  2009,  there  were
approximately 57,310,345 shares of common stock outstanding on record.

         As of March 31, 2008, 3,127,678 shares of outstanding common stock were
cancelled  for   non-performance  of  various  consultants  and  termination  of
negotiations of additional debt or equity.

PURCHASES OF THE COMPANY'S SECURITIES BY ESP OR ITS AFFILIATES

         None of the Company's  shares of common stock were  purchased by ESP or
its affiliates during the fiscal year ended December 31, 2008.

DIVIDENDS

         The Company has not  declared or paid any cash  dividends on its common
stock and does not anticipate paying dividends for the foreseeable future.

EQUITY COMPENSATION PLAN INFORMATION

         See "Executive Compensation-- Employee Benefit Plans."

WARRANTS

         During the fiscal year ended December 31, 2008, ESP issued  warrants to
purchase a total of  2,745,400  shares of common  stock,  of which  950,000 were
issued for  Services at an exercise  price of $0.17 per share and expire 3 years
from the date of  issuance,  1,183,331  were issued for  Services at an exercise
price of $0.25 per share and expire 3 years from the date of  issuance,  100,000
were issued for  Services  at an exercise  price of $0.50 per share and expire 3
years from the date of issuance, 300,000 were issued for Services at an exercise
price of $0.58 per share and expire 3 years from the date of  issuance,  212,069
were issued for  Services  at an exercise  price of $0.75 per share and expire 3
years from the date of issuance.

         As of March 31, 2009, none of these warrants have been exercised.

ITEM 6. SELECTED FINANCIAL DATA.

         Not applicable.


ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

CAUTIONARY STATEMENTS

         This   Form   10-K   contains    financial    projections   and   other
"forward-looking  statements," as that term is used in federal  securities laws,
about ESP Inc.'s  ("ESP,"  "we," "us," or the  "Company")  financial  condition,
results of operations  and business.  These  statements  include,  among others:
statements  concerning the potential for revenues and expenses and other matters
that are not historical  facts.  These  statements may be made expressly in this
Form 10-K.  You can find many of these  statements  by looking for words such as
"believes," "expects,"  "anticipates,"  "estimates," or similar expressions used
in this Form 10-K.  These  forward-looking  statements  are  subject to numerous
assumptions, risks and uncertainties that may cause the Company's actual results
to be materially  different from any future results  expressed or implied by the
Company in those  statements.  The most  important  facts that could prevent the
Company from  achieving  its stated goals  include,  but are not limited to, the
following:

         (a)      volatility or decline of the Company's stock price;

         (b)      potential fluctuation in quarterly results;

                                      -24-
<PAGE>

         (c)      failure of the Company to earn revenues or profits;

         (d)      inadequate  capital to continue  the  business and barriers to
                  raising the  additional  capital or to obtaining the financing
                  needed to implement its business plans;

         (e)      failure to commercialize  the Company's  technology or to make
                  sales;

         (f)      changes in demand for the Company's products and services;

         (g)      rapid and significant changes in markets;

         (h)      litigation  with or legal  claims and  allegations  by outside
                  parties;

         (i)      insufficient revenues to cover operating costs;

         (j)      failure to obtain FDA approval for the  Company's  new medical
                  scanning device, which is still in its prototype stage.

         There is no assurance that we will be profitable. We may not be able to
develop, manage or market our products and services successfully.  We may not be
able to attract or retain qualified executives and technology personnel.  We may
not be able to obtain  customers for our products or services.  Our products and
services may become  obsolete.  Government  regulation  may hinder our business.
Additional  dilution in outstanding  stock  ownership may be incurred due to the
issuance  of more  shares,  warrants  and  stock  options,  or the  exercise  of
outstanding warrants and stock options.

         Because the statements are subject to risks and  uncertainties,  actual
results  may  differ   materially   from  those  expressed  or  implied  by  the
forward-looking statements. The Company cautions you not to place undue reliance
on the  statements,  which  speak  only as of the date of this  Form  10-K.  The
cautionary  statements  contained  or  referred  to in this  section  should  be
considered in connection  with any  subsequent  written or oral  forward-looking
statements  that the  Company  or persons  acting on its  behalf may issue.  The
Company  does not  undertake  any  obligation  to  review or  confirm  analysts'
expectations  or  estimates  or  to  release   publicly  any  revisions  to  any
forward-looking  statements to reflect events or circumstances after the date of
this Form 10-K or to reflect the occurrence of unanticipated events.

         The  following  discussion  should  be read  in  conjunction  with  our
consolidated financial statements and notes to those statements.  In addition to
historical  information,  the  following  discussion  and  other  parts  of this
quarterly  report contain  forward-looking  information  that involves risks and
uncertainties.

CURRENT OVERVIEW

         Our efforts have been to establish ESP in the various local,  state and
federal  governmental  agencies responsible for creating policies related to the
residential and commercial  building  industry and associated  health and energy
efficiency  needs.  The  Company's  holistic  approach to  providing  inspection
services has been accepted as a primary industry  representative  by a number of
these  agencies.  ESP  continues  to make its  resources  available to assist in
information  exchange  with the Housing  and Urban  Development,  Department  of
Defense,  Veterans Affairs,  the Federal Housing Authority,  Fannie Mae, Freddie
Mac, Ginnie Mae agencies  including their associated  consultants while upcoming
policies are being decided.

         The  Company has  continued  to develop and  implement  its  inspection
protocols,  training and certification with ConSol,  Allied Business Schools and
the Environmental Assessment Association.  Our progress on optimizing the entire
on-line  inspection  process has continued based on the outcomes of the proof of
concept conducted in 2008.

         Our  test-marketing  of  the  CEHI(TM)  program  and  related  services
conducted in 2008 has now finished and additional refinements are in progress.

                                      -25-
<PAGE>

         The  sales and  revenues  from  service  are  either  from our proof of
concept and  test-marketing  phase of  applicants  enrolling  into the  CEHI(TM)
program or end-customers requesting inspections.

         Our  test-marketing  efforts  through WEB site  advertising,  broadcast
facsimile and broadcast email to thousands of potential customers throughout the
United  States  generated  leads of  potential  customers  desiring  to purchase
services either  immediately or in the course of one month.  Management  expects
that when the additional  refinements to the marketing  program are completed it
will  eventually  help  stabilize the amount of services sold on a monthly basis
with immediate sales leads. The greater the number of leads  generated,  whether
immediate  or long term,  the greater the  opportunity  to  eventually  create a
consistent number of sales.

CRITICAL ACCOUNTING POLICIES

         Our discussion  and analysis of our financial  condition and results of
operations are based upon our financial statements,  which have been prepared in
accordance with accounting principles generally accepted in the United States of
America.  The  preparation  of these  financial  statements  requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues  and  expenses,   and  related  disclosure  of  contingent  assets  and
liabilities.  We monitor our estimates on an on-going basis for changes in facts
and  circumstances,  and material  changes in these estimates could occur in the
future.  Changes in  estimates  are  recorded in the period in which they become
known. We base our estimates on historical experience and other assumptions that
we believe to be reasonable under the  circumstances.  Actual results may differ
from our estimates if past experience or other assumptions do not turn out to be
substantially accurate.

         We have  identified  the  policies  below as critical  to our  business
operations and the understanding of our results of operations.

REVENUE RECOGNITION

         We recognize  revenue in accordance  with the  Securities  and Exchange
Commission  ("SEC") Staff Accounting  Bulletin No. 104, "Revenue  Recognition in
Financial Statements" ("SAB 104"). We recognize revenue upon delivery,  provided
that evidence of an arrangement  exists,  title, and risk of loss have passed to
the  customer,  fees are fixed or  determinable,  and  collection of the related
receivable is reasonably  assured.  We record  revenue net of estimated  service
refunds, which is based upon our refund policy. We accrue the subscription based
HLMP  fees  for  future  service  delivery  and  other  allowances  based on our
experience.  We will record  interest  income on the accrued HLMP fees as earned
income on a quarterly basis.  Generally, if we extend credit to our customers we
do  not  require  collateral.  We  perform  ongoing  credit  evaluations  of our
customers and historic  credit losses have been within our  expectations.  We do
not  provide  services  until we have  either a  purchase  agreement  or service
agreement signed by the customer with a payment arrangement.  This is a critical
policy,  because we want our accounting to show only sales that are "final" with
a payment  arrangement.  We do not make  consignment  sales or  inventory  sales
subject to a "buy back" or return arrangement from customers.

         As of January 1, 2007, the Company  ceased  offering new franchises and
did not renew any franchise  registration  or make any  franchise  sales for the
year  ending  December  31,  2007 or the year  ending  December  31,  2008.  All
franchisees have either been  incorporated into the CEHI program or released for
non-performance.  All  franchisees  that  have been  incorporated  into the CEHI
program or released for non-performance  have executed mutual releases for their
previously owned franchises.


                                      -26-
<PAGE>


COST OF REVENUE

         Cost of revenue  generated  by Safeguard  consists of costs  related to
cost of goods sold for providing CEHI inspection services.  Costs related to the
CEHI services include contractor fees,  laboratory fees,  related supplies,  and
materials.

         Cost  of  revenue  generated  by the  interest  on the  accrual  of the
subscription  based HLMP fees  consists of costs  related to trust fund manager,
bank fees, and affinity programs.

         Cost of revenue  generated by NPS consists of costs  related to cost of
providing membership services. Costs related to the membership services includes
postage,   industry  related  information   literature,   related  supplies  and
materials.

         Cost of revenue  generated by Porter Valley Software  consists of costs
related to cost of providing  application  support and upgrade  services.  Costs
related to the application support service include application hosting, postage,
telephone  long  distance,  industry  related  information  literature,  related
supplies and materials.  Costs related to application  upgrade  services include
on-going development and programmer consultant fees,

OTHER ACCOUNTING FACTORS

         The  effects  of  inflation  have  not  had a  material  impact  on our
operation, nor are they expected to in the immediate future.

         Although we are unaware of any major seasonal  aspect that would have a
material effect on the financial  condition or results of operation,  other than
the current economic environment,

RESULTS OF  OPERATIONS  FOR THE YEAR ENDED  DECEMBER 31, 2008 AS COMPARED TO THE
YEAR ENDED DECEMBER 31, 2007.

REVENUE

         Total  revenue for the period  ended  December  31, 2008  increased  by
$689,035 to $1,270,838  from $581,803 in the prior year ended December 31, 2007,
which  represented  an increase of 118%.  The  increase in sales was  attributed
directly to higher volume of contractors and clients.

         Several employees were let go and offices in Arizona,  California.  The
Company  consolidated  the National  Professionals  Services,  Inc.,  and Porter
Valley  Software,  Inc.,  offices  into the main office in Palm  Springs and was
subsequently closed, which lowered administrative expenses. Although the Company
has made significant  strides in implementing its strategy the economic downtown
has contributed significantly to the lower than expected revenue.

GENERAL AND ADMINISTRATIVE EXPENSES

         General and administrative expenses decreased by $3,247,322,  down from
$9,658,867  in 2007, to $6,411,545  for the year ended  December 31, 2008.  This
decrease  in general and  administrative  expenses  was the result of  decreased
commissions  from the prior  period and  decreased  finance  fees from the prior
period.

NET LOSS

         There can be no  assurance  that the  Company  will  generate  positive
revenues  from its operating  activities,  or that it will achieve and sustain a
profit during any future period,  particularly  if operations  remain at current
levels.   Failure  to  achieve  significant   revenues  or  profitability  would
materially and adversely affect the Company's business, financial condition, and
results of operations.  For the fiscal year ended December 31, 2007, the Company
incurred a net pre-tax loss from continuing operations of $7,212,194. This was a
decrease of  $14,255,912  or 151%  compared  to the prior  year.  74% of the net
pre-tax  loss for the fiscal  year ended  December  31, 2007 was the result of a
write down of $11,444,378 in goodwill,  $4,407,663 in finance fees, and $359,218
in assets (training materials) attributable to the AHI acquisition.

                                      -27-
<PAGE>

         We expect the trend of operating losses by the Company to continue into
the  future  at the  current  or  greater  rate as we  spend  money  on  product
development  and  marketing.  There is no assurance  we can achieve  significant
profitable sales to overcome losses. We do not expect  litigation  against us to
expand as we have secured an agreement from an equity investor,  pursuant to the
Form 8K filed on March 2, 2009,  to purchase the entire  value of the  currently
released  private  placement,  so our  feeling  is that the  trend is away  from
increasing litigation,  although we can give no assurances in relation to future
litigation.

LIQUIDITY AND CAPITAL RESOURCES

         ESP had net cash of $8,744 at December 31, 2008, as compared to $-0- at
December 31, 2007.

         During the year ended  December 31, 2008,  ESP used  $1,371,031 of cash
for  operating  activities,  as  compared  to  $5,051,668  during the year ended
December 31, 2007. The decrease in the use of cash for operating  activities was
a result of finance fees, accounts payable, and other general and administrative
expenses.

         Cash  provided by  financing  activities  relating  to the  issuance of
shares of common stock during the year ended  December 31, 2008 was  $1,011,139,
as compared to $2,046,416 during the year ended December 31, 2007. Since January
1, 2008,  ESP's  capital  needs have  primarily  been met from the  proceeds  of
private placements, loans and, to a lesser extent, sales.

         The  Company's  $8,744 cash balance at December 31, 2008,  would not be
adequate to fund the  Company's  operations  for more than a short period if the
Company were to continue to use cash in operating activities at the same rate as
in prior months.  The Company will need to rely upon continued  borrowing and/or
sales of additional  equity  instruments  to support its continued  growth.  The
Company's  management  believes  it  will  be able  to  obtain  sufficient  cash
resources and working  capital to meet the Company's  present cash  requirements
through debt and/or  equity-based fund raising.  Following the fiscal year ended
December 31, 2008; the Company has been successful in closing  additional  funds
as described  under the  Convertible  Notes and through the sale of unregistered
common stock (see "ITEM 8,  Financial  Statements,  Events  Subsequent to Fiscal
Year Ended December 31, 2008" below). The Company contemplates  additional sales
of debt  instruments  and  unregistered  common stock  during the current  year,
although  whether it will be successful in doing so, and the additional  amounts
it will receive as a result, cannot be assumed or predicted.

         Our total assets  decreased from  $1,789,245 as of December 31, 2007 to
$997,208 as of December 31, 2008, a difference of $792,037 or 44%.

         Our total liabilities increased from $5,224,682 as of December 31, 2007
to $7,214,601 as of December 31, 2008. This increase is due in large part to new
financing and increase in accounts payable.

         Primarily  in  connection  with  the   non-performance  of  two  equity
investors,  the Company has had three  judgments  imposed:  Palm Desert National
Bank for  $284,761.89,  David  Reichman  for  $95,463.00  and BOCA  funding  for
$741,839.00. These amounts are included in our current financials and negatively
impact the liquidity of the Company.

