SB-2/A

As filed with the Securities and Exchange Commission on February 13, 2006

Registration No. 333-130889

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 1
TO

FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

AMERICAN MOLD GUARD, INC.
(Exact name of Registrant as specified in its charter)

California	1799	74-3077656
(State or Other Jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
Incorporation or Organization)	Classification Code Number)	Identification No.)

30200 Rancho Viejo Road
Suite G
San Juan Capistrano, California 92675
(949) 240-5144
(949) 240-6144 Facsimile
(Address, including zip code, and telephone number, including area code, of Registrant’s executive offices)

Thomas Blakeley
Chief Executive Officer
American Mold Guard, Inc.
30200 Rancho Viejo Road
Suite G
San Juan Capistrano, California 92675
(949) 240-5144
(949) 240-6144 Facsimile
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Please send copies of all communications to:

Joel J. Goldschmidt, Esq.	Debra K. Weiner, Esq.
Morse, Zelnick, Rose & Lander LLP	Wickersham & Murphy, P.C.
405 Park Avenue	430 Cambridge Avenue
Suite 1401	Suite 100
New York, New York 10022	Palo Alto, California 94306
(212) 838-8269	(650) 323-6400
(212) 838-9190 Facsimile	(650) 323-1108 Facsimile

     Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), check the following box. |X|

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |   |

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |   |

     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |   |

     If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. |   |

CALCULATION OF REGISTRATION FEE

			Proposed			Proposed
			Maximum			Maximum
	Amount		Offering			Aggregate		Amount
Title of Each Class of	to be		Price Per Unit/			Offering		of
Securities to be Registered	Registered (1)		Share/Warrant			Price (2)		Registration Fee
Units, consisting of two shares of common
stock, no par value, two Class A warrants
and one Class B warrant, each to purchase
one share of common stock	1,265,000	(1)	$	14.00	(2)	$	17,710,000.00	$	1,894.97
Common stock included in the units	2,530,000	(1)		—			—		—
Class A warrants to purchase common
stock included in the units	2,530,000	(1)		—			—		—
Class B warrants to purchase common
stock included in the units	1,265,000	(1)		—			—		—
Common stock underlying the Class A
warrants included in the units(3)	2,530,000	(1)	$	10.50	(2)	$	26,565,000.00	$	2,842.46
Common stock underlying the Class B
warrants included in the units(3)	1,265,000	(1)	$	14.00	(2)	$	17,710,000.00	$	1,894.97
Representative’s warrants	110,000			—			—		(4	)
Units issuable upon exercise of the
representative’s warrants	110,000		$	16.80	(2)	$	1,848,000.00	$	197.74
Common shares included in the units
underlying the representative’s warrants(3)	220,000			—			—		—
Class A warrants to purchase common
stock included in units issuable upon
exercise of the representative’s warrants	220,000			—			—		—
Class B warrants to purchase common
stock included in the units issuable upon
exercise of the representative’s warrants	110,000			—			—		—
Common stock underlying the Class A
warrants to purchase common stock
included in units issuable upon exercise of
the representative’s warrants(3)	220,000		$	10.50	(2)	$	2,310,000.00	$	247.17
Common stock underlying the Class B
warrants to purchase common stock
included in units issuable upon exercise of
the representative’s warrants(3)	110,000		$	14.00	(2)	$	1,540,000.00	$	164.78
Total	12,485,000			—		$	67,683,000	$	7,242.09	(5)

(1)	Includes 165,000 units issuable upon exercise of underwriters’ over-allotment option.
(2)	Estimated solely for purposes of calculating the amount of the registration fee paid pursuant to Rule 457(g) under the Securities Act.
(3)	Pursuant to Rule 416 under the Securities Act, there are also being registered hereby such additional indeterminate number of shares as may become issuable pursuant to the antidilution provisions of the warrants.
(4)	No registration fee required pursuant to Rule 457 of the Securities Act.
(5)	$7,672.95 was previously paid prior to the initial filing of this registration statement.

     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)

Dated February 13, 2006

1,100,000 Units

each consisting of

two shares of common stock, two Class A Warrants and one Class B Warrant

     This is our initial public offering. We are offering 1,100,000 units, each unit consisting of two shares of common stock, two Class A warrants and one Class B warrant. Each Class A warrant entitles its holder to purchase one share of common stock at an exercise price equal to 75% of the initial unit offering price. Each Class B warrant entitles its holder to purchase one share of common stock at an exercise price equal to 100% of the initial unit offering price. The Class A and Class B warrants are exercisable at any time after they become separately tradable until their expiration date, five years after the date of this prospectus. We may redeem some or all of the Class A warrants at a price of $0.25 per warrant at any time beginning six months after the date of this prospectus by giving the holders not less than 30 days’ notice, which we may do at any time after the closing price for our common stock on the Nasdaq Capital Market has equaled or exceeded 100% of the initial unit offering price for any five consecutive trading days. We may redeem some or all of the Class B warrants, at a price of $0.25 per warrant at any time beginning six months after the date of this prospectus by giving the holders not less than 30 days’ notice, which we may do at any time after our gross revenues, as confirmed by an independent audit, for any 12-month period preceding the notice, are equal to or greater than $20 million.

     We anticipate that the initial public offering price of the units will be in the range of $12.00 - $14.00 per unit.

     Initially, only the units will trade. The common stock and the warrants will begin trading separately on the 30th calendar day following the date of this prospectus. Once separate trading in the common stock and warrants begins, trading in the units will cease, and the units will be delisted.

     We have applied to list the units, common stock, the Class A warrants and the Class B warrants on the Nasdaq Capital Market and the Pacific Exchange under the symbols “AMGIU,” “AMGI,” “AMGIW” and “AMGIZ,” respectively.

     Investing in these units involves significant risks. See “Risk Factors” beginning on page 7.

     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the disclosures in this prospectus. Any representation to the contrary is a criminal offense.

	Per Unit	Total
Public offering price	$	$
Underwriting discount	$	$
Proceeds to us, before expenses	$	$

     We have also agreed to pay Paulson Investment Company, Inc., the representative of the underwriters of this offering, a nonaccountable expense allowance equal to 3% of the total public offering price for the 1,100,000 units offered by this prospectus and to issue to Paulson a warrant covering 110,000 units, identical to the units offered by this prospectus, having an exercise price per unit equal to 120% of the initial unit public offering price.

     We have also granted Paulson a 45-day option to purchase up to an additional 165,000 units to cover over-allotments.

Paulson Investment Company, Inc.                
Capital Growth Financial, LLC
                        Chicago Investment Group, LLC

The date of this prospectus is                , 2006

     Unless specified to the contrary or the context indicates otherwise, the use of the pronouns “we,” “us,” “our,” and the like shall be deemed to refer to American Mold Guard, Inc., its predecessors, its subsidiaries and their respective predecessors.

PROSPECTUS SUMMARY

     This summary highlights selected information from this prospectus and does not contain all of the information that is important to you. For a more complete understanding of this offering, we encourage you to read this entire prospectus, including our financial statements and the notes to those statements. Unless indicated to the contrary, and other than the Consolidated Financial Statements and notes thereto, all information in this prospectus has been retroactively adjusted to reflect the conversion of all of the outstanding shares of our Series A and Series B Convertible Preferred Stock into shares of common stock on the date of this prospectus and a one-for-.339765718 reverse stock split effective on                                    , 2006.

     American Mold Guard provides mold prevention services to the residential home building industry. Mold prevention services is a growing service application that is currently being used by many builders throughout the United States. We believe that the low cost of prevention compared to the high costs of litigation and remediation provides a compelling value proposition to the builder. Additionally, we believe our value proposition extends to the homeowner by providing a level of health and property liability protection.

     Mold contamination is a major contributor to odor, premature aging and spoilage in homes. In addition, mold can cause health problems in humans. Due to the increasing frequency of mold contamination in residential real estate and the heightened public awareness of health problems associated with mold contamination, mold has become a prevalent issue in real estate litigation. Insurance companies are challenging mold coverage under existing policies and writing new policies that specifically exclude mold coverage. We believe that, as mold coverage litigation matures and new exemptions are incorporated into insurance policies, those who claim injury from mold have and will be forced to seek compensation for their alleged damages from other parties such as lenders, builders, building owners, designers, engineers and architects. We believe that this shift in mold responsibility focus will further drive the growth of the mold prevention services industry.

     Our solution to the problem of mold contamination involves removing all visible mold contamination from wood, concrete and other construction materials and applying a surface coating solution that prevents microbes from growing on treated surfaces. The materials we use are non-toxic, environmentally safe and provide long-term efficacy against microbial growth. We back our service with a warranty that extends for the entire “statute of repose,” the period during which, under state law, builders have continuing liability for construction defects. This warranty covers both property damage and personal injury arising from mold contamination on any surface that we treat. The personal injury aspect of this warranty is backed by a $2 million pollution liability mold giveback provision under our general liability policy with Evanston Insurance Company, rated A (excellent) by A.M. Best Company.

     Our initial business development efforts have focused on single and multi-family residential new construction because we believe this market segment provides our greatest growth opportunity. We currently operate 11 service centers in four regions - California, Florida, Texas and Louisiana. We have provided our services to over 350 national and regional single- and multi-family home builders. Our clients include national single-family builders such as Lennar Corporation, DR Horton, Inc. and Centex Corporation, regional single-family home builders such as Issa Homes, Inc., The McCaffrey Group and Lenox Homes, and multi-family home builders, such as Global Construction Company, L.L.C., Hanover R.S. Limited Partnership, Bosa Development and Opus West Construction, Inc. For the nine month period ended September 30, 2005, national single-family home builders accounted for approximately 35% of our revenue, regional single-family home builders accounted for approximately 35% of our revenue and multi-family home builders, accounted for approximately 28% of our revenue.

     We believe that our revenue growth has validated our business strategy even though we continue to lose money. For 2003, our revenues were $182,000. In 2004, our revenues were $1.55 million. For the nine month period ended September 30, 2005, our revenues were $4.1 million. During these periods we incurred losses of $1.2 million, $3.3 million and $3.0 million, respectively.

     Our objective is to be the dominate provider of mold prevention services in the building industry through the accumulation of market share and through the use of the “Mold Guard” brand. Our primary objective is to continue to build market share. The key elements of our growth strategy include:

• maximizing our first mover advantage in the regions we currently serve by aggressively pursuing direct sales to large national and regional builders;
  
  
• expanding into new regions by capitalizing on our existing relationships with builders and by aggres- sively responding to new opportunities, such as the rebuilding of New Orleans and other Gulf Coast communities;
  
  
• continuing to build our “Mold Guard” brand identity;

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• creating industry demand by educating lenders, builders, contractors, architects, insurance companies, and the general public on the health risks and the legal ramifications associated with mold exposure, as well as on the value of our service;
  
  
• expanding our service offerings; and
  
  
• expanding into new market segments.

Corporate Information

     Our principal executive office is temporarily located at 30200 Rancho Viejo Road, Suite G, San Juan Capistrano, California 92675 and our telephone number is (949) 240-5144. Our web address is www.americanmoldguard.com. None of the information on our website is part of this prospectus.

The Offering

Securities offered	1,100,000 units, each unit consisting of two shares of
	common stock, two Class A redeemable common stock
	purchase warrants and one Class B redeemable common
	stock purchase warrant. Initially, only the units will trade.
	The common stock and the warrants included in the units
	will not trade separately until the 30th calendar day fol-
	lowing the date of this prospectus or the first trading day
	thereafter if the 30th day is a weekend or holiday. Once
	separate trading in the common stock and warrants com-
	mences, the units will cease trading and will be delisted.
Shares of common stock to be outstanding
after this offering	3,740,295
Warrants:
Number of Class A warrants to be outstanding
after this offering	2,430,770
Number of Class B warrants to be outstanding
after this offering	1,215,385
Exercise terms	Each Class A warrant entitles its holder to purchase one
	share of common stock at an exercise price equal to 75%
	of the initial unit offering price. Each Class B warrant
	entitles its holder to purchase one share of common stock
	at an exercise price equal to 100% of the initial unit offer-
	ing price. The Class A and Class B warrants are exercis-
	able at any time after they become separately tradable.
Expiration date	, 2011
Redemption	We may redeem some or all of the warrants at any time
	beginning six months after the date of this prospectus, at a
	price of $0.25 per warrant, on 30 days’ notice to the hold-
	ers. However, we may redeem the Class A warrants only
	if the closing price for our common stock, as reported on
	the Nasdaq Capital Market has equaled or exceeded 100%
	of the initial unit offering price for any five consecutive
	trading days. We may redeem the Class B warrants only if
	our gross revenue, as confirmed by an independent audit,
	for any 12-month period preceding the notice, is equal to
	or greater than $20 million.

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Proposed Nasdaq Capital Market and Pacific
Exchange symbols	Units	AMGIU
	Common stock	AMGI
	Class A Warrants	AMGIW
	Class B Warrants	AMGIZ
Risk factors	Investing in our securities involves a high degree of risk.
	As an investor, you should be able to bear the loss of
	your entire investment. You should carefully consider
	the information set forth in the Risk Factor section
	beginning on page 7 of this prospectus in evaluating an
	investment in our securities. In particular, you should
	consider our ability to continue as a going concern, our
	limited operating history, our history of losses and cash
	flow deficits, our need for capital, the newness of the
	industry in which we operate and our lack of any propri-
	etary products or systems.

     The number of shares of common stock and the number of Class A and Class B warrants to be outstanding after this offering includes:

• 230,770 shares, 230,770 Class A warrants and 115,385 Class B warrants included in the units to be issued to the holders of $1.5 million aggregate principal amount of our 10% unsecured promissory notes due August 31, 2006 (the “Unsecured Notes”), assuming an initial public offering price of $13.00 per unit. The actual number of units that will be issued to the holders of the Unsecured Notes will depend on the actual initial public offering price of the units;

• an aggregate of 74,146 shares of common stock issued in December 2005, of which 56,085 were issued for services, 16,022 were issued in satisfaction of indebtedness in the amount of $58,947 and 2,039 were issued as an interest payment;
  
  
• 1,359 shares of common stock that we will issue in February 2006 as an interest payment; and
  
  
• 66,222 shares of common stock that we will issue on the date of this prospectus for legal services under an agreement that we entered into in December 2005.

     Unless otherwise stated, the information contained in this prospectus assumes no exercise of:

• any of the Class A and Class B warrants (including the Class A and Class B warrants that will be issued to the holders of the Unsecured Notes);

• the over-allotment option granted to the representative to purchase up to an additional 165,000 units;
  
  
• warrants to purchase 110,000 units granted to the representative in connection with this offering; and

• any other warrants and options outstanding on the date of this prospectus.

     In addition, except where indicated otherwise, none of the information in this prospectus assumes voluntary conversion of our 10% secured convertible notes in the aggregate principal amount of $1,950,000 and the accrued interest (the “Convertible Notes”) into shares of our Series C Convertible Preferred Stock or the conversion of those shares into an equal number of shares of our common stock. Based on the accrued interest through January 31, 2006, we estimate that the Convertible Notes are convertible into approximately 631,010 shares of Series C Preferred Stock, which would be further convertible into an equal number of shares of common stock.

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Summary Financial Information

	From inception
	(January 13,
	2003) through			Year ended			Nine months ended September 30,
	December 31,			December 31,
	2003			2004				2004			2005
	(in thousands, except share and per share data)
							(unaudited)
Consolidated statement of
operations data:
Revenue	$	182		$	1,553		$	859		$	4,135
Gross profit	$	(46	)	$	333		$	180		$	863
Selling, general and administrative
expenses	$	1,137		$	3,303		$	2,117		$	3,351
Loss from operations	$	(1,183	)	$	(2,970	)	$	(1,938	)	$	(2,488	)
Net loss	$	(1,184	)	$	(3,290	)	$	(1,983	)	$	(3,001	)
Dividends on cumulative preferred stock		38			114			85			90
Net loss applicable to
common shareholders	$	(1,222	)	$	(3,404	)	$	(2,068	)	$	(3,091	)
Net loss per share-basic and diluted	$	(2.03	)	$	(4.26	)	$	(2.65	)	$	(3.31	)
Cumulative preferred stock
dividends per share	$	(0.06	)	$	(0.15	)	$	(0.11	)	$	(0.10	)
Net loss per share attributable to
common stock	$	(2.09	)	$	(4.41	)	$	(2.76	)	$	(3.41	)
Weighted average number of shares
outstanding-basic and diluted		583,632			772,189			749,062			906,572

     The table below summarizes our consolidated balance sheet data at September 30, 2005 on an actual basis, on a pro forma basis and pro forma as adjusted for this offering. The pro forma data takes into account:

• a $200,000 unsecured loan that we incurred in November 2005;
  
  
• 230,770 shares, 230,770 Class A warrants and 115,385 Class B warrants included in the units to be issued to the holders of the Unsecured Notes, assuming an initial public offering price of $13.00 per unit. The actual number of units that will be issued to the holders of the Unsecured Notes will depend on the actual initial public offering price of the units;

• conversion of all of the Series A and Series B Preferred Stock into 324,307 shares of common stock;
  
  
• an aggregate of 74,146 shares of common stock issued in December 2005, of which 56,085 were issued for services, 16,022 were issued in satisfaction of indebtedness in the amount of $58,947 and 2,039 were issued as an interest payment;
  
  
• 1,359 shares of common stock that we will issue in February 2006 as an interest payment; and
  
  
• 66,222 shares of common stock that we will issue on the date of this prospectus for legal services under an agreement that we entered into in December 2005.

     The pro forma as adjusted data also takes into account our receipt of approximately $12 million of estimated net proceeds from this offering and the use of approximately $5 million of proceeds to repay our outstanding indebtedness, including the Convertible Notes.

Consolidated balance sheet data:

	September 30, 2005
	(unaudited)
							Pro forma
	Actual			Pro forma			as adjusted
				(in thousands)
Current assets	$	2,461		$	2,661		$	9,581
Working capital (deficit)	$	(2,765	)	$	(2,706	)	$	4,294
Total assets	$	2,801		$	3,001		$	10,817
Total liabilities	$	5,929		$	5,253		$	1,069
Shareholders' equity (deficit)	$	(3,127	)	$	(2,252	)	$	9,748

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RISK FACTORS

     This offering and an investment in our securities involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus, including our financial statements and the notes to those statements, before you purchase any units. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, could negatively impact our business, results of operations or financial condition in the future. If any of the following risks and uncertainties develops into actual events, our business, results of operations or financial condition could be adversely affected. In those cases, the trading price of our securities could decline and you may lose all or part of your investment.

Risks Related to Our Business

We have a history of losses and cash flow deficits and we expect to continue to operate at a loss and to have negative cash flow for the foreseeable future. This could cause the price of our stock to decline.

     Since our inception, we have incurred net losses in every quarter through September 30, 2005. At September 30, 2005, we had cumulative net losses of $7.5 million and a working capital deficit of $2.8 million. We also have negative cash flows from operations. Historically, we have funded our operations from internally generated funds, proceeds from the sale of debt and equity securities, payment of obligations with common stock and negative working capital. From inception through September 30, 2005, we raised approximately $4.6 million from the issuance of debt and $1.5 million from the issuance of preferred equity securities. Our growth strategy is to increase our market share by opening more service centers. This is likely to result in additional losses and negative cash flow for the foreseeable future. We cannot assure you that we will ever become profitable.

Our independent registered public accounting firm has substantial doubt about our ability to continue as a going concern. If we cannot continue as a going concern, you will lose your entire investment.

     In their report in connection with our 2003 and 2004 financial statements, our independent registered public accounting firm included an explanatory paragraph stating that because we have incurred net losses and have a net capital deficiency and because we require additional funds to meet our obligations and fund the costs of our operations, there is substantial doubt as to our ability to continue as a going concern. If we cannot continue as a going concern, it is likely that your entire investment will be lost. Our ability to continue as a going concern will depend, in large part, on our ability to obtain additional financing—preferably from the sale of equity securities—to fund future operations and to significantly increase our sales. This offering is a principal element of our plan to move towards profitable operations. Even if this offering is completed, if, in the future, we are unable to achieve positive cash flow from operations or secure additional financing as needed, we may again experience the risk that we will not be able to continue as a going concern.

We have breached various covenants related to the Convertible Notes. If the holder of this debt calls the notes, we may be forced into bankruptcy.

     The Convertible Notes are in default because we have breached various covenants that we agreed to when we issued them. The holder has not yet sent us a default notice although it is aware of the breaches. If the holder were to call the notes, demand immediate payment and obtain a final judgment before this offering is completed, we may have to declare bankruptcy because we do not have the ability to repay the notes.

Our future success depends on broad market acceptance of mold prevention services, which may not happen. In that case, we may never achieve profitability.

     The market for mold prevention services is relatively new and small. As is typical of a new and rapidly evolving industry, the demand for, and market acceptance of, mold prevention services is highly uncertain. Currently, mold prevention services are not required by local building codes or the insurance industry, making it even more difficult for us to market our services. In order to be successful, we must educate property owners, builders and the public on the importance of mold prevention. We believe that one of the major obstacles we face is the lack of knowledge of the importance of maintaining indoor environments mold-free. We spend a considerable amount of time educating property owners, builders, contractors and the general public on the health risks associated with mold exposure and the value of our services. We can provide no assurances that these efforts will be successful or result in increased revenue. Our success also depends on builde rs allocating a portion of their construction budget for problem avoidance. In the event that builders do not have funds available for such purpose, the sales of our services will be adversely affected. We cannot assure you that the demand for mold preven-

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tion service will become widespread. If the market for mold prevention services fails to develop or develops more slowly than we anticipate, our business could be adversely affected.

Our limited operating history makes it difficult for us to accurately forecast our revenues and appropriately plan our expenses.

     We commenced operations in September 2002 and incorporated in January 2003. As a result of our limited operating history, it is difficult to accurately forecast our revenue and plan our operating expenses. Revenues and operating results are difficult to forecast because they generally depend on the volume and timing of the job orders we receive, which are uncertain. Some of our expenses are fixed and, as a result, we may be unable to adjust our spending in a timely manner to compensate for any unexpected shortfall in revenues. This inability could cause our net income in a given quarter to be lower than expected or our net loss to be higher than expected. In addition, our limited operating history makes it difficult to evaluate our business and prospects. An investor should consider our business and prospects in light of the risks, uncertainties and difficulties frequently encountered by early stage companies, including limited capital, marketing and sales obstacles and delays, inability to gain customer acceptance of our services, inability to attract and retain high-quality and talented executives and other personnel and significant competition. If we are unable to successfully address these risks, our business may not grow, our stock price may suffer and/or we may be unable to stay in business.

A significant portion of the proceeds of this offering will be used to repay debt. The balance may not be sufficient to fully execute on our growth strategy. As a result, we may need to raise additional capital in the future.

     Approximately 44% of the net proceeds of this offering will be used to repay existing indebtedness, including indebtedness owed to a number of our existing shareholders, and only approximately 53% of the estimated net proceeds of this offering, or $6.4 million, will be used for expansion, sales and marketing, capital expenditures and working capital. This amount will not be sufficient to execute our growth strategy in full. Since our growth strategy contemplates a national roll-out of service centers in targeted markets, we anticipate that we will need to raise additional capital in the future, particularly if the warrants included in the units offered under this prospectus are not exercised. We could also face unforeseen costs, such as an increase in the cost of raw materials and operating expenses, which would further strain our limited financial resources. Also, our revenues could fall short of our projections because builders could discontinue ordering our services or for reasons unrelated to our services, such as severe weather or natural disasters in a region of the country where we have projected significant sales or a decline in the new construction segment of the residential housing construction industry, which would further increase our operating losses and negative cash flow.

If we need to raise additional capital in the future, we may not be able to do so on terms that are reasonable, if at all. This could cause our operating and financial performance to decline from previous levels or to be lower than expected, which, in turn, could negatively impact the market price of our securities.

     Other than this offering, we have no arrangements or commitments for additional financings. We do not have any currently identified sources of additional capital on which we could rely. New sources of capital may not be available to us when we need it or may be available only on terms we would find unacceptable. If capital is not available on satisfactory terms, or is not available at all, we may be unable to continue to fully develop our business or take advantage of new business opportunities. In addition, our results of operations may decline from previous levels or may fail to meet expectations because of the higher cost of capital. As a result, the price of our publicly traded securities may decline, causing you to lose all or part of you investment. Finally, equity financing, if obtained, could result in additional dilution to our existing shareholders.

