FORM 10-KSB
                     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, 2006

            For the period from January 1, 2006 to December 31, 2006

                         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(B) OF THE ACT:

                                                     NAME OF EACH EXCHANGE ON
 TITLE OF EACH CLASS                                      WHICH REGISTERED
----------------------                               -------------------------
    COMMON STOCK                                                 N/A
    PREFERRED STOCK                                              N/A

         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-KSB or any
amendment to this Form 10-KSB. |X|

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

         State issuer's revenues for its most recent fiscal year:  $82,319

         The aggregate  market value of voting stock held by  non-affiliates  of
the  registrant was  approximately  $4,533,836 as of March 31, 2007 (computed by
reference to the last sale price of a share of the registrant's  Common Stock on
that date as reported on the Over-The-Counter Bulletin Board Market).

         There were 14,743,624  shares  outstanding of the  registrant's  Common
Stock as of March 31, 2007.

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


<PAGE>



     CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
                    SECURITIES LITIGATION REFORM ACT OF 1995

THIS ANNUAL REPORT ON FORM 10-KSB AND THE INFORMATION  INCORPORATED BY REFERENCE
MAY INCLUDE  "FORWARD-LOOKING  STATEMENTS"  WITHIN THE MEANING OF SECTION 27A OF
THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. THE COMPANY  INTENDS THE
FORWARD-LOOKING  STATEMENTS  TO BE COVERED  BY THE SAFE  HARBOR  PROVISIONS  FOR
FORWARD-LOOKING  STATEMENTS.  ALL  STATEMENTS  REGARDING THE COMPANY'S  EXPECTED
FINANCIAL POSITION AND OPERATING RESULTS,  ITS BUSINESS STRATEGY,  ITS FINANCING
PLANS AND THE OUTCOME OF ANY CONTINGENCIES ARE FORWARD-LOOKING  STATEMENTS.  THE
FORWARD-LOOKING  STATEMENTS ARE BASED ON CURRENT ESTIMATES AND PROJECTIONS ABOUT
OUR  INDUSTRY  AND  OUR  BUSINESS.  WORDS  SUCH  AS  "ANTICIPATES,"   "EXPECTS,"
"INTENDS," "PLANS," "BELIEVES," "SEEKS,"  "ESTIMATES,"  VARIATIONS OF SUCH WORDS
AND  SIMILAR   EXPRESSIONS   ARE  INTENDED  TO  IDENTIFY  SUCH   FORWARD-LOOKING
STATEMENTS.   THE   FORWARD-LOOKING   STATEMENTS   ARE   SUBJECT  TO  RISKS  AND
UNCERTAINTIES  THAT COULD CAUSE ACTUAL RESULTS TO DIFFER  MATERIALLY  FROM THOSE
SET FORTH OR IMPLIED BY ANY FORWARD LOOKING  STATEMENTS.  THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE PUBLICLY THE FORWARD-LOOKING  STATEMENTS  CONTAINED HEREIN,
WHETHER AS A RESULT OF NEW  INFORMATION,  FUTURE EVENTS OR OTHERWISE,  EXCEPT AS
MAY BE REQUIRED BY LAW.


<PAGE>


                                TABLE OF CONTENTS

                                      10KSB

PART I........................................................................1
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        ITEM 2...............................................................14
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        ITEM 3...............................................................14
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        ITEM 4...............................................................15
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PART II......................................................................15
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        ITEM 5...............................................................15
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        ITEM 6...............................................................16
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        ITEM 7...............................................................19
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        ITEM 8...............................................................38
        -------
        ITEM 8A..............................................................38
        --------
        ITEM 8B..............................................................39
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PART III.....................................................................39
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        ITEM 9...............................................................39
        -------
        ITEM 10..............................................................45
        --------
        ITEM 11..............................................................46
        --------
        ITEM 12..............................................................48
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        ITEM 13..............................................................48
        --------
        ITEM 14..............................................................49
        --------

SIGNATURES...................................................................50
----------




<PAGE>

                                     PART I

ITEM 1. BUSINESS

GENERAL
         Environmental   Service   Professionals,   Inc.  ("ESP")  is  a  Nevada
corporation  headquartered in Southern California.  ESP's strategy is to acquire
several businesses that have complimentary  goals for dealing with environmental
issues  and  resolving  environmentally  sensitive  problems.  ESP  has  already
completed two  acquisitions  and is in various stages of discussion with several
other companies that management believes are good operational and economic fits.
The current acquisition candidates, if they are acquired, will include some that
will be  free-standing  subsidiaries  and  others  that  will be  absorbed  into
existing operations.

         ESP's  strategy is being  implemented  in following  three phases:  (1)
Phase 1 (last quarter  2006),  ESP focused on developing  the holding  company's
legal,  financial,  operational  and management  structures;  (2) Phase 2 (first
quarter 2007),  ESP focused on the  on-boarding of new affiliates to the holding
company and the  development and test marketing of the new suite of products and
services that will be offered through these affiliates;  and (3) Phase 3 (second
quarter  2007),  ESP plans to focus on the full  implementation  of its national
marketing campaign.

         ESP  owns  100%  of  the  issued  and  outstanding   stock  of  Pacific
Environmental  Sampling,  Inc., a California  corporation  ("PES"), and Allstate
Home Inspection & Environmental  Testing,  Ltd., a Vermont  corporation  ("AHI")
engaged in the home inspection  business.  See "BUSINESS - Stock  Acquisition of
Allstate  Home  Inspection  &  Environmental  Testing,  Ltd." ESP also  recently
acquired  100% of the  issued and  outstanding  stock of  National  Professional
Services,  Inc.,  a Delaware  corporation  ("NPS")  engaged in the  business  of
provided consulting and training in the mold and moisture  inspection  industry.
See "BUSINESS - Asset  Acquisition of NPS, Inc." ESP is currently under contract
to  purchase  substantially  all  of the  assets  of  International  Association
Managers,  Inc.,  a Minnesota  corporation  engaged in the business of operating
national  associations  of  professional  home  inspectors  and  appraisers in a
variety of fields.  See  "BUSINESS - Asset  Acquisition  of Robert G.  Johnson's
Companies."

         AHI and PES, since 1996 and 2002, respectively, have offered franchised
inspection  services for addressing mold and moisture intrusion that can have an
acute or chronic  negative  impact on the indoor air quality of  commercial  and
residential buildings.  These divisions have franchises throughout North America
that are independently owned and operated.

         ESP's  strategy,  in-part,  requires  these  divisions to stop offering
franchises  and replace that business  with the new method of service  delivery,
the Certified  Environmental  Home Inspector  ("CEHI").  These  divisions are to
continue to refine and implement  both the annual Mold and Moisture  Maintenance
("MMM") and the National Builder's Mold and Moisture ("NBMM") subscription-based
maintenance  programs  including  all related  product and services as described
below.

         PES currently has 45 franchise territories which, management estimates,
cover the testing requirements for over 5,000,000 homes throughout the states of
Oregon, California, Nevada and Arizona. Additionally,  management estimates that
PES' direct  corporate and branch office  operators  currently cover the testing
needs for another  5,000,000 homes in the same states.  PES is fully insured and
holds  memberships  in  necessary  industry  organizations  and  seats  on  some
governing boards of these industry organizations.  As of March 31, 2007, PES had
11 independently  owned and operated  franchises  operating 20 territories,  and
three branch offices of which two are ran by outside  service  providers and one

                                      -1-
<PAGE>

that  is  directly  owned  and  operated  by PES as a  corporate  branch  office
servicing all established but yet un-sold territories.

         AHI  currently  has 60  independently  owned  and  operated  franchises
operating  mainly in the eastern United States and one in central Canada.  These
franchises offer both home inspections and environmental assessments,  including
indoor air quality testing,  radon,  home energy and neighborhood  environmental
reports.

OVERVIEW AND DESCRIPTION OF PRODUCT AND SERVICES

         ESP's and its affiliates  approach  begins with maximizing the benefits
to the  Mortgage  Banking  Industry,  the  Insurance  Industry,  the Real Estate
Industry,  and the Building Industry, by dramatic reduction of their exposure to
liability and ultimately the protection of the consumer.

         By  supporting  the  direction  of the National  Association  of Mold &
Moisture Professionals  ("NAMMP"), ESP and its affiliates have developed a suite
of   environmental   services  to  meet  the  various   industry   stakeholders'
requirements. ESP and its affiliate's business model provides for a single point
of contact  capable of  completing  a wide  variety  of  environmental  testing,
inspections,  and assessments of moisture  intrusion issues.  These services are
backed  up by the  industry's  most  robust  support  system  which  assists  in
identifying and recommending  preventative measures that may dramatically reduce
costly and unhealthy concerns quickly and effectively.

         The Certified Environmental Home Inspector ("CEHI") is the single point
of contact and the  foundation  that all these  services  rely on. The CEHI is a
part  of an  elite  corps  of  Home  Inspectors.  Only  those  traditional  Home
Inspectors who meet the  prerequisites  are provided with the advanced tools and
training to specifically meet the new needs of the industry.

         The CEHI  delivers  unique  services  designed to PREVENT,  PROTECT and
PROMOTE.  That is, prevent water  intrusion and moisture  problems,  protect the
stakeholders from liability and consumers  against unhealthy living  conditions,
and  promote a greater  standard of living at a lower cost by  promoting  annual
preventive maintenance and energy conservation.

         ESP and its  affiliates  focus on  prevention  and  maintenance  as the
long-term solution.  Therefore, ESP and its affiliates have developed the annual
MMM,  and the NBMM  programs  which work hand in hand with the New  Builder's 10
year warranty.

         ESP and its  affiliates  provide a number of services  and products for
their clients. The full list of products and services include:

o        CEHI: This Environmental Certification for Home Inspectors has received
         national  endorsements  as the most complete and robust  program in the
         industry.  A  CEHI  Certification  means  that  improved  and  expanded
         environmental  services  are  available  to  every  homeowner.  It also
         provides  this industry with a level of confidence in a work force that
         has never before been attained.

o        CENTRALIZED  CALL CENTER:  the resource  provides a quality  controlled
         interface with clients.  The Center  receives the call from a client to
         request a test, and answers any questions the client may have regarding
         the testing process.  The required  information  regarding the location
         and  situation is gathered and entered  into the custom  online  remote

                                      -2-
<PAGE>

         scheduling  system.  The system allows for the efficient  management of
         field  service   resources  by  marketing   territory  and  provides  a
         standardized  reporting of test results, also known as the interpretive
         report.

o        CERTIFIED MOLD & MOISTURE INSPECTION  ("CMI"):  CMI is the new industry
         standard  for the mold and  moisture  inspection  process.  This  field
         inspection  is supported by a fully  automated  system that  produces a
         standardized  report by  utilizing  a tablet  personal  computer  and a
         centralized custom software application.

o        ANNUAL MMM: The MMM is a CMI that is scheduled on an annual  basis.  It
         provides peace of mind to the client.

o        POST  REMEDIATION  INSPECTION  ("PRI"):  The  PRI  is  a  comprehensive
         inspection  performed  after  remediation and before any containment is
         removed.  This will follow  prescribed  protocols that are based on the
         type of remediation performed.

o        MOLD  SAMPLES:  The CEHI is  trained to  collect  samples  based on the
         results of the  inspection.  The process  follows  strict  protocols to
         ensure chain of custody and prevent cross-contamination.

o        NBMM  PROGRAM:  The NBMM  Program will  provide  protection  on several
         levels.  The basic  protection  will  include an initial  moisture/mold
         survey and certified  report  document,  which will be provided to both
         the builder/developer and the home owner prior to the close of the home
         purchase  contract/escrow.  This will help to uncover  any  preexisting
         problems at the time of transfer of title,  thus  minimizing  liability
         for all parties involved for up to a 10 year period.

o        HYGIENIST  SERVICES  THAT  SUPPORT  THE  CEHI  NETWORK:  The  Certified
         Industrial  Hygienist  Services  provide CEHIs with ongoing support and
         oversight,  thus ensuring  proper  delivery of CEHI services.  Prior to
         release,  the custom interpretive report is reviewed by a member of the
         Industrial  Hygiene  Staff.  This review  ensures  the client  receives
         consistent   and   accurate    information    and   "best   in   class"
         recommendations.  The  Industrial  Hygiene Staff  provides the consumer
         with  consultation,  ensuring  that  they  understand  the  information
         contained in the report. By understanding the pre- and post remediation
         documents,  ensures that the work is completed  properly to protect the
         consumer's health and manage the stakeholders' liability.

o        ENERGY  INSPECTIONS  KNOWN  AS THE HOME  ENERGY  TUNE-UP:  Represent  a
         service that has more and more appeal as energy costs skyrocket.  These
         reports are delivered online within seconds of data input. When enacted
         upon, these reports can save the consumer thousands of dollars annually
         and  help  to  promote  a  cleaner  environment  through  reduction  of
         greenhouse gases.

o        NEIGHBORHOOD  ENVIRONMENTAL  REPORTS:  Abridged phase one environmental
         assessments  designed for  residential  properties.  These  reports are
         written  by  trained  environmental  professionals  with  access to the
         largest environmental  database in the world. Upon request, the reports
         are delivered online, usually within five to ten minutes.

o        ALLERGEN  SCREENING:  A  service  that  offers a broad  appeal in every
         community, with asthma and allergies reaching epidemic proportions.

o        RADON   TESTING:    Provided   by   National    Environmental    Health
         Association-certified   technicians   utilizing   the   most   accurate
         (according to the  Environmental  Protection  Agency) passive  devices,
         with lab reports available 24 hours a day, 7 days a week, via Web-based
         analysis.


                                      -3-
<PAGE>


INDUSTRY OVERVIEW

         There are two main  concerns for industry  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:

    o   Moisture Intrusion
       o      Structural effects
       o      Mold

    o   Natural and Made-Made sources
       o      Biological contaminates (Mold, Dander...etc.)
       o      Chemical contaminates (Volatile Organic Compounds, Radon ...etc.)

         The   stakeholders   of  the  building   industry   have  an  excellent
understanding  of the cause and effect of Moisture to Structural  integrity of a
building.  They  also  have a strong  understanding  of the  concerns  of Radon,
asbestos, lead and a good understanding of Volatile Organic Compounds ("VOCs").

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

        o   Independent   governing  body  with  industry  stakeholders  on  the
            board/committees
        o   Standardized training
        o   Standardized certification process
        o   Standardized inspection and report process
        o   Standardized result analysis

         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.

         Bottom-line,  the  stakeholders  need to understand and accept that the
pressure to address  indoor air  quality  concerns  are clearly  coming from the
collective  conscience  of the  buyers  and  owners  who are now are  focused on
environmental  issues and  demanding a "healthy"  and "green"  place of work and
domicile.

         Exposure to mold can cause  adverse  health  conditions  not limited to
allergic responses;  it can cause toxigenic effects and has been associated with
opportunistic infections.

         The Environmental  Protection Agency ("EPA") states that all molds have
the  potential  to cause  health  effects.  The Centers for Disease  Control and
Prevention ("CDC") asserts that it is important to maintain  buildings,  prevent
water damage, and mold growth, and clean up moldy materials.

         The  Institute  of  Medicine  concluded  that  there is an  association
between  exposure to mold and  exacerbation of asthma.  Respiratory  illness and
infections  due  to  inhalation  of  fungal  spores  have  been  documented  for
individuals with compromised immune systems,  as well as in individuals  working
in  industrial,  agricultural,  and office  settings.  The  National  Toxicology

                                      -4-
<PAGE>

Program has classified some toxins produced by mold as human carcinogens.  Other
potential  health  effects,  such as  pulmonary  hemorrhage,  memory  loss,  and
lethargy are still under investigation.