GOING CONCERN QUALIFICATION

         The Company has incurred  significant losses from operations,  and such
losses are expected to continue.  The Company's  auditors have included a "Going
Concern  Qualification" in their report for the year ended December 31, 2008. In
addition,  the  Company  has  limited  working  capital.  The  foregoing  raises
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans include  seeking  additional  capital and/or debt financing.
There is no guarantee  that  additional  capital  and/or debt  financing will be
available when and to the extent required,  or that if available,  it will be on
terms  acceptable to the Company.  The  financial  statements do not include any
adjustments that might result from the outcome of this  uncertainty.  The "Going
Concern  Qualification"  may  make it  substantially  more  difficult  to  raise
capital.

OFF-BALANCE SHEET ARRANGEMENTS

         None.

                                      -28-
<PAGE>
ITEM 8. FINANCIAL  STATEMENTS AND  SUPPLEMENTARY  DATA OF ENVIRONMENTAL  SERVICE
PROFESSIONALS, INC.


                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                 FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

                                    CONTENTS


Report of Independent Registered Public Accounting Firm .................    F-2

Balance Sheets as of December 31, 2008 and 2007..........................    F-3

Statement of Operations for the years ended December 31, 2008 and 2007...    F-4

Statement of Changes in Stockholders' Deficit for the years ended
 December 31, 2008 and 2007..............................................    F-5

Statement of Cash Flows for the years ended December 31, 2008 and 2007 ..    F-6

Notes to Financial Statements ...........................................    F-7

























                                      -29-
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

                             STAN J.H. LEE, CPA, CMA
              2160 North Central Rd. Suite 203 Fort Lee t NJ 07024
                    P.O. Box 436402 San Ysidro CA 92143-9402
            619.623.7799, FAX: 619-564-3408 E-MAIL: STAN2U@GMAIL.COM


To the Board of Directors and Stockholders
Environmental Service Professionals, Inc.

         We have  audited  the  accompanying  balance  sheets  of  Environmental
Service  Professionals,  Inc.  as of  December  31,  2008 and 2007,  the related
statements of operations,  stockholders' equity, and cash flows for the two-year
period  ended   December  31,  2008.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

         We conducted  our audits of these  statements  in  accordance  with the
standards of the Public  Company  Accounting  Oversight  Board (United  States).
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
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  financial  statements  referred to above  present
fairly,  in all  material  respects,  the  financial  position of  Environmental
Service Professionals,  Inc. as of December 31, 2008 and 2007 and the results of
its  operations  and its cash flows for the two year period  ended  December 31,
2008, in conformity with accounting  principles generally accepted in the United
States of America.

         The Company's  financial  statements  are prepared  using the generally
accepted accounting principles applicable to a going concern, which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business.   The  Company  has  deficit  accumulated  at  December  31,  2008  of
$31,237,713  including a net loss of $7,212,194  for the year ended December 31,
2008. These factors as discussed in Note 10 to the financial statements,  raises
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's plans in regard to these matters are also described in Note 10. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.



/s/ Stan J.H. Lee, CPA, CMA

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


Fort Lee, New Jersey
April 15, 2009
May 8, 2008 (for December 31, 2007)

          Registered with the Public Company Accounting Oversight Board
          Member of New Jersey Society of Certified Public Accountants

                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                          ENVIRONMENTAL SERVICE PROFESSIONALS, INC. AND SUBSIDIARIES
                                          Consolidated Balance Sheet

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

                                                    ASSETS

                                                                          AS OF                   AS OF
                                                                       DECEMBER 31,            DECEMBER 31,
                                                                           2008                    2007

                                                                    ------------------      -----------------
 <S>                                                                 <C>                     <C>
    CURRENT ASSETS
      Cash & cash equivalents                                       $           8,744       $              -
      Accounts receivable                                                      79,814                138,180
      Receivable - other                                                        9,199                  9,868
      Prepaid expense                                                               -                926,254
                                                                    ------------------      -----------------

    TOTAL CURRENT ASSETS                                                       97,757              1,074,301

    NET PROPERTY & EQUIPMENT                                                   54,637                 72,972

    OTHER ASSETS
      Deposits                                                                  2,120                  2,120
      Net - association membership list                                       751,750                639,852
      Employee Advances                                                        90,944                      -

    TOTAL OTHER ASSETS                                                        844,814                641,972

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

            TOTAL ASSETS                                            $         997,208       $      1,789,245
                                                                    ==================      =================

                                 LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

    CURRENT LIABILITIES
      Accounts payable                                              $       2,081,707       $      1,308,814
      Bankoverdraft                                                            83,758                336,369
      Line of credit                                                          583,461                220,417
      Accrued liabilities                                                     233,212                144,502
      Taxes payable                                                             1,151                      -
      Loans payable                                                         2,958,885              1,947,746
      Loans payable - related party                                            28,493                 22,900
                                                                    ------------------      -----------------

    TOTAL CURRENT LIABILITIES                                               5,970,667              3,980,748

    LONG-TERM LIABILITIES
      Unsecured 10% Loan payable                                            1,243,934              1,243,934
                                                                    ------------------      -----------------

    TOTAL LONG-TERM LIABILITIES                                             1,243,934              1,243,934
                                                                    ------------------      -----------------

            TOTAL LIABILITIES                                               7,214,601              5,224,682

    STOCKHOLDERS' EQUITY (DEFICIT)

      Common stock, (par value $.001 per share, 100,000,000 shares
         authorized: 55,398,595 and 21,783,375 shares issued and
         outstanding as of December 31, 2008 and 2007, respectively)           55,599                 21,783
      Paid-in capital                                                      24,964,721             20,568,299
      Retained earnings (Deficit)                                         (31,237,713)           (24,025,519)
                                                                    ------------------      -----------------

    TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                   (6,217,393)            (3,435,437)
                                                                    ------------------      -----------------
              TOTAL LIABILITIES &
                         STOCKHOLDERS' EQUITY (DEFICIT)             $         997,208       $      1,789,245
                                                                    ==================      =================

</TABLE>

               See Notes to the Consolidated Financial Statements

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                        ENVIRONMENTAL SERVICE PROFESSIONALS, INC. AND SUBSIDIARIES
                                   Consolidated Statement of Operations
--------------------------------------------------------------------------------------------------------

                                                                  YEAR ENDED             YEAR ENDED
                                                                 DECEMBER 31,           DECEMBER 31,
                                                                     2008                   2007
                                                              --------------------   -------------------
<S>                                                           <C>                    <C>

        REVENUES
          Income                                              $         1,270,838    $          581,803
                                                              --------------------   -------------------

        NET REVENUE                                                     1,270,838               581,803

        COST OF GOODS SOLD
          Cost of goods sold                                              463,669                57,104
                                                              --------------------   -------------------

        TOTAL COST OF GOODS SOLD                                          463,669                57,104
                                                              --------------------   -------------------

        GROSS PROFIT                                                      807,169               524,699

        OPERATING EXPENSES
          Depreciation                                                     18,335                13,281
          Finance fee                                                         409             4,407,663
          Directors fees                                                3,750,000                     -
          Professional fees                                             1,002,503             1,975,798
          General and administrative                                    1,640,298             3,262,125
                                                              --------------------   -------------------

        TOTAL OPERATING EXPENSES                                        6,411,545             9,658,867
                                                              --------------------   -------------------

        LOSS FROM OPERATIONS                                           (5,604,376)           (9,134,168)

        OTHER INCOME (EXPENSES)
          Interest income                                                       -                   366
          Interest expense                                             (1,607,444)             (209,099)
          Impairment of goodwill                                                -           (11,444,378)
          Other income                                                         54               234,019
          Other expenses                                                     (428)             (914,846)
                                                              --------------------   -------------------

        TOTAL OTHER INCOME (EXPENSES)                                  (1,607,818)          (12,333,938)
                                                              --------------------   -------------------

        NET INCOME (LOSS)                                     $        (7,212,194)   $      (21,468,106)
                                                              ====================   ===================

         BASIC EARNING (LOSS) PER SHARE                       $             (0.16)   $            (1.18)
                                                              --------------------   -------------------

        WEIGHTED AVERAGE NUMBER OF
          COMMON SHARES - BASIC AND DILUTED                            43,748,777            18,250,793
                                                              ====================   ===================

</TABLE>



               See Notes to the Consolidated Financial Statements

                                      F-4

<PAGE>
<TABLE>
<CAPTION>
                   ENVIRONMENTAL SERVICE PROFESSIONALS, INC. AND SUBSIDIARIES
                     Consolidated Statement of Stockholder Equity (Deficit)
                                     As of December 31, 2008
------------------------------------------------------------------------------------------------
                                                            ADDITIONAL
                                      COMMON       COMMON    PAID-IN      RETAINED       TOTAL
                                      SHARES      STOCK      CAPITAL      EARNINGS
                                                                         (DEFICIT)
------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>     <C>          <C>           <C>
------------------------------------------------------------------------------------------------
 BALANCE,  DECEMBER 31, 2006         13,973,546     13,973  11,323,035   (2,557,413)   8,779,595
------------------------------------------------------------------------------------------------

Shares Issued on January 25, 2007        39,266         39      64,161                    64,200

Shares Issued On February 16, 2007      200,000        200      19,800                    20,000

Shares Issued On February 20, 2007    1,000,000      1,000     579,000                   580,000

Shares Issued on March 16, 2007         122,917        123     188,980                   189,103

Shares Issued on April 16, 2007         153,000        153     519,647                   519,800

Shares Issued on May 18, 2007         1,795,000      1,795   1,090,047                 1,091,842

Shares Issued on June 7, 2007           404,742        405      78,945                    79,350

Shares Issued On June 26, 2007          900,000        900   1,491,600                 1,492,500

Shares Issued on July 7, 2007           381,035        381   2,340,136                 2,340,517

Shares Issued on July 17, 2007          892,300        892     891,408                   892,300

Shares Issued On August 1, 2007          50,000         50      28,950                    29,000

Shares Issued on September 11, 2007     806,051        806      79,799                    80,605

Shares Issued on October 2, 2007        515,518        516   1,818,341                 1,818,857

Shares Issued on October 2, 2007        550,000        550      54,450                    55,000

 Net loss for the year ended
 December 31, 2007                                                      (21,468,106) (21,468,106)
-------------------------------------------------------------------------------------------------
 BALANCE,  DECEMBER 31, 2007         21,783,375     21,783  20,568,299  (24,025,519)  (3,435,437)
-------------------------------------------------------------------------------------------------

Shares Issued on February 21, 2008      100,000        100      13,900                    14,000

Shares Issued on March 17, 2008         100,000        100      14,900                    15,000

Shares Issued on March 19, 2008          25,000         25       3,725                     3,750

Shares Issued on June 7, 2008         2,179,504      2,180     197,620                   199,800

Shares Issued on June 10, 2008       25,000,000     25,000   3,725,000                 3,750,000

Shares Issued on June 10, 2008          800,000        800     119,200                   120,000

Shares Issued on June 20, 2008          500,000        500      74,500                    75,000

Shares Issued on July 29, 2008          110,000        110       9,790                     9,900

Shares Issued on August 15, 2008        438,965        439      28,094                    28,533

Shares Issued on August  21, 2008        98,324         98       7,768                     7,866

Shares Issued on September 23, 2008     200,000        200      11,800                    12,000

Shares Issued on September 24, 2008     545,000        545      32,155                    32,700

Shares Issued on September 24, 2008     200,000        200      11,800                    12,000

Shares Issued on October 29, 2008       311,615        312      18,385                    18,697

Shares Issued on November 21, 2008    1,000,000      1,000      49,000                    50,000

Shares Issued on November 24, 2008      235,000        235       9,165                     9,400

Shares Issued on November 24, 2008      125,000        125       4,875                     5,000

Shares Issued on December 15, 2008    1,464,812      1,647      56,945                    58,592

Shares Issued on December 23, 2008      200,000        200       7,800                     8,000

 Net loss for the year ended
 December 31, 2008                                                       (7,212,194)  (7,212,194)
-------------------------------------------------------------------------------------------------
 BALANCE,  DECEMBER 31, 2008         55,416,595   $ 55,599 $24,964,721 $(31,237,713) $(6,217,393)
=================================================================================================

</TABLE>





               See Notes to the Consolidated Financial Statements

                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                           ENVIRONMENTAL SERVICE PROFESSIONALS, INC. AND SUBSIDIARIES
                                      Consolidated Statement of Cash Flows

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

                                                                                YEAR ENDED         YEAR ENDED
                                                                               DECEMBER 31,       DECEMBER 31,
                                                                                  2008               2007
                                                                             ---------------    ---------------
<S>                                                                          <C>                <C>

   CASH FLOWS FROM OPERATING ACTIVITIES

     Net income (loss)                                                       $    (7,212,194)   $   (21,468,106)

     Adjustments to reconcile net loss to net cash
     provided by (used in) operating activities:
           Depreciation                                                               18,335             13,281
           Amortization                                                                    -             19,711
           Common stock                                                            4,430,238          2,284,458
                   (Increase) decrease in goodwill                                         -          9,340,570
                   (Increase) decrease in finance fee                                      -          4,407,663
           Changes in operating assets and liabilities:
                   (Increase) decrease in accounts receivable                         58,366            120,809
                   (Increase) decrease in other receivable                               669             (9,868)
                   (Increase) decrease in prepaid expenses                           926,254           (513,758)
                   (Increase) decrease in employee advances                          (90,944)                 -
                   (Increase) decrease in security deposits                                -             69,906
                   (Increase) decrease in business areas                                   -             15,779
                   (Increase) decrease in accounts payable and accrued expenses      861,603          1,026,018
                   (Increase) decrease in bank overdraft                            (252,611)           336,369
                   (Increase) decrease in association membership list               (111,898)          (659,000)
                   (Increase) decrease in income tax payable                           1,151            (35,500)
                                                                             ---------------    ---------------

          NET CASH USED BY OPERATING ACTIVITIES                                   (1,371,031)        (5,051,668)

   CASH FLOWS FROM INVESTING ACTIVITIES

     Acquisition of equipment                                                              -            (47,433)
     Increase in loan payable                                                      1,011,139          2,093,849
                                                                             ---------------    ---------------

          NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                      1,011,139          2,046,416

   CASH FLOWS FROM FINANCING ACTIVITIES

     Line of credit                                                                  363,044            118,455
     Increase in loan payable - related party                                          5,593             22,900
     Proceeds from stock issuances                                                         -          2,560,954
                                                                             ---------------    ---------------

         NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                         368,637          2,702,309
                                                                             ---------------    ---------------

         NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS                            8,744           (302,943)

         CASH AT BEGINNING OF YEAR                                                         -            302,943
                                                                             ---------------    ---------------

         CASH AT END OF YEAR                                                 $         8,744    $             -
                                                                             ===============    ===============

     SUPPLEMENTAL DISCLOSURES OF CASH FLOW
     INFORMATION:

     Interest paid                                                           $     1,607,444    $       209,098
                                                                             ===============    ===============

     Income taxes paid                                                       $           800    $           800
                                                                             ===============    ===============

     SUPPLEMENTAL DISCLOSURES OF NON-CASH FLOW
     INFORMATION:

        Common stock issued for acquisition subsidiary                       $       525,000    $     1,475,000
</TABLE>
               See Notes to the Consolidated Financial Statements

                                       F-6
<PAGE>
                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.
                 Notes to the Consolidated Financial Statements
                           December 31, 2008 and 2007

1. ORGANIZATIONS AND DESCRIPTION OF BUSINESS

Environmental   Service   Professionals,   Inc.  (the  "Company")  is  a  Nevada
corporation, incorporated on September 29, 1992 as Glass-Aired Industries Group,
LTD. The Company filed a certificate  of amendment of articles of  incorporation
on September 18, 2006 to change its name to Environmental Service Professionals,
Inc. effective October 11, 2006.