We may not succeed in establishing the “Mold Guard” brand, which could prevent us from acquiring customers and increasing our revenues.

     A significant element of our business strategy is to build market share by continuing to promote and establish the “Mold Guard” brand. If we cannot establish our brand identity, we may fail to build the critical mass of customers required to substantially increase our revenues. Promoting and positioning our brand will depend largely on the success of our sales and marketing efforts and our ability to provide a consistent, high quality customer experience. To promote our brand, we expect that we will incur substantial expenses related to advertising and other marketing efforts. If our brand promotion activities fail, our ability to attract new customers and maintain customer relationships will be adversely affected, and, as a result, our financial condition and results of operations will suffer.

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There is very little, if anything, about our service that is proprietary. As such, we are likely to face increasing competition, making it more difficult for us to capture market share.

     We do not own any intellectual property or other proprietary rights. The raw materials that we use are not owned or produced by us and are available commercially. Although we believe that the methodology we use in delivering our services is proprietary, there is very little we can do to protect it. Except for our senior executive officers, none of our employees or contractors sign confidentiality, non-compete and non-disclosure agreements. With virtually no barriers to entry, any number of potential competitors could enter the market and provide the same services that we provide. Competitors may misappropriate our methodology or our methodology may otherwise become known or independently developed by competitors. This could materially and adversely affect our business and the value of your investment.

As public awareness of the health risks and economic costs of mold contamination grows, we expect competition to increase, which could make it more difficult for us to grow and achieve profitability.

     We expect competition to increase as awareness of mold-related problems increases and as we demonstrate the success of mold prevention. A rapid increase in competition could negatively affect our ability to develop new and retain our existing clients and the prices that we can charge. Many of our competitors and potential competitors have substantially greater financial resources, customer support, technical and marketing resources, larger customer bases, longer operating histories, greater name recognition and more established relationships than we do. We cannot be sure that we will have the resources or expertise to compete successfully. Compared to us, our competitors may be able to:

• develop and expand their products and services more quickly;
  
  
• adapt faster to new or emerging technologies and changing customer needs and preferences;
  
  
• take advantage of acquisitions and other opportunities more readily;
  
  
• negotiate more favorable agreements with vendors and customers;
  
  
• devote greater resources to marketing and selling their products or services; and
  
  
• address customer service issues more effectively.

     Some of our competitors may also be able to increase their market share by providing customers with additional benefits or by reducing their prices. We cannot be sure that we will be able to match price reductions by our competitors. In addition, our competitors may form strategic relationships to better compete with us. These relationships may take the form of strategic investments, joint-marketing agreements, licenses or other contractual arrangements that could increase our competitors’ ability to serve customers. If our competitors are successful in entering our market, our ability to grow or even sustain our current business could be adversely impacted.

A significant portion of our sales is derived from a limited number of customers. If any of these customers decide they no longer will use our services, our financial performance will be severely and adversely impacted.

     For 2004, we derived approximately 30% of our revenue from Lennar Corporation or one of its divisions or subsidiaries. For the nine months ended September 30, 2005, the Lennar entities accounted for approximately 31% of our revenue. We cannot assure you that we can sustain this level of sales to this customer. If we do not diversify our customer base and this customer either stops using our services or reduces its reliance on us, our losses will increase.

If we fail to keep up with changes in our industry, we will become less competitive, limiting our ability to generate new business and increase our revenues.

     In order to remain competitive, serve our customers effectively and increase our revenue, we must respond on a timely and cost-efficient basis to changes in technology, industry standards and procedures and customer preferences. We need to continuously develop new procedures and technologies that address new developments in the construction industry in general, the market segments we serve and the regions in which we operate, as well as laws, regulations, rules, standards, guidelines, releases and other pronouncements that are periodically issued by legislatures, government agencies, courts, professional associations and others. In some cases these changes may be significant and the cost to comply with these changes may be substantial. We cannot assure you that we will be able to adapt to any changes in the future, that we will have the financial resources to keep up with changes in the marketplace or that we will be able to offset those costs with increases in the amounts we charge

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for our services. This would cause our net income to decline, which likely will lead to a decline in the price of our publicly traded securities, resulting in a loss of all or a part of your investment.

We rely on our suppliers to provide us with the raw materials we need to provide mold prevention services and these third parties may fail to deliver us the material we need in a timely fashion, which could adversely affect our reputation and our ability to generate revenues.

     We use two products for our mold prevention services: baking soda and an antimicrobial agent. Our ability to service our customers depends on us having a regular and reliable source for these materials. We rely on our suppliers to provide us with adequate quantities of these products in a timely manner. A failure by our suppliers to provide us with these key products in a timely manner or in sufficient quantities will have an adverse effect on our ability to satisfy customer demand and could damage our reputation and brand and substantially harm our financial condition and results of operations. Timely delivery of these products could be affected by a number of factors including, labor issues at the supplier and shipper, inclement weather and product availability. We only have a supply agreement covering the antimicrobial agent. Recently, our principal supplier of baking soda was unable to satisfy our demand because it underestimated our needs. As a result, we had to delay fulfilling some of our contracts. If these shortages occur on a regular basis, we will lose revenue opportunities, which would have an adverse impact on our financial condition and could negatively impact our reputation, which could have longer term adverse consequences on our ability to grow our business.

We do not have “exclusive” or long-term firm commitments from builders for our services, negating any competitive advantage we get from these relationships.

     Although we have ongoing relationships with a number of national and regional home builders, none of these relationships are “exclusive.” In addition, we do not have any long-term firm commitments from builders to use our services. Even “preferred provider” status, which we enjoy with two national home builders, does not guarantee that we will be hired for a particular job or any job with that customer. As a result, our revenues are unpredictable, and we are highly susceptible to competition. There is nothing preventing any of our customers from entering into identical or similar relationships with our competitors or from discontinuing their relationship with us at any time. If a number of builders were to terminate their relationship with us at the same time or direct business to our competitors, our business, operating and financial condition would suffer.

We have a limited amount of general liability insurance coverage. A large damage award for personal injury or property damage could render us financially insolvent.

     There is increasing litigation in the United States over personal injuries caused by mold contamination and jury awards relating to such litigation are significant. If our services fail to prevent mold growth on a surface we treated, a person suffering property damage or personal injury is likely to sue us. In such event, our insurance coverage — $2 million — may not be sufficient. We intend to seek additional liability insurance coverage in the future. However, we cannot assure you that additional insurance will be available to us at a reasonable cost, if at all. Litigation that is launched against us and that results in a large jury award could render us financially insolvent.

Our business may suffer from lack of diversification, which makes us much more susceptible to adverse economic trends. However, if we offer new services, we may harm our brand identity and experience a decline in our operating results.

     Currently, we provide a single service — mold prevention — primarily to a narrow segment of the building industry — new home construction. The risks associated with focusing on a limited line of business to a limited market segment are substantial. If the new home construction market declines, if builders and consumers do not accept our services or if there is a general decline in market demand for, or any significant decrease in, the perceived need for our services, we are not financially or operationally capable of introducing alternative services within a short time frame. As a result, lack of acceptance of our services or a significant decline in the demand for our services could cause us to curtail or even cease operations. Recently, we have started to provide pest control services on a limited basis. Expanding our service offerings may require us to incur significant marketing expenses and capital investments, develop sourcing arrangements with new vendors and comply with additional regulatory requirements. These requirements could strain our managerial, financial and operational resources. Also, if we offer a new service that is not well-received by consumers, either because it is not effective or for any other reason, the “Mold Guard” brand and reputation could be adversely affected, our revenues may fall short of expectations and we may incur substantial expenses that are not offset by increased revenues.

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Our future success depends on retaining our existing senior executives and hiring and retaining additional management personnel as well as skilled managers and sales personnel for our service centers. Losing any of our key employees or failing to hire new management level personnel could limit our ability to execute our growth strategy, resulting in lost sales and a slower rate of growth.

     Our future success depends, in part, on the continued active participation of Tom Blakeley, our chief executive officer, and Mark Davidson, our chief financial and chief operating officer. We do not carry, nor do we anticipate obtaining, “key man” insurance on either of them. If, for any reason, Mr. Blakeley or Mr. Davidson decides to discontinue his active participation in our business, our financial condition or results of operations could be adversely affected. Also, our current management team is not sufficient for our projected needs. As our business grows, we will need to hire full-time chief financial officer, a vice president of operations, a marketing director and a director of human resources. Competition for such highly skilled executives in Orange County, California, where our executive offices are located, is intense, and we may find it difficult to hire the people we need.

     In addition, we must hire and retain at least one experienced and knowledgeable general manager and sales executive for each region in which we establish a service center. The competition for high-quality, skilled managers and sales personnel in the new home construction industry is intense, causing the search process to be time-consuming and expensive. Moreover, in certain parts of the country, it may also be difficult to find workers to staff the crews needed to perform our services at the construction sites. We may not be able to hire enough qualified personnel to meet our needs as our business grows or to retain the employees we currently have. Our inability to hire and retain the individuals we need could hinder our ability to sell our existing services. If we are not able to attract and retain qualified employees, we will not be able to successfully implement our business plan and our business will be harmed.

For a company our size, we have high administrative expenses, particularly because of the salaries paid to our senior executive officers. As a result, it will be more difficult for us to achieve profitability, which could cause our stock price to fall.

     Each of our two senior executives has an employment agreement under which his base salary is tied to our revenue. As our revenue increases, so do their salaries. Based on our revenue for the quarter ended September 30, 2005, their combined base salaries are $370,000. Their salaries will continue to increase until our revenue reaches $8.5 million per quarter. These salaries represent a significant portion of our overhead and make it more difficult for us to achieve profitability. If our profitability is delayed, our stock price could decline, causing you to lose a portion of your investment.

We may not be able to manage our growth effectively, create operating efficiencies or achieve or sustain profitability.

     The ability to manage and operate our business as we execute our growth strategy will require effective planning. Significant rapid growth could strain our internal resources, leading to a lower quality of customer service, reporting problems and delays in meeting important deadlines, resulting in loss of market share and other problems that could adversely affect our reputation and financial performance. Our efforts to grow have placed, and we expect will continue to place, a significant strain on our personnel, management systems, infrastructure and other resources. Our ability to manage future growth effectively will also require us to continue to update and improve our operational, financial and management controls and procedures. If we do not manage our growth effectively, we could be faced with slower growth and a failure to achieve or sustain profitability.

Risks Related to this Offering

     The holder of the Convertible Notes has the right to convert those notes into preferred stock that has rights and privileges that are superior to those of the common stock. This could make our common stock less attractive and depress its value.

     The holder of the Convertible Notes has the right to convert those notes into shares of Series C Convertible Preferred Stock, which, in turn, is convertible into an equal number of shares of our common stock. This could impair the value of our common stock for the following reasons:

• The Series C Preferred Stock accrues dividends at the rate of 8% per annum cumulatively from the date of issuance.


• No dividends may be paid on any other class of stock unless and until all accumulated dividends on the Series C Preferred Stock have been paid in full.
  
  

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• In a liquidation, the holders of the Series C Preferred Stock are entitled to an amount equal to its liquidation preference, which includes the principal amount of and accrued interest on the Convertible Notes that were converted into Series C Preferred Stock and all accumulated but unpaid dividends on the Series C Preferred Stock, before payments are made to other shareholders. In addition, after payment of the liquidation preference, the holders of the Series C Preferred Stock are entitled to participate in the distribution of any remaining assets with all other holders of our capital stock on a pro rata basis.
  
  
• The Series C Preferred Stock votes with the common stock on all matters on as converted basis. Assuming the holder of the Convertible Notes exercised its conversion right in full on February 1, 2006, it would own approximately 631,010 shares of Series C Preferred Stock representing approximately 17.6% of our voting securities after this offering. That would make it our largest single shareholder and it would have significant influence in any matter that is presented to shareholders for vote.
  
  
• The conversion ratio will be adjusted on a “weighted average” basis if we issue any shares of common stock or any debt or equity security convertible into shares of common stock at a price per share that is less than $3.36.
  
  
• The consent of the holders of the Series C Preferred Stock is required for significant corporate transactions such as a sale of all or substantially all of our assets, a merger where we would not be the surviving entity and stock redemptions.
  
  
• We could not issue any series or class of equity securities with rights and preferences that are equal to or superior to those of the Series C Preferred Stock without the consent of the holders of the Series C Preferred Stock. As a result, the holder of the Series C Preferred Stock could make it more difficult for us to raise additional capital or require us to pay a liquidated amount or give up other rights as a condition for obtaining its consent.

Our stock price may fluctuate after this offering, which could result in substantial losses for investors and significant costs related to litigation.

     The market price for the units, our common stock and the warrants will vary from the initial public offering price after trading commences. This could result in substantial losses for investors. The market price of our securities may fluctuate significantly in response to a number of factors, some of which are beyond our control. These factors include:

• quarterly and seasonal variations in operating results;
  
  
• changes in financial estimates and ratings by securities analysts;
  
  
• announcements by us or our competitors of new product and service offerings, significant contracts, acquisitions or strategic relationships;
  
  
• publicity about our company, our services, our competitors or business in general;
  
  
• additions or departures of key personnel;
  
  
• fluctuations in the costs of materials and supplies;
  
  
• any future sales of our common stock or other securities; and
  
  
• stock market price and volume fluctuations of publicly-traded companies in general and in the construction services sector in particular.

     The trading prices of companies like us with a limited history of operations, history of losses and operating in a new service industry, have been especially volatile. Investors may be unable to resell our securities that they own at or above the initial public offering price.

We are controlled by a limited number of shareholders, which will limit your ability to influence the outcome of key decisions.

     Immediately after this offering, our executive officers and directors will, in the aggregate, own 15.1% of the issued and outstanding shares of our common stock, or 13.9% if the over-allotment option is exercised in full. As a result, these shareholders will have the ability to exercise substantial control over our affairs and corporate actions requiring shareholder approval, including electing and removing directors, selling all or substantially all of our assets, merging with another entity or amending our articles of incorporation. This de facto control could be disad-

12

vantageous to our other shareholders with interests that differ from those of the control group, if these shareholders vote together. For example, the control group could delay, deter or prevent a change in control even if a transaction of that sort would benefit the other shareholders. In addition, concentration of ownership could adversely affect the price that investors might be willing to pay in the future for our securities.

As a public company, our administrative costs will be significantly higher than they are now, making it more difficult for us to be cash flow positive and profitable.

     The Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the Securities and Exchange Commission as well as Nasdaq and the Pacific Exchange, where we plan to list our securities, have required changes in corporate governance practices of public companies. We expect that these new rules and regulations will increase our legal and financial compliance costs and make some activities more time consuming. For example, in connection with becoming a public company, we will create several board committees, implement additional internal controls over financial reporting and disclosure controls and procedures, retain a transfer agent, adopt and administer an insider trading policy and incur costs to prepare, file and distribute periodic reports in compliance with our obligations under the securities laws. We estimate that the annual expenses relating to us being a public company will be approximately $750,000 to $1,000,000. These expenses include additional amounts for legal and accounting services, listing fees for Nasdaq and the Pacific Exchange, transfer agent fees, additional insurance costs, printing and filing fees, fees for investor and public relations and compensation payable to non-employee directors. These additional costs will make it more difficult for us to become cash flow positive and profitable. In addition, these new rules and regulations and the increased responsibilities they impose on directors and officers, could also make it more difficult for us to attract and retain qualified members for our board of directors, particularly to serve on our audit committee, and qualified executive officers.

If an active market does not develop for our securities, you may not be able to sell them when you want.

     Before this offering, there has been no public market for our securities, and we cannot assure you that an active trading market for the units, our stock or the warrants will develop or that the market price of the units will not decline below the initial public offering price. The initial public offering price of the units will be determined through negotiations between us and the representative. Numerous factors, many of which are beyond our control, may cause the market price of our securities to fluctuate significantly. These factors include announcements of technological innovations or geographic expansion and new customers or new projects for existing customers, our operating performance and that of similar companies, market conditions in the industry, speculation in the press or investment community and the general state of the securities markets. In addition, quarterly fluctuations of our results of operations may also affect the market price of our securities.

We do not anticipate paying dividends in the foreseeable future. This could make our stock less attractive to potential investors.

     We anticipate that we will retain all future earnings and other cash resources for the future operation and development of our business and we do not intend to declare or pay any cash dividends in the foreseeable future. Future payment of cash dividends will be at the discretion of our board of directors after taking into account many factors, including our operating results, financial condition and capital requirements. Corporations that pay dividends may be viewed as a better investment than corporations that do not.

If we do not maintain an effective registration statement or comply with applicable state securities laws, you may not be able to exercise the warrants.

     In order for you to be able to exercise the warrants included in the units, the underlying shares must be covered by an effective registration statement and qualify for an exemption under the securities laws of the state in which you live. We cannot assure you that we will continue to maintain a current registration statement relating to the offer and sale of the Class A and Class B warrants included in the units and the common stock underlying these warrants, or that an exemption from registration or qualification will be available throughout their term. This may have an adverse effect on the demand for the warrants and the prices that can be obtained from reselling them.

The warrants may be redeemed on short notice. This may have an adverse impact on their price.

     We may redeem the Class A and Class B warrants for $0.25 per warrant on 30 days’ notice at any time after the specific redemption conditions in the respective warrants have been satisfied. If we give notice of redemption, you will be forced to sell or exercise your warrants or accept the redemption price. The notice of redemption could come at a time when it is not advisable or possible for you to exercise the warrants or a current prospectus or

13

exemption from registration or qualification does not exist. As a result, you would be unable to benefit from owning the warrants being redeemed.

Future sales or the potential for sale of a substantial number of shares of our common stock could cause the trading price of our common stock and unit warrants to decline and could impair our ability to raise capital through subsequent equity offerings.

     Sales of a substantial number of shares of our common stock in the public markets, or the perception that these sales may occur, could cause the market price of our stock to decline and could materially impair our ability to raise capital through the sale of additional equity securities. Once this offering is completed, we will have 3,740,295 shares of common stock issued and outstanding and will have reserved an additional 5.7 million shares of common stock for future issuance as follows:

• 3,646,155 shares underlying the Class A and Class B warrants (including the warrants held by the holders of the Unsecured Notes);

• 825,000 shares underlying the over-allotment option, including the shares underlying the Class A and Class B warrants included in the units underlying that option;
  
  
• 550,000 shares underlying the representative’s warrant, including the shares underlying the Class A and Class B warrants includable in the representative’s warrants;

• 254,824 shares underlying warrants outstanding on the date of this prospectus; and
  
  
• 427,707 shares reserved for issuance under our stock option plan.

     The common stock included in the units sold in this offering as well as the common stock underlying the warrants, other than those shares held by “affiliates,” as defined by the rules and regulations promulgated under the Securities Act of 1933, as amended, will be freely tradable without restriction. We have agreed to register one year from the date of this offering all of the securities included in the units that will be issued to the holders of the Unsecured Notes, which include 230,770 shares of common stock, 230,770 Class A warrants, 115,385 Class B Warrants and 346,155 shares of common stock underlying those warrants (assuming an initial public offering price of $13.00 per unit). Finally, upon the expiration of the one-year “lock-up” agreements to be signed by all of our existing shareholders (but not the holder of the Convertible Notes), approximately                     unregistered shares will be saleable without restriction under Rule 144(k) promulgated under the Securities Act of 1933 and another                     unregistered shares will be saleable subject to the timing and volume limitations set forth in Rule 144(d) promulgated under the Securities Act of 1933.

The existence of outstanding options and warrants may impair our ability to obtain additional equity financing.

     The existence of outstanding options and warrants may adversely affect the terms at which we could obtain additional equity financing. The holders of these options and warrants have the opportunity to profit from a rise in the value or market price of our common stock and to exercise them at a time when we could obtain equity capital on more favorable terms than those contained in these securities.

Management has broad discretion over the use of proceeds from this offering. We may use the proceeds of this offering in ways that do not improve our operating results or the market value of our securities.

     We will have broad discretion in determining the specific uses of the proceeds from the sale of the units. While we have general expectations as to the allocation of the net proceeds of this offering, that allocation may change in response to a variety of unanticipated events, such as differences between our expected and actual revenues from operations or availability of commercial financing opportunities, unexpected expenses or expense overruns or unanticipated opportunities requiring cash expenditures. We will also have significant flexibility as to the timing and the use of the proceeds. As a result, investors will not have the opportunity to evaluate the economic, financial or other information on which we base our decisions on how to use the proceeds. You will rely on the judgment of our management with only limited information about their specific intentions regarding the use of proceeds. We may spend most of the proceeds of this offering in ways with which you may not agree. If we fail to apply these funds effectively, our business, results of operations and financial condition may be materially and adversely affected.

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We may issue shares of preferred stock in the future, which could depress the price of our stock.

     Our corporate charter authorizes us to issue shares of “blank check” preferred stock. Our board of directors has the authority to fix and determine the relative rights and preferences of preferred shares, as well as the authority to issue such shares, without further shareholder approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders preferred rights to our assets upon liquidation, the right to receive dividends before dividends are declared to holders of our common stock, and the right to the redemption of such preferred shares, together with a premium, prior to the redemption of the common stock. To the extent that we do issue such additional shares of preferred stock, the rights of the holders of our common stock could be impaired thereby, including, without limitation, with respect to liquidation.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This prospectus contains forward-looking statements that involve risks and uncertainties relating to future events or our future financial performance. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited, to statements concerning:

• the anticipated benefits and risks associated with our business strategy;
  
  
• our future operating results and the future value of our common stock;
  
  
• the anticipated size or trends of the markets in which we compete and the anticipated competition in those markets;
  
  
• our ability to attract customers in a cost-efficient manner;
  
  
• our ability to attract and retain qualified management personnel;
  
  
• potential government regulation;
  
  
• our future capital requirements and our ability to satisfy our capital needs;
  
  
• the anticipated use of the proceeds realized from this offering;
  
  
• the potential for additional issuances of our securities;
  
  
• the possibility of future acquisitions of businesses or assets; and
  
  
• possible expansion into international markets.

     Furthermore, in some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms or other comparable terminology. These statements are only predictions. In evaluating these statements, you should specifically consider various factors, including the risks outlined in the Risk Factors section above. These factors may cause our actual results to differ materially from any forward-looking statement.

     Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

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USE OF PROCEEDS

     The principal purposes of this offering are to repay debt and to provide us with the working capital we need to open new service centers. Assuming a public offering price of $13.00 per unit, after deducting the estimated expenses of this offering, including the underwriting discount of $1,144,000, the representative’s non-accountable expense allowance of $429,000 and other estimated offering expenses of $727,000, we estimate that the net proceeds to us from this offering will be approximately $12,000,000. (Non-accountable expenses are expenses incurred by the representative in connection with this offering that are payable out of the proceeds of the offering, but for which it is not required to produce evidence of payment because we have agreed to pay a fixed percentage of the gross proceeds for this purpose.) If the representative exercises the over-allotment option in full, we estimate that the net proceeds of the offering will be approximately $14,000,000.

We expect to use the net proceeds as follows:
	Approximate		Approximate
Use of Proceeds	Amount		Percentage
Repayment of debt	$	5,250,000	43.8	%
Region expansion and new service centers		1,800,000	15.0
Sales and marketing		700,000	5.8
Capital expenditures		680,000	5.7
Deferred compensation and severance		360,000	3.0
Working capital		3,210,000	26.8
Total	$	12,000,000	100.0	%

     Repayment of debt. All of our outstanding indebtedness, including unpaid principal and accrued interest through the date of closing, will be repaid out of the proceeds of this offering. At September 30, 2005, our total outstanding indebtedness, was approximately $4.9 million, including the Convertible Notes, the Unsecured Notes, other unsecured debt (approximately $1.1 million) and accrued interest (approximately $320,000). Other unsecured debt includes two notes held by the representative with an aggregate unpaid principal balance of $400,000 and accrued interest through September 30, 2005 of approximately $7,500. In addition, in November 2005, we borrowed $200,000, in January 2006, we borrowed $50,000 and in February 2006, we borrowed $100,000. Finally, and accrued interest for the fourth quarter of 2005 was approximately $50,000. The Unsecured Notes and most of the other unsecured debt must be repaid out of the proceeds of this offering. The Convertible Notes are due and payable in full on September 30, 2007 but are prepayable, without premium or penalty, at any time beginning or after September 30, 2006. It is our intention to exercise our prepayment right as soon as possible.