        At present,  there are no legal standards for mold exposure.  Molds can
be found everywhere in the  environment,  and more than 1,000 different kinds of
indoor molds have been found in homes in the United States.

         Molds can grow on any organic  substance as long as moisture and oxygen
are  present.  Due to the  ubiquitous  nature  of  molds  and the  variation  of
individual  susceptibility,  no dose-response  relationship has been determined.
This creates challenges when attempting to set safe, acceptable exposure limits.

         In contrast to occupational exposure limits that pertain to the healthy
working  population,  any proposed  mold  exposure  standards  must be stringent
enough to protect even the most susceptible members of the population, including
infants, the elderly and immunocompromised individuals.

         Mold  legislation has been passed in several states and task forces are
currently working to establish acceptable exposure limits.

         ESP and its affiliates are fully supportive of NAMMP.  This independent
non-profit  organization  has  active  participation  by  the  leading  industry
stakeholders.  This  entity is  providing  non-bias  information  and the needed
direction to the industry by focusing on the following:

        o   A Standardized Inspection and Report Process

        o   An Independent Governing Body (nonprofit organization) with industry
            stakeholders on the board/committees

    Supported by:

        o   Standardized Training

        o   A Standardized Certification Process

RECENT BUSINESS COMBINATION

         ESP was originally  incorporated as Glas-Aire Industries Group, Ltd. in
the State of Nevada on September 29, 1992 to design,  develop,  manufacture  and
market sunroof wind deflectors,  hood  protectors,  rear air deflectors and door
visors for cars, light trucks and vans. In December 2001,  Glas-Aire  Industries
Group,   Ltd.  acquired  Wonder  Tool,  Inc.  ("Wonder  Tool"),  a  wholly-owned
subsidiary  of Cyclo  Manufacturing  Company.  The Wonder Tool  acquisition  was
accounted for as a reverse  acquisition  because the shareholders of Wonder Tool
became controlling  shareholders of Glas-Aire  Industries Group, Ltd. On January
9, 2003,  Glas-Aire  Industries Group, Ltd.  completed the sale of substantially
all of the assets and certain of the  liabilities  of Wonder  Tool.  On July 31,
2004, Glas-Aire Industries Group, Ltd. closed its warehouse operation and was an
inactive company until October 2006.

         PES was originally  incorporated in the State of California in May 2002
for the purpose of  providing  limited  mold and  allergen  survey  services for
single family and multi-tenant residential and commercial buildings. On or about
October 12,  2006,  Glas-Aire  Industries  Group,  Ltd.  acquired  PES through a
business  combination whereby Glas-Aire Industries Group, Ltd. issued 14,625,000
shares  of its  common  stock  to PES  (the  "Business  Combination").  PES then
immediately  distributed the shares among its  shareholders on a pro rata basis,
not  including  subsequent  investors  in PES' private  placement,  who received

                                      -5-
<PAGE>

shares of Glas-Aire  Industries  Group, Ltd. common stock in a separate exchange
that closed  within a short time after the closing of the Business  Combination.
The separate  exchange included all of the shares of PES' common stock issued in
PES' prior  private  placements.  Accordingly,  at the  closing of the  separate
exchange,  investors  in the prior  private  placements  were  issued a total of
1,545,484  additional shares of Glas-Aire Industries Group, Ltd. common stock in
exchange for 1,545,484  shares of PES' common  stock.  A portion of these shares
owned by management were later redeemed by ESP pursuant to a Redemption, Lock-up
and  Vesting  Agreement,  dated  November  1,  2006,  by and  among  ESP and six
shareholders  of ESP. See "Item 11.  Security  Ownership  of Certain  Beneficial
Owners and  Management." In addition,  all PES warrants owned by those investors
and by PES consultants  were accepted by ESP for  cancellation in  consideration
for ESP issuing warrants to purchase ESP common stock at the same exercise price
and on the same terms and conditions as the Company warrants.

         In  consideration  for the  issuance  of the  14,625,000  shares in the
Business Combination,  PES: (1) caused all of its shareholders to convey 100% of
their  shares of PES'  capital  stock to ESP so that PES  became a  wholly-owned
subsidiary  of ESP on the closing;  (2) assumed the  obligation  to pay the debt
owed by Glas-Aire  Industries Group, Ltd. to HSBC bank in the outstanding amount
of  approximately  $69,825  Canadian  dollars,  which ESP has paid in full;  (3)
entered  into a  consulting  agreement  with Craig  Grossman,  the former  Chief
Executive Officer of Glas-Aire Industries Group, Ltd., and (4) paid the costs of
bringing  ESP  current  on  its  reporting  obligations  to  the  United  States
Securities  and Exchange  Commission  after the  closing.  On the closing of the
Business  Combination,  Glas-Aire  Industries  Group,  Ltd.  changed its name to
Environmental  Service  Professionals,  Inc. and its trading symbol from GLAR to
EVSP.

CONSULTING AGREEMENT WITH CRAIG GROSSMAN

         PES entered into a Consulting Agreement (the "Grossman Agreement") with
Mr. Craig Grossman,  the former Chief Executive Officer of Glas-Aire  Industries
Group,  Ltd.,  on  October  12,  2006 in which  PES  caused  ESP to issue to Mr.
Grossman   500,000   warrants  to  purchase  500,000  shares  of  common  stock,
exercisable  for a period of five years at an exercise price of $0.75 per share.
Additionally,  PES  agreed to: (1) pay Mr.  Grossman a  consulting  fee equal to
$6,000 per month for a period of 12 months  after the  closing  of the  Business
Combination;  (2) provide comparable health insurance to Mr. Grossman during the
term of the Grossman Agreement;  (3) pay Mr. Grossman a referral fee equal to 8%
of all initial  franchise  fees paid to PES that Mr.  Grossman  sells during the
consulting  period;  and (4) give Mr.  Grossman an option to purchase any of the
branch offices selected by him which are established by him in any one county in
the State of Washington during the consulting  period.  The selected branch will
operate in accordance with the PES' standard branch agreement.

         In consideration  for the  compensation Mr. Grossman  receives from the
PES, Mr. Grossman agreed to use his best efforts during the consulting period to
establish and supervise the operation of the PES' branch offices in the State of
Washington,  as well as to refer prospective purchasers of franchises to the PES
for the sale of franchises in all territories where the PES is legally permitted
to sell them.

CONSULTING AGREEMENT WITH REAL ASSET MANAGEMENT LLC

         On April 4, 2006,  PES entered  into a Consulting  Agreement  (the "RAM
Agreement") with Real Asset Management, LLC (the "Consultant"). According to the
RAM  Agreement,  PES has engaged the Consultant to act as its agent in assisting
PES in its  development  of  corporate  programs  and in  structuring  corporate
transactions  and affairs as the  Consultant  deems  necessary  to enable PES to
accomplish the  objections set forth in PES' business plan. The Consultant  will
carry out its duties in a number of different  ways,  including  but not limited
to: (1) making  recommendations  on and  assisting  in  introducing  PES and its
business concept to one or more registered NASD member firms so as to assist PES

                                      -6-
<PAGE>

in raising  capital;  (2) introducing PES to other  consultants  specializing in
corporate  finance and  development;  and (3) introduce  prospective  investors,
investment  banking firms and  market-makers to PES. The initial term of the RAM
Agreement is 24 months,  with automatic renewal for another 24 months unless one
party  notifies the other party of its election to terminate the RAM  Agreement.
In  consideration  for the consulting  services,  the Consultant has been issued
750,000  shares of PES' common  stock and 250,000  warrants to purchase  250,000
additional  shares of PES' common stock for an exercise price of $0.75 per share
for a period of five  years  after the date of  issuance  of the  warrants.  The
shares have  piggyback  registration  rights.  These  shares and  warrants  were
exchanged for an equivalent number of shares and warrants in ESP.

CONSULTING AGREEMENT WITH GALLATIN CONSULTING, INC.

         On April 4, 2006,  PES entered  into a Consulting  Agreement  (the "GCI
Agreement") with Gallatin Consulting, Inc. (the "Consultant").  According to the
GCI Agreement, PES engaged the Consultant for the purpose of providing corporate
and  business  development  services  to assist PES with  business  development,
corporate  development,  and  the  marketing  of  PES'  business  and  franchise
opportunities  in the  Midwest.  The  Consultant  has certain  expertise  in the
evaluation of potential business opportunities and the implementation of various
projects  of  the  nature  contemplated  by  PES in  its  future  expansion  and
development.  Therefore,  the Consultant is to assist PES in its  development of
corporate programs and corporate  transactions as the Consultant deems necessary
to enable PES to accomplish the  objectives  set forth in PES' current  business
plan.  The term of the GCI  Agreement  is 12 months.  In  consideration  for the
consulting  services,  the PES has (1) issued 750,000 shares of its common stock
to Consultant with piggyback registration rights, (2) issued 250,000 warrants to
purchase 250,000 additional shares of PES' common stock for an exercise price of
$0.75 per share for a period of five years after the date of the issuance of the
warrants,  and (3)  granted  Consultant  a right of first  refusal to purchase a
franchise  or operate a PES branch  office in the states of  Illinois,  Indiana,
Wisconsin,  and  Michigan.  These  shares and  warrants  were  exchanged  for an
equivalent number of shares and warrants in ESP.

STOCK ACQUISITION OF NPS, INC.

         National Professional Services, Inc. ("NPS") was formed in 2005 through
the mutual consent of two different parties who were each individually promoting
educational  programs for the insurance  industry,  the building trade industry,
the home and mold inspection  industries,  and the general public.  Once formed,
the  goal of the  company  was to  approach  moisture  and  mold  issues  from a
proactive stance so as to help prevent many common consumer  issues.  ESP's goal
in  acquiring  the  company was to use it as a channel to move across the United
States in teaching and administering its program.  In January 2007, ESP acquired
100% of the outstanding  capital stock of NPS in  consideration  for $175,000 in
cash  and  425,000  shares  of  ESP  common  stock.  Upon  the  closing  of  the
acquisition,  NPS' founders, Rick LaPierre and Dennis Ragain, became consultants
of ESP.

         A few years ago, Mr. LaPierre  established a building sciences training
program in Florida which was being taught by his  organization  in the community
college  venue  at the time of  acquisition.  Mr.  Ragain,  on the  other  hand,
developed a training program in Oregon around the same time that covered much of
the  same  information  but  with an  emphasis  directed  toward  the  insurance
community.  It was felt by both  parties  that by joining  forces and  combining
their efforts,  a synergy would develop that would expand the training  beyond a
single  effort.  This combined  training  program  became known as the Certified
Moisture Management  Professional  Program ("CMP") and developed a best of class
inspection process known as the Certified Moisture Inspection ("CMI").

                                      -7-

<PAGE>


         PIA Western  Alliance,  an association of insurance  agents in the nine
western states,  immediately  saw the benefits to the insurance  industry of the
CMP program.  They actively  promoted the effort of NPS by sponsoring an initial
summit in  Seattle,  Washington,  in  January  2006 to  present  the  program to
insurance  executives.  In May 2006, PIA Western Alliance joined forces with PIA
National, the Alliance's national body located in Alexandria, Virginia, and held
another summit meeting in Irvine, California to push NPS' program forward at the
national  level.  This summit  included the attendance of members of the banking
and lending industry,  builders,  insurance executives, and real estate brokers.
These two summits have led to other  meetings for NPS with the Mortgage  Bankers
Association in Washington, D.C., PIA National in Alexandria,  Virginia, and IBHS
in Tampa, Florida. Furthermore, discussions are currently underway regarding the
inspection  processes  used by Fannie Mae and Freddie  Mac so as to  incorporate
these  processes  into  the  moisture  management  evaluation  of  the  company.
Education  programs  focused on moisture  management  for the general public and
other  interested  industry  personnel  are now  being  developed  to be  taught
throughout the community college system in the near future.

         Mr.  LaPierre and Mr. Ragain  continue to be committed to promoting the
CMP  program  throughout  the  nation  as a  solution  to the  growing  problems
associated with moisture and mold infestation.

STOCK ACQUISITION OF ALLSTATE HOME INSPECTION & ENVIRONMENTAL TESTING, LTD.

         On  February  20,  2007,  ESP closed the  purchase of 100% of the total
issued  and  outstanding  stock of  Allstate  Home  Inspection  &  Environmental
Testing,  Ltd.  ("AHI") in exchange for  1,000,000  shares of ESP's common stock
issuable  in  installments  over  time,  250,000  warrants  entitling  the Chief
Executive  Officer of AHI to purchase 250,000  additional shares of ESP's common
stock at a purchase price of $0.75 per share for a period of five years from the
date of the closing, plus $950,000 in cash, payable in installments over time.

         AHI was founded in 1994 to meet the growing  public need for  household
environmental  testing.  AHI  established  a home  inspection  business that has
redefined the expectations for traditional home inspection with standard-setting
services for most major household environmental  concerns.  Today, AHI continues
to define  the home  inspection  industry.  Whether a  consumer  is a  homebuyer
looking for the highest quality in home inspection services, or a homeowner with
environmental concerns, AHI has the correct services available for them.

         Upon the  closing of the Stock  Purchase  Agreement,  Mr.  Finigan  was
appointed by ESP as the Division President of the AHI Division, for a minimum of
275 days after the closing,  and  thereafter on an "at will" basis.  Mr. Finigan
handles all day-to-day  responsibilities of the AHI Division, with the exception
of any  tasks to be  handled  specifically  by ESP.  Additionally,  Mr.  Finigan
oversees  the AHI  Division's  profit  and loss  responsibilities  as stated and
agreed to in the AHI 2007 Budget. Mr. Finigan's other  responsibilities  include
the preparation of the monthly  accounting  reports for AHI,  finalizing the AHI
2007 Budget, and mutually  establishing a five year plan of action with ESP. Mr.
Finigan was also appointed to ESP's Board of Directors on March 30, 2007.

         In 2006,  AHI was ranked as number 360 in America's Top 500  Franchises
by ENTREPRENEUR  MAGAZINE,  and is consistently  ranked as one of the leaders in
the home inspection  industry.  AHI maintains 61 highly trained inspectors in 40
states,  and in Puerto Rico.  Management  believes that no other home inspection
company prepares their inspectors to perform as many  environmental  services as
AHI home  inspectors are trained to perform.  AHI home inspectors are trained to
perform  home  inspections,   mold  assessments,  air  quality  testing,  seller
preparation home inspections, final walk-through inspections (prior to closing),
pool and spa inspections,  new construction  phase  inspections,  radon testing,

                                      -8-
<PAGE>

lead dust  sampling,  water quality  sampling,  insect  infestation  inspection,
septic system testing, carbon monoxide testing,  electro-magnetic field testing,
and arsenic residue on pressure treated decks.

ASSET ACQUISITION OF ROBERT G. JOHNSON'S COMPANIES

         On March 1, 2007, ESP entered into a term sheet with Robert G. Johnson,
the  100%  owner  of each of the  following  Minnesota  entities:  International
Association  Managers,  Inc.,  National  Association of Real Estate  Appraisers,
Environmental  Assessment Association,  Association of Construction  Inspectors,
Housing  Inspection  Foundation,   International  Real  Estate  Institute,   and
International  Society  of  Meeting  Planners  (collectively,  the  "Entities").
International  Association  Managers,  Inc.  is the manager of each of the other
Entities  (the  "Manager").  Collectively,  the  Entities  are  engaged  in  the
businesses of operating associations for construction inspection,  environmental
inspection  and  testing,   promotion  and   development  of  home   inspection,
professional  realty and appraisal  reports,  the provision of meeting planners,
the  promotion  of  ongoing   education  in  appraisal   review,   and  mortgage
underwriting (collectively, the "Business").