The Company's primary business is to offer various  inspection  services through
its subsidiary  Environmental Safeguard  Professionals,  Inc. ("Safeguard"),  to
address mandated energy certification,  construction defects,  moisture or other
environmental issues that impact commercial and residential  buildings.  Through
its subsidiary National Professional  Services,  Inc. ("NPS"), ESP offers annual
trade  memberships and management  services for industry  related  associations.
Through its  subsidiary  Porter Valley  Software,  Inc.  ("PVS"),  an inspection
software  company,  the  Company  plans  to  provide  the  core  of its  on-line
inspection protocols.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the Company's significant  accounting policies consistently applied
in  the  preparation  of  the  accompanying  consolidated  financial  statements
follows:

The Company must  restate its  financial  statements  for the fiscal years ended
December  31,  2006 and 2007,  as well as for the three  months  ended March 31,
2007,  June 30,  2007,  September  30,  2007,  March 31,  2008,  June 30,  2008,
September  30, 2008 to reflect the Security and Exchange  Commission's  concerns
regarding the Company's prior accountant's treatment of the business combination
which  closed in October  2006.  We do not  anticipate  that the  changes to the
Company's  financial  statements  will be  material  or that  they  will  have a
material  adverse effect on its business,  but we cannot assure that the changes
will  not  adversely   affect  the  trading  price  of   Environmental   Service
Professionals, Inc., Common Stock.

ACCOUNTING METHOD

The Company's  policy is to use the accrual  method of accounting to prepare and
present financial  statements,  which conforms to generally accepted  accounting
principles ("GAAP"). The Company has elected a December 31, year-end.

USE OF ESTIMATES

In  preparing  financial   statements  in  conformity  with  generally  accepted
accounting  principles  ("GAAP"),  management is required to make  estimates and
assumptions  that affect the reported  amounts of assets and liabilities and the
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and revenues and expenses during the reporting period. Actual results
could differ from those  estimates.  In accordance  with FASB 16 all adjustments
are normal and recurring.

CASH AND CASH EQUIVALENTS

The Company considers all liquid  investments with a maturity of three months or
less from the date of purchase that are readily convertible into cash to be cash
equivalents.  The Company  maintains its cash in bank deposit  accounts that may
exceed federally  insured limits.  The Company has not experienced any losses in
such accounts.



                                      F-7
<PAGE>
                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.
                 Notes to the Consolidated Financial Statements
                           December 31, 2008 and 2007


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ACCOUNTS RECEIVABLE

The  Company's  customer base consists of a  geographically  dispersed  customer
base.  Management  reviews the  composition of accounts  receivable and analyzes
historical  bad debts,  customer  concentrations,  customer  credit  worthiness,
current economic trends and changes in customer payment patterns to evaluate the
adequacy  of these  reserves.  Reserves  (if any) are  recorded  primarily  on a
specific identification basis.

CONCENTRATION OF CREDIT RISK

The Company  maintains  their cash in bank  deposit  accounts  that at times may
exceed federally  insured limits.  The Company has not experienced any losses in
such accounts.  Management believes that they are not exposed to any significant
credit risk related to cash.

BASIS OF CONSOLIDATION

The  consolidated  financial  statements  include the accounts of  Environmental
Service  Professionals,  Inc.,  the parent  Company,  and National  Professional
Service  Inc.,  a Delaware  Corporation,  Allstate  Home  Inspection & Household
Environmental  Testing, Ltd, a Delaware corporation,  which subsequently changed
its name to  Environmental  Safeguard  Professionals,  Inc. on February 1, 2008,
International  Association  Managers,  Inc., a Minnesota  corporation,  National
Professional Services, Inc., a Delaware corporation, and Porter Valley Software,
Inc. a California  corporation,  the Company's  wholly owned  subsidiaries.  All
significant  intercompany  balances and  transactions  have been  eliminated  in
consolidation.

PROPERTY & EQUIPMENT

Property and  equipment are stated at cost.  Expenditures  for  maintenance  and
repairs  are  charged to  expenses  as  incurred  and  additions,  renewals  and
betterments  are  capitalized.  When  property  and  equipment  are  retired  or
otherwise disposed of, the related cost and accumulated depreciation are removed
from the  respective  accounts,  and any gain or loss is included in operations.
Depreciation  of property  and  equipment  is provided  using the  straight-line
method for  substantially  all  assets  with  estimated  lives of three to eight
years.

                                      F-8

<PAGE>
                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.
                 Notes to the Consolidated Financial Statements
                           December 31, 2008 and 2007


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

IMPAIRMENT OF LONG-LIVED ASSETS

The Company applies the provisions of Statement of Financial Accounting Standard
No. 144,  "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS
No. 144"), issued by the Financial Accounting Standards Board ("FASB").  FAS No.
144 requires that long-lived  assets be reviewed for impairment  whenever events
or changes in  circumstances  indicate that the carrying  amount of an asset may
not be  recoverable  through the estimated  undiscounted  cash flows expected to
result from the use and eventual  disposition  of the assets.  Whenever any such
impairment exists, an impairment loss will be recognized for the amount by which
the carrying value exceeds the fair value.

The Company tests long-lived assets, including property, plant and equipment and
intangible assets subject to periodic amortization,  for recoverability at least
annually  or  more   frequently   upon  the  occurrence  of  an  event  or  when
circumstances  indicate  that the net  carrying  amount is greater than its fair
value.  Assets  are  grouped  and  evaluated  at  the  lowest  level  for  their
identifiable cash flows that are largely  independent of the cash flows of other
groups of  assets.  The  Company  considers  historical  performance  and future
estimated  results in its  evaluation of potential  impairment and then compares
the carrying amount of the asset to the future  estimated cash flows expected to
result from the use of the asset.  If the carrying  amount of the asset  exceeds
estimated  expected  undiscounted  future cash flows,  the Company  measures the
amount of impairment  by comparing the carrying  amount of the asset to its fair
value.  The  estimation  of fair  value is  generally  measured  by  discounting
expected  future  cash  flows as the  rate  the  Company  utilizes  to  evaluate
potential investments. The Company estimates fair value based on the information
available in making whatever estimates, judgments and projections are considered
necessary.  There was no  impairment  of  long-lived  assets  in the year  ended
December 31, 2008.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of financial accounting standard No. 107, Disclosures about fair value
of financial  instruments,  requires that the Company  disclose  estimated  fair
values of financial instruments. The carrying amounts reported in the statements
of financial position for current assets and current liabilities qualifying,  as
financial  instruments  are a  reasonable  estimate of fair value.  The carrying
amounts related to cash equivalents,  accounts receivable,  other current assets
and accounts payable approximate fair value due to the relatively short maturity
of  such  instruments.  The  fair  value  of  long-term  debt  is  estimated  by
discounting  the  future  cash  flows  of each  instrument  at  rates  currently
available to the Company for similar debt instruments of comparable maturities.

The  Company's  financial   instruments  primarily  consist  of  cash  and  cash
equivalents,  accounts  receivable,  advances to  employees,  accounts  payable,
equipment deposits, and related party advances and borrowings.

As of the balance  sheet  dates,  the  estimated  fair  values of the  financial
instruments  were  not  materially  different  from  their  carrying  values  as
presented on the balance  sheet.  This is attributed to the short  maturities of
the instruments and that interest rates on the borrowings approximate those that
would have been  available  for loans of  similar  remaining  maturity  and risk
profile at respective balance sheet dates.

                                      F-9
<PAGE>
                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.
                 Notes to the Consolidated Financial Statements
                           December 31, 2008 and 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REVENUE RECOGNITION

The  Company  recognizes  its  revenue in  accordance  with the  Securities  and
Exchange   Commissions  ("SEC")  Staff  Accounting  Bulletin  No.  104  "Revenue
Recognition in Financial  Statements"  ("SAB 104").  SAB 104 revises or rescinds
portions of the interpretative guidance included in Topic 13 of the codification
of  staff  accounting  bulletins  in order to make  this  interpretive  guidance
consistent with current  authoritative  accounting and auditing guidance and SEC
rules and regulations

Revenue  recognized  is revenue  upon  delivery,  provided  that  evidence of an
arrangement  exists,  title, and risk of loss have passed to the customer,  fees
are  fixed  or  determinable,  and  collection  of  the  related  receivable  is
reasonably assured.

The Company records  revenue net of estimated  service  refunds,  which is based
upon our refund policy.

The Company accrues the subscription based HLMP fees for future service delivery
and other allowances based on our experience.

Generally,  if credited is extended to  customers  the Company  does not require
collateral. The Company performs ongoing credit evaluations of our customers and
historic credit losses have been within their expectations.

The Company does not provide  services until it has either a purchase  agreement
or service agreement signed by the customer with a payment arrangement.  This is
a critical policy,  because  management wishes the accounting to show only sales
that are "final" with a payment arrangement.

The Company does not make  consignment  sales,  service sales or inventory sales
subject to a "buy back" or return arrangement from customers.

 As of January 1, 2007, the Company  ceased  offering new franchises and did not
renew any franchise registration or make any franchise sales for the year ending
December 31, 2007 or the year ending  December 31, 2008.  All  franchisees  have
either been incorporated into the CEHI program or released for  non-performance.
All franchisees  that have been  incorporated  into the CEHI program or released
for  non-performance  have executed mutual releases for their  previously  owned
franchises.

COST OF REVENUE

Cost of revenue  generated  by  Safeguard  consists of costs  related to cost of
goods sold for providing  CEHI  inspection  services.  Costs related to the CEHI
services  include  contractor  fees,  laboratory  fees,  related  supplies,  and
materials.
Cost of revenue  generated  by the  interest on the accrual of the  subscription
based HLMP fees consists of costs related to trust fund manager,  bank fees, and
affinity programs.

Cost of revenue  generated by NPS consists of costs related to cost of providing
membership services.  Costs related to the membership services includes postage,
industry related information literature, related supplies and materials.

Cost of revenue generated by Porter Valley Software consists of costs related to
cost of providing application support and upgrade services. Costs related to the
application support service include application hosting, postage, telephone long
distance,   industry  related  information  literature,   related  supplies  and
materials.  Costs  related to  application  upgrade  services  include  on-going
development and programmer consultant fees.

                                      F-10
<PAGE>
                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.
                 Notes to the Consolidated Financial Statements
                           December 31, 2008 and 2007


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ADVERTISING COSTS

The Company expenses the cost of advertising as incurred or, as appropriate, the
first time the advertising  takes place.  Advertising  costs for the years ended
December 31, 2008 and 2007 were $19,389 and $159,479, respectively.

STOCK-BASED COMPENSATION

In October  1995,  the FASB  issued SFAS No. 123,  "Accounting  for  Stock-Based
Compensation".  SFAS No. 123 prescribes  accounting and reporting  standards for
all stock-based compensation plans, including employee stock options, restricted
stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123
requires compensation expense to be recorded (i) using the new fair value method
or (ii) using the existing accounting rules prescribed by Accounting  Principles
Board Opinion No. 25,  "Accounting  for stock issued to employees"  (APB 25) and
related  interpretations  with  pro  forma  disclosure  of what net  income  and
earnings  per share would have been had the  Company  adopted the new fair value
method. The Company uses the intrinsic value method prescribed by APB 25 and has
opted for the disclosure provisions of SFAS No.123.

INCOME TAXES

The Company  accounts for income taxes under  Statement of Financial  Accounting
Standards No. 109 (SFAS 109). Under SFAS 109, deferred income taxes are reported
using the liability  method.  Deferred tax assets are  recognized for deductible
temporary  differences  and deferred tax  liabilities are recognized for taxable
temporary  differences.  Temporary  differences are the differences  between the
reported  amounts of assets and  liabilities  and their tax bases.  Deferred tax
assets are reduced by a valuation  allowance when, in the opinion of management,
it is more likely than not that some  portion or all of the  deferred tax assets
will not be realized.  Deferred tax assets and  liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.

BASIC AND DILUTED NET LOSS PER SHARE

Net loss per share is calculated  in accordance  with the Statement of financial
accounting  standards No. 128 (SFAS No. 128), "Earnings per share." SFAS No. 128
superseded  Accounting  Principles  Board  Opinion  No.15 (APB 15). Net loss per
share for all periods  presented  has been  restated to reflect the  adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of  common  shares  outstanding.  Diluted  net  loss  per  share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised.  Dilution is computed by applying the treasury stock method. Under
this method,  options and warrants are assumed to be exercised at the  beginning
of the period (or at the time of issuance,  if later),  and as if funds obtained
thereby were used to purchase  common  stock at the average  market price during
the period.

SEGMENT REPORTING

Statement of Financial  Accounting  Standards No. 131 ("SFAS 131"),  "Disclosure
About  Segments of an Enterprise  and Related  Information"  requires use of the
"management approach" model for segment reporting. The management approach model
is based on the way a company's management organizes segments within the company
for making operating  decisions and assessing  performance.  Reportable segments
are based on products  and  services,  geography,  legal  structure,  management
structure, or any other manner in which management disaggregates a company. SFAS
131 has no effect on the Company's financial  statements as substantially all of
the Company's operations are conducted in one industry segment.

                                      F-11
<PAGE>
                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.
                 Notes to the Consolidated Financial Statements
                           December 31, 2008 and 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENT PRONOUNCEMENTS

In  December  2007,  the FASB  issued  SFAS No. 141  (Revised  2007),  "Business
Combinations."  The objective of this statement is to  significantly  change the
accounting for business combinations.  Under Statement 141R, an acquiring entity
will be required to recognize all the assets acquired and liabilities assumed in
a  transaction  at the  acquisition-date  fair  value with  limited  exceptions.
Statement  141  applies  prospectively  to business  combinations  for which the
acquisition  date is on or after the  beginning  of the first  annual  reporting
period  beginning on or after December 15, 2008. The Company does not expect the
adoption of SFAS No. 141R to have a material  impact on the Company's  financial
statements.