     Region expansion and new service centers. This is the amount we anticipate investing in new service centers over the next 12 months in regions we are currently serving and in new regions. Over the next 12 months we anticipate expanding into two to four new regions and opening eight to 12 new service centers. The exact number of new regions and new service centers that we open will ultimately depend on availability of capital, new business opportunities and strategic relationships. New regions are more expensive to start because of the investment in full regional infrastructure and time to initial revenue flow. We estimate the total cash investment to open a region and operate it until it becomes cash flow positive, including personnel, equipment and material costs and overhead, is approximately $400,000. We estimate the total cash investment necessary to open a new service center in a region we currently serve and operate it until it becomes cash flow positive is approximately $150,000.

     Sales and marketing. This includes the estimated cost of an additional eight sales and marketing personnel as well as the cost of an enhanced sales and marketing program that will target not only builders but insurance companies, lenders, architects and the general public. This program will include direct sales calls, telemarketing, targeted mailing, general advertising and appearances at trade shows and conventions.

     Capital expenditures. This amount consists primarily of property, plant and equipment, such as computer and communications equipment, needed to support an increase in business activity. It also includes the cost of upgrading our accounting software should we determine that an upgrade is necessary. It does not include any capital expenditures specifically associated with local service centers.

     Deferred compensation. This amount consists of $240,000 of accrued but unpaid compensation due to our chief executive officer and our chief operating officer, as well as a lump sum payment of $120,000 due when this offering is complete to our former president who resigned as of November 30, 2005. The accrued compensation will be paid over a period of six months beginning 30 days after the date of this prospectus.

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Working capital. This amount includes working capital required for our general corporate purposes including rent, utilities, and insurance, as well as the working capital required by our local service centers until they becomecash flow positive. A portion of this amount includes the cost of searching for and hiring additional management personnel, including a chief financial officer, a vice president of operations and a director of human resources. We may also use a portion of the proceeds allocated to working capital for reducing our accounts payable and accrued expenses and to increase our general liability insurance coverage. If the representative exercises the over-allotment option, the additional net proceeds of approximately $2.0 million will be added to working capital.

     The above information represents our best estimate of our working capital requirements based upon the current status of our business. We will retain broad discretion in the allocation of the net proceeds within the categories listed above. The amounts actually expended for these purposes may vary significantly and will depend on a number of factors, including our rate of revenue growth, cash generated by operations, evolving business needs, changes in demand for our services, the cost to open new service centers, our marketing efforts, competitive developments, new strategic opportunities, general economic conditions and other factors that we cannot anticipate at this time.

     Pending their use, we intend to invest the net proceeds of this offering in interest-bearing, investment grade securities, or, if necessary to avoid being designated an investment company under the Investment Company Act of 1940, United States government securities.

     We expect that the net proceeds from this offering, when combined with cash flow from operations, will be sufficient to fund our operations and capital requirements for at least 12 months following this offering. We may be required to raise additional capital through the sale of equity or other securities sooner if our operating assumptions change or prove to be inaccurate. We cannot assure you that any financing of this type would be available. In the event of a capital inadequacy, we would be required to limit our growth and the expenditures described above.

DIVIDEND POLICY

     We have never declared or paid any dividends and we do not intend to pay any dividends in the foreseeable future. We intend to retain any future earnings for use in the operation and expansion of our business. Any future decision to pay dividends on common stock will be at the discretion of our board of directors and will be dependent upon our fiscal condition, results of operations capital requirements and other factors our board of directors may deem relevant.

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CAPITALIZATION

     The following table sets forth our capitalization as of September 30, 2005 on an actual basis, on a pro forma basis and pro forma as adjusted for this offering. The pro forma data takes into account:

• a $200,000 unsecured note that we issued in November 2005 and the proceeds from the issuance of that note;
  

• conversion of all of the Series A and Series B Preferred Stock into 324,307 shares of common stock;
  
  
• 230,770 shares, 230,770 Class A warrants and 115,385 Class B warrants included in the units that we will issue to holders of the Unsecured Notes on the date of this prospectus (based on an assumed initial public offering price of $13.00 per unit);
  
  
• an aggregate of 74,146 shares of common stock issued in December 2005, of which 56,085 were issued for services, 16,072 were issued in satisfaction of indebtedness in the amount of $58,947 and 2,039 were issued as an interest payment;
  
  
• 1,359 shares of common stock that we will issue in February 2006 as an interest payment; and
  
  
• 66,222 shares of common stock that we will issue on the date of this prospectus for legal services under an agreement that we entered into in December 2005.

     The pro forma as adjusted data also take into account our receipt of $12 million of estimated net proceeds from this offering and our use of approximately $5.0 million of those proceeds to repay all of our outstanding indebtedness.

     The $1.5 million of deferred interest costs (debt discount) associated with the Unsecured Notes will be fully amortized into interest expense when the notes are repaid. Of the $13.5 million constituting the net proceeds of this offering and the value of the units that we will issue to the holders of the Unsecured Notes, we will allocate $7.927 million to the common stock and $5.573 million to the warrants included in the units based on the estimated relative fair value of those securities.

	September 30, 2005
	(unaudited)
							Pro forma
	Actual			Pro forma			as adjusted
				(in thousands)
Debt	$	3,644		$	3,786		$	—
Shareholders’ equity:
Preferred stock, no par value, 10,000,000 shares
authorized Series A Redeemable Convertible
Preferred Stock, 499,999 authorized, 499,999
issued and outstanding actual; no shares issued
and outstanding pro forma and pro forma, as
adjusted		625			—			—
Series B Redeemable Convertible Preferred Stock,
1,210,000 authorized, 454,500 issued and
outstanding actual; no shares issued and outstanding
pro forma and pro forma, as adjusted		859			—			—
Series C Redeemable Convertible Preferred
Stock, 5,000,000 authorized, no shares issued
and outstanding actual, pro forma and pro
forma as adjusted		—			—			—
Common stock, no par value, 50,000,000 shares
authorized; 844,849 shares issued and
outstanding, actual; 1,540,295 shares issued
and outstanding pro forma; and 3,740,295 shares
issued and outstanding, pro forma as adjusted		1,075			4,315			11,361
Additional paid-in capital		1,789			2,408			7,362
Accumulated deficiency		(7,475	)		(8,975	)		(8,975	)
Total shareholders’ equity (deficiency)		(3,127	)		(2,252	)		9,748
Total capitalization	$	517		$	1,534		$	9,748

     Debt includes short and long-term notes plus accrued interest as reflected on our balance sheet as of September 30, 2005.

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DILUTION

     If you purchase units in this offering, your interest will be diluted to the extent of the excess of the public offering price per share of common stock over the as adjusted net tangible book value per share of common stock after this offering. Net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities, divided by the total number of shares of common stock outstanding. For purposes of the dilution computation and the following tables, we have allocated the full purchase price of a unit to the shares of common stock included in the unit and none to the warrants.

     At September 30, 2005, we had a negative net tangible book value of approximately $3.1 million, or approximately negative $2.03 per share based on 1,540,295 shares issued and outstanding on a pro forma basis. After taking into account the estimated net proceeds from this offering of $12,000,000, our net tangible book value at September 30, 2005 would have been approximately $8.9 million, or $2.37 per share. This represents an immediate increase of $4.40 per share to existing shareholders and immediate dilution of $4.13 per share, or 63.5%, to the new investors who purchase units in this offering. The following table illustrates this per share dilution:

Assumed initial public offering price per share				$	6.50
Pro forma net tangible book value per share at September 30, 2005	$	(2.03	)
Increase in net tangible book value per share attributable to new investors		4.40
Net tangible book value per share after the offering					2.37
Dilution per share to new investors				$	4.13

     The following table summarizes as of September 30, 2005 the differences between the existing shareholders and the new investors with respect to the number of shares purchased, the total consideration paid and the average price per share paid:

	Shares Purchased				Total Consideration				Average
									Price Per
	Number		Percent		Amount		Percent		Share
Existing stockholders	1,540,295	(1)	41.2	%	$	4,326,294	23.2	%	$	2.81
New investors	2,200,000		58.8	%	$	14,300,000	76.8	%	$	6.50	(3)
Total	3,740,295	(2)	100.0	%	$	18,626,294	100.0	%

(1)	The number of shares owned by existing shareholders includes (i) 230,770 shares of common stock underlying the units to be issued to the holders of the Unsecured Notes on the date of this prospectus, assuming an initial public offering price of $13.00 per unit; (ii) an aggregate 74,146 shares of common stock issued in December 2005; (iii) 66,222 shares to be issued on the date of this prospectus; (iv) 1,359 shares of common stock that we will issue in February 2006 as an interest payment; and (v) 324,307 shares of common stock to be issued to the holders of our Series A and Series B Preferred Stock on the date of this prospectus. The actual number of units that will be issued to the holders of the Unsecured Notes will depend on the actual initial public offering price of the units.
(2)	Does not include any shares underlying unexercised warrants and options.
(3)	Based on an initial public offering price of $13.00 per unit.

     If the representative exercises the over-allotment option in full, the new investors will purchase 2,530,000 shares of common stock. In that event, the gross proceeds from this offering will be $16,445,000, representing approximately 79.2% of the total consideration for 62.2% of the total number of shares of common stock outstanding, and the dilution to new investors would be $3.83 per share, or 58.9%.

     To the extent any options or warrants outstanding on the date of this prospectus that have an exercise price of less than $6.50 per share are exercised, you will experience further dilution.

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SELECTED CONSOLIDATED FINANCIAL DATA

     The selected consolidated financial data set forth below should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. The consolidated statement of operations data for each of the periods in the two-year period ended December 31, 2004 and the consolidated balance sheet data at December 31, 2004 are derived from our financial statements, which have been audited by Haskell & White LLP, independent registered public accounting firm, and are included elsewhere in this prospectus. The consolidated statement of operations data for each of the nine months ended September 30, 2004 and 2005 and the consolidated balance sheet data at September 30, 2005 are derived from unaudited financial statements included elsewhere in this prospectus, and in the opinion of management, include all adjustments, consisting principally of normal recurring adjustments, necessary for a fair presentation of such information. Historical results are not necessarily indicative of the results to be expected in the future, and the results of interim periods are not necessarily indicative of results for the entire year.

Consolidated statement of operations data:

	From inception
	(January 13,
	2003) through			Year ended			Nine months ended September 30,
	December 31,			December 31,
	2003			2004			2004			2005
	(in thousands, except share and per share data)
							(unaudited)
Revenue	$	182		$	1,553		$	859		$	4,135
Cost of revenue		228			1,220			679			3,272
Gross profit		(46	)		333			180			863
Selling, general and administrative
expenses		1,137			3,303			2,118			3,351
Loss from operations		(1,183	)		(2,970	)		(1,938	)		(2,488	)
Interest expense		—			(278	)		(44	)		(512	)
Other loss		—			(42	)		—			—
Loss before provision for taxes		(1,183	)		(3,290	)		(1,982	)		(3,000	)
Provision for taxes		1			1			1			1
Net loss	$	(1,184	)	$	(3,290	)	$	(1,983	)	$	(3,001	)
Dividends on preferred stock		38			114			85			90
Net loss applicable to
common shareholders	$	(1,222	)	$	(3,404	)	$	(2,068	)	$	(3,091	)
Net loss per share—basic and diluted	$	(2.03	)	$	(4.26	)	$	(2.65	)	$	(3.31	)
Accumulated preferred stock dividends
per share	$	(0.06	)	$	(0.15	)	$	(0.11	)	$	(0.10	)
Net loss per share attributable to
common stock	$	(2.09	)	$	(4.41	)	$	(2.76	)	$	(3.41	)
Weighted average number of shares
outstanding — basic and diluted		583,632			772,189			749,062			906,572
Consolidated balance sheet data:
							December 31,				September 30,
							2004				2005
											(unaudited)
							(in thousands)
Current assets							$	832		$	2,461
Working capital deficiency							$	(993	)	$	(2,765	)
Total assets							$	1,062		$	2,801
Total liabilities							$	2,100		$	5,929
Shareholders’ deficiency							$	(1,038	)	$	(3,127	)

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Overview

     We provide mold prevention services to builders of single and multi-family homes. To date, we have provided our service to over 350 national and regional single- and multi-family home builders through 11 service centers located in California, Florida, Texas and Louisiana. Our clients include national home builders such as Lennar Corporation, DR Horton, Inc. and Centex Corporation, regional home builders such as Issa Homes, Inc., The McCaffrey Group and Lenox Homes and multi-family home builders such as Global Construction Company, L.L.C., Hanover R.S. Limited Partnership, Bosa Development and Opus West Construction, Inc.

     Although our business continues to grow, we continue to lose money on an operating and cash flow basis. However, we believe that the primary reason that we have yet to be cash flow positive and profitable is because we continue to invest in our business by opening new service centers.

     Approximately 15% of the proceeds of this offering will be used to open new service centers in regions that we are currently serving and in new regions. Based on our experience, the total cost to open a service center in a new region is approximately $400,000 and the total cost to open a service center in an existing region is $150,000. To staff a region we typically hire a general manager, a sales manager, an operations manager and at least two three-person work crews. The equipment required for a region includes office computers, trucks, compressors, soda blasting equipment and ancillary peripheral equipment. In addition to these costs, there is also the cost for materials, including our antimicrobial agents and baking soda, fuel, rent and other operating expenses. To staff a service center we typically hire a sales representative, an operations manager and at least two three-person work crews. In some cases we may not add a dedicated sales representative to a new center because the area may be covered from another service center. The equipment required for a service center includes office computers, trucks, compressors, soda blasting equipment and ancillary peripheral equipment. In addition to these costs, there is also the cost for materials, including our antimicrobial agents and baking soda, fuel, rent and other operating expenses.

     Our future financial condition and operating performance may be affected by several industry trends. The major trends that we believe will have a positive impact on our business are the growth in residential housing construction and the backlog of homes to be built by our customer and prospective customer base. In addition, we believe public awareness of the health risks associated with mold contamination, particularly in the aftermath of Hurricanes Katrina, Rita and Wilma, the growth in mold-related insurance claims and litigation and the high cost of mold remediation will also contribute to our growth. On the other hand, higher interest rates, higher building costs, increasing levels of inventories in the housing construction industry and the general decline in the rate of growth of the new home construction industry could retard our growth. While we may be negatively impacted by these trends, we believe we will be able to manage these challenges through favorable pricing conditions in strategic markets and through continued efforts to control costs.

     To date, capital constraints have been the biggest obstacle to our growth. Lack of capital has prevented us from aggressively marketing our services. Marketing is an important part of our business plan because builders need to be persuaded to make our mold prevention services standard line items in their budgets. Additional capital will allow us to increase sales and marketing resources in our existing four regions as well as expanding into new regions. The lack of capital has also had negative margin impacts on our service operations in the areas of raw material cost, labor cost and labor productivity. Additional capital will allow us to implement operations improvement programs that we expect will lead to higher gross margins.

     Our strategy is to continue to establish new service centers throughout the country. Where we open new service centers and how many we will open will depend on a number of factors including existing customer demand, the strength of the new housing market in a particular region, the extent to which mold may or may not be a problem in a particular region, the availability of capital and other opportunities. In our experience, a new service center usually does not become cash flow positive until it has been operating for at least eight months and it does not become profitable until it has been operating for approximately one year. As a result, an aggressive expansion program would adversely affect our financial performance. On the other hand, we believe that an aggressive expansion policy would enable us to achieve our goal of capturing a larger market share relatively quickly in advance of our existing and potential competitors. One of the challenges we face is balancing our goals of achieving profitability as soon as possible and capturing market share.

     In addition, we intend to expand our service offerings to the residential segment of the construction industry to include similar or related services. For example, in February 2005 we acquired Trust One Termite, Inc., a

21

provider of pest control services. As a result, we are now a licensed pesticide operator in California and can offer pest prevention treatments to our customers in the State of California. We issued 3,428 shares of common stock, valued at $12,500, for all of the stock of Trust One. At the time of acquisition, Trust One’s assets included $9,000 of cash.

     We measure our business using both financial and other operating metrics. The financial metrics include revenue, gross margin, operating expenses and income from continuing operations. The operating metrics include (i) new sales order activity, (ii) service schedule, (iii) material usage, and (iv) crew productivity.

New Sales Order Activity. With this metric we measure the level of new customer commitments in terms of new clients and dollar value of orders. We use this metric to gauge the effectiveness of our sales efforts. The data is gathered by sales representative, by region and by month. We monitor new order activity between project type: single-family versus multi-family. We also analyze new orders based on our customer segmentations of regional builders and national builders.

Service Schedule. We utilize this data to evaluate the demand for services in each service center or region. This measurement allows us to identify unused service capacity and to shift capacity, when necessary, to service centers with greater demand.

Material Usage. As material cost represents a key component of our total cost of service, we use this metric to gauge the relative usage of material in each service center and region. The material usage rate for soda can vary depending on the amount of mold contamination on the wood surfaces required to be removed, the relative humidity of the region and the proficiency of the crews. We monitor the material usage rate in order to help identify service centers that may need operational improvements or training to decrease their relative cost of service.

Crew Productivity. This measure focuses on our cost of service. We have planning standards for each region that we use to plan crew labor requirements. Measuring productivity, how many square feet of construction are treated in a day, allows us to analyze the effectiveness of our labor force and crew leaders. Anticipated productivity by project is also a determining factor in project pricing. Again, the productivity levels vary depending on the type of project (single-family versus multi-family), the climate conditions, the training level and experience of the crew and the amount of mold contamination to be removed from the project.

Our Business Growth

     Our revenue growth in 2004 and 2005 is a result of expansion within existing regions and into new regions. Since the beginning of 2004, we have established new operations in California (expanded to Northern California in February 2004), Florida (opened in May 2004), Texas (opened in October 2004) and Louisiana (opened in October 2005).

Revenue growth by region for 2004 and 2005 is itemized in the table below:
	Quarterly Revenue by Region
	(in thousands)
Region	1Q04		2Q04		3Q04		4Q04		1Q05		2Q05		3Q05
California	$	70.9	$	283.8	$	351.2	$	442.4	$	492.8	$	714.9	$	868.1
Florida		—		1.6		151.5		236.1		348.6		304.6		484.8
Texas		—		—		—		15.1		117.7		101.8		174.5
Other		—		—		—		—		27.8		142.9		356.1
Total	$	70.9	$	285.4	$	502.7	$	693.7	$	986.9	$	1,264.2	$	1,883.6

• The California region currently has six service centers serving the Bay Area, Sacramento, Fresno and Southern California. We had $1,148,000 in revenue for 2004 and $2,076,000 in revenue for the first nine months of 2005 in California, an 81% increase in year-to-date 2005 over the full year 2004.
  
  
• The Florida region, which opened in May 2004, currently has three service centers serving Tampa, Orlando and south Florida. We had $390,000 in revenue for 2004 and $1,138,000 in revenue for the first nine months of 2005 in Florida, a 192% increase in year-to-date 2005 over the full year 2004.
  
  
• The Texas region, which opened in October 2004, currently operates out of one service center in Houston. We had $15,000 in revenue for 2004 and $394,000 in revenue for the first nine months of 2005 in Texas.

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     We opened a service center in New Orleans in October 2005 in response to the demand for restoration services resulting from damage caused by Hurricane Katrina. As a result of Hurricane Katrina, many homes in the New Orleans suffered extensive water damage and mold contamination. Rather than demolish the homes entirely, restoration companies are removing all the sheetrock, wall board and other materials so that all that is left of the homes are the exterior walls and the wood frame. The restoration companies then hire companies like us to come in and remove the mold contamination.

     Revenues included under “other” include revenues for mold prevention services on large multi-family projects outside the four regions, from our Trust One termite control business and from other ancillary services that we may provide.

Customer Growth Focus

     We analyze our customer activity in categories of national builders and regional builders. An estimated 30% of the national home building market is controlled by the top 20 national builders, with the remaining 70% controlled by regional builders. Builder Online magazine recently ranked the Top 100 builders nationally. According to a recent ranking of the top 100 U.S. home builders published by Builder Online magazine, we have serviced projects with three of the top four national builders: D.R. Horton, Inc., Lennar Corporation and Centex Corporation. To date, we have developed a solid working relationship with Lennar where we have serviced projects in nine of their regional divisions in California and Florida. Lennar projects accounted for approximately 31% of our total revenue for the nine months ended September 30, 2005. We had several multi-family projects completed or in process in California for D.R. Horton. D.R. Horton projects accounted for 2% of our total revenues for the nine month period ended September 30, 2005. Our work for Centex Corporation includes projects in California and Texas.

     Many builders are involved in single-family and/or multi-family construction. We monitor each type of project separately for operational efficiency and scheduling purposes. We also monitor our sales activities with national builders to look for opportunities to leverage our business across multiple regions. This provides our sales force with the ability to reference completed projects for a national builder in that builder’s other regional divisions. For example, we routinely reference projects serviced in California and Florida for Lennar when we are selling to new prospective Lennar divisions. We believe that it is important to have sales efforts with national builders targeted at the regional level as well as the corporate level. These accounts are strategic to our business, both in terms of their potential revenue size and of their leadership position in the residential construction industry.

Critical Accounting Policies and Estimates

     The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements that have been prepared according to accounting principles generally accepted in the United States. In preparing these financial statements, we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. We evaluate these estimates on an ongoing basis. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We consider the following policies to be the most important to the portrayal of our financial condition.

  Revenue Recognition

     Revenue is based on contracts for agreed upon fees entered into with customers for the services to be completed and is recognized when the service is completed, the amount of the service and contract value is determinable and collection is reasonably assured. The resulting accounts receivable are reported at their principal amounts adjusted for an estimated allowance for uncollectible amounts, if appropriate.

  Product Warranties

     We provide a general warranty that extends for the entire “statute of repose,” the period during which, under the various state laws, builders have continuing liability for construction defects. In general, the period on continuing liability is between ten and fifteen years depending upon the state in which the service has been provided. The warranty covers both property damage and personal injury arising from mold contamination on any surface we treat. The personal injury portion of the warranty is supported by a $2 million pollution liability mold giveback provision under our general liability policy. We estimate our exposure to warranty claims based upon historical warranty claim costs. We review these estimates on a regular basis and adjust the warranty provisions as actual experience differs from historical estimates or other information becomes available. However, we do not have, at this time, sufficient

23

experience to determine if a reserve is required and/or if the coverage under the general liability policy is sufficient should claims be filed against us. To date, we have not been required to perform under the terms of our warranty provisions, and we are not aware of any pending or threatened claims.

   Stock-Based Compensation

     We account for stock-based compensation using the fair value method under SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure.” We measure employee compensation cost under the intrinsic method provided by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”) under which compensation expense is recognized for the excess, if any, of the fair value of our common stock over the option price on the date the option is granted. We estimate the fair value of stock options using the Black-Scholes method of valuation, which takes into account such factors as the current price of the stock, the volatility of the stock price, the option’s exercise price, the expected life of the option, a risk-free interest rate and the stock’s expected dividend yield. No such compensation expense was recognized during the period from inception, January 13, 2003, through September 30, 2005. We recognize compensation expense related to grants of options/warrants to non-employees in accordance with the fair value provisions of SFAS No. 123.

     In December 2004, the FASB issued Statement 123R, “Share-Based Payment,” a revision of Statement 123 that supersedes APB 25. Statement 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant-date fair value of those instruments. The cost will be recognized as compensation expense over the service period, generally the vesting period. We are required to adopt Statement 123R beginning with the first quarter of 2006. We will utilize the Black-Scholes valuation model to estimate the fair value of stock options, and we expect the impact of our adoption of Statement 123(R) to be similar to the information disclosed in note 3 of our consolidated financial statements. The future results will be impacted by the number and value of additional stock option grants as well as the value of the existing unvested options. The adoption of statement 123R will result in increased operating expenses beginning in the first quarter of 2006.