         INTERNATIONAL ASSOCIATION MANAGERS, INC.

         International  Association  Managers,  Inc.  ("IAMI") is the management
company for the  following  trade  associations:  National  Association  of Real
Estate  Appraisers,   Environmental   Assessment  Association,   Association  of
Construction  Inspectors,  Housing  Inspection  Foundation,  International  Real
Estate  Institute,  International  Society  of  Meeting  Planners  and  National
Association of Review  Appraisers and Mortgage  Underwriters.  IAMI is a leading
management company providing  professional offices and experienced  "association
management" staff offering  day-to-day  management,  educational event planning,
membership services, new membership marketing, board of directors' coordination,
accounting, legal coordination, strategic planning, and database maintenance.

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

         NATIONAL ASSOCIATION OF REAL ESTATE APPRAISERS

         National   Association  of  Real  Estate  Appraisers   ("NAREA")  is  a
Professional  Organization  founded in 1966,  making  available highly qualified
Real Estate Appraisers to those requiring  Professional Appraisal Reports. NAREA
is one of the largest Professional  Associations in the United States. NAREA has
earned the  credibility  and  public  trust one needs  when  affiliating  with a
professional  organization.   The  Code  of  Ethics  and  Uniform  Standards  of
Professional  Appraisal Practice ("USPAP"),  to which a member must adhere, give
the industry the  assurance it needs when  accepting an appraisal  report from a
NAREA designated member. Professionally presented education programs enhance the
member's  knowledge.  Along with the regular  seminars  nationwide and an annual
Appraisal Expo and Conference, members receive bimonthly newsletters,  appraisal
guidelines,  updates  on  regulations,  the  Annual  Membership  Directory,  and
legislative monitoring of the issues affecting the Appraisal industry.

         ENVIRONMENTAL ASSESSMENT ASSOCIATION

         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 and state agencies, private
companies and many others.

                                      -9-
<PAGE>

         The  Environmental  Assessment  Association's  membership  consists  of
environmental  inspectors,  lenders,  remediation firms and government agencies.
The  Environmental   Assessment  Association  offers  several  professional  and
memberships,  making  the  Association  one of the  largest  in  the  world  for
environmental professionals, and providing the largest networking association in
the country.  EAA has worked closely with environmental  protection agencies and
has maintained a reputation of "being involved."

         ASSOCIATION OF CONSTRUCTION INSPECTORS

         Association of  Construction  Inspectors  ("ACI") is one of the largest
professional  organizations  for those involved in  construction  inspection and
construction project management.  ACI is also the leading association  providing
standards,  guidelines,   regulations,  education,  training,  and  professional
recognition in a field that is an important  procedure for both  residential and
commercial  construction.  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,  verify each stage of construction and reporting
to the client).

         HOUSING INSPECTION FOUNDATION

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

         INTERNATIONAL REAL ESTATE INSTITUTE

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

         INTERNATIONAL SOCIETY OF MEETING PLANNERS

         International  Society of Meeting  Planners  ("ISMP") is a professional
organization founded in 1966, making available highly qualified meeting planners
to those requiring  professional  meeting  planners.  ISMP is one of the largest
professional associations in the United States, with more members in more cities
than many other organizations.

                                      -10-
<PAGE>

         ISMP has  earned  the  credibility  and  public  trust one  needs  when
affiliating  with a  professional  organization.  The Code of Ethics and Uniform
Standards of  Professional  Meeting  Planners  Practice,  to which a member must
adhere,  gives the  industry  the  assurance  it needs when  accepting a meeting
report  from  a  ISMP  designated  member.  Professionally  presented  education
programs enhance the member's  knowledge.  Along with the weekly seminars and an
annual Planners Expo and  Conference,  members  receive  bimonthly  newsletters,
meeting guidelines, updates on regulations, the Annual Membership Directory, and
legislative monitoring of the issues affecting the society industry.

        NATIONAL ASSOCIATION OF REVIEW APPRAISERS & MORTGAGE UNDERWRITERS

         Established  in 1975, the National  Association of Review  Appraisers &
Mortgage  Underwriters  ("NARA/MU")  is a non-profit  organization  dedicated to
maintaining professional standards and promoting ongoing education in the fields
of appraisal review and mortgage underwriting.  The growth and recognition which
NARA/MU and its members have experienced is an indication that these specialized
fields were long overdue in being represented on a professional basis.

         NARA/MU  membership  consists  of  members  representing  international
corporations,  banks, thrifts, insurance companies, accounting firms, law firms,
and private real estate  lenders.  Virtually all the major federal  agencies are
represented  as are  hundreds of state and local  government  agency real estate
professionals.  In addition, NARA/MU membership includes a substantial number of
independent real estate appraisers and consultants who are involved in reviewing
and mortgage underwriting.

         Federal and state  regulators  are requiring  that lenders have a sound
policy for the review of appraisals and an overall  quality  control program for
underwriting.   NARA/MU  has  been   showing   lenders  and  other  real  estate
professionals  how to  establish  these  kind of  programs  since  1975  through
information  and  education.  Members  are  not  only  recognized  as  the  most
experienced  and competent in the  industry,  many are making the rules that the
industry must follow.  The NARA/MU offers the opportunity to stay abreast of the
appraisal review, appraisal and mortgage underwriting industries.

REVENUE MODEL

         ESP and its affiliates earn revenue through a number of sources. First,
PES generates  revenue by  conducting  onsite home and office indoor air quality
inspection tests, as well as inspecting suspect surface areas that may be moist,
porous,  or already growing mold.  Next, PES provides for laboratory  testing of
any such  surface  area,  thereby  earning  revenue by charging  clients for the
service.  Should the  laboratory  tests come back positive for mold or any other
known toxin,  PES will then provide the client with temporary  encapsulation  or
air  scrubbing as a remedial  measure,  charging the client for the service.  If
further  measures are required,  PES will then propose  reports by its Certified
Industrial  Hygienists  recommending  remediation  procedures  and referring the
client to hygienist  and remedial  services.  PES' reports may include  detailed
remediation protocols and post-remediation testing and interpretations, all at a
cost to the client which in part produces  revenue for PES. Another way that PES
earns revenue is through the selling of franchises throughout the country.

         ESP is  expected  to earn  additional  revenue in the  future  from its
recent  acquisitions of NPS and AHI, and the pending acquisition of the Entities
currently  owned by Robert G.  Johnson.  Revenue from these  businesses  include
initial and ongoing franchise fees and royalties, and association fees and dues.
There is no assurance, however, that ESP or any of its subsidiaries or divisions
will be profitable.

                                      -11-
<PAGE>


MARKETING

         ESP and its  affiliates  have been  chosen to sit on NAMMP's  governing
board and  various  other  committees,  which have been  created to develop  and
promote  new  standards  for IAQ  reporting  as well  as new  standards  for the
training of future assessors.

         ESP  and  its  affiliates   business  market  will  primarily   include
residential and commercial  property  inspectors,  pest and termite  inspectors,
building management firms,  property  developers,  and remediation and abatement
companies.

         ESP and its  affiliates  have  assembled  a group of  individuals  from
different  backgrounds,   education,  experience,  and  qualifications  into  an
operational  and  marketing  team.  As a  team,  the  various  individuals  have
experience in operations,  sales and marketing,  as well as financial expertise.
Several of ESP and its affiliate's team members have seats on various boards and
committees for creating  industry  standards and  perfecting  changes within the
insurance industry regarding IAQ liability.

         The  overall  marketing  goals  include:  generating  brand  awareness,
generating  sales  of CEHI  training,  environmental  inspection  tests  and the
continued acquisition of complimentary companies. These goals are expected to be
achieved  through three separate and distinct  marketing  strategies  which will
target:  (1)  CEHI  prospects;   (2)  consumers;  and  (3)  business-to-business
prospects.  ESP and its  affiliates  are not going to engage in the  typical new
product  rollout  advertising  campaign.  Its campaign is more complex since the
target market is comprised of multiple segments.  Rather, ESP and its affiliates
rollout  seeks to  reach  three  distinctively  different  groups:  (1) the CEHI
prospect  (targeted  through member lists of existing  inspector  organizations,
trade shows,  and the internet);  (2) the consumer (which may be easier to reach
as it allows for mass marketing);  and (3)  business-to-business,  which will be
the major focus of advertising and direct  marketing to create a client base for
ESP and its affiliates.

         One of the first  priorities  of this  strategy  is to  redesign  ESP's
existing  logo to strengthen  it for use on a national  scale.  The current logo
needs to be graphically enhanced for greater impact. This is the key to creating
an image of strength that will work well on a wide variety of backgrounds,  from
business cards and forms,  to truck signs,  to television  and even  billboards.
Another major  priority of the marketing  campaign will be the  development of a
website for ESP. The website  will be a tool that will be fully  utilized in all
three prongs of the marketing  program,  and will be a key medium to reach those
segments in a cost  effective way.  Consumers  will likely  discover ESP through
search engines, whether consumer, business-to-business or franchise prospects. A
very strong,  user friendly site to guide prospects to any of the three areas of
interest is highly recommended. Although the cost of development of a first-rate
site will be high,  this is a fundamental key to promoting ESP, both quickly and
successfully.

         ESP's sales  strategy  will combine the  strengths of its core business
model  with  targeted   affiliations   and  acquisitions  to  provide  the  most
comprehensive  offerings in the market place.  These planned  activities will be
implemented as follows:  sales and training  seminars,  and active  solicitation
through various networks of franchise prospects, consumers, insurance companies,
business-to-business networks, realtors, remediators, and contractors.

         As far as advertising and promotions are concerned,  the most important
prong  of  the  three-pronged   marketing  plan  is  to  acquire  prospects  for
franchises. Considerable thought needs to go into this marketing strategy. Trade
shows would likely be the most effective route for  advertising,  outside and in
conjunction  with the website.  To be successful at trade shows,  ESP will need:
(1) booth design and construction  resulting in a highly professional booth with
large  screen  TV that  will be used to show a  professional  loop  video of the
benefits  of using  ESP's  services;  and (2)  brochures  and  other  collateral
information.  Other  marketing  tools ESP plans to utilize  include:  (1) direct

                                      -12-
<PAGE>

marketing through the mail to lists of previous franchise prospects,  as well as
to existing pest control franchise owners; (2) 30 minute television infomercials
that will air information directed toward franchise opportunities; (3) strategic
search engine  placement;  (4) dimension  specific space ads; (5) ten to fifteen
second  television  commercials  directed to the consumer,  as well as 30 minute
television  infomercials  directed to consumers living in humid or wet climates;
(6) use of the Yellow Pages; (7) business-to-business  target marketing aimed at
generating   name   recognition   and  awareness   among  real  estate   service
professionals;  (8)  direct  marketing  to  realtors;  (9) direct  marketing  to
remediators; and (10) direct marketing to contractors if the budget allows.

COMPETITION

         Although the  non-industrial  indoor air quality  industry is a new and
emerging market, ESP and its affiliates are subject to strong  competition.  Its
principal competitors are other Certified Industrial  Hygienists ("CIHs"),  home
inspectors,  termite inspectors, and remediation and abatement companies. Due to
the new and upcoming insurance regulations for assessor certifications,  many of
these competitors may not have the  certifications  that will be required by the
insurance  industries.  Nevertheless,  ESP and its affiliate's hygienist service
market will be competing against testing firms, insurance companies, brokers and
agents,  as  well  as  others  who do not  become  a CEHI  through  ESP  and its
affiliates.  In fact, many of these competitors are currently clients of ESP and
its affiliates.  For example,  competing Certified Industrial Hygienists may use
CEHIs for  testing,  and  competing  assessors  may use ESP and its  affiliate's
training and Certified Industrial Hygienist services.  There are numerous indoor
air quality  assessors,  surveyors,  and Certified  Industrial  Hygienists  that
directly  compete with ESP and its affiliates,  and that have greater  financial
and managerial resources than ESP and its affiliates.  Many of these competitors
have longer  operating  histories  and more brand  recognition  than ESP and its
affiliates.  There is no assurance that ESP and its affiliates will successfully
compete in the indoor air quality testing and reporting industry.

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.

TRADEMARKS AND TRADENAMES

         PES, a wholly owned  subsidiary of ESP,  owns the following  registered
trademarks/service  marks: (1) Environmental  Sampling  Professionals,  Inc.(R),
registration  number  2721471;  and (2) ESP and Design(R),  registration  number
2788620.

         AHI, a wholly owned  subsidiary of ESP,  owns the following  registered
trademarks/service marks: (1) Allstate Home Inspection & Household Environmental
Testing(R),  registration number 2509084; (2) and Advance Look(R),  registration
number 3035162.

                                      -13-

<PAGE>


EMPLOYEES

         As of March 31, 2007, ESP and its affiliates  employed eleven people on
a full-time basis. In addition,  we utilize the services of several  consultants
and part-time employees on a regular basis.

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,
as opposed to the drier  conditions  during spring and summer.  Management  does
not,  however,  expect the  disparity  in cash flow from summer and winter to be
detrimental to the operation of the companies on an overall basis.

ITEM 2. PROPERTIES

         ESP and its affiliates  currently  lease three  different  spaces,  one
located at 91 Summer St, Barre,  Vermont  05641,  one located at 39 Elmwood Ave,
Barre, Vermont 05641 and a third at 1111 E. Tahquitz Canyon Way, Suite 110, Palm
Springs,  California  92262. The Palm Springs location is ESP's main office with
approximately   4,433   square  feet  of  office  space  at  a  rental  rate  of
approximately $6,000 per month pursuant to a three year lease which commenced in
August, 2006. The Barre locations are the AHI division office with approximately
2,000 square feet and a training  center with  approximately  3,000 square feet.
These locations rent for $900.00 per month and $1,400.00 per month  respectively
pursuant to one year leases which started in September, 2006 and December, 2006.

ITEM 3. LEGAL PROCEEDINGS

KIMBERLEY D. JAMESON V. PACIFIC ENVIRONMENTAL SAMPLING. ETC., ET AL.

         On March 6, 2006,  Ms.  Jameson  filed an overtime  compensation  claim
against PES. The  California  Division of Labor  Standards  Enforcement  Hearing
Officer ruled in favor of Ms. Jameson. PES filed a timely appeal of the decision
with the  Superior  Court of  California.  On February 14, 2007 a trial was held
concerning  this matter.  At this time the Judge has not ruled on his  findings.
PES believes that the claim is unfounded  and the PES will prevail.  The Hearing
Officer's finding was in the amount of $43 thousand.

JOHN COOLEY V. PACIFIC ENVIRONMENTAL SAMPLING, INC. ETC., ET AL.

         On December 6, 2006,  John Cooley,  a former PES employee and director,
filed a  civil  complaint  against  Pacific  Environmental  Sampling,  Inc.  and
Environmental  Service  Professionals,  Inc. The complaint  alleged  claims for:
Breach  of  Fiduciary  Duty;  Fraud;  Declaratory  Relief;   Injunctive  Relief;
Constructive Trust; and appointment of a Receiver.

         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 27, 2007.

         The action is still in the early pleading and discovery  stage, and ESP
and its affiliates cannot predict the outcome.  However,  ESP and its affiliates
believe they have meritorious defenses and are vigorously defending the action.

                                      -14-
<PAGE>

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.