In December 2007, FASB issued FASB Statement No. 160, "Noncontrolling  Interests
in  Consolidated  Financial  Statements--an  amendment  of  ARB  No.  51."  This
Statement   applies  to  all  entities  that  prepare   consolidated   financial
statements,  except  not-for-profit  organizations,  but will  affect only those
entities  that  have  an  outstanding  non-controlling  interest  in one or more
subsidiaries or that  deconsolidate a subsidiary.  Not-for-profit  organizations
should  continue to apply the guidance in Accounting  Research  Bulletin No. 51,
"Consolidated   Financial  Statements,"  before  the  amendments  made  by  this
Statement,   and  any  other  applicable  standards,   until  the  Board  issues
interpretative  guidance.  This  Statement is effective  for fiscal  years,  and
interim  periods  within those fiscal years,  beginning on or after December 15,
2008 (that is, January 1, 2009, for entities with calendar  year-ends).  Earlier
adoption is prohibited. The effective date of this Statement is the same as that
of the related Statement 141(R).  This Statement shall be applied  prospectively
as of the  beginning  of the fiscal year in which this  Statement  is  initially
applied,   except  for  the  presentation  and  disclosure   requirements.   The
presentation and disclosure  requirements shall be applied  retrospectively  for
all periods presented.  This statement has no effect on the financial statements
as the Company does not have any outstanding non-controlling interest.

In March 2008,  the FASB  issued FASB  Statement  No.  161,  "Disclosures  about
Derivative  Instruments and Hedging Activities." The new standard is intended to
improve financial reporting about derivative  instruments and hedging activities
by requiring enhanced disclosures to enable investors to better understand their
effects on an  entity's  financial  position,  financial  performance,  and cash
flows.  It is effective  for  financial  statements  issued for fiscal years and
interim  periods  beginning  after  November  15, 2008,  with early  application
encouraged.  The new standard also improves  transparency about the location and
amounts of  derivative  instruments  in an entity's  financial  statements;  how
derivative  instruments  and  related  hedged  items  are  accounted  for  under
Statement  133; and how derivative  instruments  and related hedged items affect
its financial position,  financial  performance,  and cash flows. FASB Statement
No. 161 achieves these  improvements by requiring  disclosure of the fair values
of derivative  instruments  and their gains and losses in a tabular  format.  It
also  provides  more  information  about  an  entity's  liquidity  by  requiring
disclosure of  derivative  features that are credit  risk-related.  Finally,  it
requires  cross-referencing within footnotes to enable financial statement users
to locate important.  Based on current  conditions,  the Company does not expect
the  adoption  of SFAS  161 to  have a  significant  impact  on its  results  of
operations or financial position.

3. ACCOUNTS RECEIVABLE

All accounts  receivable are trade related.  These  receivables  are current and
management  believes  are  collectible  except  for  which a  reserve  has  been
provided.  The balance of accounts  receivable  as of December 31, 2008 and 2007
were $79,814 and $138,180.  The reserve  amount for  uncollectible  accounts was
zero as of December 31, 2008 and 2007, respectively.


                                      F-12
<PAGE>

                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.
                 Notes to the Consolidated Financial Statements
                           December 31, 2008 and 2007

4. NOTES PAYABLE & LONG TERM LIBILITIES

Notes payable as of December 31, 2008 consist of the following:

                                                   December 31, 2008
---------------------------------------- --------------------------------------

Unsecured loans, with annual interest
of (various)                                           $  2,958,885

Unsecured notes, with annual interest
of 10%                                                    1,243,934
---------------------------------------- --------------------------------------
                                                       $  4,202,819
======================================== ======================================

The  Company  has  various  lines of  credit.  These  lines of credit  are in an
adjustable  rate loan. The loans are open revolving  lines of credit with annual
interest  rates.  There are no  restrictions  on the use of this line of credit.
There was an  outstanding  balance of $583,461 and $220,417,  as of December 31,
2008 and 2007, respectively.


5. ACCRUED EXPENSES

Accrued expenses consisted of the following:

                                     December 31, 2008      December 31, 2007
    Accrued wages                           $   45,342           $          0
    Other accrued expenses                     188,407                144,502
                                  --------------------- ----------------------
    Total                                   $  233,749           $    144,502
                                  ===================== ======================


6. BASIC INCOME / (LOSS) PER COMMON SHARE

Basic gain (loss) per common  share has been  calculated  based on the  weighted
average number of shares of common stock outstanding during the period.

                                      December 31, 2008      December 31, 2007
                                    -------------------- -----------------------


Basic income / (loss) per share           $ (0.16)              $       (1.18)
                                    ==================== =======================

Weighted average number of shares
outstanding                               43,748,777               18,250,793
                                    ==================== =======================






                                      F-13

<PAGE>
                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.
                 Notes to the Consolidated Financial Statements
                           December 31, 2008 and 2007

7. INCOME TAXES

No  provision  was made for Federal  income tax for the year ended  December 31,
2006 and 2005,  since the Company had  significant  net  operating  loss.  As of
December 31, 2008, the Company incurred net operating losses for tax purposes of
approximately $32,409,171.  The net operating loss carry forwards may be used to
reduce taxable income through the year 2028. The  availability  of the Company's
net operating loss carry forwards are subject to limitation if there is a 50% or
more positive change in the ownership of the Company's  stock. The provision for
income taxes consists of the state minimum tax imposed on corporations.

                                   December 31, 2008      December 31, 2007
------------------------------- ---------------------- ----------------------

Accumulated deficit as of:           $   (32,409,171)        $  (21,468,106)
Gross income tax benefit                  11,019,118              7,513,837
Valuation allowance                      (11,019,118)            (7,513,837)
------------------------------- ---------------------- ----------------------
Net income tax benefit               $             -         $            -
=============================== ====================== ======================


8. STOCKHOLDERS' EQUITY

The  stockholders'  equity section of the Company contains the following classes
of capital stock as of December 31, 2008:

        o        Common stock, $ 0.001 par value
        o        Authorized:  100,000,000
        o        Issued: 55,398,595


COMMON STOCK

On February 21, 2008 the Company issued  100,000 shares for services  rendered @
$0.14 per share.

On March 17, 2008 the Company  issued  100,000  shares for  services  rendered @
$0.15 per share.

On March 19, 2008 the Company issued 25,000 shares for services rendered @ $0.15
per share.

On June 7, 2008 the Company  issued  2,179,504  shares for  services  rendered @
$0.09 per share.

On June 10, 2008 the Company issued 25,000,000 shares for director fees rendered
@ $0.15 per share.

On June 10, 2008 the Company issued 800,000 shares for services rendered @ $0.15
per share.

On June 20, 2008 the Company issued 500,000 shares for services rendered @ $0.15
per share.

On July 29, 2008 the Company issued 110,000 shares for services rendered @ $0.09
per share.

On August 15, 2008 the Company  issued  438,965  shares for services  rendered @
$0.06 per share.

On August 21, 2008 the Company  issued  98,324  shares for  services  rendered @
$0.08 per share.

On September 23, 2008 the Company issued 200,000 shares for services  rendered @
$0.06 per share.

On September 24, 2008 the Company issued 545,000 shares for services  rendered @
$0.06 per share.


                                      F-14
<PAGE>
                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.
                 Notes to the Consolidated Financial Statements
                           December 31, 2008 and 2007

8. STOCKHOLDERS' EQUITY (CONTINUED)

On September 24, 2008 the Company issued 200,000 shares to employees @ $0.06 per
share.

On October 29, 2008 the Company issued  311,615  shares for services  rendered @
$0.06 per share.

On November 21, 2008 the Company issued 1,000,000 shares for services rendered @
$0.05 per share.

On November 24, 2008 the Company issued  235,000 shares for services  rendered @
$0.04 per share.

On  November  24, 2008 the Company  issued  125,000  shares for cash @ $0.04 per
share.

On December 15, 2008 the Company issued 1,446,812 shares for services rendered @
$0.04 per share.

On December 23, 2008 the Company  issued 200,000 shares in acquisition of Porter
Valley @ $0.04 per share.

At  December  31,  2008 the  Company  had  55,398,595  shares  of  common  stock
outstanding.

WARRANTS

During the year ended December 31, 2008, the Company issued  1,500,000  warrants
to purchase  1,500,000  shares of common  stock with an exercise  price of $0.17
exercisable for a period of three years from the date of issuance  pursuant to a
private  placement  for  cash.  These  warrants  have a fair  value of  $255,000
determined using the Black Scholes pricing model.

During the year ended December 31, 2008, the Company issued warrants to purchase
1,399,997 shares of common stock with an exercise price of $0.25 exercisable for
a period of three years from the date of issuance in conjunction with loans made
to the Company.  The warrants have a fair value of $349,999 determined using the
Black Scholes pricing model.

During the year ended December 31, 2008, the Company issued 600,000  warrants to
purchase  600,000  shares  of  common  stock  with an  exercise  price  of $0.58
exercisable  for a period of three years from the date of issuance for penalties
on loans  with a fair  value of  $348,000  determined  using the  Black  Scholes
pricing model.

During the year ended December 31, 2008, the Company issued 600,000  warrants to
purchase  600,000  shares  of  common  stock  with an  exercise  price  of $0.75
exercisable for a period of three years from the date of issuance for consulting
services  with a fair  value of  $450,000  determined  using the  Black  Scholes
pricing model.

During the year ended December 31, 2007, the Company issued 350,000  warrants to
purchase  350,000  shares  of  common  stock  with an  exercise  price  of $0.01
exercisable  for a  period  of  three  years  from  the  date  of  issuance  for
key-personal  retention with a fair value of $3,500  determined  using the Black
Scholes pricing model.

During the year ended December 31, 2007, the Company issued  1,311,245  warrants
to purchase  1,311,245  shares of common  stock with an exercise  price of $0.25
exercisable for a period of three years from the date of issuance  pursuant to a
private  placement  for  cash.  These  warrants  have a fair  value of  $327,811
determined using the Black Scholes pricing model.


                                      F-15
<PAGE>
                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.
                 Notes to the Consolidated Financial Statements
                           December 31, 2008 and 2007

8. STOCKHOLDERS' EQUITY (CONTINUED)

WARRANTS

During the year ended December 31, 2007,  the Company issued 86,000  warrants to
purchase  86,000  shares  of  common  stock  with an  exercise  price  of  $0.58
exercisable for a period of three years from the date of issuance in conjunction
with  loans  made to the  Company.  The  warrants  have a fair  value of $49,880
determined using the Black Scholes pricing model.

During the year ended December 31, 2007, the Company issued 125,000  warrants to
purchase  125,000  shares  of  common  stock  with an  exercise  price  of $0.75
exercisable  for a period of three years from the date of issuance for penalties
on loans  with a fair  value of  $156,250  determined  using the  Black  Scholes
pricing model.

During the year ended December 31, 2007, the Company issued 367,400  warrants to
purchase  367,400  shares  of  common  stock  with an  exercise  price  of $1.25
exercisable for a period of three years from the date of issuance for consulting
services  with a fair  value of  $551,100  determined  using the  Black  Scholes
pricing model.

OPTIONS

In April 2008,  the Company  issued stock options to purchase  800,000 shares of
our  common  stock at an  exercise  price of $0.10 per share to two  independent
directors. In October 2008, the Company issued stock options to purchase 250,000
shares  of our  common  stock at an  exercise  price of $0.10  per  share to one
independent  director.  On March 2, 2009, the Company issued options to purchase
900,000  shares of our common  stock at an exercise  price of $0.05 per share to
our three independent directors.

9. SUPPLEMENTAL DISCLOSURE OF CASH FLOWS

The Company  prepares its statements of cash flows using the indirect  method as
defined under the Financial Accounting Standard No. 95.

The Company paid income taxes of $800 and interest of $1,607,444 during the year
2008. The Company paid income taxes of $800 and interest of $209,099  during the
year 2007.


10. GOING CONCERN

The Company's  financial  statements are prepared  using the generally  accepted
accounting  principles  applicable to a going concern,  which  contemplates  the
realization  of assets and  liquidation  of  liabilities in the normal course of
business.  In the years  ended  December  31,  2008 and 2007,  the  Company  had
incurred  losses of $7,212,194 and  $21,468,106,  respectively.  The Company has
accumulated  deficit of  $31,237,713  on December  31, 2008.  In  addition,  the
Company had minimum  cash flow from  operating  activities  amounting  of $8,744
during the year ended December 31, 2008.  The  continuing  losses have adversely
affected the liquidity of the Company.

In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded  asset amounts shown in the  accompanying  balance
sheet is dependent  upon continued  operations of the Company,  which in turn is
dependent  upon the  Company's  ability  to  raise  additional  capital,  obtain
financing and to succeed in its future operations.  The financial  statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and  classification  of liabilities that might
be necessary should the Company be unable to continue as a going concern.


                                      F-16
<PAGE>
                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.
                 Notes to the Consolidated Financial Statements
                           December 31, 2008 and 2007


10. GOING CONCERN (CONTINUED)

Management  has taken the following  steps to revise its operating and financial
requirements,  which it believes are  sufficient to provide the Company with the
ability to continue as a going concern.  Management devoted  considerable effort
during  the years  ended  December  31,  2007 and  2008,  toward  (i)  obtaining
additional equity financing and in that regard, the Company is in the process of
offering to sell more shares in private placements to accredited investors, (ii)
controlling  of  salaries  and  general  and  administrative   expenses,   (iii)
management  of  accounts  payable,  (iv)  evaluation  of  its  distribution  and
marketing methods,  and (v) increasing  marketing and sales. In order to control
general  and  administrative  expenses,  the Company  has  established  internal
financial  controls in all areas,  specifically in hiring and overhead cost. The
Company has also  established  a hiring  policy  under  which the  Company  will
refrain from hiring  additional  employees  unless  approved by the CEO and CFO.
Accounts  payable are reviewed and approved or  challenged  on a daily basis and
the sales  staff is  questioned  as to the  validity of any expense on a monthly
basis. Senior management reviews the annual budget to ascertain and question any
variance from plan, on a quarterly basis, and to anticipate and make adjustments
as may be feasible.

11. COMMITTMENTS

The Company is on a month to months lease  agreement.  The Company had no future
minimum lease commitments,  including  property taxes and insurance,  payable at
December 31, 2008.

Rent expenses for leased  facility was $142,756 for the year ended  December 31,
2008. It is anticipated  that the company will  consolidate  and re-located to a
new central main office in Palm Springs during the second quarter of 2009.


12. ACQUISITIONS

On or about June 19, 2008, the "Closing"),  Environmental Service Professionals,
Inc. (the  "Company"),  Porter Valley Software,  Inc., a California  corporation
("PVS"),  and Keith Swift, Jackie Swift and Lorne Steiner, an individual and 100
%  shareholders  of PVS  ("Sellers"),  completed the closing of a stock purchase
agreement (the "SPA")  pursuant to which the Company  acquired 100% of the total
issued  and  outstanding  stock of PVS in  exchange  for  650,000  shares of the
Company's common stock issuable in installments over time (the "Stock Payment"),
plus $400,000 in cash,  payable in installments  over time (the "Cash Payment").
As a result of the Closing, PVS is a wholly owned subsidiary of the Company.

13. CONTINGENCIES & LITIGATION

Primarily in connection with the  non-performance  of two equity investors,  the
Company became engaged in litigation in several  courts.  JOHN COOLEY V. PACIFIC
ENVIRONMENTAL  SAMPLING,  INC.  ETC.,  ET AL and STEINER V. KEITH  SWIFT,  JACKI
SWIFT,   INDIVIDUALS,   ENVIRONMENTAL   SERVICE   PROFESSIONALS,   INC.   as   a
cross-defendant, which are still in litigation and none have reached judgment or
been settled or dismissed.  The company has retained appropriate counsel and all
retainer fees are reflected in the  liability  section of the Company's  balance
sheet and total $7,500.