  Debt Discount

     Some of our financing transactions involved convertible debt or both debt and equity instruments. In those cases where the financing includes both debt and equity instruments, we are required to allocate the proceeds received in these transactions to the underlying debt and equity instruments based on their relative fair values. The amounts we allocate to the equity instrument are then amortized into interest expense over the expected life of the debt instrument. For debt instruments that are convertible into shares of our common stock, we are required to compute a beneficial conversion feature if the conversion rate is lower than the estimated fair value of the stock into which the debt is convertible. The amount of the beneficial conversion feature is amortized into interest expense over the expected life of the debt. We determined the fair value of common stock based on recent sales of stock to independent third parties in similar transactions.

Results of Operations

Comparison of Nine Months Ended September 30, 2004 and 2005

	Nine months ended September 30,
	2004					2005
	(unaudited)
				Percentage					Percentage		Increase/
	Amount			of revenue		Amount			of revenue		(decrease)
				(all dollar amounts are in thousands)
Revenue	$	859		100.0	%	$	4,135		100.0	%	$	3,276
Cost of revenue		679		79.0			3,272		79.1		$	2,593
Gross profit/margin		180		21.0			863		20.9		$	683
Selling, general and administrative expenses		2,117		246.4			3,351		81.0		$	1,234
Loss from operations		(1,938	)	(225.6	)		(2,488	)	(60.2	)	$	550
Interest expense		(44	)	(5.1	)		(512	)	(12.4	)	$	468
Loss before provision for taxes		(1,982	)	(230.7	)		(3,000	)	(72.6	)	$	1,018
Provision for taxes		1		0.1			1		—		$	—
Net loss	$	(1,983	)	(230.8	)%	$	(3,001	)	(72.6	)%	$	1,018

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  Revenue

     Revenue for the nine months ended September 30, 2005 increased 381% compared to revenue for the nine months ended September 30, 2004. The revenue growth was primarily a result of increased business volume. During the first nine months of 2005, we added seven new service center locations. Serviced volume during the periods increased from approximately 3.7 million square feet in the 2004 period to 17.0 million square feet in the 2005 period. Pricing for services was generally the same in both periods. We anticipate that the future operations will experience a general increase in our pricing structure as the demand for our services increases.

     Revenue growth was achieved in all of our operating regions. In the 2005 period, California revenue accounted for $2.1 million, or approximately 52% of our revenue, and Florida accounted for $1.1 million, or approximately 28% of our revenue. California revenue increased by $1.3 million, of which approximately $600,000 was attributable to existing service centers (representing an 89% revenue increase in those locations) and $700,000 was attributable to new service centers established in Sacramento and Fresno. Revenue from all California service centers is expected to continue to grow in future periods due to continuing customer demand and public awareness of potential health issues related to mold. Florida revenue increased by $1.0 million, all as a result of increased demand in the areas served by our existing service centers. Texas revenue increased by $400,000 due to increased home builder demand. Of the remaining $600,000 increase in revenue, $300,000 was attributable to projects in regions where we do not have any service centers, $200,000 was attributable to Trust One and $100,000 constituted miscellaneous revenue. We expect to increase the number of our service centers as the demand for our services increases and as we determine that new centers are considered to be an economically feasible strategic move.

     In addition to regional tracking, we also track revenue by the type of customer. Currently, we view our customers as comprising three distinct categories - national builders, regional builders and multi-family project builders. Our revenue has increased across all three categories from the nine months ended September 30, 2004 to the nine months ended September 30, 2005. Revenue for the national builder group totaled $1.4 million for the period, an increase of 366% from the same period in 2004. Revenue for the regional builder group totaled $1.4 million for the period, an increase of 742% from the same period in 2004. Revenue for the multi-family group totaled $1.2 million for the period, an increase of 211% from the same period in 2004.

  Cost of Revenue

     Cost of revenue includes the material, labor and other costs directly related to providing our services, including the depreciation expense relating to equipment used to provide our services. Recently, we have taken steps, some of which are discussed below, to reduce our cost of revenue and improve our gross margins.

     Our lack of capital has had a negative margin impact on our service operations in the areas of raw material cost, labor cost and labor productivity. For example, prior to June 2005, we could not afford our own workman’s compensation insurance policy and were therefore forced to hire workers from employee leasing firms or labor agencies, both of which are considerably more expensive than if we hired our workers directly. By the second quarter of 2005, our financial condition had improved to the point that we were approved for our own workman’s compensation policy through AIG, enabling us to hire our own workers directly, and, consequently, resulting in significant cost savings. As a result, we believe our gross margins will improve.

     Although cost of revenue for the nine months ended September 30, 2005 increased 382% over cost of revenue for the nine months ended September 30, 2004, gross margins for both periods were virtually identical. Labor costs were $328,000 and $1,611,000 for the periods ending September 30, 2004 and 2005, respectively, reflecting an increase of 391%. Material costs were $87,000 and $823,000, respectively, reflecting an increase of 850%. Direct costs were $264,000 and $838,000, respectively, reflecting an increase of 217%. Direct labor cost as a percentage of revenue is consistent across both periods at 38% and 39%, respectively. As the largest component of our cost of service, direct labor cost is a primary focus area for our operations. Direct labor cost as a percentage of revenue decreased to below 30% in the three months ended September 30, 2005, primarily as a result of savings from the workman’s compensation policy change described above. We are reviewing our operating process to determine if we can increase labor productivity. However, we do not, at this time, have sufficient experience to determine if productivity increases are possible.

     Raw material costs have increased as a percentage of revenue from 10% in the first nine months of 2004 to 18% for the comparable period in 2005. This increase is attributable to higher freight and shipping costs in 2005 as fuel prices and overall shipping costs have increased. Also, the lack of working capital has forced us to order raw materials in smaller lot sizes to conserve cash; the smaller lot sizes, however, limit our ability to receive vol-

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ume discounts and also increase our shipping costs. The increase in the number of projects in Florida and Texas has also contributed to material cost increases as higher amounts of materials are used in these regions due to high levels of humidity. We expect that we will be able to order raw materials in more economic quantities, reducing our per unit cost as well as the related freight costs to ship them to our service centers.

     Other costs of revenue include costs associated with fuel, service vehicle rental, equipment rental, equipment depreciation, direct supplies and other costs directly associated with the services we provide. Other direct costs have decreased as a percentage of revenue from 31% in the first nine months of 2004 to 20% for the comparable period in 2005. Depreciation expense for the period ended September 30, 2004 and 2005 was $41,000 and $74,000, respectively, reflecting 4.8% and 1.8% of revenue for the respective periods. Due to cash constraints, we rented rather than purchased equipment, reducing our depreciation expense as a percentage of revenue. As our cash position improves, we intend to lease, on a capital basis, equipment, which would increase depreciation expense and reduce rental costs. Automobile insurance expense for the period ended September 30, 2004 and 2005 was $8,000 and $37,000, respectively, reflecting 1% of revenue for both periods. Workman’s compensation expense was $98,000 for the period ended September 30, 2005. Since we first obtained our own policy in June 2005 there was no comparable expense in the 2004 period. Other direct costs were $215,000 and $629,000 for the periods ended September 30, 2004 and 2005, respectively, or 25% and 15% of revenue. The increases were largely in the areas of vehicle rentals and fuel expenses, as we increased the number of vehicles and equipment to service the increased number of customer projects. By purchasing new equipment, we will be able to reduce our reliance on rentals, which should improve our gross margins.

  Selling, General and Administrative Expenses

     Selling, general and administrative expenses include corporate and regional overhead such as compensation and benefits for sales, administrative and executive personnel, rent, insurance, professional fees, non-cost of revenue related travel, marketing and office related expenses. Selling, general and administrative costs were $2,117,000 and $3,351,000 for the nine months ended September 30, 2004 and 2005, respectively, or 246% and 81% of revenue. Non-service employee payroll costs increased from $1,441,000 to $2,128,000 for the nine months ended September 30, 2004 and 2005, respectively, or 168% and 51% of revenue. The increases in payroll costs were directly related to the addition of a chief financial officer in 2004, accounting and marketing personnel, regional management and sales personnel in California and Texas and other administrative staff. Also, as provided in their employment agreements, the base salaries of our senior executives increased in 2005 because our revenue increased. We expect that the trend of adding selling, general and administrative personnel will continue as our revenue grows and once we become a public company. We intend to add both direct sales personnel and commission representatives as we expand into new regions and as the demand for our services increase. Marketing personnel are expected to increase as we develop more marketing plans and advertising campaigns for our services. General and administrative personnel will increase, primarily in the financial functions, to meet the needs of being a public company.

     General insurance costs increased form $139,000 to $292,000 for the nine months ended September 30, 2004 and 2005, respectively, or 16% and 7% of revenue. The decrease as a percentage of revenue is a result of spreading the costs of insurance, which increased 110% from 2004 to 2005, over a 381% increase in revenue. While we expect that our insurance costs will increase in absolute dollar terms, we anticipate that they will not increase proportionally to our revenue growth, lowering the percentage relationship to revenue. Facility rental costs were $80,000 and $145,000 for the nine months ended September 30, 2004 and 2005, respectively, or 9.3% and 3.5% of revenue. Facility rental costs increased 81% from 2004 to 2005, but decreased as a percent of revenue. Telecommunications increased from $32,000 to $88,000 for the nine months ended September 30, 2004 and 2005, respectively, or 3.7% to 2.1% of revenue. The increase in dollars spent was due to the addition of service centers in locations outside of Southern California. Travel costs increased from $73,000 to $142,000 for the nine months ended September 30, 2004 and 2005, respectively, or 8.5% and 3.4% of revenue. The 95% increase in dollars spent was due to the addition of service centers in locations outside of Southern California as well as having certain service crews traveling to job sites in areas in which service centers were not located.

     Approximately $105,000 of the cost increase in selling, general and administrative expenses, or 8.5%, is attributable to Trust One, which we acquired in February 2005. Marketing costs accounted for approximately $81,000, or 6.6%, of the increase and depreciation expense resulting from capital asset purchases resulting from the increase in staffing accounted for $19,000, or 1.5%, of the increase. Approximately $180,000 represents the value of warrants accrued in the year ended December 31, 2004 and issued in January 2005 to satisfy an interest obligation to one of our creditors.

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     Once this offering is completed, we expect to experience a general increase in general and administrative expenses as a consequence of administrative and reporting requirements associated with being a public company. Specifically, we will have increases in professional services related to auditing expenses and legal costs, increases in various administrative costs due to record keeping and filing fees, and increases in insurance costs related to directors and officers liability and general liability insurance.

  Interest Expense

     Interest expense for the nine months ended September 30, 2005 totaled $512,000, an increase of $468,000 over the same period in 2004. The increase is directly attributable to the increase in debt financings in the fourth quarter of 2004 and the first three quarters of 2005. Of the amount incurred in 2005, $171,000 represented interest paid in cash or stock or accrued during the period, $25,000 represented amortization of debt discount on the Convertible Notes and $316,000 represented amortization of the beneficial conversion feature as the Convertible Notes have an effective conversion price below the deemed fair market value of our stock on the date of issuance.

  Provision for Taxes

      This amount, $800, represents California franchise taxes.

Comparison of Periods Ended December 31, 2003 and 2004

	From inception
	(January 13, 2003)					Year ended
	through December 31, 2003					December 31, 2004
				Percentage of					Percentage of		Increase/
	Amount			revenue		Amount			revenue		(decrease)
				(all dollar amounts are in thousands)
Revenue	$	182		100.0	%	$	1,553		100.0	%	$	1,371
Cost of revenue		228		125.3			1,219		78.6		$	991
Gross profit/margin		(46	)	(25.3	)		333		21.4		$	379
Selling, general and administrative expenses		1,137		624.7			3,303		212.7		$	2,166
Loss from operations		(1,183	)	(650.0	)		(2,970	)	(191.2	)	$	1,787
Interest expense		—		—			278		(17.9	)	$	278
Other loss		—		—			(42	)	(20.6	)	$	320
Loss before provision for taxes		(1,183	)	(650.0	)		(3,290	)	(211.8	)	$	2,107
Provision for taxes		1		0.5			1		—		$	—
Net loss	$	(1,184	)	(650.5	)%	$	(3,291	)	(211.9	)%	$	2,107

  Revenue

     Revenue for the year ended December 31, 2004 increased 753% compared to revenue for the period ended December 31, 2003. Revenue growth was primarily driven by the shift in our focus in late 2003 from mold testing for consumers to mold prevention in the new construction industry. Revenue related to mold testing and prevention for consumers in 2003 totaled approximately $55,000 and those services were generally discontinued in late 2003 as we focused all of our resources on new construction mold prevention services.

     In 2004, California revenue accounted for $1.1 million, or approximately 74% of revenue, while Florida revenue accounted for $0.4 million or approximately 25% of revenue.

  Cost of Revenue

     Cost of revenue for the year ended December 31, 2004 totaled $1.2 million, an increase of 435% compared to the cost of revenue for the period ended December 31, 2003. Labor costs were $94,000 and $585,000 for the periods ended December 31, 2003 and 2004, respectively, reflecting an increase of 522%. Material costs were $46,000 and $182,000 for the periods ended December 31, 2003 and 2004, respectively, reflecting an increase of 296%. Direct costs were $88,000 and $452,000 for the periods ended December 31, 2003 and 2004, respectively, reflecting an increase of 414%. Depreciation expense for the periods ended December 31, 2003 and 2004 was $10,000 and $50,000, respectively, representing 5.5% and 3.2% of revenue for the respective periods. 2003 was the first year of operations and due to cash constraints, we rented rather than purchased equipment. Automobile insurance expense for the periods ended December 31, 2003 and 2004 was $3,000 and $85,000, respectively, reflecting approximately 1.6% and 5.5% of revenue for the respective periods.

     In 2004, we expanded our number of service crews and service centers and, as a result, we increased the number of vehicles that we used. Workman’s compensation expense was $12,000 for the year ended December 31, 2003 and $43,000 for the period ended December 31, 2004. Other direct costs were $63,000 and $274,000 for the periods

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ended December 31, 2003 and 2004 respectively, or 25% and 15% of revenue. While some of our costs, such as equipment rentals and other direct costs, experienced decreases due to economies of scale, other costs, such as the cost of fuel and increased reliance on rental vehicles and equipment to service an increasing number of job sites, were primary contributors to higher costs. We also experienced an increased cost of revenue as we added service centers in Florida and Texas in 2004. The additional costs associated with these new service centers included training cost for new field technicians, service center start-up costs and labor productivity inefficiencies. 

 Selling, General and Administrative Expenses

     Selling, general and administrative costs were $1,137,000 for 2003 and $3,303,000 for the year ended December 31, 2004, reflecting a 191% increase. As a percentage of revenue, selling, general and administrative expenses for 2003 and 2004 were 625% and 213%, respectively. The increase in absolute terms is primarily attributable to increased headcount and other expenses related to our expansion in California ($0.6 million), Florida ($0.3 million) and Texas ($0.1 million). Non-service employee payroll costs increased from $350,000 to $1,137,000 for the years ended December 31, 2003 and 2004, respectively, or 192% and 73% of revenue. The increases in payroll costs were directly related to the addition of a chief financial officer in 2004, accounting and marketing personnel and other administrative staff. General insurance costs increased from $14,000 to $149,000 for the periods ended December 31, 2003 and 2004, respectively, or 8% and 9.6% of revenue. The increase as a percentage of revenue is a direct result of the increase in insurance costs to cover potential insurable risk and our service warranty. Facility rental costs were $39,000 and $117,000 for the periods ended December 31, 2003 and 2004, respectively, or 21.4% and 7.5% of revenues. Facility rental costs increased 200% from 2003 to 2004, but decreased as a percent of revenue.

     Telecommunication expenses increased from $15,000 to $52,000 for the periods ended December 31, 2003 and 2004, respectively, or 8.2% to 3.3% of revenue. The increase in dollars spent was due to the addition of service centers in locations outside of Southern California. Travel costs increased from $14,000 to $115,000 for the periods ended December 31, 2003 and 2004, respectively, or 7.7% and 7.4% of revenue. The 700% increase in dollars spent was due to the addition of service centers in locations outside of Southern California as well as having service crews travel to job sites outside the region in which they were based. Legal costs increased from $175,000 in the period ended December 31, 2003 to $183,000 for the year ended December 31, 2004. The costs were incurred in relation to establishing the corporate entity and the various debt and equity financings. For the year ended December 31, 2004, we accrued a $150,000 executive bonus based on reaching specific revenue milestones. Also, the 2004 amount includes noncash compensation charges (common stock issuances) of approximately $656,000 for employees, directors and third party service providers. The comparable 2003 amount is $294,000.

  Interest Expense

     Net interest expense from the year ended December 31, 2004 totaled $278,000, of which $120,000 constitutes interest paid in cash or in stock or accrued during the year; $30,000 represents amortization of debt discount and $128,000 represents the value of a warrant issued to the holder of an unsecured note in settlement of a dispute over the terms of that indebtedness.

  Other Loss

     In 2004, we reported a loss of $42,000 as a result of a non-insured theft of capital assets.

  Provision for Taxes

     The amount, $800, represents California franchise taxes.

Liquidity and Capital Resources

     We have funded our business with internally generated funds, proceeds from the sale of equity and debt securities, payment of obligations with common stock and negative working capital. From inception through September 30, 2005, we raised approximately $4.6 million from the issuance of debt securities and approximately $1.5 million from the sale of preferred equity securities. We have also issued common stock in settlement of $1.2 million of obligations — $256,000 of interest, $748,000 of salaries, $145,000 of director fees and $94,000 of professional services — to reduce the need to further issue debt and/or equity securities. In addition, as of September 30, 2005, we had a working capital deficit of approximately $2.8 million. These funding strategies have enabled us to offset accumulated losses of $7.6 million.

     During the period from inception through December 31, 2004, we issued $625,000 worth of Series A Preferred Stock and $859,000 worth of Series B Preferred Stock. We also incurred $649,000 of short-term debt

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and issued $1,000,000 aggregate principal amount of our 10% convertible notes. Based on the effective conversion rate of the convertible notes, we estimated the beneficial conversion feature to be $754,386, which is being amortized to interest expense over the life of the notes. Additionally, we issued $1,158,000 worth of common stock in payment of interest, salaries, director fees and professional services. During this period, we incurred accumulated losses of approximately $4.5 million and, at December 31, 2004, had negative working capital of $1.0 million. All of the proceeds generated during the period from the sale of our debt and equity securities were used to finance our operating losses. 

    The key components of our current assets are cash and accounts receivable and the key components of our current liabilities at December 31, 2004 are short-term debt, accounts payable and accrued payroll. The principal reasons for our working capital deficit at December 31, 2004 are as follows:

• Accounts Receivable of $380,000. During the year ended December 31, 2004, revenue increased by $1,370,000. Most of this increase came in the last quarter of the year. Approximately 7% of the accounts receivable balance, or $26,086, was due to retentions held back from payment by major home builders until such time as the entire project was completed. Substantially all of the remaining 93% of receivables was collected in the first quarter of 2005.
  
  
• Accounts payable and accrued liabilities of $531,000. The increase in accounts payable and accrued expenses was consistent with increases in revenue, cost of revenue and operating expenses. To accommodate the additional need for operating funds during the period, payments to vendors were extended beyond credit terms.
  
  
• Accrued salary, wages and commissions of $240,000. During the period, we increased our work force to accommodate the increase in our business. Additionally, senior management elected to defer a portion of their wages to meet the needs of the working capital deficit. Commissions increased proportionally to the increase in sales and are payable 50% upon billing and 50% upon collection of the receivable.
  
  
• Accrued bonuses of $150,000. Accrued bonuses are payable to the executive staff and the payment was deferred to accommodate the needs of the working capital deficit.

     Net cash used in operations during the period was approximately $1.8 million, which consisted of losses from operations of approximately $4.5 million offset by $2 million of non-cash expenses, such as the use of stock to pay interest, salaries and other obligations, plus depreciation charges of $64,000 and net changes in working capital.

     During the period, we purchased capital assets, consisting primarily of vehicles and office furniture and fixtures, of $294,000. Most of the capital assets were purchased for the operations of our mold treatment crews. Each crew utilizes approximately $50,000 of equipment. Due to our operating losses and cash position, leasing facilities were not available.

     During the period from January 1, 2005 through September 30, 2005, we issued an additional $950,000 aggregate principal amount of 10% convertible notes and $2,000,000 of unsecured notes. Based on the effective conversion rate of the convertible notes issued, we estimated the beneficial conversion feature to be $169,535, which is being amortized to interest expense over the life of the notes. Simultaneously with the issuance of a $500,000 principal amount convertible note in April 2005, we also issued warrants to purchase 170,745 shares of our common stock at an exercise price of $5.86 per share at any time up to April 15, 2008. We recorded $147,368 at debt discount in connection with the issuance of this warrant. Also, during the period, we issued $22,500 worth of common stock in payment of interest. During the period, we had a net loss of $3.0 million and our working capital deficit was approximately $2.8 million. All of the proceeds from the sale of debt and equity securities during the period were used to finance our operating losses other than the ending cash balance as of September 30, 2005, which was approximately $600,000.

     The key components of our current assets are cash and accounts receivable and the key components of our current liabilities at September 30, 2005 are short-term debt, accounts payable and accrued payroll. The principal reasons for the working capital deficit at September 30, 2005 are as follows:

• Accounts Receivable of $1,158,000. During the nine months ended September 30, 2005, revenue increased by approximately $2.6 million over the year ended December 31, 2004 and receivables increased by approximately $778,000. Approximately 6% of the accounts receivable balance at September 30, 2005, or $68,167, was due to retentions held back from payment by the major home builders until such time as the entire project was completed. Substantially all of the remaining 94% of receivables was collected in the fourth quarter of 2005, and we do not expect any difficulties in collecting the balance.
  
  

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• Accounts payable and accrued liabilities of $1,158,000. The increase in accounts payable and accrued expenses was consistent with the increase in revenue, cost of revenue and operating expenses. To accommodate the additional need for operating funds during the period, payments to vendors were extended beyond credit terms. On occasion, we experienced periods in which we were placed on credit hold until payments were released. While we believe that those instances may have affected our revenue growth, we have not quantified that consequence.



• Accrued salary, wages and commissions of $587,000. During the period, we increased our work force to accommodate the increase in our business. Additionally, senior management elected to defer a portion of their wages to meet the needs of the working capital deficit. Commissions increased proportionally to the increase in sales and are payable 50% upon billing and 50% upon collection of the receivable.
  
  
• Accrued bonuses of $348,000. Accrued bonuses of $348,000 are payable to the executive staff and the payment has been deferred to accommodate the needs of the working capital deficit. These bonuses are ultimately to be paid 70% in common stock and 30% in cash over a six month period beginning 30 days after the completion of this offering.
  
  
• Accrued interest of $321,000. Accrued interest of $321,000 has been deferred until the completion of this offering, after which all outstanding debt and accrued interest will be repaid.
  
  
• Deferred offering costs of $479,000. Deferred offering costs of $479,000 associated with this offering, will be paid when this offering is completed and will be offset against the gross proceeds.

     Net cash used in operations during the nine months ended September 30, 2005 was approximately $2.0 million, which consisted of losses from operations of approximately $3.0 million offset by $350,000 of non-cash expenses noted above plus depreciation charges of $107,000 and net changes in working capital.

     At the present time we are not aware of any trends, other than those discussed elsewhere in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this prospectus.

     We believe that the net proceeds from this offering together with cash flow from operations will be sufficient to meet our working capital and capital expenditure requirements for the next 12 months. However, if we experience a significant deterioration in our receivable collections, or if we are not successful in growing our revenue and improving operating margins, we may need to seek additional sources of liquidity to fund operations. Our future depends upon many factors, including but not limited to, increasing our revenue, improving operating margins, recruiting, hiring, training and retaining significant numbers of qualified personnel, forecasting revenues, controlling expenses and managing assets. Our ability to achieve these objectives could have a positive affect on our results of operations. If we need additional funds, there are no assurances that adequate financing will be available on acceptable terms, if at all. We may in the future seek additional financing from public or private debt or equity financing. There can be no assurance such financing will be available on terms favorable to us or at all. To the extent any such financing involves the issuance of equity securities, such issuances may be at or below existing market prices and existing shareholders could suffer dilution and losses in the value of their investment.