                                     PART II

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

COMMON STOCK

         ESP's common stock began  trading on March 16, 2007 on the OTC Bulletin
Board Market  under the symbol  "EVSP," and before that on the Pink Sheets under
the same symbol.  The range of high and low bid  quotations  for the last fiscal
quarter so far have been as follows:

   First Quarter to end on March 31, 2007          HIGH                  LOW
                                                   ----                  ---

                                                   1.01                  0.52


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

         As of March 31, 2007,  there were  approximately  106 record holders of
ESP's common  stock,  not  including  shares held in "street  name" in brokerage
accounts  which is  unknown.  As of March 31,  2007,  there  were  approximately
14,743,624 shares of common stock outstanding on record.

DIVIDENDS

         ESP 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

         During  2006,  no Stock  Option  Plan was  adopted  for any  Directors,
Officers, Employees, Key Consultants, or any other individual.

WARRANTS

         For the fiscal year ended  December  31, 2006,  ESP issued  warrants to
purchase a total of 4,808,446 shares of unregistered common stock,  4,050,000 of
which were issued to founders,  key  executives  and  consultants at an exercise
price of $0.75 per  share,  388,446  of which  were  issued to  investors  at an
exercise  price of $0.75 per  share,  and  370,000  of which  were  issued at an
exercise price of $1.00 per share.  All of these warrants expire on November 30,
2011.

         In  addition,  in  February  2007,  ESP  issued  warrants  to  purchase
1,350,000  shares of  unregistered  common stock to  consultants  at an exercise
price of $0.25 per share expiring in February 2010 and in March 2007, ESP issued
warrants to purchase 93,444 shares of unregistered  common stock to investors at
an exercise price of $0.75 per share expiring in January 2012.

                                      -15-
<PAGE>

         As of March 31, 2007, none of the warrants had been exercised.

ITEM 6.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF RESULTS OF  OPERATIONS  AND
FINANCIAL CONDITION

CAUTIONARY STATEMENTS

         This   Form   10-KSB   contains   financial   projections   and   other
"forward-looking  statements," as that term is used in federal  securities laws,
about Environmental Service Professionals,  Inc.'s 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-KSB.  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-KSB.  These  forward-looking  statements are subject to numerous
assumptions,  risks and  uncertainties  that may  cause ESP and its  affiliate's
actual results to be materially  different from any future results  expressed or
implied by ESP and its affiliates in those statements.  The most important facts
that could  prevent  ESP and its  affiliates  from  achieving  its stated  goals
include, but are not limited to, the following:

         (a)      volatility or decline of ESP's stock price;
         (b)      potential fluctuation in quarterly results;
         (c)      failure of ESP and its affiliates to earn revenues or profits;
         (d)      inadequate  capital and  barriers  to raising  the  additional
                  capital or to obtaining the financing  needed to implement its
                  business plans and to make planned acquisitions;
         (e)      inadequate capital to continue business;
         (f)      changes in demand  for ESP and its  affiliate's  products  and
                  services;
         (g)      rapid and significant changes in markets;
         (h)      litigation  with or legal  claims and  allegations  by outside
                  parties;
         (i)      loss of customers and franchisees;
         (j)      insufficient revenues to cover operating costs; and
         (k)      default on outstanding notes and other liabilities.

         Because the statements are subject to risks and  uncertainties,  actual
results  may  differ   materially   from  those  expressed  or  implied  by  the
forward-looking  statements. ESP cautions you not to place undue reliance on the
statements,  which speak only as of the date of this Form 10-KSB. 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
ESP and its  affiliates or persons  acting on its behalf may issue.  ESP and its
affiliates  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-KSB or to reflect the occurrence of unanticipated events.

         The  following  discussion  should be read in  conjunction  with  ESP's
condensed  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.

                                      -16-

<PAGE>


OVERVIEW

         During 2006,  management's  main effort was focused on positioning  ESP
and its  affiliates  deeper into the newly  emerging mold testing and inspection
industry,   and  beginning  to  reshape  its  structure  to  create  a  national
organization  that would be poised to take the leadership  role in the moisture,
mold, and home inspection  industries.  Today,  management believes  significant
progress has been made. With the establishment of ESP's primary service programs
have been established. Now through its subsidiaries, ESP plans to launch several
new programs that will reshape the moisture, mold and home inspection industries
as we know them today,  with the focus being to cause these industries to become
one. ESP plans to acquire other independent  owner-operators in home inspection,
mold inspection,  moisture and related  environmental  industries throughout the
United  States  and  Canada,  holding  them  as new  subsidiaries  or  operating
divisions.  In 2007, ESP plans to make several strategic  acquisitions that will
enable  it  to  invest  time  and   resources  in  developing   and   delivering
state-of-the-art  procedures  and tools to provide  environmental  services  for
addressing many environmental  issues in the building,  residential,  commercial
and real estate industries.

         Management  envisions  2007 as a year  for  bringing  together  several
industries that are ready for consolidation. Consolidation will provide for more
cost effective  services,  which will potentially  increase the level of service
and increase  profit  potential.  For example,  in late 2006 the home inspection
industry had  experienced a reduction in revenue of between 30% and 50% due to a
lower  number  of  sales  in the  real  estate  market.  Management  feels  that
businesses  must be able to  continue  in both  strong  and  weak  markets,  and
therefore has created a new revenue stream through its CEHI Program which should
only generate significant additional revenue.

         Management understands the issues that currently affect ESP will affect
the  insurance,  mortgage  banking,  real estate and building  industries  as it
relates  to  moisture  and  mold  related  issues.  Management  understands  the
relationship  between these  industries and the consumer,  and  understands  the
significant  costs  associated  with  these  issues.  Management  feels that the
consumer must be kept as a key component to the equation by providing a solution
that will benefit all parties.  In this vein,  management  has  developed  ESP's
Annual Moisture Mold Management  Inspection Program.  The program is designed to
be a well-balanced,  cost effective solution to an environmental  issue that for
many  years  has not  been  dealt  with  due to the  uncertainty  of  liability.
Management  believes that the best way to navigate through different  industries
and to grow  ESP's  profit is  through  voluntary  measures  to sooth  community
concerns  and through  promoting  ESP's  image as a company  that  improves  the
consumer's daily life and safety.

CRITICAL ACCOUNTING POLICIES

         Management's  discussion and analysis of ESP's financial  condition and
results of operations are based upon ESP's 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
ESP 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 ESP's 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 ESP's estimates on historical  experience and other  assumptions
that we believe to be reasonable  under the  circumstances.  Actual  results may
differ from ESP's estimates if past experience or other  assumptions do not turn
out to be substantially  accurate.  Additional  disclosure  regarding applicable
critical  accounting  policies is  included  in the notes to ESP's  consolidated
financial statements.

                                      -17-
<PAGE>

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

REVENUE

        Total  revenue for the twelve  month  period  ended  December  31, 2006
increased  by $82,319 to $82,319  from $0 in the prior  year.  This  increase in
revenue  was a result of the  reverse  merger of PES into  Glas-Aire  Industries
Group, Ltd., which then changed its name to Environmental Service Professionals,
Inc. (ESP).  This revenue is PES revenue from October 12, 2006 through  December
31, 2006. It does not include any PES revenue before that date.

GENERAL AND ADMINISTRATIVE EXPENSES

         General and  administrative  expenses  increased by  $471,208,  up from
$226,874  in 2005,  to  $644,287  for the year ended  December  31,  2006.  This
increase  in general and  administrative  expenses  was the result of  increased
staffing of office and clerical  personnel of $177,977 from the prior period and
increased  professional  and  consulting  fees of $59,382 from the prior period,
which were partially offset by reductions in other categories.

NET LOSS

         Net loss increased by $230,181,  or 74%, to $540,622 for the year ended
December 31, 2006,  compared to the prior year where the net loss was  $310,441.
This  increase  in net  loss  was the  result  of an  increase  in  general  and
administrative  expenses  and  marketing  costs,  as well as  significant  costs
incurred for the reverse merger of PES into ESP (formerly  Glas-Aire  Industries
Group, Ltd.). Currently operating costs exceed revenue because sales are not yet
sufficient. We cannot assure when or if revenue will exceed operating costs.

LIQUIDITY AND CAPITAL RESOURCES

         ESP had net cash of  $302,943  at  December  31,  2006,  as compared to
$1,832 at December 31, 2005.

         During the year ended  December 31, 2006, ESP used $514,144 of cash for
operating activities,  as compared to $32,718 during the year ended December 31,
2005.  The increase in the use of cash for operating  activities was a result of
legal fees incurred to go public, 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, 2006 was $770,996,  as
compared to $0 during the year ended  December 31, 2005.  Since January 1, 2007,
ESP's  capital  needs  have  primarily  been met from the  proceeds  of  private
placements and, to a lesser extent, sales.

         ESP  will  have  additional  capital  requirements  during  2007  if it
continues  with its plan of developing  new programs and requisite  services and
acquiring new businesses.  Although we cannot quantify these  anticipated  costs
with specificity,  we estimate that ESP will incur  approximately  $3,600,000 of
business  acquisition costs and $980,000 in marketing and sales costs during the
twelve months of  operations  ending  December 31, 2007.  We do not  anticipate,
however, any significant capital equipment  expenditures.  There is no assurance
that  actual  business  acquisition  and  marketing  costs will not exceed or be
different than the amounts expected by ESP's management. We intend to meet ESP's
cash  requirements  through  private  placements  of  ESP's  capital  stock  and
short-term  promissory  notes,  sales  of  ESP's  services,  and  franchise  and
association  revenue.  We cannot assure that ESP will have sufficient capital to
finance  ESP's  growth and  business  operations  or that such  capital  will be

                                      -18-
<PAGE>

available  on  terms  that  are  favorable  to ESP or at all.  We are  currently
incurring operating deficits and business acquisition costs that are expected to
continue for the foreseeable future.

ITEM 7. FINANCIAL STATEMENTS OF ENVIRONMENTAL SERVICE PROFESSIONALS, INC.



                    ENVIRONMENTAL SERVICE PROFESSIONALS, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                 FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




                                    CONTENTS


                                                                            PAGE


Reports of Independent Registered
        Public Accounting Firms ........................................     20

Balance Sheet as of December 31, 2006...................................     21

Statement of Operations for the years ended
        December 31, 2006 and 2005......................................     22

Statement of Changes in Shareholders Equity for the years ended
         December 31, 2006 and 2005.....................................     23

Statement of Cash Flows for the years ended
        December 31, 2006 and 2005......................................     24

Notes to Financial Statements ...........................................  25-37




                                      -19-

<PAGE>
                          CHANG G. PARK, CPA, PH. D.
              * 371 E STREET * CHULA VISTA * CALIFORNIA 91910-2615O
                 * TELEPHONE (858)722-5953 * FAX (858) 408-2695
                         * E-MAIL CHANGGPARK@GMAIL.COM *


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders
Environmental Service Professionals, Inc.
(Formerly Glas-Aire Industries Group Ltd.)
Palm Springs, CA


We have audited the  accompanying  consolidated  balance sheets of Environmental
Service  Professionals,  Inc.  (Formerly  Glas-Aire  Industries  Group Ltd., the
"Company")  as of  December  31,  2006  and 2005  and the  related  consolidated
statements of operations, changes in shareholders' equity and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audits.

We conducted our audits in accordance  with 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  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Glas-Aire Industries
Group Ltd. as of December 31, 2006 and 2005,  and the results of its  operations
and its cash flows for the years then ended in  conformity  with U.S.  generally
accepted accounting principles.

The  consolidated  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in Note 15 to the
consolidated  financial  statements,  the Company's losses from operations raise
substantial  doubt  about  its  ability  to  continue  as a going  concern.  The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.



/s/Chang G. Park, CPA
--------------------
Chang G. Park, CPA

February 23, 2007
Chula Vista, CA. 91910



        MEMBER OF THE CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
          REGISTERED WITH THE PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD

                                      -20-

<PAGE>
          ENVIRONMENTAL SERVICE PROFESSIONALS, INC. AND SUBSIDIARIES
                   (Formerly Glas-Aire Industries Group, Ltd.)
                           Consolidated Balance Sheets
<TABLE>
<CAPTION>

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

                                     ASSETS

                                                                             AS OF                   AS OF
                                                                         DECEMBER 31,             DECEMBER 31,
                                                                             2006                     2005
                                                                       ------------------       -----------------

      CURRENT ASSETS
<S>                                                                  <C>                     <C>
      Cash & cash equivalents                                        $           302,943     $             1,832
      Accounts receivable                                                        258,989                       -
      Prepaid expense                                                              1,432

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

      TOTAL CURRENT ASSETS                                                       563,364

      NET PROPERTY & EQUIPMENT                                                    38,820                       -

      OTHER ASSETS
      Deposits                                                                    72,026                       -
      Net trademarks                                                                 563                       -
      Goodwill                                                                 8,819,698
      Investments in business areas                                               15,779                       -

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

      TOTAL OTHER ASSETS                                                       8,908,066
                                                                       ------------------       -----------------

            TOTAL ASSETS                                             $         9,510,250     $             1,832
                                                                       ==================       =================

                  LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

      CURRENT LIABILITIES
      Accounts payable and accrued liabilities                       $           427,298     $           382,731
      Line of credit                                                             101,962                       -
      Income taxes payable                                                        35,500                  35,500
      Loans payable                                                              238,000                       -
                                                                      ------------------       -----------------

      TOTAL CURRENT LIABILITIES                                                  802,760                 418,231

      LONG-TERM LIABILITIES                                                      859,831                       -
                                                                       ------------------       -----------------

      TOTAL LONG-TERM LIABILITIES                                                859,831                       -
                                                                       ------------------       -----------------

            TOTAL LIABILITIES                                                  1,662,591                 418,231

      STOCKHOLDERS' EQUITY (DEFICIT)

      Common stock, (par value $.001 per share, 100,000,000 shares
         authorized: 16,618,463 shares and 2,711,213 shares issued and
         outstanding as of December 31, 2006 and 2005, respectively)              16,618                  27,112
      Paid-in capital                                                         10,364,487               1,549,313
      Foreign currency translation adjustment                                          -                 652,778
      Retained earnings                                                       (2,533,446)             (2,645,602)
                                                                       ------------------       -----------------

      TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                     7,847,659                (416,399)

              TOTAL LIABILITIES &
                                                                       ------------------       -----------------
                         STOCKHOLDERS' EQUITY (DEFICIT)              $         9,510,250     $             1,832
                                                                       ==================       =================
</TABLE>

              See Notes to the Consolidated Financial Statements.

                                      -21-
<PAGE>

           ENVIRONMENTAL SERVICE PROFESSIONALS, INC. AND SUBSIDIARIES
                   (Formerly Glas-Aire Industries Group, Ltd.)
                      Consolidated Statement of Operations
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                                       YEAR ENDED               YEAR ENDED
                                                                                      DECEMBER 31,             DECEMBER 31,
                                                                                          2006                     2005
                                                                                    -----------------        ------------------
REVENUES
<S>                                                                                 <C>                      <C>
  Income                                                                            $         82,319         $               -
                                                                                    -----------------        ------------------

NET REVENUE                                                                                   82,319                         -

COST OF GOODS SOLD
  Purchases                                                                                   15,282                         -
                                                                                    -----------------        ------------------

TOTAL COST OF GOODS SOLD                                                                      15,282                         -
                                                                                    -----------------        ------------------

GROSS PROFIT                                                                                  67,037                         -

OPERATING EXPENSES
  Depreciation                                                                                 3,205                         -
  General and administrative                                                                 644,082                   226,874
                                                                                    -----------------        ------------------

TOTAL OPERATING EXPENSES                                                                     647,287                   226,874
                                                                                    -----------------        ------------------

INCOME (LOSS) FROM OPERATIONS                                                               (580,250)                 (226,874)

OTHER INCOME (EXPENSES)
  Interest income                                                                                  1                        94
  Interest expense                                                                           (16,416)                  (83,661)
  Other income                                                                                57,043                         -
  Miscellaneous expense                                                                       (1,000)                        -
                                                                                    -----------------        ------------------

TOTAL OTHER INCOME (EXPENSES)                                                                 39,628                   (83,567)
                                                                                    -----------------        ------------------

NET INCOME (LOSS)                                                                           (540,622)                 (310,441)
                                                                                    =================        ==================

 BASIC EARNING (LOSS) PER SHARE                                                     $          (0.07)        $           (0.11)
                                                                                    -----------------        ------------------

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES - BASIC AND DILUTED                                                        7,214,324                 2,711,213
                                                                                    =================        ==================
</TABLE>

             See Notes to the Consolidated Financial Statements.