Primarily in connection with the  non-performance  of two equity investors,  the
Company  has  had  three  judgments  imposed;  Palm  Desert  National  Bank  for
$284,761.89,  David Reichman for  $95,463.00  and BOCA funding for  $741,839.00.
These amounts are included in our current  financials and negatively  impact the
liquidity of the Company.

The Company has an obligation to re-purchase  215,321 shares of its common stock
at a price of $1.00 per share  (129,310  shares issued to Pacific Image Connect,
Inc. and 86,011 shares issued to Niv Benshalom.


                                      F-17
<PAGE>
                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.
                 Notes to the Consolidated Financial Statements
                           December 31, 2008 and 2007

14. RELATED PARTY TRANSACTION

The Company has a consulting agreement with one of the independent  Directors of
the Company under which he receives fees of $5,000 per month plus expenses. This
independent  Director provides marketing,  and financial services to the Company
pursuant to the consulting agreement,  which is terminable on 30 days, notice by
either  party.  The  consulting  agreement  commenced on July 1, 2007,  and will
continue  until  such  time  as the  Company  terminates  the  agreement  or the
independent  Director  elects to cease  providing the consulting  services.  The
compensation has been included in accrued expenses.

The Company has a consulting  agreement with the Chief Operating  Officer of the
Company  under  which he  currently  receives  fees of  $14,550  per month  plus
expenses.  The Chief  Operating  Officer  provides  management,  administrative,
marketing,  and  financial  services to the Company  pursuant to the  consulting
agreement, which is terminable on 30 days notice by either party. The consulting
agreement  commenced on April 1, 2006 and will  continue  until such time as the
Company  terminates the agreement or the Chief Executive  Officer  resigns.  The
accrued un-paid fees and expenses to Chief  Operating  Officer of $29,840.24 for
the period ending December 31, 2007,  $139,259.59 for the period ending December
31, 2008,  and  $43,864.20  for the period  ending March 31, 2009 for a combined
total of $212,964.03 has been included in due to consultants.

During the normal course of business, the Chief Executive Officer authorized the
advancement  of funds to the  Company.  These  advances  are  recorded as due to
Pro-Active  Business  Services,  Inc. As of February  27, 2007 the Company has a
loan payable to Pro-Active Business Services,  Inc. in the amount of $192,086.99
plus $48,038.36 of interest.  This is an unsecured loan with an interest rate of
5%. Interest is currently being waived.

As of December  31, 2008 the Company has a loan payable due to Joseph  Leone,  a
former director and current stockholder of the Company in the amount of $22,900.
This is an  unsecured  loan with an  interest  rate of 3% per annum.  As of June
2007, Mr. Leone has agreed to waive all accrued interest.


15. SUBSEQUENT EVENTS

Effective on February 19, 2009,  holders of  31,541,483  shares of the Company's
common stock, or approximately  60.0% of the total issued and outstanding common
stock of the Company,  voted to amend the Company's Certificate of Incorporation
in order to  increase  the  number of  authorized  shares of common  stock  from
100,000,000,  par value $0.001 per share, to  295,000,000,  par value $0.001 per
share and to increase the number of  authorized  shares of preferred  stock from
1,000,000,  par value $0.01 per share, to 5,000,000, par value $0.001 per share.
The Board of  Directors  of the Company  voted  unanimously  to  implement  this
shareholder  action.  On January 27, 2009,  the Company filed a  Certificate  of
Designation to authorize  3,000,000 shares of Series A Preferred Stock,  none of
which have been issued.

                  Each share of Series A Preferred  Stock has no voting  rights.
         Shares of Series A  Preferred  Stock  converted  into  shares of Common
         Stock will have the same voting  rights of other Common  Stock.  At the
         time of  conversion  each share of Series A  Preferred  Stock  shall be
         converted  at a rate of 40  shares of  Common  Stock for each  share of
         Series A Preferred  Stock.  The Company has reserved an aggregate of up
         to 120,000,000  shares of Common Stock for issuance upon the conversion
         of the Series A  Preferred  Stock.  The Series A  Preferred  Stock will
         participate with the Common Stock on an as-converted basis with respect
         to any dividends,  which may be declared by the Board of Directors. The
         terms of the Series A Preferred  Stock are more fully  described in the
         Certificate  of  Designation  filed with the  Secretary of State of the
         State of Nevada on January  27,  2009,  establishing  the  preferences,
         limitations and relative rights of the Series B Preferred Stock.

                  A copy of the  Certificate  of  Designation  for the  Series A
         Preferred  Stock is filed as Exhibit A to Form 14-C and is incorporated
         herein by reference.


                                      F-18
<PAGE>
                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.
                 Notes to the Consolidated Financial Statements
                           December 31, 2008 and 2007


15. SUBSEQUENT EVENTS (CONTINUED)

On February  20,  2009,  the  Company  filed a  Certificate  of  Designation  to
authorize  3,000 shares of Series B Preferred  Stock, of which 3,000 shares have
been issued to the Chief Executive Officer of the Company.

                  Each share of Series B Preferred  Shares has 50,000  votes and
         will  vote with the  holders  of the  Common  Stock as one  class.  The
         liquidation  preference  of Series B Preferred  Stock is hundredth of a
         cent  ($0.001)  per share of Series B  Preferred  Stock.  The  Series B
         Preferred  Stock will not  participate  with respect to any  dividends,
         which  may be  declared  by the  Board of  Directors.  The terms of the
         Series B Preferred Stock are more fully described in the Certificate of
         Designation filed with the Secretary of State of the State of Nevada on
         February  24,  2009,  establishing  the  preferences,  limitations  and
         relative rights of the Series B Preferred Stock.

                  A copy of the  Certificate  of  Designation  for the  Series B
         Preferred Stock is filed as Exhibit 3.1 to Form 8-K and is incorporated
         herein by reference.

On January 27, 2009, the Company issued a private placement  memorandum to raise
$30,000,000.


























                                      F-19
<PAGE>

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.

None.


ITEM 9A(T). CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

         Disclosure  controls and procedures  are controls and other  procedures
that are designed to ensure that information  required to be disclosed by ESP is
recorded, processed,  summarized and reported, within the time periods specified
in the rules and forms of the Securities and Exchange Commission.  The Company's
Chief Executive  Officer and Acting Chief  Financial  Officer is responsible for
establishing and maintaining controls and procedures for the Company.

         Management has evaluated the effectiveness of the Company's  disclosure
controls and procedures as of December 31, 2008 (under the  supervision and with
the  participation  of the Company's  Chief  Executive  Officer and Acting Chief
Financial Officer) pursuant to Rule 13a-15(e) under the Securities  Exchange Act
of 1934,  as amended.  As part of such  evaluation,  management  considered  the
matters  discussed below relating to internal control over financial  reporting.
Based on this evaluation, the Company's Chief Executive Officer and Acting Chief
Financial Officer has concluded that the disclosure  controls and procedures are
effective.

         The term "internal  control over  financial  reporting" is defined as a
process  designed by, or under the  supervision of, the  registrant's  principal
executive  and  principal  financial  officers,  or persons  performing  similar
functions,  and effected by the registrant's board of directors,  management and
other personnel,  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  and
includes those policies and procedures that:

         o        pertain  to the  maintenance  of  records  that in  reasonable
                  detail  accurately  and fairly  reflect the  transactions  and
                  dispositions of the assets of the registrant;

         o        provide reasonable assurance that transactions are recorded as
                  necessary to permit  preparation  of financial  statements  in
                  accordance with generally accepted accounting principles,  and
                  that receipts and  expenditures  of the  registrant  are being
                  made only in accordance with  authorizations of management and
                  directors of the registrant; and

         o        provide reasonable  assurance  regarding  prevention or timely
                  detection of unauthorized  acquisition,  use or disposition of
                  the  registrant's  assets that could have a material effect on
                  the financial statements.

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

         The  Company's   management  is  responsible   for   establishing   and
maintaining adequate internal control over financial  reporting,  (as defined in
Rule  13a-15(f)  under  the  Securities  Exchange  Act of 1934).  The  Company's
internal  control  over  financial  reporting  is a process  designed to provide
reasonable  assurance  regarding the reliability of financial  reporting and the
preparation  of  financial   statements  for  external  purposes  of  accounting
principles  generally  accepted in the United  States.  Because of its  inherent
limitations, internal control over financial reporting may not prevent or detect
misstatements.  Therefore,  even those  systems  determined  to be effective can
provide  only  reasonable  assurance  of  achieving  their  control  objectives.
Furthermore,  projections of any evaluation of  effectiveness  to future periods
are subject to the risk that  controls  may become  inadequate  due to change in
conditions,  or the degree of  compliance  with the policies or  procedures  may
deteriorate.

         Under the supervision and with the participation of the Company's Chief
Executive Officer and Acting Chief Financial  Officer,  the Company conducted an
evaluation of the  effectiveness  of its control over financial  reporting as of

                                      -30-
<PAGE>

December 31, 2008. In making this  assessment,  management used the criteria set
forth by the Committee of Sponsoring  Organizations  of the Treadway  Commission
("COSO") in internal control-integrated framework. Based on this evaluation, the
Company's  Chief  Executive  Officer  and Acting  Chief  Financial  Officer  has
concluded that the disclosure controls and procedures are effective.

AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

         This  annual  report  does not  include  an  attestation  report of the
Company's  registered  public  accounting firm regarding  internal  control over
financial  reporting.  Management's report was not subject to attestation by the
Company's  registered  public accounting firm pursuant to temporary rules of the
Securities  and  Exchange  Commission  that permit the  Company to provide  only
management's report in this annual report.

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

         There have been no  changes  in the  Company's  internal  control  over
financial  reporting  that occurred  during the Company's  fiscal year that have
materially  affected,  or  are  reasonably  likely  to  materially  affect,  the
Company's  internal  control  over  financial  reporting.  Prior  to the  fourth
quarter,  ESP completed  procedures to achieve  Sarbanes-Oxley  404  compliance,
which were tested during and since the fourth quarter.

INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS

         The Company's  management does not expect that its disclosure  controls
or its internal  control  over  financial  reporting  will prevent or detect all
error and all fraud. A control system, no matter how well designed and operated,
can provide only reasonable,  not absolute,  assurance that the control system's
objectives  will be met.  The design of a control  system must  reflect the fact
that there are  resource  constraints,  and the  benefits  of  controls  must be
considered relative to their costs. Further, because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance
that  misstatements  due to error or fraud  will not  occur or that all  control
issues and instances of fraud,  if any,  within the Company have been  detected.
These   inherent   limitations   include  the   realities   that   judgments  in
decision-making  can be faulty and that  breakdowns  can occur because of simple
error or mistake.  Controls can also be  circumvented  by the individual acts of
some persons,  by collusion of two or more people, or management override of the
controls.  The  design of any  system of  controls  is based in part on  certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving  its stated goals under all  potential
future  conditions.  Projections of any evaluation of controls  effectiveness to
future periods are subject to risks.  Over time,  controls may become inadequate
because of changes in  conditions or  deterioration  in the degree of compliance
with policies or procedures.


ITEM 9B. OTHER INFORMATION

         None.

                                    PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

BOARD OF DIRECTORS

         Our Board of Directors  currently  consists of five directors.  Messrs.
Moyer,  August,  and Iger are  "independent"  as defined in Rule 4200 of FINRA's
listing standards. Mr. Torres, who is our President and Chief Executive Officer,
and Mr. Watkins, who is our Chief Operating Officer and Corporate Secretary, are
not independent.

         The following table sets forth the directors,  executive officers,  and
key consultants of ESP as of March 31, 2009:

                                      -31-
<PAGE>
<TABLE>
<CAPTION>
<S>                      <C>       <C>                                                            <C>
------------------------ --------- -------------------------------------------------------------- --------------------
NAME                     AGE       POSITION                                                              SINCE
------------------------ --------- -------------------------------------------------------------- --------------------
Edward L. Torres         50        Chairman,  Chief  Executive  Officer,  President  and  Acting     October 11, 2006
                                   Chief Financial Officer
Lyle Watkins             48        Director, Chief Operating Officer, and Corporate Secretary        October 11, 2006
Leroy Moyer (1)(2)       66        Director                                                             April 1, 2007
S. Robert August(2)      60        Director                                                              May 31, 2007
Robert S. Iger(2)        68        Director                                                           August 29, 2008
------------------------ --------- -------------------------------------------------------------- --------------------
(1)      Member of Audit Committee

(2)      Independent member of the board of directors
</TABLE>

         EDWARD TORRES, age 50, has been the Chairman,  Chief Executive Officer,
and President of ESP since October 2006 and of Safeguard  since  February  2007.
Mr.  Torres  has  over  25  years  of  business  development  experience  as  an
entrepreneur in several  professional  industries.  Mr. Torres  graduated with a
Bachelor's   Degree  in  Business   Development,   and  established  a  national
manufacturing  service  business with Priority Sales and Service.  After several
years with that  company,  Mr.  Torres  merged the company with  Sandelos USA, a
national   company  known  for  its  kitchen  and  bath  products.   He  oversaw
international  production and  distribution of the products for the U.S. market,
as well as  participated  in the  acquisition  of  Sandelos,  USA during the mid
1990's.  In  1996,  he  participated  in the  acquisition  of  Commercial  Labor
Management,  Inc., a public entity, and arranged its reverse merger with Zeros &
Ones, Inc., a technology  company  currently traded on Pink Sheets.  During 1996
Mr.  Torres also  participated  in the  formation of Joint  Employers  Group,  a
California based professional  employer  organization.  Overseeing the company's
marketing and sales division, he was instrumental in increasing its revenue from
$100,000 in 1995 to $65 million in 2001. In 2003 Mr. Torres arranged the sale of
Joint  Employers  Group,  Inc. to ITEC, a publicly  traded  company in the human
resource industry.  In 2003 Mr. Torres,  through  Pro-Active  Business Services,
founded  Contempo  Homes  and was  instrumental  in  obtaining  71 acres for the
development  of 130  homes.  All of the  homes  built by  Contempo  Homes,  Inc.
incorporate  distinct  architectural  design,  modern  conveniences,  and  Green
Technology,  also known as ContempoGREEN and EcoModern. The combination of these
various elements makes Contempo homes unique and desirable.  In 2005, Pro-Active
and Mr. Torres sold their holdings in Contempo Homes and currently  provide land
development and entitlement  procurement  consulting  services to clients in the
City of Palm Springs and in the Coachella Valley communities.  Mr. Torres serves
on  several   local  task  forces  and  on  a  variety  of   building   industry
organizations,  which have helped to establish his  influence in many  Coachella
Valley cities. He sits on the Building  Industry  Association Board of Directors
as  Immediate  Past  President  of the  Desert  Chapter,  Senior  Officer of the
Southern California Building Industry Association, President of the Palm Springs
Economic Development  Corporation (PSEDC), and has served or serving is a member
of the City Task Force for establishing  new development  standards for the City
of Palm Springs and business retention guidelines.