Commitment and Contingencies

     We intend to use the net proceeds of this offering to repay all of our outstanding indebtedness. We do not currently have any equipment leasing programs or bank facilities although once our financial position stabilizes we plan to investigate whether we would qualify for any of those types of financing opportunities.

     We have obligations under real property leases for our executive offices in San Juan Capistrano, California and our various service centers in California, Texas, Florida and Louisiana. The rent for executive offices is $2,500 per month and the lease expires in August 2006. The commercial real estate rental market in Orange County, California is tight. According to the January 30, 2006 edition of the Orange County Business Journal, vacancy rates in the county are approximately 6.2% and rents for commercial space average from $1.83 to $2.28 per square foot per month, depending on location. Since we will be required to post a significant security deposit when we sign a new lease, we have decided to wait until this offering is completed before we start looking for new space in order to conserve cash. Our service center leases expire at various times between now and September 2008, and our gross monthly rental for these locations is currently $16,500. We do not anticipate that we would have difficulty renewing expiring leases or finding new locations, if necessary.

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     We have employment agreements with our two senior executive officers, which expire in 2009. Based on our current revenue, for 2006 our chief executive officer has a base salary of $220,000 and our chief operating/chief financial officer has a base salary of $150,000. In addition, in November 2005, we entered into a Severance and General Release Agreement with our former president, under which we have a total commitment of $442,000, a portion of which will be paid out of the proceeds of this offering and the balance of which will be paid out of operating cash flow.

     We provide a general warranty that extends for the entire “statute of repose,” the period during which, under various state laws, builders have continuing liability for construction defects. In general, this period is between ten and fifteen years depending upon the state in which the service has been provided. The warranty covers both property damage and personal injury arising from mold contamination on any surface we treat. The personal injury portion is supported by a $2 million pollution liability mold giveback provision under our general liability policy. To date we have not been required to perform under the terms of our warranty provisions, and we are not aware of any pending or threatened claims. However, should we be confronted with claims that result in damages in excess of our insurance coverage, we may be liable for substantial funds that could significantly reduce our working capital.

     Our employees are covered under a workman’s compensation insurance policy issued by AIG that expires August 15, 2006. Since we first obtained this policy in August 2005, we have not been able to develop a claims history indicating that we are under insured or that we will be liable for back premiums due to existing claims.

Seasonality and Cyclicality

     We have not been in business long enough to have gone through multiple business cycles to assess what impact they would have on our business. We do know, however, that, in general, the construction industry slows down considerably after Thanksgiving and does not pick up again until after early in the new year. We believe this fact will have an adverse impact on our fourth quarter operating results. In addition, as is typical in the construction industry, our results of operations could be adversely impacted by weather conditions; this is true in our current southern locations, and we expect it to be more of a factor as we expand into cold-weather regions.

Effect of Recent Accounting Pronouncements

     In December 2004, the Financial Accounting Standards Board (“FASB”) determined that the effective date for adoption of SFAS No. 123R, Share-Based Payment would be the first interim or annual period after June 15, 2005. In April 2005, the Securities and Exchange Commission changed the effective date to the first fiscal year beginning after June 15, 2005. SFAS No. 123R is a revision of SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. SFAS 123R requires us to measure compensation cost for all outstanding unvested share-based awards at fair value beginning on January 1, 2006. SFAS No. 123 defines the fair value method of accounting for issuance of stock options and other equity instruments. Under the fair value method, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. Pursuant to SFAS No. 123, companies had been encouraged, but were not required to adopt the fair value method of accounting for employee stock based transactions. Companies were also permitted to continue to account for such transactions under Accounting Principles Board Opinion (APB) No. 25, but were required to disclose in a note to the financial statements the pro forma effect as if the Company had applied SFAS No. 123. We apply APB Opinion No. 25 and related interpretations in accounting for stock-based transactions with employees and comply with the disclosure requirements of SFAS No. 123 and No. 148.

     We will begin accounting for share-based payments in accordance with SFAS No. 123R effective with the beginning of our 2006 calendar year. As of the required effective date, all public entities and those nonpublic entities that used the fair-value-based method for either recognition or disclosure under Statement 123 will apply this Statement using a modified version of prospective application. Under that transition method, compensation cost is recognized on or after the required effective date for the portion of outstanding awards for which the requisite service has not yet been rendered, based on the grant-date fair value of those awards calculated under Statement 123 for either recognition or pro forma disclosures. For periods before the required effective date, those entities may elect to apply a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods by Statement 123. Nonpublic entities that used the minimum value method in Statement 123 for either recognition or pro forma disclosures are required to apply the prospective transition method as of the required effective date. The adoption of SFAS No. 123R and the corresponding recognition of compensation cost is expected to have a material impact on our financial statements, and we expect the impact to be similar to the information disclosed in note 3 of our consolidated financial statements. We may consider implementing modifications to our long-term compensation plans, including adopting alternative compensation arrangements. We are not presently aware of any other significant issues that might result from adoption of the standard.

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BUSINESS

     We provide mold prevention services to home builders in the United States. We believe that the low cost of prevention compared to the high costs of litigation and remediation provides a compelling sales proposition. In addition, we believe that single and multi-family residential new construction represents the greatest market growth opportunity within this industry and that is where we currently are focusing our efforts. However, other markets, including commercial and industrial, not-for-profit (such as hospitals and schools) and government buildings, present future business expansion opportunities.

Industry Background

     Over the past few years, mold contamination in buildings has emerged as a serious problem both as a health issue and as an economic issue. Fungi commonly found in buildings with water intrusion problems include Stachybotrys, Aspergillus, Penicillium and Trichoderma. Several mold species can produce a wide variety of mycotoxins that can enter the body via inhalation or contact with the skin. Even in low concentrations, mycotox-ins can cause adverse health effects, including skin irritation, respiratory disease, cancer and immune disorders. Mycotoxins elicit a toxic response in virtually all individuals who come in contact with them. Stachybotrys, a well-known mycotoxin-producing mold, has received much publicity from the media, especially regarding high-profile closings of public and private buildings, schools, courthouses and hospitals. Inhaling of mold spores may lead to or exacerbate allergic reactions or cause toxic effects or infections. Allergic reactions include asthma, Hypersensitivity Pneumonitis (HP) and allergic rhinitis. Skin contact with mold spores may cause dermatitis, noted by visible red itchy patches of skin. The most common symptoms associated with allergic reactions are runny nose, eye irritations, cough, congestion and aggravation of asthma. A wide variety of symptoms has been attributed to the toxic effects of mold. Symptoms such as fatigue, nausea, headaches, respiratory distress and eye irritation have been reported.

     The media has helped increase public awareness of the health risks posed by mold contamination. Many of the reports place the blame for mold contamination on builders, owners, building managers, designers, engineers, architects, or insurance companies and may be a contributing factor to the increase in single-party and class action lawsuits. Insurers have seen mold-related claims rise dramatically over the last several years. These claims have been driven in part by significant jury verdicts in cases like Ballard v. Farmers ($32 million verdict reduced to $4 million on appeal) and Anderson v. Allstate ($18 million verdict reduced to $2.4 million), involving mold damage to the insured’s homes, where the insurance companies were alleged to have breached their duty of good faith and fair dealing and were held liable for not properly responding to the insured’s claims for coverage. Insurance companies are countering by challenging mold coverage under existing policies and attempting to revise new policies to ensure mold coverage is not available. As this mold coverage litigation matures and the new exemptions from coverage are implemented, those who claim injury from mold will be forced to target other parties, like builders, owners, designers, engineers, architects and product manufacturers. In a recent California case, a couple who claimed their son suffered brain damage from toxic mold in their home reached a $22.6 million settlement with the lumberyard that supplied the wood and 16 other defendants.

     Mold prevention is a new service within the general construction industry. As a result, there is a shortage of data in terms of how much money is actually being spent on mold prevention services, but we do know that awareness of the problems caused by mold is increasing and the mold prevention industry is emerging. We measure the size of the industry in terms of potential business. For example, in Southern California new residential construction for 2005 is predicted to be 177.1 million square feet. Based on our average service pricing, the total potential market for mold prevention services in the Southern California region is approximately $62.0 million annually. We have treated approximately 3.4 million square feet in Southern California to date in 2005, or approximately 1.9% of the total market. Applying this analysis to all the markets that we serve, we have treated approximately 16.9 million square feet to date in 2005, representing approximately 3.3% of those markets. Based on our knowledge of the market and the industry and our relationship with home builders across the country, we believe that we are one of the largest mold prevention service companies in the United States.

     We believe the mold prevention service industry will grow for the following reasons:

• Mold contamination in residential real estate construction is unavoidable. Wood and wood byproducts are still, by far, the primary material used in residential real estate construction. Because the wood is exposed to the elements before and during the construction process, most buildings are contaminated even before the structure is sealed. Even after construction is completed, leaks, lack of proper ventilation, lack of light and other construction defects, even if they do not compromise the integrity of the structure, create an optimum environment for mold to grow.

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• Insurance against mold contamination is extremely expensive. The increase in the number of mold-related insurance claims has prompted many insurance companies to carve mold coverage out of general liability policies. Insurers who underwrite pollution legal liability policies do offer mold coverage as part of environmental insurance policies. However, this type of policy enhancement is expensive, involves high deductibles and is limited in scope. According to the Environmental Risk Resources Association, the cost of adding mold coverage to a pollution legal liability policy is typically 7% to 10% of the amount of coverage purchased, with a 10% to 15% deductible. So, for example, a $1 million liability policy would have an additional annual premium of $70,000 to $100,000 and a deductible ranging from $100,000 to $150,000 if mold coverage were added to the policy. Of course, insurance coverage is not a guarantee against being sued and may only provide limited coverage for the economic loss.
  

• The cost of remediation is extremely high. We believe that the cost of remediation could be as high as $50 per square foot.
  

• The economic impact of mold contamination is broad. Lenders are increasingly concerned over mold contamination as it affects the value of their collateral and, as a result, are requiring builders and developers to implement various prevention and management policies and practices that will minimize the risk. For example, the U.S. Department of Housing and Urban Development recently instituted a policy requiring buildings to be certified as “mold free” as a condition for financing.
  

• Public awareness of the health risks related to mold is growing. There is a growing recognition of the total economic cost of indoor pollutants in general and mold in particular. In 2005, the California Air Resources Board estimated the annual cost to California’s economy attributable to mold hazards, due to premature deaths, medical costs, lost worker productivity and related impacts, was $220 million.

Our Business

     Our business is removing existing mold spores from wood and other building materials used in residential construction and preventing future mold growth on these materials by coating them with an antimicrobial solution. Mold growth requires mold spores, a food source (e.g. wood) and moisture. Mold is ubiquitous and present in every residential home. As a result, builders, engineers and architects have dedicated their mold prevention efforts to developing sealed structures to prevent water or moisture from seeping into areas where mold spores already exist. However, that approach does not work due to one or more of the following factors: design defects, engineering defects and living habits. From an engineering standpoint, it is impossible to design a building that is 100% waterproof. First, all structures are exposed to climatic elements including rain, sleet, snow and humidity. Second, all residential homes have water pipes that run behind walls that can leak or even rupture. Moisture is also created when warm air passes over pipes carrying cold water, resulting in condensation. Third, because of the trend towards energy conservation that began in the 1970’s, moisture that gets trapped behind walls typically has little or no opportunity to evaporate. Finally, it is difficult to regulate the living habits of the occupants.

     We take an entirely different approach to the problem. We have developed an environmentally-friendly three-step process that removes all visible mold growth from exposed building surfaces and applies an anti-microbial coating that prevents future mold growth. First, we use a soda blasting technique to remove all traces of mold contamination on all exposed building surfaces, whether wood, metal or concrete. Second, we clean the entire area to remove all residue of the soda, contaminants and debris. Finally, we apply our antimicrobial agent to all exposed surface areas contracted by the builder.

     We use two products in our process: baking soda for mold removal and an antimicrobial agent for mold growth prevention. Currently, we use an antimicrobial product manufactured in the United States exclusively for our use, which is a silicone-based product that is odorless and colorless. When applied, it bonds to the surface to prevent mold growth. A surface treated with this antimicrobial agent acts like a “bed of nails” to microbes, rupturing microbial membranes on contact. The chemistry underlying the antimicrobial agent we use, which has been in existence for over 30 years, is non-toxic, environmentally safe and provides long-term efficacy against microbial growth. It has been certified by BuildingGreen, Inc. as a “green” product.¹

____________

1      BuildingGreen, the publisher of Environmental Building News and which maintains a website at www.buildinggreen.com, is an independent company that provides information to building industry professionals and policymakers that is designed to improve the environmental performance and reduce the adverse impacts of buildings.

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We believe that our success depends on our ability to provide customers with “best of breed” technology for mold prevention. Under our agreement with the manufacturer of the antimicrobial agent we are currently using, the manufacturer cannot sell the product, under any name, to anyone else as long as we satisfy minimum use requirements. On the other hand, we are not precluded from using other antimicrobial agents or purchasing comparable products from another source.

     To date, our focus has been on the residential segment of the construction industry. This segment includes multi-family construction, single family construction and custom built homes. We have targeted this segment initially because of its size and growth, the high frequency of mold contamination in these structures and the high profile in the media of mold contamination in residential housing. We have provided our services to over 350 national and regional single- and multi-family home builders, including Lennar Corporation, DR Horton, Inc., Centex Corporation, Issa Homes, Inc., The McCaffrey Group, Lenox Homes, Global Construction Company, L.L.C., Hanover R.S. Limited Partnership, Bosa Development and Opus West Construction, Inc. The reaction among our clients has been positive, and we continue to generate repeat business from these builders. We currently operate 11 service centers in four regions — California, Florida, Texas and Louisiana — with plans to expand into strategically selected additional markets throughout the United States. We are not aware of any other company that has a plan, like we do, for a national roll-out of service centers to provide mold prevention services to the construction industry.

     Our fees vary from region to region and from project to project. The factors that we use to determine the prices we charge for our services include some or all of the following: (i) the size of the project; (ii) the region; (iii) proximity to a service center; (iv) the type of construction (e.g. single or multi-family); (v) the areas of the structure to be treated; (vi) the construction materials that are being treated; and (vii) the customer.

Our Strategy

     Our primary objective is to dominate the newly emerging mold prevention services industry. The key elements of our strategy include the following:

• Maximize first mover advantage. We plan to aggressively pursue direct sales in the regions we currently serve by targeting additional national and regional builders in those areas.
  
  
• Enhance our existing strategic relationships and develop new ones. Our strategy is to market our services directly to builders. We have established relationships with a number of major national and regional home builders in the United States, designating us a “preferred provider” of mold prevention services. These relationships are significant because we believe they create a barrier to entry, and we can leverage off these relationships when we establish new service centers.
  
  
• Expand into new regions and markets. We have identified potential new regions for expansion based on factors such as the number of housing starts and the prevalence of mold. We will also expand into new markets in response to demand from existing customers. Finally, we will react quickly to new opportunities arising as a result of unforeseen events. For example, in October 2005, in response to the devastation caused by Hurricane Katrina, we expanded into New Orleans.
  
  
• Build brand identity. We will continue to build the brand identity of “Mold Guard” through a comprehensive aggressive sales and marketing campaign.
  
  
• Create industry demand. We plan to educate lenders, builders, contractors, insurance companies, engineers, architects and the general public on the health risks and the legal ramifications associated with mold exposure, as well as on the value of our services.
  
  
• Expand our service offerings. As a result of our acquisition of Trust One in February 2005, we are a licensed pesticide operator in California. We also are licensed in the states of Texas and Louisiana. Through Trust One, we offer termite control services in California. We intend to offer additional environmental-related services such as concrete sealing and interior surface treatment.
  
  
• Expand into new market segments. Other market segments of the construction industry include the not-for-profit, such as schools and hospitals, governmental, such as courthouses, prisons and military bases, hospitality and commercial markets.

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Sales and Marketing

     Historically, our marketing efforts have targeted builders, primarily because they make the decision whether or not to use our services. We usually contact builders directly, either by calling them or by sending them written marketing materials. We intend to expand our marketing activities by targeting other decision influencers such as lenders, insurance companies, architects and engineers. Although mold prevention is generally not required by insurance companies, lenders or even legislatures, we believe that as the economic cost of mold contamination becomes more apparent, the decision making process will be taken out of the hands of the builders. HUD, the largest home lender in the country, now requires a certificate that the property is mold-free before it will lend against the property.

     Regional builders are an important segment for us as they comprise the majority of the market. We utilize a direct sales force in each region to call on regional builder contacts. Contacts are identified and approached through referral selling, direct mail and direct phone contact from our sales force. We utilize both internal and external sales representatives in our direct sales teams. Direct sales efforts are directly supervised by the regional general managers in California, Florida, Texas and Louisiana.

     Another marketing strategy is to enter into exclusive marketing agreements with local persons or firms under which they would develop marketing programs for specific markets, and we would pay them a fee based on the effectiveness of their marketing program. In December 2005, we entered into a “Joint Marketing Cooperative Endeavor Agreement” with an entity called Gulf Coast Mold Guard, LLC. Under this agreement, Gulf Coast Mold Guard agreed to provide us with $300,000 of capital to purchase and/or lease equipment and personnel so that we can provide mold prevention and restoration services in the coastal regions of Louisiana, Mississippi and Alabama, referred to as the Gulf Coast region, and, at its own cost and expense, to develop a marketing campaign for us in that region. Under the agreement, the minimum annual advertising expenditures for Gulf Coast Mold Guard are $180,000, provided that our gross receipts from the Gulf Coast region are at least $100,000 per month for the first year of the agreement and $150,000 per month after the first year. In exchange, we agreed to pay them a portion of all our revenue derived from providing our services in that region.

     Our sales and marketing staff includes our vice president of sales and three regional sales directors. With the proceeds of this offering, we intend to hire additional sales personnel at both the corporate and the regional levels. Our goal is to expand our existing relationships with builders and to develop new relationships with other national and regional builders and other trades and professions servicing the construction industry. We will continue to use our current strategies, which include direct selling and mailing, telemarketing and joint marketing arrangements like the one we have with Gulf Coast Mold Guard. In addition, we will participate in trade shows and conventions and develop a national public relations campaign that will be designed to increase the awareness of mold contamination and its adverse effects and promote our solution.

Competition

     The market for mold prevention services is relatively new. There is currently no dominant market leader in the mold prevention services industry, and, we believe, significant business opportunities exist. We believe we are in a first-to-market leadership position, and we plan to use this advantage to promote prevention compared with costly mold remediation and restoration. As the market for mold prevention services expands, we expect that competition will increase.

     Our principal competitors include companies currently manufacturing antimicrobial surface coatings that depend on third party applicators for distribution and sales. These types of companies include Fosters Inc., Envirocare and Nisus Corporation, all of which are chemical manufacturers. Other potential competitors include pest control companies and other construction industry trades. We believe that we have a strategic advantage over these competitors because (a) of our low cost structure and efficient operations; (b) of our ability to service customers out of our company-owned and operated service centers (as opposed to third party applicators) and (c) we are not tied to a specific mold prevention technology, enabling us to always provide the “best of breed” services to our customers.

     We believe that builders will opt to use our services for the following reasons:

• Our services are performed by our specially-trained work crews. Most of our competitors tend to be chemical companies who are trying to sell one of their products. These companies usually hire third party applicators, which are likely to use unskilled labor for the task.

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• We offer a comprehensive service that includes removing existing mold from the wood structure, applying an antimicrobial solution to the structure and site cleanup. The chemical companies who are our chief competitors only offer the antimicrobial application.
  
  
• We believe that our antimicrobial agent is more effective than any other antimicrobial product available on the market. First, ours is a silicone-based product that adheres to the surface to which it is applied. It does not wear off and cannot be removed except with caustic agents or by friction. Second, it results in a “physical” kill as opposed to a “chemical” kill, which means the microbes cannot develop immunity against the antimicrobial agent like bacteria can develop immunity against an antibiotic.
  
  
• We offer our customers a warranty that extends for the entire period of the “statute of repose” — i.e., the period during which builders have continuing liability under state law for defects in the structure. In California and Texas, the statute of repose is 10 years; in Florida it is 15 years; and in Louisiana it is five years. Under our warranty, we will remediate, at our own expense, any mold contamination that develops on any surface that we treated. The warranty also covers personal injuries from mold contamination. This portion of the warranty is backed by our General Liability Policy with Evanston Insurance, rated A by A.M. Best, which has a pollution liability mold give back provision. This provision covers property damage and personal injury resulting from mold contamination on any surface we treated. The policy limits are $2 million per occurrence/$2 million aggregate.

Intellectual Property

     At the present time, we do not own any patents, trademarks or copyrights that are material to our business. We do believe that our methodology is proprietary but we have no means of protecting it other than through non-disclosure and non-compete agreements. While we try to have all our executive and management level employees sign such agreements, we are not always successful and none of our hourly employees have signed such agreements. Even in those cases where we are successful in obtaining non-compete and non-disclosure agreements, it may be difficult, if not impossible, for us to enforce our rights. We have the exclusive rights to the antimicrobial agent that we use, and we believe it is the most effective antimicrobial agent available today. However, even in that case, we do not own the patents on that agent, and even if we did, the patents have expired. As a result, there are virtually no barriers to entry in the mold prevention services industry, and we are susceptible to competition from any number of sources including chemical companies, pest control companies and other trades that provide services to the construction industry.

Government Regulation

     A number of states have enacted or are considering the adoption of legislation providing for the convening of task forces, usually comprised of health officers, health and medical experts, mold abatement experts, affected consumers and representatives of affected industries to conduct feasibility studies concerning permissible exposure limits to mold in indoor environments and to advise and, if appropriate, develop objective standards for the assessment and remediation of indoor mold.

     In addition, some states, including Florida, Illinois, Louisiana, Oklahoma, Texas and Wisconsin, have enacted laws requiring the registration, licensure or certification of mold remediation and abatement contractors. These laws generally provide for the appropriate state regulatory authority to establish training and eligibility requirements and application procedures for the registration, certification or licensure of applicants, provide guidelines for disciplinary action and penalties for violations of these guidelines, including modification, suspension or revocation of a registration, certification or license. In other instances, particularly California and Louisiana, the states require a pest control operator’s license or a contractor’s license for mold prevention service companies. We believe we have all the necessary qualifications, licenses, permits and certificates required by the states in which we are operating.

     At the federal level, Representative John Conyers of Michigan has introduced a bill entitled “The United States Toxic Mold Safety and Protection Act.” This bill, if enacted into law, would direct the U.S. Environmental Protection Agency (“EPA”) and the U.S. Department of Housing and Urban Development (“HUD”), respectively, to establish guidelines that identify conditions that facilitate indoor mold growth and measures that can be implemented to prevent such growth. The guidelines would also address mold inspection, testing and remediation. The bill also requests EPA and HUD to establish guidelines for certifying mold inspectors and remediators.

Employees

     As of February 1, 2006, we had 121 employees of which 31 were full-time and 90 were part-time. We have 8 employees based in our executive offices. Our employees are not covered by a labor union. We believe that our relationship with our employees is good.

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Facilities

     Our executive offices are temporarily located at 30200 Rancho Viejo Road, Suite G, San Juan Capistrano, California 92675 under a lease that expires in August 2006. We will begin the search for permanent facilities after this offering. In addition, we lease office / service center space in the following locations:

State	Address
California	2125 Howell Street, Suite G, Anaheim
California	2038 E. Jensen Avenue, Fresno
California	3310 Monier Circle, Suite 8, Rancho Cordova
California	4200 Northgate Blvd, Unit #1404, Sacramento
California	157 Nardi Lane D, Martinez
California	6250 Sierra Lane, Dublin
Florida	9942 Currie Davis Drive, Suite A, Tampa
Florida	3714 Vineland Road, Orlando
Texas	751 Bradfield, Houston
Louisiana	5600 Jefferson Highway, Suite 274, New Orleans

Legal Proceedings

     We are not presently involved in any legal proceeding that we deem material.

Corporate History

     We commenced operations in September 2002 and subsequently incorporated in California in January 2003.