                                      -22-
<PAGE>
           ENVIRONMENTAL SERVICE PROFESSIONALS, INC. AND SUBSIDIARIES
                   (Formerly Glas-Aire Industries Group, Ltd.)
             Consolidated Statement of Stockholder Equity (Deficit)
                 For the Years Ended December 31, 2006 and 2005
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------------
                                                                        ADDITIONAL
                                                COMMON      COMMON        PAID-IN       RETAINED       FOREIGN         TOTAL
                                                SHARES       STOCK        CAPITAL       EARNINGS       CURRENCY
                                                                                        (DEFICIT)     TRANSLATION
----------------------------------------------------------------------------------------------------------------------------------

<S>                                             <C>             <C>        <C>           <C>               <C>           <C>
 Balance, December  31, 2004                    2,711,213       27,112     1,549,313     (2,335,161)       652,778       (105,958)

 Net loss for the year ended
 December 31, 2005                                                                         (310,441)                     (310,441)

----------------------------------------------------------------------------------------------------------------------------------
 BALANCE,  DECEMBER 31, 2005                    2,711,213       27,112     1,549,313     (2,645,602)       652,778       (416,399)
----------------------------------------------------------------------------------------------------------------------------------

Shares issued on April 24, 2006                 3,170,522       31,705       285,475                                      317,180

Shares Adjustment                                    (583)          (6)            6                                            -

Reverse Split 1 to 3.75 on October 11, 2006    (4,312,689)     (57,243)       57,243                                            -

Shares Issued on October 11, 2006              14,625,000       14,625     8,175,375                                    8,190,000

Shares Issued On December 1, 2006                 425,000          425       297,075                                      297,500

Foreign Currency Translation                                                                652,778       (652,778)             -

 Net loss for the year ended
 December 31, 2006                                                                         (540,622)                     (540,622)
----------------------------------------------------------------------------------------------------------------------------------
 BALANCE,  DECEMBER 31, 2006                   16,618,463     $ 16,618  $ 10,364,487    $(2,533,446)           $ -    $ 7,847,659
</TABLE>

















            See Notes to the Consolidated Financial Statements.

                                      -23-
<PAGE>
           ENVIRONMENTAL SERVICE PROFESSIONALS, INC. AND SUBSIDIARIES
                   (Formerly Glas-Aire Industries Group, Ltd.)
                      Consolidated Statement of Cash Flows

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                                                                YEAR ENDED          YEAR ENDED
                                                                                 DECEMBER 31,     DECEMBER 31,
                                                                                  2006                2005
                                                                             --------------     ---------------

   CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                           <C>                <C>
   Net income (loss)                                                               (540,622)     $     (310,441)

   Adjustments to reconcile net loss to net cash provided by (used in)
   operating activities:
       Depreciation                                                                   3,205                   -
       Amortization                                                                   3,969                   -
       Common Stock and options for compensation                                    317,180                   -
   Changes in operating assets and liabilities:
       (Increase) decrease in accounts receivable                                    70,081                   -
       (Increase) decrease in prepaid expenses                                       (1,432)                  -
       (Increase) decrease in accounts payable and accrued expenses                (366,525)            277,723
                                                                              --------------     ---------------

        NET CASH USED BY OPERATING ACTIVITIES                                      (514,144)            (32,718)


   CASH FLOWS FROM INVESTING ACTIVITIES                                                   -                   -
                                                                              --------------     ---------------

        NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                               -                   -

   CASH FLOWS FROM FINANCING ACTIVITIES

     Line of credit                                                                  26,165                   -
     Increase in loan payable                                                        10,000                   -
     Proceeds from long-term liabilities                                            734,831                   -
                                                                              --------------     ---------------

        NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                         770,996                   -
                                                                              --------------     ---------------

       NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS                           256,852             (32,718)

      CASH AT BEGINNING OF YEAR                                                       1,832              34,550
      CASH AT OCTOBER 11, 2006 OF SUBSIDIARY                                         44,259                   -
                                                                              --------------     ---------------

       CASH AT END OF YEAR                                                    $     302,943      $        1,832
                                                                              ==============     ===============


   SUPPLEMENTAL DISCLOSURES OF CASH FLOW
   INFORMATION:

   Cash paid for Interest                                                     $           -      $            -
                                                                              ==============     ===============

   Income taxes paid                                                          $           -      $            -
                                                                              ==============     ===============

   SUPPLEMENTAL DISCLOSURES OF NON CASH
   ACTIVITIES:

      Common stock issued for acquisition subsidiary                          $   8,487,500      $            -
      Increase in accounts receivable from acquisition                             (329,070)                  -
      Increase in property & equipment from acquisition                             (42,025)                  -
      Increase in deposits from acquisition                                         (72,026)                  -
      Increase in goodwill from stock issuance                                   (8,819,698)                  -
      Increase in trademarks from acquisition                                          (587)                  -
      Increase in investment in business areas from acquisition                     (19,725)                  -
      Increase in accounts payable and accrued liabilities from acquisition         411,093                   -
      Increase in line of credit from acquisition                                    75,797                   -
      Increase in loan payable from acquisition                                     228,000                   -
      Increase in long-term liabilities from acquisition                            125,000                   -
                                                                              --------------     ---------------
                                                                              $      44,259      $            -
                                                                              ==============     ===============
</TABLE>
                     See Notes to the Financial Statements.
                                      -24-
<PAGE>

          Environmental Service Professionals, Inc. and Subsidiaries
                  (Formerly Glass -Aire Industries Group, Ltd.)
                 Notes to the Consolidated Financial Statements
                        As of December 31, 2006 and 2005

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

NATURE OF OPERATIONS:

Environmental Services Professionals,  Inc. (formerly Glas-Aire Industries Group
Ltd.),  a Nevada  corporation  ("ESP"  or the  "Company")  was  incorporated  on
September  29,  1992.  Prior to ceasing  business  in March  2004,  the  Company
manufactured and distributed wind deflector products to automobile manufacturers
in the United States, Canada and Japan.

The Company  franchises  the right to operate a business that  provides  limited
mold,  moisture and allergen  survey  services for  residential  and  commercial
buildings  utilizing  the  Company's  mandatory  central  call  center.   Visual
inspections  and collecting of samples are part of the survey  services that are
offered.  An accredited  laboratory  analyzes  these samples and the results are
reported  to  the  clients.   Temporary  containment  services  are  offered  as
appropriate.

ESP has received  approval by the appropriate  governmental  agencies,  to offer
franchises  throughout  41 states  within the United  States that do not require
specific state registration.

On May 19,  2005,  July 30,  2004 and  January  9, 2003,  Pacific  Environmental
Sampling,  Inc. ("PES"),  the operating  division of ESP, received approval from
the California  Department of Corporations to offer franchises  within the State
of California.  Said approval is required on a yearly calendar basis. Currently,
the Company is  authorized  to offer  franchises  within the State of California
until April 20, 2006. In March of 2007 ESP decided to  discontinue  the business
of offering franchises.

As of October 11, 2006,  the Company  completed (a) a one for 3.75 reverse split
of its total  issued and  outstanding  common  stock,  (b) an  amendment  to its
Articles  of   Incorporation   changing  its  name  to   Environmental   Service
Professionals,  Inc. and increasing  its authorized  common stock to 100,000,000
shares,  par value  $0.001 per share and (c) the closing of its  reverse  merger
with PES pursuant to which PES became a wholly-owned  subsidiary of the Company,
and PES's management and  shareholders  assumed control of the Company (See Note
12)

On December 1, 2006, the Company closed its acquisition of National Professional
Service Inc. (NPS) pursuant to which NPS became a wholly-owned subsidiary of the
Company.


                                      -25-

<PAGE>
          Environmental Service Professionals, Inc. and Subsidiaries
                  (Formerly Glass -Aire Industries Group, Ltd.)
                 Notes to the Consolidated Financial Statements
                        As of December 31, 2006 and 2005

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. 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.

B. BASIS OF CONSOLIDATION

The  consolidated  financial  statements  include the accounts of  Environmental
Service  Professionals,  Inc.,  the parent  Company,  and Pacific  Environmental
Sampling,  Inc., a California  corporation,  and National  Professional  Service
Inc., a Delaware  Corporation,  the  Company's  wholly owned  subsidiaries.  All
significant  intercompany  balances and  transactions  have been  eliminated  in
consolidation.

C. CASH EQUIVALENTS

The Company  considers  all highly liquid  investments  with a maturity of three
months or less when purchased to be cash equivalents.

D.   ESTIMATES AND ADJUSTMENTS

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  ("GAAP")  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  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.

E.   ACCOUNTS RECEIVABLE

Management considers accounts receivable to be fully collectible;  according, no
allowance for doubtful  accounts is required.  If amounts become  uncollectible,
they will be charged to operations when that determination is made.

                                      -26-
<PAGE>
          Environmental Service Professionals, Inc. and Subsidiaries
                  (Formerly Glass -Aire Industries Group, Ltd.)
                 Notes to the Consolidated Financial Statements
                        As of December 31, 2006 and 2005


NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

F. CONCENTRATION OF CREDIT RISK

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

PES  [maintains  credits  with Bank of  America.  Management  performs  periodic
evaluations of the relative credits standing to the financial  institution.  The
Company has not sustained any material  credit losses for the  instruments.  The
carrying  values  reflected in the balance sheet at December 31, 2006 reasonable
approximate the fair values of cash,  accounts payable,  and credit obligations.
In making such  assessment,  the  Company,  has  utilized  discounted  cash flow
analysis,  estimated, and quoted market prices as appropriate in accordance with
paragraph 9 of SFAS 107.

G. REVENUE RECOGNITION AND FRANCHISE FEES

Revenue  includes the following:  ESP revenue  consists of survey  services that
include visual  inspections  and collecting of samples.  The Company  recognizes
revenue when services on contracts are provided.

The  Company  follows  Statement  of  Financial  Accounting  Standards  No. 45 -
"Accounting for Franchise Fee Revenue."

Under this  provision  franchise fee revenue from an individual  franchise  sale
ordinarily  is  recognized,   with  an   appropriate   provision  for  estimated
uncollectible  amounts, when all material services or conditions relating to the
sale  have  been  substantially   performed  or  satisfied  by  the  franchisor.
Substantial  performance for the franchisor means that (a) the franchisor has no
remaining  obligation  or intent - by  agreement,  trade  practice,  or law - to
refund  any cash  received  or  forgive  any unpaid  notes or  receivables;  (b)
substantially  all of the  initial  services of the  franchisor  required by the
franchise agreement have been performed; and (c) no other material conditions or
obligations related to the determination of substantial performance exist.

If the franchise  agreement does not require the  franchisor to perform  initial
services but a practice of voluntarily  rendering  initial services exists or is
likely to exist  because of business or  regulatory  circumstances,  substantial
performance  is not be assumed  until  either  the  initial  services  have been
substantially  performed or reasonable  assurance  exists that the services will
not be performed.  The  commencement of operations by the franchisee is presumed
to be the earliest point at which substantial  performance has occurred,  unless
it  can  be  demonstrated  that  substantial  performance  of  all  obligations,
including services rendered voluntarily, has occurred before that time.

                                      -27-
<PAGE>
          Environmental Service Professionals, Inc. and Subsidiaries
                  (Formerly Glass -Aire Industries Group, Ltd.)
                 Notes to the Consolidated Financial Statements
                        As of December 31, 2006 and 2005

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Continuing  franchise  fees are  reported  as revenue as the fees are earned and
become  receivable from the franchisee.  Costs relating to continuing  franchise
fees are expensed as incurred.  Although a portion of the  continuing fee may be
designated for a particular purpose,  such as an advertising  program, it is not
recognized  as revenue until the fee is earned and becomes  receivable  from the
franchisee.

H. GOODWILL

In  accordance  with  Statements  of  Financial  Accounting  Standards  No. 142,
goodwill is not amortized since it has an indefinite life. Instead, it is tested
annually for  impairment.  During the year ended December 31, 2006 there were no
changes in the carrying amount of goodwill.

I. RECENT ACCOUNTING PRONOUNCEMENTS

In February 2007, the Financial  Accounting  Standards  Board (FASB) issued SFAS
No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities -
Including an Amendment  of FASB  Statement  No.  115".  This  statement  permits
entities to choose to measure many financial instruments and certain other items
at fair  value.  Most of the  provisions  of SFAS No. 159 apply only to entities
that  elect the fair  value  option.  However,  the  amendment  to SFAS No.  115
"Accounting for Certain  Investments in Debt and Equity  Securities"  applies to
all entities with  available-for-sale  and trading  securities.  SFAS No. 159 is
effective as of the beginning of an entity's first fiscal year that begins after
November 15, 2007.  Early  adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provision of SFAS No. 157, "Fair Value Measurements".  The adoption
of this  statement  is not expected to have a material  effect on the  Company's
financial statements.

In September  2006, the SEC issued Staff  Accounting  Bulletin  ("SAB") No. 108,
"Considering   the  Effects  of  Prior  Year   Misstatements   when  Quantifying
Misstatements  in Current Year Financial  Statements." SAB No. 108 addresses how
the effects of prior year  uncorrected  misstatements  should be considered when
quantifying  misstatements  in current year  financial  statements.  SAB No. 108
requires  companies to quantify  misstatements  using a balance sheet and income
statement   approach  and  to  evaluate   whether  either  approach  results  in
quantifying  an error that is  material  in light of  relevant  quantitative  an
qualitative  factors.  SAB No. 108 is  effective  for fiscal  years ending after
November 15, 2006.  The Company is currently  evaluating  the impact of adopting
SAB No.  108 but does not  expect  that it will  have a  material  effect on its
financial statements.

                                      -28-
<PAGE>

          Environmental Service Professionals, Inc. and Subsidiaries
                  (Formerly Glass -Aire Industries Group, Ltd.)
                 Notes to the Consolidated Financial Statements
                        As of December 31, 2006 and 2005

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In September  2006,  the FASB issued SFAS No. 158,  "Employers'  Accounting  for
Defined  Benefit Pension and Other  Postretirement  Plans - an amendment of FASB
Statements No. 87, 88, 106, and 132(R)".  This statement  requires  employers to
recognize  the   overfunded  or   underfunded   status  of  a  defined   benefit
postretirement  plan (other than a multiemployer  plan) as an asset or liability
in its statement of financial  position and to recognize  changes in that funded
status in the year in which the changes occur through  comprehensive income of a
business  entity or  changes  in  unrestricted  net  assets of a  not-for-profit
organization.  This  statement  also  requires an employer to measure the funded
status of a plan as of the date of its year-end statement of financial position,
with  limited  exceptions.  The  provisions  of SFAS No. 158 are  effective  for
employers  with publicly  traded  equity  securities as of the end of the fiscal
year ending  after  December 15,  2006.  The  adoption of this  statement is not
expected to have a material effect on the Company's  future  reported  financial
position or results of operations.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements".  The
objective of SFAS 157 is to increase consistency and comparability in fair value
measurements and to expand disclosures about fair value  measurements.  SFAS 157
defines  fair  value,  establishes  a  framework  for  measuring  fair  value in
generally accepted  accounting  principles,  and expands  disclosures about fair
value measurements.  SFAS 157 applies under other accounting pronouncements that
require or permit  fair value  measurements  and does not  require  any new fair
value measurements.  The provisions of SFAS No. 157 are effective for fair value
measurements  made in fiscal  years  beginning  after  November  15,  2007.  The
adoption of this  statement  is not  expected  to have a material  effect on the
Company's future reported financial position or results of operations.