         LYLE WATKINS,  age 48, has been a Director and  Corporate  Secretary of
ESP since  October 2006.  He has been the Chief  Operating  Officer of ESP since
October  2006  and of  each  of its  wholly  owned  subsidiaries  (Environmental
Safeguard  Professionals,  Inc.,  Porter  Valley  Software,  Inc.  and  National
Professional  Services,  Inc.) as they were acquired. Mr. Watkins has an Applied
Science Degree -  Telecommunications,  and received a Masters Degree in Business
Administration  in 1996.  He has  served as Chief  Financial  Officer of Pacific
Image  Connect,  Inc. in  Thousand  Oaks,  California.  He served as Director of
Systems Engineering of Rhythms NetConnections,  Inc. in Englewood, Colorado, and
a Manager of Business Development for GTE International.  As Manager of Business
Development,  he directed the operations of engineering  and sales support for a
strategic business unit with a sales support staff including  engineers,  market
development managers, program and project managers, trainers, database analysts,
contract  administrators and field operations desk staff. During his tenure, top
line revenue of his strategic business unit increased 275% to $250 million,  the
department  expanded from 22 personnel to 159  personnel,  he managed assets and
administered an $18 million annual expense budget,  expenses were reduced by 15%
and  profitability  increased  by $3 million.  Mr.  Watkins has also managed the
review of cash flow and value statement analysis, developed and launched a fiber
based  metropolitan  ATM  service,  and  negotiated   technology  and  exclusive
marketing agreements with property developers in Canada, the United States, Hong
Kong and the  Philippines.  Mr.  Watkins has developed  joint  ventures  between
telecommunications   companies  and  property   developers   including   design,
implementation and service delivery of advanced CATV networks.  He has performed
market development and new business implementation  throughout North America and
Southeast Asia.

                                      -32-
<PAGE>

         LEROY MOYER,  age 66, has been a Director of ESP since April 2007.  Mr.
Moyer is a Certified Public Accountant and currently is the Director of Business
Development  for  Dimensional  Insight,  a business  intelligence  and corporate
performance  management  company that  delivers  software and services that help
companies drive, monitor and understand corporate  performance.  Mr. Moyer began
his career with Deloitte, Haskins & Sells (subsequently Deloitte and hereinafter
referred to as "Deloitte")  where he was  responsible  for multiple  clients who
ranged from recently  funded  start-up  companies to  multinational  Global 1000
corporations.  In 1980 he was  elected a Partner of  Deloitte.  His career  with
Deloitte included over 22 years serving the unique and complex needs of emerging
technology businesses,  international  experience in Deloitte's Paris office and
Deloitte's New York executive  office where he provided expert  technical advice
on SEC matters, mergers and acquisitions. In Mr. Moyer's SEC department role, he
worked extensively with Deloitte clients, underwriters and investment bankers on
significant reporting,  filing and disclosure matters. Mr. Moyer has also served
as a Vice  President  of  Finance,  as well as Chief  Financial  Officer of both
private and public  companies  focused on high  technology,  telecommunications,
software,  hardware,  and  manufacturing.  Mr. Moyer has been both an inside and
independent  member  of  various  Boards of  Directors,  and has  experience  in
information   technology  systems,   contracts,   treasury,   legal,  tax,  risk
management, pricing and sales and strategic planning.

         S. ROBERT AUGUST, age 60 has been a Director of ESP since May 31, 2007.
Mr. August is the  President and founder of S. Robert August & Company,  Inc., a
national  marketing and management  firm  specializing  in servicing real estate
builders,  developers,   realtors,  economic  development  councils,  suppliers,
manufacturers, and related businesses. The company, located in Denver, Colorado,
was  founded  by Mr.  August  in  1983.  Mr.  August  is  also  the  founder  of
RealtyWorks,  Inc.,  a real  estate  firm  founded in 1995 in Denver,  Colorado,
specializing in land and new home sales, which operated until 2006. From 1983 to
1995,  Mr.  August was the founder and  President  of S.  Robert  August  Realty
Corporation in Denver,  Colorado,  specializing in land and new home sales.  Mr.
August  was the Vice  President  of  Marketing  and Sales for  Stuart R. Scott &
Associates, Inc. from 1982 to 1983, where he trained, supervised and motivated a
real estate sales force for six  residential  communities.  Mr.  August has also
served as a Director of Marketing for The Ranch in Denver,  Colorado,  from 1978
to 1982, a Project  Manager for  Tollin-Grayboyes  from 1976 to 1978,  and other
positions in real estate sales and consulting. Mr. August has a Bachelor of Arts
Degree in Labor Management  Relations from  Pennsylvania  State University and a
Masters  of  International  Management  from the  American  Graduate  School  of
International  Management  (1976). Mr. August is also active in fund raising for
Children's  Hospital,  Multiple  Sclerosis,  Hospice of Metro  Denver,  Colorado
Easter Seal Society, Show Home for Hope, Bridge Project,  Colorado AIDS Project,
Colorado  Pediatric  Aids  Foundation,  Home Builders  Foundation,  and National
Association of Home Builders'  ("NAHB") Home Builders Care. Mr. August serves as
a Past Chairman of the NAHB's National Sales and Marketing Council.

         ROBERT IGER,  age 68, has been a Director of ESP since August 29, 2008.
Mr. Iger is a founder of Iger & Associates,  which,  2003, has represented local
and national clients before local, state, and federal public officials providing
political  leadership  in complex  government  matters.  He works  closely  with
elected  and  appointed  public  officials  on public  finance,  transportation,
airport,  land use,  and  healthcare  matters.  He advises  clients on  business
development  opportunities.  He also provides  timely  information on any legal,
regulatory,  and  legislative  changes  impacting  clients.  He has an extensive
business  background  in corporate  governance,  legal  support,  and  corporate
financing.  From 1989 to 1990,  Mr.  Iger was the Chief  Executive  Officer,  of
ColorMax,  a  public  company.  Also  from  1982 to 1994,  he was a Senior  Vice
President for Oxford First Corporation. From 1994 to 1996, he ran LAR Holdings &
Eventide  Capital,  a venture  capital  firm.  From 1979 to 1981, he was General
Manager of Candle Corporation,  a start-up computer software company.  From 1969
to 1977, Mr. Iger was with Xerox  Corporation  and when he left he was in charge
of strategic  planning for the largest division of Xerox. He is an active member
of the  California  Bar and  holds a Juris  Doctor  Degree  from  Western  State
University.  He earned a Bachelor's  Degree in Economics and a Masters Degree in
Econometrics from the State University of New York at Buffalo. He also taught an
Economics  course  at the  State  University  of New  York at  Buffalo,  Millard
Fillmore College,  and University of Phoenix. As an officer of the United States
Air Force, Mr. Iger was commissioned at the age of 20 years old.

         No officer or  director  is  required  to make any  specific  amount or
percentage of his business time available to us. Each of our officers intends to
devote  such  amount of his or her time to our  affairs as is required or deemed
appropriate by us.

                                      -33-
<PAGE>

LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

         Under   Nevada   General   Corporation   Law  and  ESP's   Articles  of
Incorporation,  ESP's  directors  will  have  no  personal  liability  to  ESP's
stockholders  for  monetary  damages  incurred  as the  result of the  breach or
alleged  breach by a director  of his "duty of care."  This  provision  does not
apply  to  the  directors'  (i)  acts  or  omissions  that  involve  intentional
misconduct  or a knowing and culpable  violation of law,  (ii) acts or omissions
that a director believes to be contrary to the best interests of the corporation
or its shareholders or that involve the absence of good faith on the part of the
director,  (iii) approval of any  transaction  from which a director  derives an
improper personal benefit, (iv) acts or omissions that show a reckless disregard
for the director's duty to the corporation or its  shareholders in circumstances
in which the  director  was aware,  or should have been aware,  in the  ordinary
course of  performing a director's  duties,  of a risk of serious  injury to the
corporation  or its  shareholders,  (v) acts or omissions  that  constituted  an
unexcused pattern of inattention that amounts to an abdication of the director's
duty to the  corporation  or its  shareholders,  or (vi) approval of an unlawful
dividend,  distribution,  stock  repurchase or redemption.  This provision would
generally  absolve  directors  of  personal  liability  for  negligence  in  the
performance of duties, including gross negligence.

         The effect of this provision in ESP's Articles of  Incorporation  is to
eliminate the rights of ESP's  stockholders  (through  stockholder's  derivative
suits on behalf of ESP) to  recover  monetary  damages  against a  director  for
breach of his fiduciary duty of care as a director (including breaches resulting
from negligent or grossly negligent behavior) except in the situations described
in clauses (i) through (vi) above.  This  provision does not limit nor eliminate
the rights of ESP or any  stockholder  to seek  non-monetary  relief  such as an
injunction or rescission in the event of a breach of a director's  duty of care.
In  addition,  ESP's  Articles of  Incorporation  provide  that if Nevada law is
amended to authorize the future  elimination or limitation of the liability of a
director,  then the liability of the directors  will be eliminated or limited to
the fullest extent permitted by the law, as amended.  Nevada General Corporation
Law  grants  corporations  the right to  indemnify  their  directors,  officers,
employees and agents in accordance with applicable law. ESP's Bylaws provide for
indemnification  of such persons to the full extent  allowable under  applicable
law.  These  provisions  will not alter the  liability  of the  directors  under
federal securities laws.

         Furthermore,  management has entered into agreements to indemnify ESP's
directors and officers, in addition to the indemnification provided for in ESP's
Bylaws.  These  agreements,  among other things,  indemnify  ESP's directors and
officers for certain expenses (including attorneys' fees), judgments, fines, and
settlement  amounts  incurred  by any such  person in any action or  proceeding,
including  any action by or in the right of ESP,  arising  out of such  person's
services as a director  or officer of ESP,  any  subsidiary  of ESP or any other
company or  enterprise to which the person  provides  services at the request of
ESP. We believe that these  provisions  and  agreements are necessary to attract
and retain qualified directors and officers.

         Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors,  officers or persons controlling ESP pursuant
to the  foregoing  provisions,  ESP has been informed that in the opinion of the
SEC, such  indemnification  is against public policy as expressed in the Act and
is therefore unenforceable.

BOARD COMMITTEES

         Our Board of Directors  currently has a standing Audit  Committee and a
Compensation  Committee.  We plan  to  establish  a  Nominating  and  Governance
Committee.  Until such committee is established,  matters otherwise addressed by
such committee will be acted upon by the majority of independent directors.  The
following is a brief description of our committees and contemplated committee.

AUDIT COMMITTEE

         Mr.  Moyer is the sole member of our Audit  Committee.  Mr. Moyer meets
the applicable  FINRA listing  standards for designation as an "Audit  Committee
Financial  Expert." The Board of Directors has adopted a written  charter of the
Audit Committee.  The Audit Committee is authorized by the Board of Directors to
review, with our independent accountants, the annual financial statements of ESP
prior to publication,  and to review the work of, and approve non-audit services
preformed by, such independent accountants. The Audit Committee will make annual

                                      -34-
<PAGE>

recommendations   to  the  Board  for  the  appointment  of  independent  public
accountants  for the  ensuing  year.  The Audit  Committee  will also review the
effectiveness  of the financial and accounting  functions and the  organization,
operations and management of ESP. The Audit Committee was formed April 2007.

         Pursuant to the Audit  Committee  charter,  the  functions of our Audit
Committee include:

         o        meeting  with our  management  periodically  to  consider  the
                  adequacy of our internal  controls and the  objectivity of our
                  financial reporting;
         o        engaging and pre-approving  audit and non-audit services to be
                  rendered by our independent auditors;
         o        recommending  to our Board of Directors the  engagement of our
                  independent   auditors  and  oversight  of  the  work  of  our
                  independent auditors;
         o        reviewing our financial  statements  and periodic  reports and
                  discussing  the  statements  and reports with our  management,
                  including any significant  adjustments,  management  judgments
                  and estimates,  new accounting policies and disagreements with
                  management;
         o        establishing   procedures  for  the  receipt,   retention  and
                  treatment of complaints  received by us regarding  accounting,
                  internal accounting controls and auditing matters;
         o        administering   and   discussing   with   management  and  our
                  independent auditors our code of ethics; and
         o        reviewing  and  approving all  related-party  transactions  in
                  accordance with applicable listing exchange rules.

COMPENSATION COMMITTEE

         The Company  established a  Compensation  Committee on August 31, 2008,
which consists of one director, S. Robert August. The Compensation  Committee is
responsible for reviewing  general policy matters  relating to compensation  and
benefits of directors and officers,  determining  the total  compensation of our
officers  and  directors.  The  Board of  Directors  does not have a  nominating
committee.  Therefore,  the  selection  of persons or  election  to the Board of
Directors was neither independently made nor negotiated at arm's length.

         The functions of our compensation committee will include:

         o        reviewing and, as it deems  appropriate,  recommending  to our
                  board  of  directors,   policies,   practices  and  procedures
                  relating to the  compensation  of our  directors and executive
                  officers and the establishment  and  administration of certain
                  of our employee benefit plans;
         o        exercising  authority  under  certain of our employee  benefit
                  plans; and
         o        reviewing  and  approving   executive   officer  and  director
                  indemnification and insurance matters.

CORPORATE GOVERNANCE AND NOMINATING COMMITTEE

         We plan to establish a corporate  governance and nominating  committee.
The functions of our corporate governance and nominating committee will include:

         o        developing  and  recommending  to our board of  directors  our
                  corporate governance guidelines;
         o        overseeing the evaluation of our board of directors;
         o        identifying  qualified  candidates  to become  members  of our
                  board of directors;
         o        selecting  nominees  for  election  of  directors  at the next
                  annual  meeting  of   shareholders   (or  special  meeting  of
                  shareholders at which directors are to be elected); and
         o        selecting  candidates  to  fill  vacancies  on  our  board  of
                  directors.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         No member of our  compensation  committee will serve as a member of the
board of directors or the  compensation  committee of any entity that has one or
more  executive  officers who serve on our board of  directors  or  compensation

                                      -35-
<PAGE>

committee.  No interlocking  relationship  exists between our board of directors
and the board of directors or compensation  committee of any other company,  nor
has any interlocking relationship existed in the past.

REPORT OF THE AUDIT COMMITTEE

         The Company's  Audit Committee has reviewed and discussed the Company's
audited  financial  statements  for the fiscal year ended December 31, 2008 with
senior  management.   The  Audit  Committee  has  reviewed  and  discussed  with
management the Company's audited financial  statements.  The Audit Committee has
also discussed with Stan Lee, Certified Public Accountants ("SL"), the Company's
independent  auditors,  the matters required to be discussed by the statement on
Auditing Standards No. 61 (Communication with Audit Committees) and received the
written  disclosures and the letter from SL required by  Independence  Standards
Board Standard No. 1 (Independence Discussion with Audit Committees).  The Audit
Committee  has  discussed  with SL the  independence  of SL as  auditors  of the
Company.  Finally,  the Audit  Committee has considered  whether the independent
auditors  provision of non-audit  services to the Company is compatible with the
auditors'  independence.  Based on the foregoing,  the Company's Audit Committee
has recommended to the Board of Directors that the audited financial  statements
of the Company be included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2008 for filing with the United States Securities
and Exchange Commission ("SEC").  The Company's Audit Committee did not submit a
formal report regarding its findings.