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MANAGEMENT

Executive Officers and Directors

     The names, ages and titles of our executive officers and directors, as of January 1, 2006, are as follows:

Name	Age	Position
Tom Blakeley	46	Chief executive officer and chairman of the
		board of directors
Mark Davidson	44	Chief operating officer and chief financial
		officer
Brad Barnes	45	Director
John W. Martin	47	Director
Michael A. Katz	56	Director – Nominee (1)
		Director – Nominee (1)
		Director – Nominee (1)
		Director – Nominee (1)

(1)      The Director-Nominees will take office on the date of this prospectus.

     Tom Blakeley. Mr. Blakeley is our founder and has been our chief executive officer and chairman of the board since January 2003. Mr. Blakeley founded the company as a sole proprietorship in September 2002 and incorporated the business in January 2003. From July 2001 through September 2002, Mr. Blakeley was retired. From January 1999 through June 2001. Mr. Blakeley was the president, chief executive officer and chairman of MindArrow Systems, Inc., a provider of online direct marketing services.

     Mark Davidson. Mr. Davidson joined us in April 2004 as our chief financial officer. In August 2005, he was also named as our chief operating officer. From February 1997 to April 2004, Mr. Davidson was the president of J2N Consulting, a management consulting firm that provided consulting services, including business analysis, financial planning, executive management and development of customized information tools, to corporate clients.

     Brad Barnes. Mr. Barnes joined us in September 2002 to focus on developing a sales and marketing strategy. When the business was incorporated in January 2003, he was named president although he continued to focus primarily on developing our sales and marketing strategy. He was also appointed to the Board. He resigned as president effective November 30, 2005. From February 1998 to October 2002, Mr. Barnes was vice president of sales and marketing at Directfit, an online hiring solutions provider for information technology personnel.

     John W. Martin. Mr. Martin has served as a director since April 2003. Mr. Martin is the sole proprietor of the Law Office of John W. Martin, a Los Angeles-based law firm specializing in corporate and securities law, which he founded in 1989.

     Michael A. Katz. Mr. Katz will join our Board once the offering is completed. Since February 2000, Mr. Katz has been the President of Western Exterminator Company, a privately-held company with over 1,000 employees that provides commercial pest control services throughout the United States and residential pest control services in California, Arizona and Nevada.

     There are no family relationships among our officers and directors.

     None of our current directors, Messrs. Blakeley, Barnes and Martin, are “independent” as required under the rules and regulations that apply to a company listed on the Nasdaq Capital Market. Mr. Katz is independent. Before this offering, we will appoint three other independent directors. We are currently considering a number of candidates.

     Under our bylaws, directors are elected annually at the annual meeting of shareholders to hold office for one year or until their successors are duly elected and qualified. We have not yet set the day for our first annual meeting of shareholders following this offering. Board vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority vote of the directors then in office,

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even if less than a quorum, or by a sole remaining director. The executive officers are appointed by the Board and serve at their discretion.

Committees of the Board of Directors

     The board of directors has authorized the establishment of three standing committees: an Audit Committee, a Compensation Committee and a Corporate Governance and Nominating Committee. Each committee will be made up entirely of independent directors.

     Audit Committee. The Audit Committee will oversee our accounting and financial reporting processes, internal systems of accounting and financial controls, relationships with auditors and audits of financial statements. Specifically, the Audit Committee’s responsibilities will include the following:

• selecting, hiring and terminating our independent auditors;
  
  
• evaluating the qualifications, independence and performance of our independent auditors;
  
  
• approving the audit and non-audit services to be performed by the independent auditors;
  
  
• review the design, implementation and adequacy and effectiveness of our internal controls and critical policies;
  
  
• overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and other accounting matters;
  
  
• with management and our independent auditors, reviewing any earnings announcements and other public announcements regarding our results of operations; and
  
  
• preparing the report that the Securities and Exchange Commission requires in our annual proxy statement.

     The chairman of the Audit Committee is                      and the other members of the audit committee are Messrs.                     and                     . The board has determined that                      is an “audit committee financial expert,” as that term is defined in Item 401(h) of Regulation S-B, and “independent” for purposes of Nasdaq listing standards and Section 10A(m)(3) of the Securities Exchange Act of 1934.

     Compensation Committee. The Compensation Committee assists the board of directors in determining the development plans and compensation of our officers, directors and employees. Specific responsibilities include the following:

• approving the compensation and benefits of our executive officers;
  
  
• reviewing the performance objectives and actual performance of our officers; and
  
  
• administering our stock option and other equity and incentive compensation plans.

     The chairman of the Compensation Committee is                      and the other members of the Compensation Committee are Messrs.                     and                     .

     Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee assists the board of directors by identifying and recommending individuals qualified to become members of the Board of Directors, reviewing correspondence from our shareholders and establishing and overseeing our corporate governance guidelines. Specific responsibilities include the following:

• evaluating the composition, size and governance of our Board of Directors and its committees and make recommendations regarding future planning and the appointment of directors to our committees;
  
  
• establishing a policy for considering shareholder nominees to our Board of Directors;
  
  
• reviewing our corporate governance principles and making recommendations to the Board regarding possible changes; and
  
  
• reviewing and monitoring compliance without code of ethics and insider trading policy.

     The chairman of the Corporate Governance and Nominating Committee is                      and the other members of the committee are Messrs.                     and                     .

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     As of the date of this prospectus, we have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer and other persons performing similar functions, as well as all of our other employees and directors. This Code of Ethics will be posted on our website at www.americanmoldguard.com.

Compensation of Directors

     Once this offering is effective, our “independent” directors will receive an annual fee of $          , payable in equal quarterly installments and $           plus reimbursement for actual out-of-pocket expenses in connection with each board meeting attended in person and $           for each board meeting attended telephonically. The head of the audit committee will receive an annual fee of $          , payable in equal quarterly installments. Each member of the audit, compensation and nominating committees will receive $           for each committee meeting they attend in person and $           for each audit committee meeting attended telephonically unless those meetings immediately precede or follow a board meeting, in which case they will receive $           for attending in person or $           if they attend by telephone.

Executive Compensation

     Summary compensation. The following table sets forth information regarding compensation awarded to, earned by, or paid to our chief executive officer and our other most highly compensated executive officers whose compensation exceeded $100,000 in 2005 for all services rendered to us in all capacities during the last three completed fiscal years.

Summary Compensation Table

										Long-term compensation
Name and								Other		Securities
Principal Position	Year	Salary			Bonus			compensation(1)		underlying options
Tom Blakeley	2005	$	209,997	(2)	$	—		$	—	—
Chief Executive Officer	2004	$	200,000	(2)	$	50,000	(2)	$	137,500	16,988
	2003	$	55,000	(2)				$	81,600	—
Brad Barnes	2005	$	131,664	(3)	$	—		$	—	—
President	2004	$	200,000	(3)	$	65,000	(3)	$	150,000	16,988
	2003	$	55,000	(3)				$	88,000	—
Mark Davidson	2005	$	150,000	(4)	$	164,202		$	—	25,307
Chief Financial Officer	2004	$	90,000	(4)	$	30,000	(4)	$	124,250	42,471
and Chief Operating Officer

(1)	Reflects the value of common stock issued for services.
(2)	Salary for 2005 does not include $53,753 of previously deferred compensation paid to Mr. Blakeley in 2005. The salary amounts for 2004 and 2003 include deferred compensation of $87,405 and $36,250, respectively. At Decemeber 31, 2005, the balance owed to Mr. Blakeley was $69,902, which will be payable over a six month period beginning with the first calendar month after the month in which this offering becomes effective.
(3)	Includes deferred compensation of $47,481 in 2005, $161,250 in 2004 and $18,750 in 2003. Mr. Barnes resigned as president effective November 30, 2005. Under the terms of his settlement agreement, the deferred compensation, together with other amounts owed to Mr. Barnes, will be paid in 12 equal monthly installments beginning with the first month after the month in which this offering takes place.
(4)	Includes deferred compensation of $37,800 in 2005 and $51,000 in 2004, which will be payable over a six month period beginning with the first calendar month after the month in which this offering becomes effective.

Options Held by Named Executives

     The following tables provide information with respect to stock options granted during the fiscal year ended December 31, 2005 to each of the executives named in the Summary Compensation Table above and the number and aggregate value of unexercised options held by those executives as of December 31, 2005. The per share exercise price of all options was equal to, or above, the estimated fair market value of a share of common stock on the date of grant. No options granted to any named executives have been exercised.

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Option Grants in Fiscal Year Ended December 31, 2005
(Individual Grants)

		Percent of
	Number of	total options
	shares	granted to
	underlying	employees in		Exercise		Expiration
Name	options	fiscal year		price		date
Mark Davidson	25,307	17.1	%	$	6.53	12/31/2010
2005 Year-End Option Values
	Number of shares underlying			Value of unexercised in-the-money
	unexercised options at fiscal year-end (#)			options at fiscal year-end ($)(1)
Name	Exercisable	Unexercisable			Exercisable	Unexercisable
Tom Blakeley	7,078	9,910		$	19,960	$	27,946
Brad Barnes	16,988	—		$	47,906	$	—
Mark Davidson	47,249	9,910		$	61,876	$	27,946

(1)      Assumes a $6.50 stock price based on a $13.00 initial public offering price for the units.

     No options were exercised by the officers named above.

Employment Agreements

We have employment agreements with Tom Blakeley and Mark Davidson.

     Our employment agreement with Mr. Blakeley has a five-year term commencing January 1, 2004 and automatically renews for successive three-year terms unless either party to the agreement gives the other party to the agreement 90 days’ prior written notice of his or its intent not to renew. Mr. Blakeley is entitled to a base salary of $170,000 per year. The base salary is increased based on the company achieving various revenue milestones as set forth in the following table.

Quarterly Revenue		Base Salary
$	500,000	$	170,000
$	1,000,000	$	220,000
$	2,500,000	$	270,000
$	4,000,000	$	320,000
$	5,500,000	$	370,000
$	7,000,000	$	420,000
$	8,500,000	$	470,000

     In addition, he is entitled to discretionary bonuses, including participation in our Annual Reward Plan, and to participate in our incentive compensation and fringe benefit programs, including a car allowance.

     In the event we terminate Mr. Blakeley’s employment for any reason other than death, disability or “justifiable cause” (defined to include any willful breach by Mr. Blakeley of his duties under the agreement or his conviction of any crime involving our property or any crime constituting a felony), Mr. Blakeley would be entitled to a severance payment equal to 24 months of his current monthly base salary plus target bonus as in effect on the last day of his employment and reimbursement for the cost of maintaining his medical and dental insurance for 24 months. In the event of a termination in connection with a “change in control” or by Mr. Blakeley for “good reason” (defined to include a relocation more than 30 miles from Irvine, California and a material reduction of Mr. Blakeley’s base salary, duties or authority), he is entitled to a lump sum payment equal to his unpaid, annualized base salary for the remainder of the year in which the termination occurs and a lump sum payment equal to three times the highest annual compensation (salary plus bonus) for any of the three calendar years immediately preceding the date of termination.

     Mr. Blakeley’s employment agreement also contains confidentiality and non-solicitation provisions as well as a provision under which he assigns all of his rights to inventions and discoveries made or conceived during his employment.

     In April 2004, we hired Mr. Davidson as our chief financial officer and in August 2005, he was also given the title and assumed the duties of chief operating officer. The terms, provisions and conditions of Mr. Davidson’s

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employment agreement are identical in all material respects to those of Mr. Blakeley’s employment agreement except for the following:

• His term began July 1, 2004;
  
  
• His initial base salary was $120,000; and
  
  
• The schedule for increases in his base salary is as follows:

Quarterly Revenue		Base Salary
$	500,000	$	120,000
$	1,000,000	$	150,000
$	2,500,000	$	180,000
$	4,000,000	$	210,000
$	5,500,000	$	240,000
$	7,000,000	$	270,000
$	8,500,000	$	300,000

In July 2005, the Board awarded a bonus to Mr. Davidson equal to 3% of our gross revenue for the year.

Severance Agreement

     On November 30, 2005, we entered into an agreement with Brad Barnes, regarding the termination of his employment. The principal terms of that agreement are as follows:

• Mr. Barnes resigned as our president effective November 30, 2005.
  
  
• We will pay Mr. Barnes $244,481 on account of accrued but unpaid salary in semi-monthly installments of $7,500 beginning in December 2005 until this offering is completed. Once this offering is completed, we will make a lump sum payment equal to the lesser of (x) the balance due and (y) $119,078. If any amount remains unpaid after the lump sum payment, it will be paid to Mr. Barnes in 12 consecutive equal monthly installments.
  
  
• We will pay Mr. Barnes $440,000 as severance pay in 12 consecutive monthly installments of $36,667, commencing 30 days after this offering is completed.
  
  
• If this offering is not completed by April 1, 2006, then on that date we are to begin making monthly payments to Mr. Barnes of $25,000 on account of both accrued salary and severance pay commencing on that date until the total of Mr. Barnes’ accrued salary and severance payment has been paid in full. If this offering is completed before the entire amount of accrued and unpaid salary and severance pay is paid in full, the monthly payments will increase so that the balance will be paid no later than the earlier of 12 months after the IPO date.
  
  
• We will pay Mr. Barnes a commission equal to 20% of the purchase price for our 50% interest in Zero Plus.
  
  
• On April 1, 2006, we will reimburse Mr. Barnes for all accrued and unreimbursed business expenses incurred by him prior to that date and for up to $5,000 for the legal fees and expenses incurred by him in connection with the preparation of the severance agreement
  
  
• Mr. Barnes will continue to participate in all of our benefit plans and programs until November 30, 2007.
  
  
• All of his unvested stock options will immediately vest and become exercisable on November 30, 2005.

• Any payment under the agreement that is not timely paid will bear interest at a rate equal to the lower of (i) the prime rate in effect from time to time as published in The Wall Street Journal and (ii) the highest rate of interest allowed by law.

Equity and Incentive Compensation Plans

     In July 2004, we adopted the American Mold Guard, Inc. Annual Reward Plan for the purpose of rewarding senior management for improving our financial results. In July 2005, the Board decided to delay the implementation of the plan to 2006. The plan is to be administered by the Compensation Committee of the Board of Directors. Participants in the plan include all officers and other key employees as determined by the chief executive officer in accordance with the plan. Under the terms of the plan, on the last day of each year, we are supposed

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to contribute a sum equal to 20% of our earnings before interest, taxes, depreciation and amortization to a bonus pool that is then allocated to the participants as determined by the Compensation Committee.

     In April 2003, our shareholders approved and ratified an American Mold Guard, Inc. Equity Incentive Plan, the purpose of which is to attract and retain the personnel necessary for our success. The Equity Incentive Plan gives our board of directors the ability to provide incentives through grants of shares of our common, stock options, restricted stock awards and stock to our full-time key employees, consultants and directors (other than directors that are not compensated for their time by us or receive only a director’s fee).

     A total of 424,707 shares of our common stock are reserved for issuance under the plan. If an award expires or terminates unexercised or is forfeited to us, or shares covered by an award are used to fully or partially pay the exercise price of an option granted under plan and any shares retained by the Company to satisfy tax withholding obligations in connection with an option exercise or the vesting of another award, become available for further awards under the plan.

     Until now this plan has been administered by the board of directors. After this offering is completed, the plan will be administered by the Compensation Committee. Except as may otherwise be provided in the plan, the Compensation Committee will have complete authority and discretion to determine the terms of awards.

     The Equity Incentive Plan authorizes the granting of options, including options that satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). The Compensation Committee will determine the period of time during which a stock option may be exercised, as well as any vesting schedule, except that no stock option may be exercised more than 10 years after its date of grant. The exercise price for shares of our common stock covered by an Incentive Stock Option cannot be less than the fair market value of our common stock on the date of grant; provided that that exercise of an Incentive Stock Option granted to an eligible employee that owns more than 10% of the voting power of all classes of our capital stock must be at least 110% of the fair market value of our common stock on the date of grant. The aggregate fair market value of shares subject to an Incentive Stock Option exercisable for the first time by an optionholder may not exceed $100,000 in any calendar year.

     The plan also authorizes the grant of restricted stock awards on terms and conditions established by the Compensation Committee. The terms and conditions will include the designation of a restriction period during which the shares are not transferable and are subject to forfeiture.

     In connection with the grant of an option under the Equity Incentive Plan, the applicable stock option agreement may grant stock appreciation equal rights (SARs) entitling the participant to receive a distribution equal to some or all of the excess of the fair market value of shares covered by the unexercised portion of the corresponding stock option over the exercise price of such shares. Such distributions are payable in cash or shares of common stock, or a combination thereof, as determined by the Compensation Committee. No SAR may be exercised in whole or in part, other than (i) in connection with the contemporaneous surrender without exercise of the corresponding stock option; or (ii) except to the extent the corresponding option is exercisable on the date the SAR is exercised; or (iii) unless the class of stock subject to the option is traded on a national securities exchange or is quoted on the Nasdaq Stock Market.

     Our board may terminate the plan without shareholder approval or ratification at any time. Unless sooner terminated, the plan will terminate on December 31, 2013. Our board may also amend the Plan, provided that no amendment will be effective without approval of our shareholders if shareholder approval is required to satisfy any applicable statutory or regulatory requirements.

Limitation of Directors’ Liability and Indemnification

     As permitted by the General Corporation Law of California (the “GCLC”), our Articles of Incorporation eliminate, to the fullest extent permitted under the GCLC, the personal liability of a director for monetary damages in an action brought by or in the right of the company for breach of a director’s duties to us and our shareholders. Under the GCLC, liability is not eliminated for (i) acts or omissions that involve intentional misconduct or a knowing and culpable violation of law; (ii) acts or omissions that a director believed 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) any transaction form which a director derived an improper personal benefit; (iv) acts or omissions that show a reckless disregard for the director’s duty to the corporation or its shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director’s duties, of a risk of serious injury to the corporation or its shareholders; (v) acts or omissions that constitute an unexcused pattern

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of inattention that amounts to an abdication of the director’s duty to the corporation or its shareholders; (vi) contracts or other transactions between corporations and directors having interrelated director in violation of Section 310 of the GCLC; and (vii) distributions, loans or guarantees made in violation of Section 316 of the GCLC. In addition, our Articles of Incorporation and bylaws provide for indemnification, to the fullest extent permitted under the GCLC, of our directors, officers and agents and persons who serve at our request as a director, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise.

     In addition, we have entered into indemnification agreements with our directors and executive officers, as permitted under the bylaws. The indemnification agreements will provide that the directors and executive officers will be indemnified to the fullest extent permitted by applicable law against all expenses (including attorneys’ fees), judgments, fines and amounts reasonably paid or incurred by them for settlement in any threatened, pending or completed action, suit or proceeding, including any derivative action, on account of their services as a director or executive officer of us or any of our subsidiaries or of any other company or enterprise in which they are serving at our request. No indemnification will be provided under the indemnification agreements, however, to any director or executive officer in certain limited circumstances, including on account of knowingly fraudulent, deliberately dishonest or willful misconduct. To the extent the provisions of the indemnification agreements exceed the indemnification permitted by applicable law, those provisions may be unenforceable or may be limited to the extent they are found by a court of competent jurisdiction to be contrary to public policy. In addition, in the opinion of the Securities and Exchange Commission, indemnification for liabilities arising under the Securities Act of 1933, as amended, is against public policy and, therefore, unenforceable. Therefore, these indemnification provisions may not limit the liability of directors and executive officers under that statute.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In 2004, we borrowed an aggregate of $90,000 on an unsecured basis from Brad Barnes, our former President and currently a director. The interest rate on this loan was 3% per month. The entire loan, including interest was repaid in March 2005.

     In November 2003, we borrowed $75,000 on an unsecured basis from Bob Barnes, the father of Brad Barnes. The loan bears interest at the rate of 7% per annum. At September 30, 2005, the balance due on this loan, including accrued interest, was $85,487. In connection with this loan, we also agreed to issue to Mr. Barnes warrants to purchase 83,116 shares of common stock at a price of $3.68 per share. The loan to Mr. Barnes will be repaid out of the proceeds of this offering.

     In April 2004, we borrowed $170,000, secured by accounts receivable, from KPC LLC and $25,000, on an unsecured basis from Peter Wilson, a principal of KPC. The interest rate on the KPC loan is 3% per month and the interest on the Wilson loan is 7% per annum. At the time of this offering KPC owned approximately 10% of our stock. At September 30, 2005, the total amount owed to KPC and Mr. Wilson, including accrued interest, was $204,408 and $27,359, respectively. These loans will be repaid out of the proceeds of this offering.

     In September 2004, we borrowed $100,000 from Seagrove LLC on an unsecured basis. The loan bears interest at 12% per annum. At the time of this offering, Seagrove owned in excess of 7% of our stock. At September 30, 2005, the balance due on this loan, including accrued interest, was $118,880. The loan will be repaid out of the proceeds of this offering.

     In 2003 and 2004, we paid John Martin, one of our directors, $39,943 and $66,775, respectively, for legal services performed by him on our behalf.

     In September 2005, we borrowed $100,000 on an unsecured basis from an existing investor. In order to induce the investor to make this loan, in January 2006 Tom Blakeley, our chief executive officer, personally guaranteed repayment of the note and agreed to transfer to the investor out of his personal holdings, a number of shares of common stock equal to the greater of (i) 10,000 or (ii) 150% of the principal amount borrowed by us divided by 50% of the initial public offering price of the units.

     In November 2005 we borrowed $200,000 from an investor on an unsecured basis. In order to induce the investor to make this loan, Mr. Blakeley agreed to transfer 20,000 shares of our common stock out of his personal holdings to this investor.

     In November 2005, we entered into a termination and severance agreement with Brad Barnes, which is more fully described in “Management — Severance Agreement.”

     In January and February 2006, we borrowed an aggregate of $150,000 on a demand basis from an existing investor, which is an institutional accredited investor. In order to induce the investor to make these loans, Mr. Blakeley agreed to transfer to the investor 5,000 shares of our common stock out of his personal holdings to this investor and Brad Barnes, one our founders and a director, agreed to transfer to the investor 25,000 shares of our common stock out of his personal holdings.

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PRINCIPAL SHAREHOLDERS

     The following table sets forth information regarding the beneficial ownership of our common shares as of February 1, 2006:

• each person, or group of affiliated persons, known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

• each of our directors and director nominees;
  
  
  
• each executive officer named in the Summary Compensation Table above; and
  
  
• all of our directors and executive officers as a group.

     The following table does not take into account any shares of common stock sold as a result of the exercise of the over-allotment option granted to the representative. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all of the shares owned by them. The individual shareholders have furnished all information concerning their respective beneficial ownership to us.

			Percent of common shares
			beneficially owned
	Shares of common stock		Before		After
Name and address of beneficial owner (1)	beneficially owned (2)		offering (3)		offering (3)
Thomas Blakeley	245,342	(4)	15.8	%	6.5	%
Brad Barnes	199,165	(5)	12.8	%	5.3	%
Mark Davidson	82,149	(6)	5.2	%	2.2	%
John W. Martin	73,410	(7)	4.7	%	2.0	%
Michael A. Katz	—		—		—
Peter Wilson	140,553	(8)	9.1	%	3.8	%
c/o KPC, LLC
20243 Piedra Chica Road
Malibu, CA 90265
Rick Edwards	101,456	(9)	6.6	%	2.7	%
c/o Seagrove, LLC
1801 Century Park East
Suite 1080
Los Angeles, CA 90067
Kevin Coleman	77,132		5.0	%	2.1	%
c/o Net Development Company
3188 Airway Avenue
Suite F
Costa Mesa, CA 90626
John Long	800,893	(10)	34.2	%	17.6	%
c/o Crestridge Investments AMG
Moldguard, L.L.C. (7)
400 Continental Boulevard
Suite 160
El Segundo, CA 90245
All directors, director-nominees and executive
officers as a group (5 persons)	580,066		35.5	%	15.1	%

*Less than 1%

(1)	Unless indicated otherwise, all addresses are c/o American Mold Guard, Inc., 30200 Rancho Viejo Road, Suite G, San Juan Capistrano, California 92675.
(2)	According to the rules and regulations of the Securities and Exchange Commission, shares that a person has a right to acquire within 60 days of the date of this prospectus are deemed to be outstanding for the purpose of computing the percentage ownership of that person but are not deemed outstanding for the purpose of computing the percentage ownership of any other person.
(3)	Based on 1,540,295 shares of common stock issued and outstanding immediately before the effective date of this offering and 3,740,295 shares of common stock issued and outstanding immediately after this offering is effective.