In June 2006,  the  Financial  Accounting  Standards  Board  (FASB)  issued FASB
Interpretation   No.  48,  "Accounting  for  Uncertainty  in  Income  Taxes,  an
interpretation  of FASB Statements No. 109". FIN 48 clarifies the accounting for
uncertainty in income taxes by prescribing a two-step method of first evaluating
whether a tax position has met a more likely than not recognition  threshold and
second,  measuring  that tax position to  determine  the amount of benefit to be
recognized  in  the  financial  statements.  FIN  48  provides  guidance  on the
presentation  of such  positions  within a  classified  statement  of  financial
position as well as on  derecognition,  interest and  penalties,  accounting  in
interim  periods,  disclosure,  and  transition.  FIN 48 is effective for fiscal
years  beginning  after December 15, 2006. The adoption of this statement is not
expected to have a material effect on the Company's  future  reported  financial
position or results of operations.

In March  2006,  the FASB  issued SFAS No. 156,  "Accounting  for  Servicing  of
Financial  Assets,  an  amendment  of FASB  Statement  No. 140,  Accounting  for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities".
This statement requires all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable, and permits for
subsequent  measurement using either fair value measurement with changes in fair
value reflected in earnings or the amortization  and impairment  requirements of
Statement No. 140. The subsequent measurement of separately recognized servicing
assets and servicing

                                      -29-
<PAGE>
          Environmental Service Professionals, Inc. and Subsidiaries
                  (Formerly Glass -Aire Industries Group, Ltd.)
                 Notes to the Consolidated Financial Statements
                        As of December 31, 2006 and 2005

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

liabilities at fair value  eliminates the necessity for entities that manage the
risks inherent in servicing assets and servicing liabilities with derivatives to
qualify for hedge accounting  treatment and eliminates the  characterization  of
declines in fair value as  impairments  or direct  write-downs.  SFAS No. 156 is
effective for an entity's first fiscal year beginning  after September 15, 2006.
The adoption of this statement is not expected to have a material  effect on the
Company's future reported financial position or results of operations.

In February 2006, the FASB issued SFAS No. 155,  "Accounting  for Certain Hybrid
Financial  Instruments-an  amendment  of FASB  Statements  No. 133 and 140",  to
simplify  and  make  more  consistent  the  accounting  for  certain   financial
instruments.  SFAS No. 155  amends  SFAS No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities", to permit fair value re-measurement for any
hybrid  financial  instrument  with an embedded  derivative that otherwise would
require  bifurcation,  provided that the whole  instrument is accounted for on a
fair  value  basis.  SFAS No.  155  amends  SFAS No.  140,  "Accounting  for the
Impairment   or  Disposal  of   Long-Lived   Assets",   to  allow  a  qualifying
special-purpose  entity to hold a derivative  financial instrument that pertains
to a beneficial  interest other than another  derivative  financial  instrument.
SFAS No. 155 applies to all financial  instruments  acquired or issued after the
beginning of an entity's first fiscal year that begins after September 15, 2006,
with earlier application allowed. The adoption of this statement is not expected
to have a material effect on the Company's future reported financial position or
results of operations.


NOTE 3.  CONTRACTS RECEIVABLE - FRANCHISE FEES

During 2004, the Company began offering financing  arrangements in the franchise
fee  agreements.  The terms of the agreements  call for 36  consecutive  monthly
payments with an interest rate ranging from 6% to 8% depending upon the value of
the total franchise fee amount and the down payment received under the franchise
agreement.


NOTE 4. PROPERTY & EQUIPMENT

Property  is  stated  at cost.  Additions,  renovations,  and  improvements  are
capitalized.  Maintenance  and repairs,  which do not extend  asset  lives,  are
expensed as incurred. Depreciation is provided on a straight-line basis over the
estimated useful lives ranging, five years for tenant improvements,  and five to
seven years on furniture and equipment.

                                      -30-
<PAGE>

          Environmental Service Professionals, Inc. and Subsidiaries
                  (Formerly Glass -Aire Industries Group, Ltd.)
                 Notes to the Consolidated Financial Statements
                        As of December 31, 2006 and 2005


NOTE 4. PROPERTY & EQUIPMENT(CONTINUED)

                                                          DECEMBER 31,
                                                             2006
                                                      --------------------
           Software                                        $       15,000
           Machinery & equipment                                   24,442
           Furniture & fixtures                                    17,583
           Computers                                               40,854
           Automotive equipment                                     8,000
                                                      --------------------
                                                           $      105,879
           Less Accumulated Depreciation                          (67,059)
                                                      --------------------
           NET PROPERTY AND EQUIPMENT                      $       38,820
                                                      ====================

Depreciation expense for the year ended December 31, 2006 was $ 3,365.


NOTE 5. LINES OF CREDIT

The  Company  has two lines of  credit,  one for  $75,000  and  another  one for
$30,000. Both lines of credit are in an adjustable rate loan. The loans are open
revolving  lines of  credit,  and  annual  interest  rates are 11.24% and 12.5%,
respectively. There are no restrictions on the use of this line of credit. There
was an outstanding balance of $72,929 and $30,326,  respectively, as of December
31, 2006.


NOTE 6.  INTANGIBLE ASSETS

Intangible assets consist of two trademarks, an investment in business areas and
goodwill.

TRADEMARKS

The trademarks are stated at cost, less  amortization of $414 as of December 31,
2006. The trademarks are being amortized over the initial registration period of
ten  years.   Trademark  registration  may  be  renewed  every  ten  years  into
perpetuity.

INVESTMENT IN BUSINESS AREAS

Business areas consist of one or more designated zip codes. The business area is
considered  open when a yellow page  advertisement  listing is made and at least
one test has been conducted.

A total of 44 business  areas have been opened  through  December 31,  2006,  of
which 32 have been sold under  franchise  agreements,  with the  remaining  open
areas are being operated by PES.

                                      -31-
<PAGE>

          Environmental Service Professionals, Inc. and Subsidiaries
                  (Formerly Glass -Aire Industries Group, Ltd.)
                 Notes to the Consolidated Financial Statements
                        As of December 31, 2006 and 2005


NOTE 6.  INTANGIBLE ASSETS(CONTINUED)

At December 31, 2002, $78,899 was capitalized  relating to start-up costs and is
being amortized over 60 months. Amortization expense for the year ended December
31, 2006 was $15,780.

GOODWILL

On October 11, 2006, the Company issued 14,625,000 shares of common stock, which
is  valued  at  $8,190,000.  At the time of  merger,  there  was  difference  of
$8,347,198  between  net asset  value of  $(157,198)  and fair  market  value of
$8,190,000, which was booked as goodwill.

On December 1, 2006, the Company issued 425,000 shares of common stock, which is
valued at  $297,500,  and paid  $175,000  to acquire  NPS.  The  Company  booked
$472,500 as goodwill.

The Company is valuing  goodwill every year to determine impairment of goodwill.
As of the end of 2006, there is no impairment.


NOTE 7. NOTES PAYABLE & LONG TERM LIABILITIES

Notes payable as of December 31, 2006 consist of the following:

                                                December 2006
                                          ---------------------------
Unsecured loan to a related party with
annual interest of 3%.                            $  238,000

Unsecured notes, with annual interest of
10%.                                              $  859,831
                                          ---------------------------

                                                  $2,268,507
                                          ===========================



NOTE 8.  RELATED PARTY TRANSACTION

As of  December  31,  2006 the  Company  has a note  payable  due to Pro  Active
Business Service,  Inc. (a related party) in the amount of $238,000.  This is an
unsecured loan with an interest rate of 3%.  Interest is currently being waived.
(total expense)

                                      -32-
<PAGE>



          Environmental Service Professionals, Inc. and Subsidiaries
                  (Formerly Glass -Aire Industries Group, Ltd.)
                 Notes to the Consolidated Financial Statements
                        As of December 31, 2006 and 2005


NOTE 9. LONG TERM LEASE AGREEMENT

The Company signed a lease  agreement for its corporate  offices in Palm Springs
commencing  August 1, 2006 with the option of renewal  for an  additional  three
years at a 5% increase each year.

The base rent is currently  $6,206.00 per month.  The following is a schedule of
payments under the above operating lease:

           YEAR ENDING DECEMBER 31,                        AMOUNT
           ------------------------                     -------------
               2006                                     $ 25,954.00
               2007                                       76,022.00
               2008                                       79,822.00
                                                        -------------
                                                        $181,798.00

NOTE 10. STOCK WARRANTS

PES issued  4,808,446 shares of common stock and 4,808,446 common stock purchase
warrants  during the year ended  December 31, 2006. The value of the warrants is
derived  by using  Black-Scholes  Option  Pricing  Model.  As per FAS 123r,  the
volatility  of the stock was  calculated  by using iShares Dow Jones US Consumer
Services  Fund data for the five previous  years,  since the PES shares were not
traded.  Risk free rate of 4.63% is that of  two-year  treasury  bills as of the
issue  date.  For the stock  price,  we used that of net asset  value per share,
which was $.008 as of the year ended  December 31, 2005.  The value of warrants,
however, was $0.

After the merger,  these  warrants were  exchanged  with those of the Company on
one-on-one basis.


NOTE 11. BASIC & DILUTED 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,         DECEMBER 31,
                                               2006                2005
                                       --------------------- -------------------

NET INCOME (LOSS) FROM OPERATIONS       $    (540,622)       $         (310,441)

BASIC INCOME / (LOSS) PER SHARE         $       (0.07)                    (0.11)
                                       ===================== ===================

WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                         7,214,324                 2,711,213
                                       ===================== ===================

                                      -33-
<PAGE>



          Environmental Service Professionals, Inc. and Subsidiaries
                  (Formerly Glass -Aire Industries Group, Ltd.)
                 Notes to the Consolidated Financial Statements
                        As of December 31, 2006 and 2005


NOTE 12. STOCK TRANSACTIONS AND BUSINESS COMBINATIONS

On April 24,  2006 the  Company  issued  2,440,000  shares  of  common  stock to
management in lieu of the payment of their services.

On April  24,  2006  the  Company  issued  236,772  shares  of  common  stock in
connection  with  the  payment  of  legal  fees  is  connection  with  the  Bank
Settlement.

On April 24, 2006 the Company  issued  400,000  shares of common stock to settle
the incurred legal fees.

On  April  24,  2006  the  Company  issued  93,750  shares  of  common  stock as
consideration  Glas-Aire  Industries  Group,  Ltd. for legal and other  services
rendered for the Company.

On October 11,  2006,  the  Company  completed  the closing of a stock  purchase
agreement  (the "SPA") to effect a reverse  merger  between the  companies  (the
"Business  Combination") under which the Company issued 14,625,000 shares of its
common  stock to PES in  consideration  for  14,625,000  shares of PES's  common
stock. PES is distributing up to 14,625,000 shares of the Company's common stock
to its existing  shareholders in consideration  for the redemption of 14,625,000
shares of the outstanding  voting stock of PES. As a result of the closing,  PES
is a wholly owned  subsidiary of the Company and the shareholders of PES are the
controlling shareholders of the Company.

According  to the SPA,  prior to the closing of the  Business  Combination,  the
Company  covenanted,  among other things, to effect a one for 3.75 reverse split
of its outstanding  common stock,  which resulted in Glas-Aire having a total of
1,568,463 shares of its common stock outstanding at closing.

On  December  1, 2006,  the Company  completed  the closing of a stock  purchase
agreement  with NPS to effect an  acquisition  under  which the  Company  issued
425,000 shares of its common stock and paid $175,000 to NPS in consideration for
100% interest of NPS's common stock. As a result of the closing, NPS is a wholly
owned subsidiary of the Company.

The  operating  results of the acquired  entities are included in the  Company's
consolidated  financial  statements  as  of  October  11,  20006;  the  date  of
acquisition.


                                      -34-

<PAGE>


          Environmental Service Professionals, Inc. and Subsidiaries
                  (Formerly Glass -Aire Industries Group, Ltd.)
                 Notes to the Consolidated Financial Statements
                        As of December 31, 2006 and 2005

NOTE 12. STOCK TRANSACTIONS AND BUSINESS COMBINATIONS(CONTINUED)

The following is summary of the Balance Sheet and Statement of Operation of PES.

BALANCE SHEET AS OF OCTOBER 11, 2006

------------------------------------------- ---------------------------
                                                     Amounts
------------------------------------------- ---------------------------
Current assets                                             $ 373,330
------------------------------------------- ---------------------------
Fixed assets                                                  42,025
------------------------------------------- ---------------------------
Other assets                                                  92,337
------------------------------------------- ---------------------------
Total assets                                               $ 507,692
----------------------------------------------------------------------

------------------------------------------- ---------------------------
Current liabilities                                        $ 539,890
------------------------------------------- ---------------------------
Long-term liabilities                                        125,000
------------------------------------------- ---------------------------
Total liabilities                                            664,890
------------------------------------------- ---------------------------
Shareholders' equity                                        (157,198)
------------------------------------------- ---------------------------
Total liabilities and shareholders' equity                 $ 507,692
------------------------------------------- ---------------------------


STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
--------------------------- -------------------- --------------------- ---------------------- ---------------------
                                January 1,           October 12,        Year ended December   Year ended December
                             2006-October 11,     2006-December 31,          31, 2006               31, 2005
                                   2006                  2006
--------------------------- -------------------- --------------------- ---------------------- ---------------------
--------------------------- -------------------- --------------------- ---------------------- ---------------------
<S>                             <C>                      <C>                  <C>                     <C>
Revenue                         $     147,618            $   82,319           $    229,937            $   871,548
--------------------------- -------------------- --------------------- ---------------------- ---------------------
Cost                                   37,896                15,282                 53,178                 24,719
--------------------------- -------------------- --------------------- ---------------------- ---------------------
Gross profit                          109,722                67,037                176,759                846,829
--------------------------- -------------------- --------------------- ---------------------- ---------------------
Operating expenses                  1,183,529               594,719              1,778,248                596,359
--------------------------- -------------------- --------------------- ---------------------- ---------------------
Net loss from operation            (1,073,807)             (527,682)            (1,601,489)               250,470
--------------------------- -------------------- --------------------- ---------------------- ---------------------
Other income(expense)                     (50)                 (200)                  (250)                   200
--------------------------- -------------------- --------------------- ---------------------- ---------------------
Net loss                        $  (1,073,857)           $ (527,882)          $ (1,601,739)           $   250,670
--------------------------- -------------------- --------------------- ---------------------- ---------------------
</TABLE>


NOTE 13. STOCKHOLDERS' EQUITY

The  stockholders'  equity section of the Company contains the following classes
of capital stock as of December 31, 2006 and 2005:

   * Common stock, $ 0.001 par value; 100,000,000 shares authorized:  16,618,463
shares and 2,711,213 shares issued and outstanding, respectively.