                                 AUDIT COMMITTEE

                                   LEROY MOYER

         Notwithstanding  anything  to  the  contrary  set  forth  in any of the
Company's  previous  or future  filings  under the  Securities  Act of 1933,  as
amended (the  "Securities  Act"),  or the  Securities  Exchange Act of 1934,  as
amended  (the  "Exchange  Act"),  that might  incorporate  this report in future
filings with the  Securities and Exchange  Commission,  in whole or in part, the
foregoing  report shall not be deemed to be  incorporated  by reference into any
such filing.

CODE OF CONDUCT

         ESP has adopted a Code of Conduct that applies to all of our directors,
officers and employees. The text of the Code of Conduct has been posted on ESP's
Internet  website  and can be viewed at  http://www.evsp.com.  Any waiver of the
provisions  of the Code of Conduct for  executive  officers and directors may be
made only by the Audit Committee and, in the case of a waiver for members of the
Audit  Committee,  by the Board of Directors.  Any such waivers will be promptly
disclosed to ESP's shareholders.

COMPLIANCE WITH SECTION 16(A) OF EXCHANGE ACT

         Section 16(a) of the Exchange Act requires the  Company's  officers and
directors,  and certain  persons who own more than 10% of a registered  class of
the Company's equity securities  (collectively,  "Reporting  Persons"),  to file
reports of ownership  and changes in ownership  ("Section 16 Reports")  with the
Securities and Exchange  Commission (the "SEC").  Reporting Persons are required
by the SEC to furnish  the Company  with  copies of all Section 16 Reports  they
file.

         Based  solely on its  review of the  copies of such  Section 16 Reports
received  by it, or written  representations  received  from  certain  Reporting
Persons,  all Section  16(a) filing  requirements  applicable  to the  Company's
Reporting  Persons during and with respect to the fiscal year ended December 31,
2008 have been complied  with on a timely  basis,  except that Edward Torres and
Lyle Watkins may have been late on their initial Form 3 filings.

                                      -36-

<PAGE>
ITEM 11. EXECUTIVE COMPENSATION

EXECUTIVE OFFICER COMPENSATION

         The following table summarizes the compensation  paid or accrued by ESP
for the year ended  December  31, 2008 and for the year ended  December 31, 2007
for  services  rendered in all  capacities,  by the  Company's  chief  executive
officer and chief  operating  officer during the fiscal years ended December 31,
2008 and December 31, 2007.
<TABLE>
<CAPTION>

                                               SUMMARY COMPENSATION TABLE

 ----------------------------------------------------------------------------------------------------------------------
 NAME AND                                                                OPTION
 PRINCIPAL POSITION                                                      AWARDS          ALL OTHER
 (1)                    YEAR     SALARY   BONUS      STOCK AWARDS ($)      ($)          COMPENSATION           TOTAL
 ----------------------------------------------------------------------------------------------------------------------
<S>                     <C>    <C>          <C>         <C>                 <C>               <C>        <C>
 Edward L. Torres,      2008   $165,375     0           $ 1,020,000         0                 0          $ 1,185,375
 Chief Executive
 Officer(2)             2007   $120,000     0                     0         0                 0          $   120,000
 ----------------------------------------------------------------------------------------------------------------------
 Lyle A. Watkins,       2008          0     0           $   480,000         0             $135,977       $   615,977
 Chief Operating
 Officer(3)             2007          0     0                     0         0             $114,680       $   114,680

 ----------------------------------------------------------------------------------------------------------------------
 OFFICERS AS A GROUP    2008   $165,375     0           $ 1,500,000         0             $135,977       $ 1,801,352
                        2007   $120,000     0           $         0         0             $114,680       $   234,680
 ----------------------------------------------------------------------------------------------------------------------
--------------------------------------------------

(1)      All officers  serve at will without  employment  contracts  except that
         Lyle  Watkins is employed  under a consulting  agreement.  See "Certain
         Relationships and Transactions - Item 13."

(2)      The Company has accrued  un-paid  salary and expenses to Mr.  Torres of
         $13,750.00 for the period ending December 31, 2007, $135,750.12 for the
         period ending  December 31, 2008,  and $34,453.15 for the period ending
         March 31, 2009 for a combined total of  $183,953.27.  In  consideration
         for his continued services to the Company,  on or about April 28, 2008,
         the  Company  authorized  the  issuance  of  17,000,000  shares  of the
         Company's  common  stock to Mr.  Edward  Torres,  the  Chief  Executive
         Officer and Acting Chief Financial Officer of the Company.

(3)      The Company has accrued  un-paid  fees and  expenses to Mr.  Watkins of
         $29,840.24 for the period ending December 31, 2007, $139,259.59 for the
         period ending  December 31, 2008,  and $43,864.20 for the period ending
         March 31, 2009 for a combined total of  $212,964.03.  In  consideration
         for his continued services to the Company,  on or about April 28, 2008,
         the  Company  authorized  the  issuance  of  8,000,000  shares  of  the
         Company's common stock to Mr. Lyle Watkins, the Chief Operating Officer
         and Corporate Secretary of the Company.
</TABLE>


EMPLOYMENT AGREEMENTS

         The Company has not entered  into any  employment  agreements  with its
executive  officers to date.  The Company may enter into  employment  agreements
with them in the future.

         Lyle A. Watkins,  the Company's  Chief  Operating  Officer,  is engaged
pursuant to a consulting agreement.  See "Certain Relationships and Transactions
- Item 13."

OUTSTANDING EQUITY AWARDS

         None of the Company's  executive officers received any stock options or
unvested stock awards during the year ended December 31, 2008.

OPTION EXERCISES AND STOCK VESTED

         The following table summarizes the equity  compensation paid by ESP for
the year ended December 31, 2008 to the Company's  chief  executive  officer and
chief operating officer.

                                      -37-


<PAGE>

DIRECTOR COMPENSATION

         The following table summarizes the  compensation  paid or accrued by us
for the  year  ended  December  31,  2008 to  ESP's  directors  who are not also
executive  officers of the Company and who were  serving as  directors of ESP on
December 31, 2008.
<TABLE>
<CAPTION>
                                                DIRECTOR COMPENSATION

--------------------------------------------------------------------------------------------------------------------
           NAME            FEES EARNED     STOCK        OPTION         NON-EQUITY      ALL OTHER
                            OR PAID IN    AWARDS ($)   AWARDS ($)    INCENTIVE PLAN   COMPENSATION
                               CASH                                   COMPENSATION        ($)         TOTAL ($)
--------------------------------------------------------------------------------------------------------------------
<S>                        <C>            <C>        <C>             <C>              <C>             <C>
S. Robert August,              - 0 -       - 0 -     $ 35,000 (1)        - 0 -          $ 70,264      $ 105,264
Director

Leroy Moyer, Director          - 0 -       - 0 -     $ 45,000 (2)        - 0 -          $  -0-        $  45,000

Robert Iger, Director          - 0 -       - 0 -     $ 25,000 (3)        - 0 -          $  -0-        $  25,000
--------------------------------------------------------------------------------------------------------------------

(1)  The  Company  granted  350,000  options to purchase  350,000  shares of the
     Company's  common stock to Mr. August on April 28, 2008. These options have
     an exercise price of $0.10 per share and are  exercisable for a period of 5
     years from April 28, 2008.

(2)  The  Company  granted  450,000  options to purchase  450,000  shares of the
     Company's  common stock to Mr. Moyer on April 28, 2008.  These options have
     an exercise price of $0.10 per share and are  exercisable for a period of 5
     years from April 28, 2008.

(3)  The  Company  granted  250,000  options to purchase  250,000  shares of the
     Company's  common stock to Mr. Iger on October 10, 2008. These options have
     an exercise price of $0.10 per share and are  exercisable for a period of 5
     years from October 10, 2008.
</TABLE>


EMPLOYEE BENEFIT PLANS

         On or about April 28, 2008,  our Board of  Directors  approved the 2008
ESP  Stock and  Incentive  Plan  (the  "2008  Plan")  for  directors,  officers,
employees, and consultants.  We anticipate that our shareholders will ratify the
2008 Plan on or before April 28, 2009. The 2008 Plan allows any of the following
types of awards,  to be granted alone or in tandem with other awards:  (1) Stock
options which may be either incentive stock options ("ISOs"), which are intended
to satisfy the requirements of Section 422 of the Internal Revenue Code of 1986,
as amended, or non-statutory  stock options ("NSOs"),  which are not intended to
meet those  requirements;  (2)  restricted  stock which is common  stock that is
subject  to  restrictions,  including  a  prohibition  against  transfer  and  a
substantial  risk of forfeiture,  until the end of a "restricted  period" during
which the grantee must satisfy certain vesting conditions;  (3) restricted stock
units  which  entitle  the grantee to receive  common  stock,  or cash (or other
property) based on the value of common stock, after a "restricted period" during
which the grantee must satisfy  certain  vesting  conditions  or the  restricted
stock unit is forfeited; (4) stock appreciation rights which entitle the grantee
to receive,  with respect to a specified  number of shares of common stock,  any
increase  in the value of the  shares  from the date the award is granted to the
date the right is exercised;  and (5) other types of  equity-based  compensation
which may  include  shares of  common  stock  granted  upon the  achievement  of
performance objectives.

         The 2008 Plan will be administered by the Compensation Committee, which
will at all times be composed of two or more  members of the Board of  Directors
who are not our  employees  or  consultants.  Any  employee or  director  of, or
consultant  for,  us or any of our  subsidiaries  or  other  affiliates  will be
eligible to receive  awards  under the 2008 Plan.  We have  reserved  10,000,000
shares of common  stock for awards  under the 2008 Plan.  In  addition,  on each
anniversary of the 2008 Plan's effective date on or before the fifth anniversary
of the  effective  date,  the  aggregate  number of shares of our  common  stock
available  for  issuance  under the 2008 Plan will be increased by the lesser of
(a) 5% of the total number of shares of our common stock  outstanding  as of the

                                      -38-
<PAGE>

December 31 immediately preceding the anniversary,  (b) 500,000 shares, or (c) a
lesser  number  of  shares  of our  common  stock  that our  board,  in its sole
discretion, determines. In general, shares reserved for awards that lapse or are
canceled will be added back to the pool of shares available for awards under the
2008 Plan.

         Awards under the 2008 Plan are forfeitable until they become vested. An
award will become vested only if the vesting  conditions  set forth in the award
agreement (as  determined by the  Compensation  Committee)  are  satisfied.  The
vesting  conditions may include  performance of services for a specified period,
achievement   of  performance   objectives,   or  a  combination  of  both.  The
Compensation  Committee  also has authority to provide for  accelerated  vesting
upon  occurrence  of an  event  such as a  change  in  control.  The  2008  Plan
specifically  prohibits the  Compensation  Committee  from  re-pricing any stock
options or stock appreciation rights. In general, awards under the 2008 Plan may
not be  assigned  or  transferred  except  by will or the  laws of  descent  and
distribution. However, the Compensation Committee may allow the transfer of NSOs
to  members  of a  2008  Plan  participant's  immediate  family  or to a  trust,
partnership,  or corporation in which the parties in interest are limited to the
participant and members of the participant's immediate family.

         The Board of Directors or the Compensation  Committee may amend, alter,
suspend, or terminate the 2008 Plan at any time. If necessary to comply with any
applicable  law  (including  stock  exchange   rules),   we  will  first  obtain
stockholder approval. Amendments,  alterations,  suspensions, and termination of
the 2008 Plan  generally  may not impair a  participant's  (or a  beneficiary's)
rights under an outstanding award. However,  rights may be impaired if necessary
to comply with an applicable law or accounting principles (including a change in
the law or  accounting  principles)  pursuant  to a written  agreement  with the
participant.  Unless it is terminated  sooner, the 2008 Plan will terminate upon
the  earlier of April 28,  2018 or the date all shares  available  for  issuance
under the 2008 Plan have been issued and vested.

         In April 2008,  the Company  issued stock  options to purchase  800,000
shares of our common  stock at an average  exercise  price of $0.10 per share to
two independent directors.  In October 2008, the Company issued stock options to
purchase  250,000  shares of our common  stock at an average  exercise  price of
$0.10 per share to one independent director.

ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

         The following table sets forth the names of our executive  officers and
directors  and all  persons  known by us to  beneficially  own 5% or more of the
issued  and  outstanding  common  stock of ESP at  March  31,  2009.  Beneficial
ownership is  determined  in  accordance  with the rules of the  Securities  and
Exchange  Commission.  In computing the number of shares beneficially owned by a
person and the  percentage  of ownership of that person,  shares of common stock
subject to options held by that person that are currently  exercisable or become
exercisable within 60 days of March 31, 2009 are deemed outstanding even if they
have  not  actually  been  exercised.  Those  shares,  however,  are not  deemed
outstanding  for the purpose of computing the percentage  ownership of any other
person. The percentage ownership of each beneficial owner is based on 57,310,345
outstanding  shares of common  stock.  Except as  otherwise  listed  below,  the
address of each person is c/o Environmental  Service  Professionals,  Inc., 1111
East Tahquitz Canyon Way, Suite 110, Palm Springs,  California 92262.  Except as
indicated,  each person listed below has sole voting and  investment  power with
respect to the shares set forth opposite such person's name.








                                      -39-
<PAGE>
<TABLE>
<CAPTION>
<S>                                                              <C>             <C>
---------------------------------------------------------------- --------------------------------
             NAME AND POSITION OF BENEFICIAL OWNER                SHARES BENEFICIALLY OWNED (1)
                                                                   NUMBER (2)        PERCENT
---------------------------------------------------------------- --------------- ----------------
Edward Torres, Chief Executive Officer, President, Acting         23,324,000         40.1%
Chief Financial Officer (3)(9)
Lyle Watkins, Chief Operating Officer, Corporate Secretary,        9,554,483         16.5%
and Director (4)(9)
S. Robert August, Director (5)                                     1,100,000          1.9%
Leroy Moyer, Director (6)                                            870,000          1.5%
Robert Iger, Director (7)                                            560,000          1.0%
---------------------------------------------------------------- --------------- ----------------
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (FIVE PERSONS)    35,408,483         58.2%
(8)
---------------------------------------------------------------- --------------- ----------------
---------------------
</TABLE>
(1)  Unless  otherwise  indicated and subject to applicable  community  property
     laws, to our knowledge each  stockholder  named in the table possesses sole
     voting and  investment  power with  respect to all shares of Common  Stock,
     except for those owned jointly with that person's spouse.

(2)  Calculation  of beneficial  ownership  assumes the exercise of all warrants
     and  options  exercisable  within  60 days of March 31,  2009,  only by the
     respective named stockholder.