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(4)	Includes 8,494 shares of common stock issuable upon exercise of stock options that are either currently exercisable or exercisable within 60 days of the date of this prospectus. Mr. Blakeley’s beneficial ownership has been reduced by 48,077 shares that he has agreed to transfer to two investors in order to induce them to lend us money. See “Certain Relationships and Related Transactions.” These shares will be transferred on or about the date of this prospectus.
(5)	Includes 16,988 shares of common stock issuable upon exercise of stock options that are currently exercisable. Mr. Barnes’ beneficial ownership has been reduced by 25,000 shares that he has agreed to transfer to an entity to induce that entity to loan us money. See “Certain Relationships and Related Transactions.”
(6)	Includes 48,665 shares of common stock issuable upon exercise of stock options that are currently exercisable or exercisable within 60 days of the date of this prospectus.
(7)	Includes 20,386 shares of common stock issuable upon exercise of stock options that are currently exercisable.
(8)	Includes 7,567 shares owned directly and 132,986 shares owned indirectly through KPC, LLC.
(9)	All shares are owned directly by Seagrove, LLC.
(10)	Reflects 169,883 shares of common stock underlying warrants that are currently exercisable and 631,010 shares of common stock that would be issued if Crestridge were to exercise its right to convert the principal amount of the convertible note ($1,950,000) and 80% of the accrued interest through January 31, 2006 ($209,000) at a conversion price of $3.36. Mr. Long has voting power and investment power over those shares.

     All of the common shares set forth in the above table other than those attributed to Crestridge are covered by lock-up agreements prohibiting their sale, assignment or transfer for one year following the date of this prospectus without the prior written consent of the underwriters’ representative.

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DESCRIPTION OF SECURITIES

     As of the date of this prospectus, our authorized capital stock consists of 50,000,000 shares of common stock, no par value, and 10,000,000 shares of undesignated preferred stock, no par value. After this offering, we will have 3,740,295 shares of common stock issued and outstanding and 4,070,295 shares if the over-allotment option is exercised in full. At the time this offering is effective, we will have 1,540,295 shares of common stock outstanding held of record by approximately 40 shareholders after taking into account (i) the conversion of all outstanding shares of our Series A and Series B Convertible Preferred Stock into 324,307 shares of our common stock, (ii) the 230,770 shares of common stock included in the units that we will issue to the holders of the Unsecured Notes (iii) 74,146 shares that we issued in December 2005, (iv) 1,359 shares of common stock that we will issue in February 2006 as an interest payment; and (v) 66,222 shares of common stock that we have agreed to issue on the date of this prospectus. The following description summarizes the most important terms of our capital stock. Because it is only a summary, it does not contain all the information that may be important to you. For a complete description, you should refer to our Articles of Incorporation, as amended, and our bylaws, which are included as exhibits to the registration statement of which this prospectus forms a part and to the provisions of California law.

Units

     Each unit consists of two shares of common stock, two Class A warrants and one Class B warrant. Each Class A and Class B warrant entitles the holder thereof to purchase one share of common stock. Initially, only the units will trade. The common stock and the warrants included in the units will not trade separately until the 30^th calendar day following the date of this prospectus or the first trading day thereafter if the 30^th day is a weekend or holiday. Once separate trading in the common stock and warrants commences, the units will cease trading and they will be delisted.

     At closing, we will deliver only unit certificates. An investor may request physical delivery of the certificate and may immediately request that the unit certificate be exchanged for stock and unit warrant certificates. If the investor does so before the stock and unit warrants trade separately, trades based on the stock and unit warrant certificates will not clear until trading in those securities commences.

Common Stock

     Subject to the preference in dividend rights of any series of preferred stock that we may issue in the future, the holders of outstanding shares of common stock are entitled to receive dividends out of legally available assets when and to the extent determined by our board of directors from time to time. Each shareholder is entitled to one vote for each share held by him on each matter submitted to a vote of shareholders and, upon giving notice as required by law, is entitled to cumulate votes for the election of directors. Our board is elected by a plurality vote of the holders of the shares of voting stock, with the seven persons receiving the highest number of votes being elected (once our director-nominees have taken office). The shares of common stock are not entitled to preemptive rights and are not convertible or redeemable. In the case of a liquidation, dissolution or other termination of our business, the holders of common stock are entitled to share ratably in the distribution of all of our assets remaining available for distribution after all of our liabilities and preferred stock preferences, if any, have been satisfied. Each outstanding share of common stock is, and all shares of common stock outstanding after this offering is completed will be, fully paid and nonassessable.

Class A Warrants

     General. Immediately after this offering, there will be 2,430,770 Class A warrants issued and outstanding of which 2,200,000 are included in the units sold in this offering and 230,770 are included in the units that we will issue to the holders of the Unsecured Notes on the date of this prospectus (assuming an initial public offering price of $13.00 per unit). The Class A warrants issued in this offering may be exercised at any time beginning 30 days after the date of this prospectus and ending on the fifth anniversary of the date of this prospectus. Each Class A warrant entitles the holder to purchase one share of common stock at an exercise price of $           per share (75% of the unit offering price). This exercise price will be adjusted if specific events, summarized below, occur. A holder of Class A warrants will not be deemed a holder of the underlying stock for any purpose until the Class A warrant is exercised.

     Redemption. Beginning six months after the effective date of this offering, we will have the right to redeem the Class A warrants at a price of $0.25 per warrant, after providing 30 days’ prior written notice to the warran-tholders, at any time after the closing price for our common stock, as reported on the principal market on which our stock trades, was at or above 100% of the unit offering price for any five consecutive trading days. We will

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send a written notice of redemption by first class mail to holders of the Class A warrants at their last known addresses appearing on the registration records maintained by the warrant agent. No other form of notice or publication or otherwise will be required. If we call the Class A warrants for redemption, the holders of the Class A warrants will then have to decide whether to sell the Class A warrants, exercise them before the close of business on the business day preceding the specified redemption date or hold them for redemption. If the Class A warrants are not covered by a current registration statement or are not qualified for sale under the laws of the state in which holders reside, warrantholders may not be able to exercise them.

     Exercise. The holders of the Class A warrants may exercise them only if an appropriate registration statement is then in effect and if the common stock issuable upon their exercise are qualified for sale under the securities laws of the state in which the holder resides. To exercise a Class A warrant, the holder must deliver to our warrant agent the Class A warrant certificate on or before the expiration date or the redemption date, as applicable, with the form on the reverse side of the certificate executed as indicated, accompanied by payment of the full exercise price for the number of Class A warrants being exercised. Fractional shares of common stock will not be issued upon exercise of the Class A warrants.

     In order for you to exercise the warrants, the shares of common stock underlying them must be covered by an effective registration statement and, if the issuance of shares is not exempt under state securities laws, must be properly registered with state securities regulators. At present, we plan to have a registration statement current when the warrants are redeemed and, to the extent that the underlying shares do not qualify for one or more exemptions under state securities laws, we intend to use our best efforts to register the shares with the relevant authorities. However, we cannot provide absolute assurances that state exemptions will be available, the state authorities will permit us to register the underlying shares, or that an effective registration statement will be in place at the relevant time(s). These factors may have an adverse effect on the demand for the warrants and the prices that can be obtained from reselling them.

     Adjustments of exercise price. The exercise price of the Class A warrants will be adjusted if we declare any stock dividend to shareholders or effect any split or share combination with regard to our common stock. If we effect any stock split or stock combination with regard to our common stock, the exercise price in effect immediately before the stock split or combination will be proportionately reduced or increased, as the case may be. Any adjustment of the exercise price will also result in an adjustment of the number of shares underlying a Class A warrant or, if we elect, an adjustment of the number of Class A warrants outstanding.

Class B Warrants

     Immediately after this offering, there will be 1,215,385 Class B warrants issued and outstanding including 1,100,000 Class B warrants included in the units sold in this offering and 115,385 Class B warrants included in the units that we will issue to the holders of the Unsecured Notes on the date of this prospectus (assuming an initial public offering price of $13.00 per unit). The Class B warrants are identical to the Class A warrants except for the following:

• the Class B warrants have an exercise price of $           per share (100% of the unit offering price); and
  
  
• the Class B warrants may only be redeemed after our gross revenues for any previous 12 month period, as confirmed by an independent audit, equals or exceeds $20 million.

Preferred Stock

     Our authorized capital includes 10,000,000 shares of undesignated preferred stock. We have created Series A, Series B and Series C Preferred Stock and have issued shares of the Series A and Series B Preferred Stock. On the date of this prospectus, all of the outstanding shares of Series A and Series B Preferred Stock will automatically convert into shares of common stock. No shares of the Series C Preferred Stock have been issued, although the holder of the Convertible Notes has the right to convert those notes into shares of Series C Preferred Stock at any time. While we intend to repay the Convertible Notes out of the proceeds of this offering, we cannot do so until September 30, 2006. As a result, there is the possibility that holder of the Convertible Notes could convert them into shares of Series C Preferred Stock before we can exercise our prepayment right. The material rights and preferences of the Series C Preferred Stock are as follows:

• Each share of Series C Preferred Stock is convertible into one share of common stock at any time at the option of the holder. The conversion ratio will be adjusted on a “weighted average” basis if we issue any shares of common stock or any debt or equity security convertible into shares of common stock at a price per share that is less than $3.36.

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• The Series C Preferred Stock accrues dividends at the rate of 8% per annum cumulatively from the date of issuance.
  
  
• No dividends may be paid on any other class of stock unless and until all accumulated dividends on the Series C Preferred Stock have been paid in full.
  
  
• In a liquidation, the holders of the Series C Preferred Stock are entitled to an amount equal to its liquidation preference, which includes the principal and accrued interest on the Convertible Notes that was converted into stock plus accumulated but unpaid dividends, before payments are made to other shareholders. In addition, after payment of the liquidation preference, the holders of the Series C Preferred Stock are entitled to participate in the distribution of any remaining assets with all other holders of our capital stock on a pro rata basis.
  
  
• The Series C Preferred Stock votes with the common stock on all matters on as converted basis. Assuming the holder of the Covertible Notes exercised its conversion right on February 1, 2006 in full, it would own approximately 631,010 shares of Series C Preferred Stock representing approximately 17.6% of our voting securities after this offering. That would make it our largest single shareholder and it would have significant influence in any matter that is presented to shareholders for vote.
  
  
• The consent of the holders of the Series C Preferred Stock is required for significant corporate transactions such as a sale of all or substantially all of our assets, a merger where we would not be the surviving entity and stock redemptions.
  
  
• We could not issue any series or class of equity securities with rights and preferences that are equal to or superior to those of the Series C Preferred Stock without the consent of the holders of the Series C Preferred Stock. As a result, the holders of the Series C Preferred Stock could make it more difficult for us to raise additional capital, require us to pay a liquidated amount or give up other rights as a condition for obtaining its consent.

Options and Warrants

     As of February 1, 2006, we had outstanding warrants covering 254,824 shares of common stock, of which warrants covering 169,883 shares are held by the holder of the Convertible Notes. Those warrants expire April 15, 2008 and have an exercise price of $5.89. The remaining warrants, covering 84,941 shares, have an exercise price of $3.68 and expire in January 2007. There are no registration rights covering the shares underlying these warrants. However, the warrants have a “cashless” or net exercise provision, which means we may not receive any proceeds if and when they are exercised but we would not have to issue the entire number of shares covered by the warrants. The exact number of shares that we would issue will depend on the market price of our stock at the time of exercise.

     As of February 1, 2006, we had outstanding options covering 267,217 shares of common stock. These options have a weighted exercise price of $4.52 per share and expire in 2009 and 2010. As of February 1, 2006, 117,871 options are exercisable.

Authorized but Unissued Shares

     The authorized but unissued shares of common stock and preferred stock are available for future issuance without shareholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public or private offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued common or preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

     The California General Corporation Law provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation’s articles of incorporation, unless the corporation’s articles of incorporation, requires a greater percentage. Our articles of incorporation do not impose any supermajority vote requirements.

Transfer Agent, Warrant Agent and Registrar

     The transfer agent and registrar for our common stock and the warrant agent for the Class A and Class B warrants will be U.S. Stock Transfer Corporation, located in Glendale, California.

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SHARES ELIGIBLE FOR FUTURE SALE

This Offering

     After this offering is completed we expect to have 3,740,295 shares of common stock outstanding. This number assumes no exercise of the representative’s over-allotment option, the Class A warrants, the Class B warrants, the representative’s warrants or any other outstanding options and warrants. We expect to have 4,070,295 shares of common stock outstanding if the representative’s over-allotment is exercised in full. Of these shares, the 2,200,000 shares of common stock issued as part of the units sold in this offering (2,530,000 shares if the representative’s over-allotment is exercised in full) will be freely tradeable without restrictions or further registration under the Securities Act of 1933, except that any shares purchased by our “affiliates,” as that term is defined under the Securities Act, may generally only be sold in compliance with the limitations of Rule 144 under the Securities Act. The 2,200,000 shares of common stock underlying the Class A warrants and the 1,100,000 shares of common stock underlying the Class B warrants issued as part of the units sold in this offering (2,530,000 shares of common stock in the case of the Class A warrants and 1,265,000 shares of common stock in the case of the Class B warrants if the representative’s over-allotment is exercised in full) will also be freely tradeable after exercise of the warrants, except for shares held by our affiliates.

Outstanding Restricted Stock

     The remaining 1,540,295 outstanding shares of common stock will be restricted securities within the meaning of Rule 144 and may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemption from registration offered by Rule 144. The holders of these shares have agreed not to sell or otherwise dispose of any of their shares of common stock for a period of one year after completion of this offering, without the prior written consent of Paulson Investment Company, Inc., the representative of the underwriters, subject to certain limited exceptions. After the expiration of the lock-up period, or earlier with the prior written consent of the representative, all of the outstanding restricted shares may be sold in the public market pursuant to Rule 144.

     Without taking into account the lock-up agreements,                 shares of common stock would be eligible for sale under Rule 144 90 days after completion of the offering. The balance of the restricted shares would be eligible for sale under Rule 144 on approximately the following schedule:

•                 shares in                200   ;
  
  
•                 shares in                200  ; and
  
  
•                 shares on                     , 2007.

     In general, under Rule 144, as currently in effect, beginning 90 days after the date of this prospectus, a person who has beneficially owned restricted shares for at least one year, including a person who may be deemed to be our affiliate, may sell within any three-month period a number of shares of common stock that does not exceed a specified maximum number of shares. This maximum is equal to the greater of 1% of the then outstanding shares of our common stock or the average weekly trading volume in the common stock during the four calendar weeks immediately preceding the sale. Sales under Rule 144 are also subject to restrictions relating to manner of sale, notice and availability of current public information about us. In addition, under Rule 144(k) of the Securities Act, a person who is not our affiliate, has not been an affiliate of ours within three months prior to the sale and has beneficially owned shares for at least two years would be entitled to sell such shares immediately without regard to volume limitations, manner of sale provisions, notice or other requirements of Rule 144.

Options and Warrants

     Stock Options

     As of February 1, 2006, we had outstanding options to purchase a total of 267,217 shares of common stock under our Equity Incentive Plan. Under that plan, we can grant options covering an additional 157,490 shares of common stock. We intend to file a registration statement under the Securities Act to register all shares of common stock issued, issuable or reserved for issuance under our stock option plans. This registration statement is expected to be filed as soon as practicable after the date of this prospectus and will automatically become effective upon filing. Following this filing, shares exercisable pursuant to vested options that are registered under this registration statement will, subject to the lock-up agreements and market standoff provisions described above and Rule 144 volume limitations applicable to our affiliates, be available for sale in the open market.

51

     Warrants

     Immediately prior to the date of this prospectus, we had outstanding warrants covering 254,824 shares of common stock. None of these warrants, nor the underlying shares of common stock, have registration rights.

Representative’s Warrants

     In connection with this offering, we have agreed to issue to the representative of the underwriters warrants to purchase 110,000 units. The representative’s warrants will be exercisable for units at any time beginning 180 days after the effective date of this offering until the fifth anniversary of the effective date. However, neither the representative’s warrants nor the underlying securities may be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the date of effectiveness or commencement of sales of the offering, except to any member participating in the offering and the officers or partners thereof, and only if all securities so transferred remain subject to the 180-day lock-up restriction for the remainder of the lock-up period. We will cause the registration statement of which this prospectus is a part to remain effective until the earlier of the time that all of the representative’s warrants have been exercised and the date which is five years after the effective date of the offering or will file a new registration statement covering the exercise and resale of those securities. The common stock and Class A and Class B public warrants issued to the representative upon exercise of these representative’s warrants will be freely tradeable.

Registration Rights

     We have agreed to register for resale approximately one year from the date of this prospectus the (a) 230,770 shares of common stock, (b) 230,770 Class A warrants and (c) 115,385 Class B warrants that we are issuing to the holders of the Unsecured Notes on the date of this prospectus as well as the 346,155 shares of common stock underlying those warrants (assuming and initial public offering price of $13.00 per unit).

     We have also granted demand and piggyback registration rights to the holder of the Convertible Note in regard to the common stock underlying the Series C Preferred Stock underlying the Convertible Notes. The demand registration rights cannot be exercised until the earlier of September 30, 2007 or six months after a “Qualified Public Offering,” defined as a public offering where the offering price is not less than $4.00 per share and the net proceeds are at least $10 million. The piggyback registration rights are exercisable immediately but are subject to full underwriter cutbacks on a Qualified Public Offering.

52

UNDERWRITING

     Paulson Investment Company, Inc. is acting as the representative of the underwriters named below. We have entered into an underwriting agreement with these underwriters regarding the units being offered under this prospectus. In connection with this offering and subject to certain conditions, each of these underwriters has severally agreed to purchase, and we have agreed to sell, the number of units set forth opposite the name of the underwriter.

	Number of
Underwriter	units
Paulson Investment Company, Inc.
Capital Growth Financial, LLC
Chicago Investment Group, LLC
Total	1,100,000

The underwriting agreement provides that the underwriters are obligated to purchase all of the units offered by this prospectus, other than those covered by the over-allotment option, if any units are purchased. The underwriting agreement also provides that the underwriters’ obligations to pay for and accept delivery of the units is subject to the approval of certain legal matters by counsel and other conditions, including, among other things, the requirements that no stop order suspending the effectiveness of the registration statement be in effect and that no proceedings for this purpose have been instituted or threatened by the Securities and Exchange Commission (“SEC”).

     The representative has advised us that the underwriters propose to offer our units to the public initially at the offering price set forth on the cover page of this prospectus and to selected dealers at that price less a concession of not more than $           per unit. The underwriters and selected dealers may reallow a concession to other dealers, including the underwriters, of not more than $           per unit. After the public offering of the units is complete, the offering price, the concessions to selected dealers and the reallowance to their dealers may be changed by the underwriters.

     The underwriters have informed us that they do not expect to confirm sales of our units offered by this prospectus on a discretionary basis.

     Over-allotment Option. Pursuant to the underwriting agreement, we have granted the representative an option, exercisable for 45 days from the date of this prospectus, to purchase up to an additional 165,000 units on the same terms as the other units being purchased by the underwriters from us. The representative may exercise the option solely to cover over-allotments, if any, in the sale of the units that the underwriters have agreed to purchase. If the over-allotment option is exercised in full, the total public offering price, underwriting discount and proceeds to us before offering expenses will be $               , $                and $               , respectively.

     Stabilization and Other Transactions. The rules of the SEC generally prohibit the underwriters from trading in our securities on the open market during this offering. However, the underwriters are allowed to engage in some open market transactions and other activities during this offering that may cause the market price of our securities to be above or below that which would otherwise prevail in the open market. These activities may include stabilization, short sales and over-allotments, syndicate covering transactions and penalty bids.

• Stabilizing transactions consist of bids or purchases made by the managing underwriter for the purpose of preventing or slowing a decline in the market price of our securities while this offering is in progress.
  
  
• Short sales and over-allotments occur when the managing underwriter, on behalf of the underwriting syndicate, sells more of our shares than they purchase from us in this offering. In order to cover the resulting short position, the managing underwriter may exercise the over-allotment option described above and/or may engage in syndicate covering transactions. There is no contractual limit on the size of any syndicate covering transaction. The underwriters will deliver a prospectus in connection with any such short sales. Purchasers of shares sold short by the underwriters are entitled to the same remedies under the federal securities laws as any other purchaser of units covered by the registration statement.
  
  
• Syndicate covering transactions are bids for or purchases of our securities on the open market by the managing underwriter on behalf of the underwriters in order to reduce a short position incurred by the managing underwriter on behalf of the underwriters.

53

• A penalty bid is an arrangement permitting the managing underwriter to reclaim the selling concession that would otherwise accrue to an underwriter if the common stock originally sold by the underwriter were later repurchased by the managing underwriter and therefore was not effectively sold to the public by such underwriter.

     If the underwriters commence these activities, they may discontinue them at any time without notice. The underwriters may carry out these transactions on the Nasdaq Capital Market, the Pacific Exchange, in the over-the-counter market or otherwise.

     Indemnification. The underwriting agreement provides for indemnification between us and the underwriters against specified liabilities, including liabilities under the Securities Act, and for contribution by us and the underwriters to payments that may be required to be made with respect to those liabilities. We have been advised that, in the opinion of the SEC, indemnification for liabilities under the Securities Act is against public policy as expressed in the Securities Act and is therefore unenforceable.

     Underwriters’ Compensation. We have agreed to sell the units to the underwriters at the initial offering price of $           per unit, which represents the initial public offering price of the units set forth on the cover page of this prospectus less an 8% underwriting discount. The underwriting agreement also provides that the representative will be paid a nonaccountable expense allowance equal to 3% of the gross proceeds from the sale of the units offered by this prospectus, excluding any units purchased on exercise of the over-allotment option. In October 2005, we paid $30,000 to the representative as an advance against payment of offering expenses.

     On completion of this offering, we will issue to the representative a warrant to purchase up to 110,000 units, for a price per unit equal to 120% of the initial public offering price of the units. The representative’s warrants will be exercisable for units at any time beginning 180 days after the effective date of this offering, and will expire on the fifth anniversary of the effective date. However, neither the representative’s warrants nor the underlying securities may be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the date of effectiveness or commencement of sales of the offering, except to any member participating in the offering and the officers or partners thereof, and only if all securities so transferred remain subject to the 180-day lock-up restriction for the remainder of the lockup period.

     The holder of these warrants will have, in that capacity, no voting, dividend or other shareholder rights. Any profit realized on the sale of the units issuable upon exercise of these warrants may be deemed to be additional underwriting compensation. The securities underlying these warrants are being registered pursuant to the registration statement of which this prospectus is a part. During the term of these warrants, the holder thereof is given the opportunity to profit from a rise in the market price of our common stock, our Class A warrants and our Class B warrants. We may find it more difficult to raise additional equity capital while these warrants are outstanding. At any time at which these warrants are likely to be exercised, we may be able to obtain additional equity capital on more favorable terms.

     The following table summarizes the underwriting discount and non-accountable expense allowance we will pay to the underwriters. These amounts are shown assuming both no exercise and full exercise of the underwriters’ over-allotment option.

	Total
		Without	With
	Per unit	over-allotment	over-allotment
Underwriting discount
Non-accountable expense
allowance

     Loans from Representative. The representative loaned us $200,000 in July 2005 and another $200,000 in August 2005. Both loans bear interest at 10% per annum. The proceeds of the loans were used to pay expenses relating to this offering and for working capital. The principal and accrued interest will be repaid out of the proceeds of this offering.

     Lock-Up Agreements. All our officers and directors and all of our pre-offering shareholders other than the holder of the Convertible Notes have agreed that, for a period of one year from the date this registration statement becomes effective, they will not sell, contract to sell, grant any option for the sale or otherwise dispose of any of our equity securities, or any securities convertible into or exercisable or exchangeable for our equity securities,

54

without the consent of the representative. The holder of the Convertible Notes is subject to a 180-day lock-up in the event the Notes are converted rather than repaid. The representative may consent to an early release from the lock-up periods if, in its opinion, the market for the common stock would not be adversely impacted by sales and in cases of an officer, director or other shareholders’ financial emergency. We are unaware of any officer, director or current shareholder who intends to ask for consent to dispose of any of our equity securities during the lock-up period.