                                      -35-
<PAGE>

          Environmental Service Professionals, Inc. and Subsidiaries
                  (Formerly Glass -Aire Industries Group, Ltd.)
                 Notes to the Consolidated Financial Statements
                        As of December 31, 2006 and 2005



NOTE 14. INCOME TAXES

Income taxes are provided in accordance  with Statement of Financial  Accounting
Standards No. 109 (SFAS 109),  Accounting for Income Taxes. A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting and net operating loss  carryforwards.  Deferred tax expense (benefit)
results  from  the net  change  during  the  year of  deferred  tax  assets  and
liabilities.

At December 31, 2006 the Company has  significant  operating and capital  losses
carryforward. The tax benefits resulting for the purposes have been estimated as
follows:

                                                  DECEMBER 31,     DECEMBER 31,
                                                      2006             2005
                                                 --------------- ---------------

  Accumulated deficit as of December 31, 2006    $ (2,533,446)   $   (2,645,602)

  Gross income tax benefit                       $    861,372    $      899,505
  Valuation allowance                                (861,372)         (899,505)
                                                 --------------- ---------------
  Net income tax benefit
                                                 $          -    $            -
                                                 =============== ===============


The net operating loss expires twenty years from the date the loss was incurred.
The retained earning balance includes  accumulated  comprehensive income (loss).
In  accordance  with SFAS 109  paragraph 18 the Company has reduced its deferred
tax benefit  asset by a valuation  allowance  due to negative  evidence that has
caused the Company to feel it is more  likely than not that some  portion or all
of the  deferred  tax asset will not be  realized.  No portion of the  valuation
allowance will be allocated to reduce  goodwill or other  noncurrent  intangible
asset of an acquired entity. There are no temporary  differences or carryforward
tax effects that would significantly affect the Companies deferred tax asset.

Utilization of the net operating losses and credit  carryforwards may be subject
to a substantial  annual limitation due to the "change in ownership"  provisions
of the Internal  Revenue Code of 1986.  The annual  limitation may result in the
expiration of net operating losses and credits before  utilization.  None of the
valuation  allowance  recognized  was  allocated  to  reduce  goodwill  or other
noncurrent  intangible  assets of an acquired  entity or directly to contributed
capital.

                                      -36-
<PAGE>

          Environmental Service Professionals, Inc. and Subsidiaries
                  (Formerly Glass -Aire Industries Group, Ltd.)
                 Notes to the Consolidated Financial Statements
                        As of December 31, 2006 and 2005

NOTE 15. GOING CONCERN

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will  continue as a going  concern.  The Company  generated net
losses of  $2,533,446  during the period from  September  29,  1992  (inception)
through December 31, 2006. These  conditions raise  substantial  doubt about the
Company's ability to continue as a going concern. The Company's  continuation as
a going concern is dependent on its ability to meet its  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.
Management  has yet to decide what type of offering  the Company will use or how
much capital the Company will raise. There is no guarantee that the Company will
be able to raise any capital through any type of offerings.


NOTE 16.  SUBSEQUENT EVENT

On or about  February  20, 2007 (the  "Closing"),  the  Company,  Allstate  Home
Inspection  & Household  Environmental  Testing,  Ltd.,  a Delaware  corporation
("AHI"),  and Francis X. Finigan,  an  individual  and sole  shareholder  of AHI
("Finigan"),  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 AHI from  Finigan in exchange  for  1,000,000  shares of the  Company's
common stock issuable in installments over time (the "Stock  Payment"),  250,000
warrants  issuable  275 days after the  Closing  entitling  Finigan to  purchase
250,000  additional  shares of the Company's common stock at a purchase price of
$0.75 per share  exercisable  for a period  of five  years  from the date of the
Closing,  plus $950,000 in cash,  payable in  installments  over time (the "Cash
Payment").  As a result of the Closing,  AHI is a wholly owned subsidiary of the
Company.



                                      -37-

<PAGE>

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

         On or about  August 8,  2006,  ESP  engaged  Chang G.  Park,  CPA ("New
Accountant") to audit and review ESP's financial statements for the fiscal years
ending  December 31, 2004,  2005,  and 2006. The New Accountant has been engaged
for  general  audit  and  review  services  and not  because  of any  particular
transaction or accounting  principle,  or because of any disagreement with ESP's
former accountant,  Dale Matheson Carr-Hilton LaBonte Chartered Accountants (the
"Former Accountant").

         The Former  Accountant,  who was engaged  effective  June 17, 2004, was
replaced effective August 8, 2006. During the term of its engagement, the Former
Accountant  did not  complete  any  audits  for  ESP.  Accordingly,  the  Former
Accountant did not issue any reports that contained either an adverse opinion or
disclaimer of opinion.  The decision to change  accountants  was recommended and
approved by ESP's Board of Directors. During the fiscal years ended December 31,
2005 and 2004 through the date hereof,  ESP did not have any disagreements  with
the Former  Accountant  on any matter of  accounting  principles  or  practices,
financial  statement  disclosure,  or auditing scope or procedure  which, if not
resolved to the Former Accountant's  satisfaction,  would have caused it to make
reference  to the subject  matter of the  disagreement  in  connection  with its
report.

         The New  Accountant  was  engaged  effective  August 8,  2006.  The New
Accountant was engaged for general audit and review  services and not because of
any  particular   transaction  or  accounting  principle,   or  because  of  any
disagreement  with the Former  Accountant.  Prior to August 8, 2006, ESP did not
consult with the New  Accountant  regarding  (i) the  application  of accounting
principles,  (ii) the type of audit  opinion that might be rendered or (iii) any
other matter that was the subject of a  disagreement  between ESP and its Former
Accountant as described in Item 304(a)(1)(iv) of Regulation S-B.

         A letter from the Former  Accountant  addressed to The  Securities  and
Exchange  Commission was requested by ESP and was attached to its Report on Form
8-K, dated August 8, 2006, as Exhibit 9(c)(16).


ITEM 8A. CONTROLS AND PROCEDURES

         As required  by Rules  13a-15(e)  and  15d-15(e)  under the  Securities
Exchange Act, we carried out an evaluation  of the  effectiveness  of the design
and  operation of our  disclosure  controls and  procedures as of the end of the
period covered by this Annual Report.  This evaluation was carried out under the
supervision and with the  participation  of our Chief Executive  Officer and our
Chief Financial Officer.

         Based  on that  evaluation,  our  Chief  Executive  Officer  and  Chief
Financial  Officer  concluded  that our  disclosure  controls and procedures are
effective in timely alerting management to material  information  relating to us
that is required to be included in our periodic  filings with the Securities and
Exchange  Commission  and that the controls  and  procedures  were  effective in
ensuring that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act are accumulated and communicated
to the Company's  management,  including  its principal  executive and principal
financial officers,  or persons performing similar functions,  as appropriate to
allow timely decisions regarding required disclosure.

         There have been no  changes in our  internal  controls  over  financial
reporting  during the most recent fiscal quarter that have materially  affected,
or are  reasonable  likely to  materially  affect,  our internal  controls  over
financial reporting.

         Disclosure  controls and procedures  are controls and other  procedures
that are  designed to ensure that  information  required to be  disclosed in our
reports  filed or  submitted  under the  Exchange  Act is  recorded,  processed,


                                      -38-
<PAGE>

summarized and reported, within the time periods specified in the Securities and
Exchange  Commission's  rules and  forms.  Disclosure  controls  and  procedures
include,  without  limitation,  controls and procedures  designed to ensure that
information required to be disclosed in our reports filed under the Exchange Act
is accumulated  and  communicated  to management,  including our Chief Executive
Officer  and  Chief  Financial  Officer,  to allow  timely  decisions  regarding
required disclosure.

         At the end of 2007,  Section 404 of the Sarbanes-Oxley Act will require
our  management to provide an assessment  of the  effectiveness  of our internal
control  over  financial  reporting,  and at the end of  2008,  our  independent
registered public accountants will be required to audit management's assessment.
We are in the  process  of  performing  the system  and  process  documentation,
evaluation and testing  required for management to make this  assessment and for
its  independent  registered  public  accountants  to provide their  attestation
report.  We have not completed this process or its assessment,  and this process
will require significant amounts of management time and resources. In the course
of evaluation and testing,  management may identify  deficiencies that will need
to be addressed and remediated.


ITEM 8B.      OTHER INFORMATION

         None.



                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF EXCHANGE ACT

         The following  table lists the executive  officers and directors of ESP
and its affiliates as of April 4, 2007:

   NAME                 AGE    POSITION

   Edward Torres        48     Chairman, Chief Executive Officer, and President

   Joseph T. Leone      36     Director of ESP and Vice-President of New  Market
                               Development of PES

   Lyle Watkins         46     Director, Chief Operating Officer, and Corporate
                               Secretary

   Michael Fell         60     Chief Financial Officer and Treasurer

   Hugh Dallas          50     Director  of ESP and Vice President of Operations
                               and Service of PES

   Francis Finigan      53     Director of ESP, Divisional President of PES, and
                               Divisional President of AHI

   Leroy Moyer (1)      62     Director
---------------------------
(1)  Member of the Audit Committee

                                      -39-
<PAGE>

         EDWARD TORRES, age 48, has been the Chairman,  Chief Executive Officer,
and President of ESP since  October  2006,  of PES since April 2005,  and of AHI
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  130.59 acres for the
development  of 421  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.  In 2004,  Mr.
Torres joined the  executive  staff of the PES to develop and prepare it for the
next level of business  development.  Pro-Active Business Services along with JP
Global,  Inc.,  an  affiliate of Pete  Torres,  acquired 28 Southern  California
territories  of the PES.  In 2005,  Mr.  Torres  became the  Chairman  and Chief
Executive Officer of the PES. 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 2nd Vice President,  is a Director of the Palm
Springs Economic Development Corporation (PSEDC), and is a member of the Citizen
Task  Force for  establishing  new  development  standards  for the City of Palm
Springs.  Mr. Torres is currently  working with several  Coachella Valley cities
and school districts in creating and developing Green  Technology,  Smart Growth
and  Responsible  Growth  guidelines for developers and builders.  Mr. Torres is
involved  in  establishing  focus  entitlement  guidelines  for the City of Palm
Springs to be used as a model for other Coachella Valley cities. Edward Torres.

         JOSEPH T. LEONE,  age 36, has been a Director of ESP since October 2006
and the  Vice-President  of New Market  Development of PES since April 2006. Mr.
Leone also served as the  President of PES from its  inception in May 2002 until
April  2006  and as a  Director  of PES  from its  inception  in May 2002  until
February  2007.  He has a State  of  California  General  Contractor's  License,
#787196,  holds a  Branch 1 Field  Representative  License  from the  California
Structural  Pest  Control  Board,  #33585,  and is a  Certified  Level  Two Mold
Assessor  by  the  Board  of  American  Society  of  Professional   Real  Estate
Inspectors. Mr. Leone also has served as an advisory board member for the Indoor
Environmental  Standards  Organization  aiding in the initial development of the
IESO standards, and has been recognized as an IESO Certified Trainer.  Currently
Mr. Leone is closely working on the development and growth of the  Environmental
Standards  Organization,  and is certified to train for this  organization.  Mr.
Leone also sits on the  committee for the PIA, the second  largest  professional
insurance  organization  in the country,  which is responsible for the immediate
implementation  of the  "Call to  Action"  set  forth  by the PIA to  adopt  the
moisture survey as the standard within the industry.

                                      -40-
<PAGE>

         LYLE WATKINS, age 46, has been a Director, Chief Operating Officer, and
Corporate Secretary of ESP since October 2006. He was a Director of PES from its
inception in May 2002 until  December 2003 and from January 2005 until  February
2007 and Chief  Financial  Officer of PES from its  inception  in May 2002 until
August 2006. He has been the Chief  Operating  Officer of PES since October 2006
and of AHI since February  2007.  Mr. Watkins has an Applied  Science Degree and
received  an MBA in 1996.  He has served as Chief  Financial  Officer of PES and
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,  USA,  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.

         MICHAEL  FELL,  age 60,  has  been  the  Chief  Financial  Officer  and
Treasurer  of ESP since  October  2006,  of PES since  August 2006,   and of AHI
since February 2007. Mr. Fell is a Certified Management  Accountant ("CMA"), and
graduated from St. Cloud University with a Bachelor of Science in Accounting and
from Syracuse  University a Masters Degree in Finance.  He has held  accounting,
finance, operations and information technology executive positions with American
Express, First Data Corporation and Time Warner Cable. Most recently, he was the
Chief  Executive  Officer  and  Director  of a  San  Francisco-based  technology
start-up company, Onflow, Inc.

         HUGH DALLAS,  age 50, has been a Director of ESP since October 2006 and
the Vice President of Operations and Service of PES since April 2006. Mr. Dallas
also served as  Secretary of PES from its  inception  in May 2002 until  October
2006 and as and a Director of PES from its inception in May 2002,  until October
2007.  Additionally,  Mr.  Dallas has also served in these  capacities  PES, and
affiliate of ESP,  since  February  2001.  Mr.  Dallas holds a Branch II and III
operators license from the California  Structural Pest Control Board, #OPR 9030,
and is a Certified  Level One Mold Assessor by the Board of American  Society of
Professional Real Estate Inspectors.  Mr. Dallas has been a member of the Indoor
Environmental  Standards  Organization,  and has been  recognized as a certified
IESO  trainer.  Mr.  Dallas has also been  certified by the American  Society of
Professional Real Estate Inspectors.

         FRANCIS  ("RICH")  FINIGAN,  age 53, has been a  Director  of ESP since
March 2007, and the Divisional  President of AHI and Divisional President of PES
since February 2007. Mr. Finigan began his career  studying  architecture at the
Boston  Architectural  Center  from  1976-1979,   becoming  an  accredited  home
inspection  instructor  in Texas  and  South  Carolina  upon  graduation.  As an
accredited  instructor,  Mr.  Finigan  was  approved by the Board of Real Estate
Appraisers in each of the States of Vermont,  New  Hampshire,  Maine,  New York,
North Carolina, South Carolina,  Maryland, Virginia,  California,  Colorado, New
Jersey and  Massachusetts,  to teach various courses.  Mr. Finigan then authored
four continuing education seminars for appraisers, called: ENVIRONMENTAL HAZARDS
& THEIR EFFECT ON VALUE,  ARCHITECTURAL  STYLES & BUILDING  TYPES,  FHA/HUD SITE
INSPECTION,  FHA/HUD TEST PREP, AND UNIFORM STANDARDS OF PROFESSIONAL  APPRAISAL
PRACTICE  7 HOUR  REVIEW.  Furthermore,  Mr.  Finigan  was  approved  by the Bar
Association of the State of Vermont to teach continuing legal education  classes
regarding  environmental  hazards.  Mr. Finigan was the chief instructor for the
American  Building  Sciences  Academy  (i.e.  the Allstate Home  Inspection  and
Appraisal  Training  Institute),  and the  author  of a 10-day  home  inspection

                                      -41-
<PAGE>

training  program,  approved by the state of South  Carolina.  Mr. Finigan has a
number of credentials,  such as: lead paint inspector,  successful completion of
the EPA Asbestos  Consultant  Program,  licensing in  Massachusetts as a Title 5
inspector,  a member and President of the American Society of Professional  Real
Estate Inspectors  ("ASPREI") as well as a Certified Master Inspector,  licensed
as a real estate appraiser in the State of Vermont,  registered with the federal
government in accordance with the FIRREA 1989, certified HUD 203K consultant, he
has been given the title of "Certified  Indoor Air Quality  Investigator" by the
American  Indoor Air Quality  Council,  "Certified  Level One Mold  Assessor" by
American Society of Professional Real Estate Inspectors,  "Certified Residential
Mold Inspector" by Indoor Environmental  Standards  Organization  ("IESO"), is a
member of the  Vermont  Association  of Realtors  and  National  Association  of
Realtors, the founding Member the Indoor Environmental  Standards  Organization,
he is a Standards  Committee member, a member of the IESO Board of Directors,  a
member of the American Indoor Air Quality Council, he is a Regional Director for
the State of Vermont,  and he is a Regional  Director for the State of Vermont's
American Indoor Air Quality Council  Chapter.  Furthermore,  Mr. Finigan was the
CEO of a design building company during the mid-1980's, he has been a consultant
and has performed over 4,000 individual  inspections,  testings, and real estate
appraisals over the last 25 years,  he has supervised a number of  environmental
mitigation and remediation  programs since 1978, he founded AHI,  authored three
books and dozens of articles on  environmental  screening  and  inspection,  has
developed a distance  learning  series for home  inspectors  featuring 13 videos
including 5.5 hours on  environmental  hazards and "Mold A Growing  Concern," he
was the Secretary of the Conservation Commission for the City of Somerville from
1986 to 1988, enforcing the Wetlands Protection Act, and was a Selectman for the
town of  Randolph,  Vermont from 1999 to 2002 in which he developed a budget for
all aspects of town government,  a normal operating budget,  and capitol budgets
as well as the creation of laws.