(3)  Includes 500,000 shares,  which may be purchased  pursuant to warrants that
     are exercisable  within 60 days of March 31, 2009. Also includes  3,207,000
     shares which are owned by Pro-Active  Retirement  Trust of which Mr. Torres
     is the  Trustee,  and 317,000  shares  which may be  purchased  pursuant to
     warrants  that are  exercisable  within 60 days of March 31, 2009 which are
     owned by  Pro-Active  Business  Services,  Inc. of which Mr.  Torres is the
     President.

(4)  Includes  500,000 shares,  which may be purchased  pursuant to warrants and
     stock options that are  exercisable  within 60 days of March 31, 2009. Also
     includes 34,483 shares and 20,000 shares which may be purchased pursuant to
     warrants  that are  exercisable  within 60 days of March 31, 2009 which are
     owned by Northcom Consulting, Inc. of which Mr. Watkins is the President.

(5)  Includes 650,000 shares,  which may be purchased  pursuant to stock options
     that are  exercisable  within  60 days of March  31,  2009.  Also  includes
     450,000  shares and  250,000  shares  which may be  purchased  pursuant  to
     warrants  that are  exercisable  within 60 days of March 31, 2009 which are
     owned  by S.  Robert  August  &  Associates  of  which  Mr.  August  is the
     President.

(6)  Includes 750,000 shares,  which may be purchased  pursuant to stock options
     that are  exercisable  within 60 days of March 31,  2009.  Includes  10,000
     shares,  which may be purchased  pursuant to warrants that are  exercisable
     within 60 days of March 31, 2009.

(7)  Includes 550,000 shares,  which may be purchased  pursuant to stock options
     that are  exercisable  within 60 days of March 31,  2009.  Includes  10,000
     shares,  which may be purchased  pursuant to warrants that are  exercisable
     within 60 days of March 31, 2009.

(8)  See footnotes (3) through (7). Includes an aggregate of 4,207,000 shares of
     Common Stock  issuable upon the exercise of warrants and stock options that
     are exercisable within 60 days of March 31, 2009.

(9)  Includes shares subject to lock-up and vesting  provisions.  On November 1,
     2006,  ESP entered into a Redemption,  Lock-up and Vesting  Agreement  (the
     "Agreement") with certain  shareholders of ESP, including Edward Torres and
     Lyle Watkins (collectively,  the "Executive"). The purpose of the agreement
     was to provide for redemption of a portion of their shares,  and to lock-up
     the balance of their shares in order to  facilitate  ESP's ability to raise
     capital. According to the Agreement, in consideration for permitting ESP to
     redeem and lock-up the shares, ESP conferred piggyback  registration rights
     to the shares for the  Executive as the shares are released  from  lock-up.
     ESP has a right of first  refusal to  purchase  the  shares  covered by the
     Agreement.  This right specifies that before there can be any valid sale or
     transfer of any of the shares by the  Executive,  the Executive  must first

                                      -40-
<PAGE>

     offer his shares to ESP. The Executive has agreed that he will not directly
     or  indirectly  sell or otherwise  transfer or dispose of any of the shares
     during the lock-up period.  Furthermore,  during the Executive's employment
     with ESP,  he has agreed  that he will not sell,  transfer,  or assign more
     than 8% of the released shares per month. Similarly, the Executive has also
     agreed  that  after  the  termination  of his  employment  with ESP for any
     reason,  he will not sell,  transfer or assign more than 4% of the released
     shares per month.  If, however,  the Executive is terminated for cause, all
     unvested  shares  on the  date  of such  termination  will  immediately  be
     cancelled.  The  following  table  lists the  number of shares  subject  to
     lock-up and the scheduled release dates:
<TABLE>
<CAPTION>
<S>                                            <C>                                          <C>
---------------------------------------------- -------------------------------------------- -------------------------
NAME OF EXECUTIVE                              NUMBER OF SHARES                             LOCK-UP PERIOD AND
                                               SUBJECT TO LOCK-UP                           RELEASE SCHEDULE
---------------------------------------------- -------------------------------------------- -------------------------
Edward L. Torres                               4,007,000                                    11/1/06: 801,400
                                                                                            11/1/07: 801,400
                                                                                            11/1/08: 801,400
                                                                                            11/1/09: 801,400
                                                                                            11/1/10: 801,400
                                                                                            11/1/06: 200,000
                                                                                            11/1/07: 200,000
Lyle A. Watkins                                                                             11/1/08: 200,000
                                               1,000,000                                    11/1/09: 200,000
                                                                                            11/1/10: 200,000
---------------------------------------------- -------------------------------------------- -------------------------
</TABLE>


ITEM  13.  CERTAIN   RELATIONSHIPS  AND  RELATED   TRANSACTIONS,   AND  DIRECTOR
INDEPENDENCE

         The following table sets forth certain information regarding loans made
by Pro-Active Land Development,  LLC. to us pursuant to promissory notes bearing
simple  interest at a rate of 5% per annum  payable on all principal and accrued
but unpaid  interest on or before June 30, 2009.  Mr. Edward  Torres,  our Chief
Executive Officer,  is the President of Pro-Active  Business Services,  Inc. Mr.
Torres agreed to cease all accruing interest as of February 27, 2007.
<TABLE>
<CAPTION>
<S>                <C>               <C>             <C>               <C>              <C>
------------------ ----------------- --------------- ----------------- ---------------- --------------
      DATE            PRINCIPAL         INTEREST           DATE           PRINCIPAL       INTEREST
------------------ ----------------- --------------- ----------------- ---------------- --------------
        4/27/2006        $15,000.00        1,633.56         7/26/2006       $50,000.00       4,828.77
         6/6/2006        $10,000.00        1,034.25         7/31/2006       $25,000.00       2,397.26
        6/13/2006        $10,000.00        1,024.66         12/1/2006       $10,000.00         790.41
        7/14/2006        $30,000.00        2,946.58         2/20/2007       $25,000.00       1,698.63
        7/21/2006        $25,000.00        2,431.51         2/27/2007       $20,000.00       1,339.73
---------------------------------------------------- ----------------- -------------------------------
TOTAL PRINCIPAL AND INTEREST (1)                     $220,000.00                 $20,125.36
---------------------------------------------------- ----------------- -------------------------------
-----------------
         (1)      As of December 31, 2008
</TABLE>

         S. Robert August, one of the Company's independent directors,  has been
engaged  pursuant to a consulting  agreement for $ 5000 per month plus expenses.
The  Agreement is  terminable  by either party on 30 days  written  notice.  The
Company owes Mr. August $ 70,264.66 under the consulting  agreement inclusive of
all prior years ending December 31, 2008.

         Lyle A. Watkins,  the Company's  Chief Operating  Officer,  is employed
pursuant to a consulting agreement currently at a fixed fee of $14,550 per month
plus  expenses.  The  Agreement is terminable by either party on 30 days written
notice. The Company owes Mr. Watkins $169,099.83 under the consulting  agreement
inclusive of all prior years ending December 31, 2008.

                                      -41-
<PAGE>

         As of December  31,  2008 the Company has a loan  payable due to Joseph
Leone, a former director and current stockholder of the Company in the amount of
$22,900.  This is an unsecured loan with an interest rate of 3% per annum. As of
June 2007, Mr. Leone has agreed to waive all accrued interest.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Stan J.H. Lee, CPA, CMA, Inc.,  Certified Public  Accountants ("SL") is
the Company's  principal  auditing  accountant  firm. SL has also provided other
non-audit  services to the Company.  The Audit Committee approved the engagement
of SL before SL rendered audit and non-audit services to the Company.

         Each year the  independent  auditor's  retention to audit our financial
statements,  including the  associated  fee, is approved by the Board before the
filing of the previous year's Annual Report on Form 10-K.

STAN J.H. LEE, CPA, CMA FEES

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

        Audit Fees (1)                             $31,000   $ 26,700
        Audit Related Fees                          15,000     12,000
        Tax Fees (2)
        All Other Fees                                 -0-      - 0 -
                                              ------------------------
                                                   $46,000    $38,700
                                              ========================
---------------------------

(1)  Audit Fees consist of fees for the audit of our  financial  statements  and
     review of the financial statements included in our quarterly reports.

(2)  Tax fees consist of fees for the preparation of original  federal and state
     income tax returns and fees for miscellaneous tax consulting services.

PRE-APPROVAL  POLICIES  AND  PROCEDURES  OF  AUDIT  AND  NON-AUDIT  SERVICES  OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

         The  Audit  Committee's  policy  is to  pre-approve,  typically  at the
beginning of our fiscal year,  all audit and non-audit  services,  other than de
minimul non-audit services,  to be provided by an independent  registered public
accounting  firm.  These  services may include,  among others,  audit  services,
audit-related  services,  tax services and other  services and such services are
generally  subject to a  specific  budget.  The  independent  registered  public
accounting firm and management are required to  periodically  report to the full
Board regarding the extent of services  provided by the  independent  registered
public  accounting firm in accordance with this  pre-approval,  and the fees for
the services  performed to date. As part of the Board's  review,  the Board will
evaluate other known potential engagements of the independent auditor, including
the scope of work proposed to be performed and the proposed fees, and approve or
reject each service,  taking into account  whether the services are  permissible
under  applicable law and the possible  impact of each non-audit  service on the
independent auditor's independence from management.  At Audit Committee meetings
throughout the year, the auditor and management may present subsequent  services
for  approval.  Typically,  these would be services such as due diligence for an
acquisition, that would not have been known at the beginning of the year.

         The Audit Committee has considered the provision of non-audit  services
provided by our independent  registered  public accounting firm to be compatible
with  maintaining  their  independence.  The Audit  Committee  will  continue to
approve all audit and permissible non-audit services provided by our independent
registered public accounting firm.

                                      -42-
<PAGE>
<TABLE>
<CAPTION>

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibits
<S>      <C>                <C>
         EXHIBIT            DESCRIPTION
         ------------       ---------------------------------------------------------------------------------------
         3.1                Articles of Incorporation (1)
         3.2                Amendment to Articles of Incorporation (1)
         3.3                Change to Articles of Incorporation, effective October 10, 2006
         3.4                Amendment to Articles of Incorporation, effective October 11, 2006
         3.5                Bylaws (1)
         4.1                Specimen Certificate for Common Stock (1)
         4.2                Security Agreement with BOCA Funding, LLC, dated June 18, 2007 (2)
         4.3                Senior Secured Convertible Note with BOCA Funding, LLC, dated June 18, 2007 (2)
         4.4                Guaranty among BOCA Funding, LLC, National Professional Services Inc., Pacific
                            Environmental Sampling, Inc., and Allstate Home Inspection & Environmental Testing,
                            Ltd., dated June 18, 2007 (2)
         4.5                Warrant to Purchase Shares of Common Stock with BOCA Funding, LLC (2)
         4.6                Form of Warrant to Purchase Shares of Common Stock
         4.7                Form of Warrant to Purchase Shares of Common Stock
         4.8                Form of Warrant to Purchase Shares of Common Stock
         5.1                Opinion of Richardson & Associates as to the legality of the securities being
                            registered
         10.1               Stock Purchase Agreement with Allstate Home Inspection & Household Environmental
                            Testing, Ltd., dated January 31, 2007 (3)
         10.2               Redemption, Lock-Up and Vesting Agreement, dated November 1, 2006 (4)
         10.3               Plan of Reorganization and Stock Purchase Agreement with Pacific Environmental
                            Sampling, Inc., dated as of July 1, 2006 (5)
         10.4               Stock Purchase Agreement with Hugh Dallas for sale of Pacific  Environmental  Sampling,
                            Inc., dated September 29, 2007 (6)
         10.5               Asset Purchase Agreement with Robert Johnson and IAMI, Inc., dated April 4, 2007 (7)
         10.6               Loan and Security Agreement with Siena Investment Resources, LLC, dated May 1, 2008 (8)
         10.7               Promissory Note with Siena Investment Resources, LLC, dated May 1, 2008 (8)
         10.8               2008 ESP Stock and Incentive Plan
         10.9               Form of Stock Option Agreement
         10.10              Stock Purchase  Agreement with Porter Valley  Software,  Inc.,  dated  effective May 1,
                            2008 (9)
------------------------
         (1)      Incorporated  by reference  from prior public reports filed by
                  Glass-Aire  Industries  Group,  Ltd. with the  Securities  and
                  Exchange Commission.
         (2)      Incorporated  by  reference  from the Report on Form 8-K filed
                  with the Securities and Exchange Commission on June 20, 2007.
         (3)      Incorporated  by  reference  from the Report on Form 8-K filed
                  with the  Securities  and Exchange  Commission on February 23,
                  2007.
         (4)      Incorporated  by  reference  from the Report on Form 8-K filed
                  with the  Securities  and  Exchange  Commission  on January 4,
                  2007.
         (5)      Incorporated  by  reference  from the Report on Form 8-K filed
                  with the  Securities  and Exchange  Commission  on October 16,
                  2006.
         (6)      Incorporated  by  reference  from the Report on Form 8-K filed
                  with the Securities and Exchange Commission on July 6, 2007.
         (7)      Incorporated  by reference from the Report on Form 8-K/A filed
                  with the Securities and Exchange Commission on July 25, 2007.
         (8)      Incorporated  by  reference  from the Report on Form 8-K filed
                  with the Securities and Exchange Commission on May 15, 2008.
         (9)      Incorporated  by  reference  from the Report on Form 8-K filed
                  with the Securities and Exchange Commission on June 16, 2008.
         (10)     Incorporated  by  reference  from the Report on Form 14C filed
                  with the  Securities  and Exchange  Commission  on January 27,
                  2009.
         (11)     Incorporated  by  reference  from the Report on Form 8-K filed
                  with the  Securities  and Exchange  Commission on February 20,
                  2009.
</TABLE>

                                      -43-
<PAGE>




                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: April 15, 2009                  ENVIRONMENTAL SERVICE PROFESSIONALS, INC.

                                          By:  /s/ Edward L. Torres
                                                -----------------------------
                                              Edward   Torres,   Chairman  of
                                              the Board  and Chief  Executive
                                              Officer  (Principal   Executive
                                              Officer)

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.


By:  /s/ Edward L. Torres                               Dated: April 15, 2009
    -------------------------------------------------
    Edward Torres, Chairman of the Board and Chief
    Executive Officer (Principal Executive Officer)


By:  /s/ Edward L. Torres                               Dated: April 15, 2009
    -------------------------------------------------
    Edward Torres, Acting Chief Financial
    Officer/Treasurer (Principal
    Financial/Accounting Officer)


By:  /s/ Lyle A. Watkins                                Dated: April 15, 2009
    -------------------------------------------------
    Lyle Watkins, Chief Operating Officer, Corporate
    Secretary and Director


By:  /s/ Leroy Moyer                                    Dated: April 15, 2009
    -------------------------------------------------
    Leroy Moyer, Director and Audit Committee
    Chairperson


By:  /s/ S. Robert August                               Dated: April 15, 2009
    -------------------------------------------------
    S. Robert August, Director


By:  /s/ Robert Iger                                    Dated: April 15, 2009
    -------------------------------------------------
    Robert Iger, Director








                                      -44-