         LEROY MOYER,  age 62, 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 leading edge 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 Securities and Exchange Commission ("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.

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

                                      -42-
<PAGE>

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
Securities  and Exchange  Commission,  such  indemnification  is against  public
policy as expressed in the Act and is therefore unenforceable.

BOARD COMMITTEES

         Mr. Leroy Moyer is the sole member of ESP's Audit Committee.  Mr. Moyer
has been appointed to serve as chairman of the Audit Committee.  Mr. Moyer meets
the applicable  NASD listing  standards for  designation as an "Audit  Committee
Financial Expert."'

AUDITOR INDEPENDENCE

         GENERAL.  Chang Park, CPA, Certified Public Accountants ("CP") is ESP's
principal auditing accountant firm.

         AUDIT FEES.  CP billed ESP $28,200  during the year ended  December 31,
2006 for the  following  professional  services:  audit of the annual  financial
statements  of ESP for the years ended  December 31, 2005 and December 31, 2004,
and the preparation of the Form 10-KSB for the year ended December 31, 2006.

                                      -43-
<PAGE>

REPORT OF THE AUDIT COMMITTEE

         ESP's  Audit   Committee  has  reviewed  and  discussed  ESP's  audited
financial  statements  for the fiscal year ended  December  31, 2006 with senior
management. The Audit Committee has reviewed and discussed with management ESP's
audited financial statements. ESP's Audit Committee has recommended to the Board
of Directors that the audited financial statements of the Company be included in
ESP's Annual  Report on Form 10-KSB for the fiscal year ended  December 31, 2006
for filing with the United  States  Securities  and Exchange  Commission.  ESP'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 ESP's
previous or future  filings under the United States  Securities  Act of 1933, as
amended,  or the  Securities  Exchange  Act of  1934,  as  amended,  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

         We have 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  www.espusa.net.  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 our shareholders.

COMPLIANCE WITH SECTION 16(A) OF EXCHANGE ACT

         Section  16(a)  of  the  Exchange  Act  requires   ESP's  officers  and
directors,  and certain  persons who own more than 10% of a registered  class of
ESP'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 ESP 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 ESP's  Reporting
Persons  during and with respect to the fiscal year ended December 31, 2006 have
been complied with on a timely basis.

                                      -44-
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

EXECUTIVE OFFICER COMPENSATION

         The following table summarizes  compensation paid or accrued by ESP and
its subsidiaries  for the year ended December 31, 2006 for services  rendered in
all  capacities,  by the  chief  executive  officer  and the other  most  highly
compensated executive officers during the fiscal year ended December 31, 2006.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                       NON-EQUITY     NON-QUALIFIED
                                                                      NCENTIVE PLAN     DEFERRED        ALL OTHER
 NAME AND PRINCIPAL                                         OPTION    COMPENSATION    COMPENSATION    COMPENSATION
      POSITION          YEAR         SALARY        BONUS    AWARDS                      EARNINGS           (1)            TOTAL

<S>                     <C>        <C>               <C>       <C>       <C>             <C>             <C>           <C>
Edward L. Torres        2006       $102,500         - 0 -     - 0 -     - 0 -           - 0 -           - 0 -           $102,500
Chief Executive
     Officer

Joseph T. Leone         2006       $75,000          - 0 -     - 0 -     - 0 -           - 0 -           - 0 -           $75,000
Vice-President of
     PES

Michael Fell            2006       $46,256          - 0 -     - 0 -     - 0 -           - 0 -           - 0 -           $46,256
Chief Financial
     Officer

Lyle Watkins            2006       $65,617          - 0 -     - 0 -     - 0 -           - 0 -           - 0 -           $65,617
Chief Operating
  Officer and
  Corporate
  Secretary

Hugh Dallas             2006       $69,167          - 0 -     - 0 -     - 0 -           - 0 -           - 0 -           $69,167
Vice President of
     PES
</TABLE>

EMPLOYMENT AGREEMENTS

         ESP  and  its  subsidiaries   have  not  entered  into  any  employment
agreements  with their  executive  officers to date,  and do not intend to enter
into employment  agreements with them at the time. ESP and its  subsidiaries may
enter into employment agreements with them in the future.

OUTSTANDING EQUITY AWARDS

         None of ESP's executive  officers received any equity awards during the
year ended December 31, 2006.

DIRECTOR COMPENSATION

         None of ESP's directors  received any compensation for their respective
services rendered to the Company during the year ended December 31, 2006.

                                      -45-
<PAGE>

STOCK OPTION PLAN

         Not applicable.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  following  table sets forth the names the  executive  officers and
directors of ESP and all persons known by ESP to beneficially  own 5% or more of
the issued and outstanding common stock of ESP at March 31, 2007:
<TABLE>
<CAPTION>
         NAME AND ADDRESS                 NUMBER OF SHARES OWNED(8)               PERCENTAGE OF OWNERSHIP(1)(2)
          OF STOCKHOLDER
------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>                                          <C>
ED TORRES(3)                                      4,007,000                                    27%
1111 E. Tahquitz Canyon Way,
Suite 110
Palm Springs, CA 92262

JOSEPH T. LEONE(4)                                  970,000                                     6%
1111 E. Tahquitz Canyon Way,
Suite 110
Palm Springs, CA 92262

LYLE WATKINS(5)                                   1,000,000                                     7%
1111 E. Tahquitz Canyon Way,
Suite 110
Palm Springs, CA 92262

HUGH DALLAS(6)                                      970,000                                     6%
1111 E. Tahquitz Canyon Way,
Suite 110
Palm Springs, CA 92262

MICHAEL FELL (7)                                  1,000,000                                     7%
1111 E. Tahquitz Canyon Way,
Suite 110
Palm Springs, CA 92262

FRANCIS ("RICH") FINIGAN (9)                        350,000(9)                                  2%
91 Summer Street
Barre, Vermont, 05641
                                                  ---------                                 ---------
TOTALS                                            8,297,000                                    56%
                                                  =========                                 =========
</TABLE>
-------------------------
(1)      Except as pursuant to applicable  community  property laws, the persons
         named in the table have sole voting and  investment  power with respect
         to all shares of common stock  beneficially  owned. The total number of
         issued and  outstanding  shares and the total number of shares owned by
         each person does not include  unexercised  warrants and stock  options,
         and is calculated as of March 31, 2007. The  percentages are based on a
         total of 14,743,624 shares of common stock outstanding.

                                      -46-
<PAGE>


(2)      The balance of the shares of ESP's common stock is currently  primarily
         owned by unaffiliated consultants and outside investors.
(3)      Edward  Torres  is  the  Chairman  of the  Board  of  Directors,  Chief
         Executive Officer, and President of ESP, PES and AHI.
(4)      Joseph T. Leone is a Vice-President of PES and a Director of ESP.
(5)      Lyle Watkins is the Chief Operating  Office and Corporate  Secretary of
         ESP, PES, and AHI and a Director of ESP.
(6)      Hugh Dallas is the Vice  President of Operations and Service of PES and
         a Director of ESP.
(7)      Michael Fell is the Chief Financial Officer of ESP, PES, and AHI.
(8)      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 the following  individual  shareholders of ESP:
         Edward Torres,  Michael Fell, Lyle Watkins,  Joseph Leone, Hugh Dallas,
         and Peter Torres (collectively,  the "Executive").  Peter Torres is the
         brother of Edward  Torres.  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 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>

                                       NUMBER OF SHARES               LOCK-UP PERIOD AND
     NAME OF EXECUTIVE                SUBJECT TO LOCK-UP               RELEASE SCHEDULE
     -----------------              ----------------------         -------------------------

<S>                                        <C>                        <C>
     Edward L. Torres                      3,007,000                  11/1/06    :   601,400
                                                                      11/1/07    :   601,400
                                                                      11/1/08    :   601,400
                                                                      11/1/09    :   601,400
                                                                      11/1/10    :   601,400

     Michael Fell                          1,000,000                  11/1/06    :   200,000
                                                                      11/1/07    :   200,000
                                                                      11/1/08    :   200,000
                                                                      11/1/09    :   200,000
                                                                      11/1/10    :   200,000

     Edward L Torres                       1,000,000                  11/1/06    :   200,000
                                                                      11/1/07    :   200,000
                                                                      11/1/08    :   200,000
                                                                      11/1/09    :   200,000
                                                                      11/1/10    :   200,000

     Lyle Watkins                          1,000,000                  11/1/06    :   200,000
                                                                      11/1/07    :   200,000
                                                                      11/1/08    :   200,000
                                                                      11/1/09    :   200,000
                                                                      11/1/10    :   200,000

     Joe Leone                               970,000                  11/1/06    :   194,000
                                                                      11/1/07    :   194,000
                                                                      11/1/08    :   194,000
                                                                      11/1/09    :   194,000
                                                                      11/1/10    :   194,000

                              -47-
<PAGE>

     Hugh Dallas                             970,000                  11/1/06    :   194,000
                                                                      11/1/07    :   194,000
                                                                      11/1/08    :   194,000
                                                                      11/1/09    :   194,000
                                                                      11/1/10    :   194,000

     Peter Torres                            420,000                  11/1/06    :   420,000
</TABLE>

(9)      Francis ("Rich") Finigan is a Director of ESP and Divisional  President
         of the PES and AHI. The current  share figure does not include up to an
         additional  650,000  shares of ESP's common stock that may be issued to
         Mr. Finigan  throughout  2007 pursuant to the Stock Purchase  Agreement
         between ESP and Mr. Finigan for the acquisition of AHI.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Francis X. Finigan, Director of ESP and Divisional President of PES and
AHI, holds title to the two leased office spaces in Barre,  Vermont. Mr. Finigan
leases these offices to Allstate  Home  Inspection  and Household  Environmental
Testing,  Ltd., a Vermont  wholly-owned  subsidiary of ESP, pursuant to one year
leases at $900 per month and $1,400 per month, respectively.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         EXHIBIT  DESCRIPTION

         3.1      Articles of Incorporation (1)
         3.2      Amendment to Articles of Incorporation (1)
         3.3      Bylaws (1)
         4.1      Specimen Certificate for Common Stock (1)
         4.2      Specimen Warrant to Purchase Shares of Common Stock (5)
         10.1     Stock  Purchase  Agreement  with  Allstate  Home  Inspection &
                  Household Environmental Testing, Ltd. (4)
         10.2     Redemption,  Lock-Up and Vesting  Agreement  dated November 1,
                  2006 (3)
         10.3     Plan of  Reorganization  and  Stock  Purchase  Agreement  with
                  Pacific Environmental Sampling, Inc., dated as of July 1, 2006
                  (2)
         10.4     Asset  Purchase  Agreement  with NPS, Inc.  dated December 12,
                  2006 (5)
         10.5     Consulting Agreement with Craig Grossman (5)
         14.1     Code of Conduct (5)
         31.1     Section 302 Certification of Chief Executive Officer (5)
         31.2     Section 302 Certification of Chief Financial Officer (5)
         32.1     Section 906 Certification (5)


            (1)Incorporated  by  reference  from prior public  reports  filed by
               Glas-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 October 11, 2006.

            (3)Incorporated  by reference from the Report on Form 8-K filed with
               the Securities and Exchange Commission on December 31, 2006.

            (4)Incorporated  by reference from the Report on Form 8-K filed with
               the Securities and Exchange Commission on February 20, 2007.

            (5) Attached hereto as an exhibit.

                                      -48-
<PAGE>

(b)      The  following  is a list of  Current  Reports on Form 8-K filed by ESP
         during and  subsequent  to the last  quarter  of the fiscal  year ended
         December 31, 2006.

         (1)      Form 8-K, dated October 12, 2006 filed with the SEC reflecting
                  the reverse merger  between  Pacific  Environmental  Sampling,
                  Inc. and Glas-Aire Industries Group, Ltd.

         (2)      Form  8-K,   dated  December  31,  2006  filed  with  the  SEC
                  reflecting  the  redemption,  lock-up  and  vesting  agreement
                  applicable to management.

         (3)      Form  8-K,  dated  February  20,  2007,  filed  with  the  SEC
                  reflecting  the  Stock  Purchase  Agreement  between  ESP  and
                  Allstate Home  Inspection & Household  Environmental  Testing,
                  Ltd.

         (4)      Form 8-K, dated March 30, 2007,  filed with the SEC reflecting
                  to  appointment  of  Francis  X.  Finigan as a member of ESP's
                  Board of Directors.

         (5)      Form 8-K,  dated April 4, 2007,  filed with the SEC reflecting
                  to  appointment  of Leroy  Moyer as a member of ESP's Board of
                  Directors and a member of ESP's Audit Committee.

ITEM 14.      PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Chang Park, CPA ("CP") is ESP's  principal  auditing firm. The CPA firm
has not provided other non-audit services to the Company. The Board of Directors
approved the engagement of CP before CP rendered audit and non-audit services to
ESP and the Company.

AUDIT FEES

         CP billed ESP $28,200 for the following professional services: audit of
the annual financial statements of ESP for the years ended December 31, 2005 and
December 31, 2004, and the preparation of the Forms 10-KSB and 10-Q for the year
ended December 31, 2005.



                                      -49-

<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 17, 2007      ENVIRONMENTAL SERVICE PROFESSIONALS, INC.


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

                           By:  \s\ Michael Fell
                                 -----------------------------------------------
                                   Michael Fell, Chief Financial Officer
                                   (Principal Accounting 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 Torres                                  Dated: April 17, 2007
      -------------------------------------------
      Edward Torres, Chairman of the Board

By:  \s\ Joseph T. Leone                                Dated: April 17, 2007
      -------------------------------------------
      Joseph T. Leone, Director

By:  \s\ Lyle Watkins                                   Dated: April 17, 2007
      -------------------------------------------
      Lyle Watkins, Director

By:  \s\ Hugh Dallas                                    Dated: April 17, 2007
      -------------------------------------------
      Hugh Dallas, Director

By:  \s\ Francis ("Rich") Finigan                       Dated: April 17, 2007
      -------------------------------------------
      Francis ("Rich") Finigan, Director

By:  \s\ Leroy Moyer                                    Dated: April 17, 2007
      -------------------------------------------
      Leroy Moyer, Director


                                      -50-