     Determination of Offering Price. The public offering price of the units offered by this prospectus and the exercise price and other terms of the Class A warrants and Class B warrants were determined by negotiation between us and the underwriters. Among the factors considered in determining the public offering price of the units and the exercise price of the warrants were:

• our history and our prospects;
  
  
• the industry in which we operate;
  
  
• the status and development prospects for our proposed services;
  
  
• our past and present operating results;
  
  
• the previous experience of our executive officers; and
  
  
• the general condition of the securities markets at the time of this offering.

     The offering price stated on the cover page of this prospectus should not be considered an indication of the actual value of the units. That price is subject to change as a result of market conditions and other factors, and we cannot assure you that the units, or the common stock and warrants contained in the units, can be resold at or above the initial public offering price.

LEGAL MATTERS

     The validity of the common shares offered by this prospectus will be passed upon for us by Morse, Zelnick, Rose & Lander LLP, New York, New York. Affiliates of Morse, Zelnick, including its partners, will own an aggregate of 110,000 shares of our common stock once this offering is completed. Wickersham & Murphy, a professional corporation, Palo Alto, California, will pass upon certain matters for the underwriters named in this prospectus in connection with this offering.

EXPERTS

     Haskell & White LLP, an independent registered public accounting firm, have audited our financial statements as of and for the periods ended December 31, 2003 and 2004 as set forth in their report. We have included these financial statements in this prospectus, and in the registration statement, of which this prospectus is a part, in reliance on Haskell & White LLP’s report, given on their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

     In connection with the units offered by this prospectus, we have filed a registration statement on Form SB-2 under the Securities Act with the Securities and Exchange Commission. This prospectus, filed as part of the registration statement, does not contain all of the information included in the registration statement and the accompanying exhibits. For further information with respect to our units, shares and warrants, and us you should refer to the registration statement and the accompanying exhibits. Statements contained in this prospectus regarding the contents of any contract or any other document are not necessarily complete, and you should refer to the copy of the contract or other document filed as an exhibit to the registration statement, each statement being qualified in all respects by the actual contents of the contract or other document referred to. You may inspect a copy of the registration statement and the accompanying exhibits and schedules without charge at the Securities and Exchange Commission’s public reference facilities, Room 1580, 100 F Street, N.E., Washington, D.C. 20549, and at its regional offices located at 233 Broadway, 16^th Floor, New York, New York 10279, and you may obtain copies of all or any part of the registration statement from those offices for a fee. You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains a web site that contains registration statements, reports, proxy and information statements and other information regarding registrants that file electronically. The address of the site is http://www.sec.gov.

     We intend to furnish our shareholders with annual reports containing financial statements audited by an independent registered public accounting firm.

55

AMERICAN MOLD GUARD, INC.

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Haskell & White LLP, Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets — December 31, 2004 and September 30, 2005 (unaudited)	F-3
Consolidated Statements of Operations — From inception (January 13, 2003)
through December 31, 2003 and Year ended December 31, 2004;
and nine months ended September 30, 2004 and 2005 (unaudited)	F-4
Consolidated Statements of Shareholders’ Deficiency — From inception (January 13, 2003)
through December 31, 2003 and Year ended December 31, 2004;
and nine months ended September 30, 2004 and 2005 (unaudited)	F-5
Consolidated Statements of Cash Flows — From inception (January 13, 2003)
through December 31, 2003 and Year ended December 31, 2004;
and nine months ended September 30, 2004 and 2005 (unaudited)	F-7
Notes to Consolidated Financial Statements	F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders
American Mold Guard, Inc.

We have audited the accompanying consolidated balance sheet of American Mold Guard, Inc. (the “Company”) as of December 31, 2004, and the related consolidated statements of operations, shareholders’ deficiency and cash flows for the year then ended and for the period from inception, January 13, 2003, through December 31, 2003. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of American Mold Guard, Inc. as of December 31, 2004, and the consolidated results of its operations and its cash flows for the year then ended and for the period from inception, January 13, 2003, through December 31, 2003 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred losses from operations since inception, has a working capital deficit and a shareholders’ deficiency, and requires additional funds to meet its obligations and fund the costs of its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are also described in Note 2. The accompanying consolidated financial statements do not include any adjustments to the financial statements that might result from the outcome of this uncertainty.

/s/ Haskell & White LLP

Irvine, California
December 8, 2005

F-2

American Mold Guard Inc.

Consolidated Balance Sheet

	December 31,			September 30,
	2004			2005
ASSETS				(unaudited)
Current Assets:
Cash and cash equivalents	$	243,788		$	603,230
Accounts receivable, less allowance for doubtful accounts of $2,110 and
$10,198 at December 31, 2004 and September 30, 2005		379,678			1,157,670
Inventories		74,044			33,456
Deferred offering costs (Note 3)		74,570			478,834
Deposits		59,275			109,028
Other current assets		620			79,026
Total Current Assets		831,975			2,461,244
Property and equipment, net (Note 4)		230,293			335,038
Intangible assets (Note 1)		—			4,397
TOTAL ASSETS	$	1,062,268		$	2,800,679
LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
Current Liabilities:
Accounts payable and accrued liabilities	$	530,891		$	1,158,459
Accrued salary, wages and commissions		240,375			586,918
Accrued bonus		150,000			190,260
Other accrued payroll related		183,512			347,860
Short term debt (Note 6)		649,245			2,621,207
Accrued interest payable		70,744			321,109
Total Current Liabilities		1,824,767			5,225,813
Long-term liabilities:
Notes payable, net of discount (Note 6)		275,318			702,267
Total Liabilities		2,100,085			5,928,080
Commitments and contingencies (Notes 1, 2 and 6-13)
Shareholders’ Deficiency (Notes 7, 8 and 9)
Series A Convertible Preferred Stock, no par value, 499,999 shares
authorized, 499,999 shares issued and outstanding at December 31, 2004
and September 30, 2005 having a liquidation preference of $715,499 and
$758,428 at December 31, 2004 and September 30, 2005		625,000			625,000
Series B Redeemable, Convertible Preferred Stock, no par value,
605,000 shares authorized, 454,500 shares issued and outstanding at
December 31, 2004 and September 30, 2005 having a liquidation preference
of $2,340,675 and $2,412,941 at December 31, 2004 and September 30, 2005		859,000			859,000
Series C Convertible Preferred Stock, no par value 5,000,000 authorized,
none issued and outstanding		—			—
Common Stock, no par value, 50,000,000 shares authorized, 2,634,061 shares and
2,537,061 shares issued and outstanding at December 31, 2004 and
September 30, 2005		1,167,593			1,074,593
Additional paid-in capital		785,086			1,789,201
Accumulated deficiency		(4,474,496	)		(7,475,195	)
Total Shareholders’ Deficiency		(1,037,817	)		(3,127,401	)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIENCY	$	1,062,268		$	2,800,679

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

F-3

American Mold Guard, Inc.

Consolidated Statements of Operations

	Period from
	inception
	(January 13,						Nine Months
	2003)						Ended
	through			Year Ended			September 30,
	December 31,			December 31,
	2003			2004			2004			2005
							(Unaudited)
Revenue	$	182,012		$	1,552,725		$	859,029		$	4,134,633
Cost of revenue
Direct costs		223,287			1,169,051			638,568			3,197,300
Depreciation expense		4,772			50,292			40,798			74,404
Total cost of revenue		228,059			1,219,343			679,366			3,271,704
Gross profit		(46,047	)		333,382			179,663			862,929
Selling, general and administrative expenses		1,137,200			3,303,148			2,117,331			3,351,244
Loss from operations		(1,183,247	)		(2,969,766	)		(1,937,668	)		(2,488,315	)
Interest expense		—			(277,833	)		(44,142	)		(511,584	)
Other (loss)		—			(42,050	)		—			—
Loss before provision for taxes		(1,183,247	)		(3,289,649	)		(1,981,810	)		(2,999,899	)
Provision for taxes		800			800			800			800
Net loss	$	(1,184,047	)	$	(3,290,449	)	$	(1,982,610	)	$	(3,000,699	)
Dividends on cumulative preferred stock		37,500			113,500			85,125			90,000
Net loss applicable to common
shareholders	$	(1,221,547	)	$	(3,403,949	)	$	(2,068,735	)	$	(3,090,699	)
Basic and diluted net loss per share	$	(0.69	)	$	(1.45	)	$	(0.90	)	$	(1.12	)
Dividends accumulated for the period on cumulative preferred stock	$	(0.02	)	$	(0.05	)	$	(0.04	)	$	(0.04	)
Net loss attributable to common stock per share	$	(0.71	)	$	(1.50	)	$	(0.94	)	$	(1.16	)
Weighted average number of common shares outstanding
– basic and diluted		1,717,748			2,272,711			2,204,644			2,668,228

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

F-4

American Mold Guard, Inc.

Consolidated Statements of Shareholders’ Deficiency
for the Period from Inception (January 13, 2003) to
September 30, 2005

	Series A			Series B
	Preferred Stock			Preferred Stock			Common Stock			Additional		Accum-
										Paid-in		ulated
	Shares		Amount	Shares		Amount	Shares		Amount	Capital		Deficit				Total
Balance as of
January 1, 2003	—	$	—	—	$	—	—	$	—	$	—	$	—		$	—
Stock issued to
founders for
services rendered	—		—	—		—	1,520,000		9,500		—		—			9,500
Stock issued for cash	499,999		625,000	—		—	—		—		—		—			625,000
Stock issued for
employee
compensation	—		—	—		—	322,000		257,600		—		—			257,600
Stock issued in
payment of interest	—		—	—		—	20,000		16,000		—		—			16,000
Stock issued in
payment of services	—		—	—		—	33,000		10,618		25,600		—			36,218
Net loss since
inception	—		—	—		—	—		—		—		(1,184,047	)		(1,184,047	)
Balance as of
December 31, 2003	499,999	$	625,000	—		—	1,895,000	$	293,718	$	25,600	$	(1,184,047	)	$	(156,618	)
Stock issued for cash				454,500		859,000										859,000
Stock issued in
payment of services	—		—	—		—	66,489		83,111		—		—			83,111
Stock issued for
employee
compensation	—		—	—		—	428,572		490,264		—		—			490,264
Stock issued for
Board of Directors
compensation	—		—	—		—	70,000		83,000		—		—			83,000
Stock issued in
payment of interest	—		—	—		—	174,000		217,500		—		—			217,500
Beneficial conversion
feature on
convertible debt	—		—	—		—	—		—		754,386		—			754,386
Fair value of stock
option issued to
consultant	—		—	—		—	—		—		5,100		—			5,100
Net loss for the year	—		—	—		—	—		—		—		(3,290,449	)		(3,290,449	)
Balance as of
December 31, 2004	499,999	$	625,000	454,500	$	859,000	2,634,061	$	1,167,593	$	785,086	$	(4,474,496	)	$	(1,037,817	)

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

F-5

American Mold Guard, Inc.

Consolidated Statements of Shareholders’ Deficiency
for the Period from Inception (January 13, 2003) to
September 30, 2005

	Series A			Series B
	Preferred Stock			Preferred Stock			Common Stock						Additional		Accum-
													Paid-in		ulated
	Shares		Amount	Shares		Amount	Shares			Amount			Capital		Deficit			Total
Balance as of
December 31, 2004	499,999	$	625,000	454,500	$	859,000	2,634,061		$	1,167,593		$	785,086	$	(4,474,496	)	$	(1,037,817	)
Repurchase of stock
issued	—		—	—		—	(125,000	)		(128,000	)		128,000		—			—
Beneficial
conversion feature
on convertible
debt	—		—	—		—	—			—			716,667		—			716,667
Fair value of issued
warrants	—		—	—		—	—			—			147,368		—			147,368
Fair value of stock
option issued to
consultant	—		—	—		—	—			—			12,080		—			12,080
Stock issued in
payment of interest	—		—	—		—	18,000			22,500			—		—			22,500
Stock issued in
acquisition of Trust
One	—		—	—		—	10,000			12,500			—		—			12,500
Net loss for the
period	—		—	—		—	—			—			—		(3,000,699	)		(3,000,699	)
Balance as of
September 30, 2005
(Unaudited)	499,999	$	625,000	454,500	$	859,000	2,537,061		$	1,074,593		$	1,789,201	$	(7,475195	)	$	(3,127,401	)

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

F-6

     American Mold Guard, Inc.

Consolidated Statements of Cash Flows

	Period from
	inception
	(January 13,						Nine Months
	2003)						Ended
	to			Year Ended			September 30,
	December 31,			December 31,
	2003			2004				2004			2005
								(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,184,047	)	$	(3,290,499	)	$	(1,982,610	)	$	(3,000,699	)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation expense		11,351			52,490			41,590			107,167
Common stock issued in payment of interest expense		16,000			217,500			167,500			22,500
Common stock issued in payment of salaries		257,600			490,264			489,300			—
Common stock issued to founders for services rendered		9,500			—			—			—
Common stock issued in payment of services		36,218			83,111			83,111			—
Common stock issued in payment of director fees		—			83,000			62,250			—
Fair value of stock option issued					5,100						12,080
Debt discount		—			754,386			—			169,535
Fair value of issued warrants		—			—			—			147,368
Increase (decrease) in cash from changes in assets and liabilities
Accounts receivable		(46,183	)		(333,495	)		(477,397	)		(777,993	)
Inventories		(6,919	)		(67,125	)		(27,061	)		40,589
Other current assets		(4,255	)		(55,640	)		(26,020	)		(125,011	)
Accounts payable and accrued expenses		164,584			366,357			282,699			620,206
Accrued salaries and wages		67,897			505,990			97,008			551,151
Accrued interest payable		901			69,843			32,473			250,365
NET CASH USED IN OPERATING ACTIVITIES		(677,353	)		(1,118,718	)		(1,257,157	)		(1,982,742	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(95,307	)		(198,827	)		(155,907	)		(206,180	)
Cash acquired in acquisition of Trust One Termite		—			—			—			9,083
NET CASH USED IN INVESTING ACTIVITIES		(95,307	)		(198,827	)		(155,907	)		(197,097	)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from notes payable		150,000			824,563			501,620			2,950,000
Bank overdraft		—			—			104			—
Payments on short term notes payable		—			(50,000	)		—			(6,455	)
Deferred offering costs		—			(74,750	)		—			(404,264	)
Proceeds from issuance of Series A Preferred Stock		625,000			—			—			—
Proceeds from issuance of Series B Preferred Stock		—			859,000			909,000			—
NET CASH FLOWS FROM FINANCING ACTIVITIES		775,000			1,558,993			1,410,724			2,539,281
INCREASE (DECREASE) IN CASH		2,340			241,448			(2,340	)		359,442
CASH BEGINNING OF PERIOD		—			2,340			2,340			243,788
CASH END OF PERIOD	$	2,340		$	243,788		$	—		$	603,230
SUPPLEMENTAL DISCLOSURES FOR CASH
FLOW INFORMATION—
Cash paid for interest	$	—		$	54,785		$	9,182		$	41,387
Cash paid for income taxes		—			—			—			—
Non-cash investing transactions - Trust One Termite
Vehicles and equipment		—			—			—			5,730
Other current assets		—			—			—			2,233
Goodwill		—			—			—			4,397
Accounts payable		—			—			—			(7,362	)
Long term notes payable		—			—			—			(1,581	)

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

F-7

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 1. Organization and Nature of Operations

  Organization

     American Mold Guard, Inc. (the “Company”) commenced operations in September 2002 and was incorporated under the laws of the State of California on January 13, 2003.

  Nature of Operations

     The Company’s principal business is providing mold prevention and restoration services to the residential home building industry. The Company focuses it efforts on single and multi-family residential new construction. Currently, the Company operates 11 service centers in four states - California, Florida, Texas and Louisiana. Through its wholly-owned subsidiary, Trust One Termite, Inc. (“Trust One”), the Company also provides termite control services.

  Acquisition of Trust One Termite, Inc.

     The Company acquired Trust One on February 1, 2005. Under the terms of the acquisition the Company issued 10,000 shares of its common stock for all the issued and outstanding shares of Trust One. The acquisition was accounted for under the purchase method of accounting in accordance with Statement of Financial Standards (“SFAS”) No. 141, “Business Combinations.” The shares were valued at $12,500, based on the estimated fair value of the Company’s common stock at the day of the acquisition of $1.25 per share. The Company acquired Trust One on February 1, 2005. The results of Trust One’s operations have been included in the Company’s consolidated financial statements since the date of acquisition.

     The acquisition of Trust One was accounted for under the purchase method of accounting in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations.” The consideration paid for all of Trust One’s stock was 10,000 shares of the Company’s common stock. The Company valued the transaction at $12,500 based on the estimated fair value of the Company’s common stock on the date of acquisition of $1.25 per share. The fair value of the Company’s common stock issued in the transaction was deemed to be a more reliable measure of the value of the transaction because it was consistent with recent valuations of the Company’s stock in connection with various financing transactions and because there was no objective reliable valuation of Trust One. Trust One was losing money and, aside from cash on hand, had nominal tangible assets. The real value of Trust One was the intangible assets — its customers and its pest control license issued by the State of California, in which Trust One had only a small investment. Using this valuation, $4,397 was allocated to intangible assets. The results of Trust One’s operations have been included in the consolidated financial statements since the date of the acquisition.

     All assets and liabilities of Trust One have been recorded in the Company’s consolidated balance sheet based on the fair values at the date of acquisition. Intangible assets relating to the purchase was $4,397. The principal asset of Trust One is a pest control service provider license issued by the State of California.

The following table details the allocation of the purchase price:

	Estimated
	Fair Value
Cash	$	9,083
Vehicles and equipment		5,730
Other current assets		2,233
Intangible assets		4,397
Accounts payable		(7,362	)
Short term notes payable		(1,581	)
Total	$	12,500

F-8

American Mold Guard, Inc.

     Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 1. Organization and Nature of Operations (continued)

     The pro forma financial results set forth below reflect certain operational data of the Company as if the acquisition of Trust One took place on January 13, 2003, the date of the Company’s incorporation.

	2004
Net revenue	$	1,997,193
Net loss	$	(3,276,474	)
Loss per common share	$	(1.11	)
Weighted average common shares outstanding		2,907,113

  Zero Plus

     Zero Plus, LLC (“Zero Plus”) was formed on April 5, 2005 by the Company and Electronic Aquagenics Unlimited (“EAU”) for the purpose of marketing and selling the products and services of EAU. Zero Plus is owned 50% by the Company and 50% by EAU. The Company and EAU agreed that the Company would provide sales and marketing expertise and EAU would supply the funding. The Company’s President devoted substantially all of his time to developing a marketing strategy and program for Zero Plus. Zero Plus was initially capitalized with cash of $83,000, all of which was provided by EAU. In May and July 2005, EAU invested an additional $50,000. As of September 30, 2005, Zero Plus had an equity deficit of $113,126 and a working capital deficit of $131,584. In December 2005, the Company sold its 50% interest in Zero Plus to EAU. (See Note 12 - Subsequent Events.)

     The Company accounts for its investment in Zero Plus using the equity method of accounting. In exchange for its 50% ownership interest, the Company is providing back office support services to Zero Plus. Each month, the Company increases its investment in Zero Plus and recognizes income for the estimated fair value of the back office support services provided to Zero Plus. Each month the Company also recognizes its proportionate share of Zero Plus’ net loss to the extent that such amount does not exceed its investment in Zero Plus. As of September 30, 2005, the Company’s basis in its investment in Zero Plus is $0.

Note 2. Going Concern and Management’s Plans

     These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, the Company’s historical financial performance, its current financial condition and the uncertainty as to whether the Company will be able to obtain additional financing, raise substantial doubt about the Company’s ability to continue as a going concern. The Company has suffered recurring operating losses since inception and for the year ended December 31, 2004, the Company incurred a net loss of $3,290,449, had a working capital deficiency of $992,792, an accumulated deficit of $4,474,496 and negative shareholders’ equity of $1,037,817. Although the Company realized revenue gains for the nine months ended September 30, 2005, the Company incurred a net loss of $3,000,699 for the period and as of that date had a working capital deficiency of $2,764,569 an accumulated deficit of $7,475,195 and negative shareholders’ equity of $3,127,401. The Company’s ability to continue as a going concern depends on its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that the Company will be successful in obtaining sufficient capital, whether through the sale of equity or debt securities. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company cease to continue operating as a going concern.

     On July 16, 2005, the Company signed a letter of intent with Paulson Investment Company (the “Underwriter”) to make a firmly underwritten initial public offering (the “IPO”). As currently contemplated, in the IPO the Company will offer 1,100,000 units, each consisting of two shares of the Company’s common stock, no par value (the “Common Stock”), two Class A redeemable common stock purchase warrants (the “Class A Warrants”) and one Class B redeemable common stock purchase warrant (the “Class B Warrants” and together with the Class A Warrants, the “Warrants”).

     As currently contemplated, the initial public offering price of the units is expected to be between $12.00 and $14.00 per unit or $13.2 million to $16.4 million in the aggregate. The net proceeds to the Company, after paying

F-9

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

underwriting commissions, a non-accountable expense allowance and other offering costs, are expected to be approximately $12.0 million. The Company has granted the Underwriter an “over-allotment” option under which the Underwriter may purchase up to 165,000 units from the Company resulting in additional gross proceeds of approximately $2.0 million. The Company intends to use the net proceeds from the IPO to repay debt, to open new service centers and for working capital and general corporate purposes. Under the terms of the letter of intent, the Company agreed that at the time the IPO is effective it will not have more than 1.4 million shares issued and outstanding. In order to comply with this condition, the Company will have to effect a reverse stock split prior to the IPO. There can be no assurance that the IPO will be consummated on the terms currently contemplated, if at all.

Note 3. Summary of Critical Accounting Policies

  Principles of Consolidation

     These consolidated financial statements are presented in accordance with generally accepted accounting principles in the United States. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Trust One. All significant inter-company accounts and transactions are eliminated upon consolidation. The operations of Zero Plus are not consolidated because the Company bears no obligation to invest capital or to fund cash flow deficits; EAU bears all risks of cash losses.

  Basis of Presentation

     The consolidated financial statements for the nine months ended September 30, 2005 and 2004 included are unaudited but have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The accompanying unaudited consolidated financial statements for the nine months ended September 30, 2004 and 2005 reflect all adjustments of a normal and recurring nature, which are, in the opinion of management, necessary to present fairly the financial position, results of operations, and cash flows of the Company for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results for any other interim period or for the fiscal year taken as whole.

  Management Estimates

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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.

  Cash and Cash Equivalents

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

  Inventories

     Inventories are stated at the lower of cost (as determined by the first-in, first-out method) or market and consist primarily of raw materials.

  Deferred Offering Costs

     Direct costs incurred in connection with the Company’s sale of the Unsecured Notes (see Note 6) during the year ended December 31, 2004 and the IPO during the nine months ended September 30, 2005, principally legal expenses, are capitalized. The costs related to the Unsecured Notes are being amortized over the life of the Unsecured Notes. The Company will be offsetting the costs associated with the IPO against the proceeds in the period in which the proceeds are received. In the event the IPO is unsuccessful, the Company will charge these costs to operations.

F-10

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 3. Summary of Critical Accounting Policies (continued)

  Property and Equipment

     Property and equipment are recorded at cost. The Company provides for depreciation over estimated useful lives ranging from three to five years, using the straight-line method. Leasehold improvements and capitalized leased equipment are amortized over the life of the related non-cancelable lease. Repair and maintenance expenditures that significantly add to the value of the property, or prolong its life, are capitalized. Repair and maintenance expenditures that do not significantly add to the value of the property, or prolong its life, are charged to expense as incurred. Gains and losses on dispositions of property and equipment are included in the related period’s statement of operations.

  Impairment of Long-Lived Assets

     The Company has adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which addresses significant issues relating to the implementation of SFAS No. 121 and develops a single accounting model, based on the framework established in SFAS No. 121 for long-lived assets to be disposed of by sale, whether or not such assets are deemed to be a business. SFAS No. 144 also modifies the accounting and disclosure rules for discontinued operations. Management did not note any indicators of impairment during the periods ended December 31, 2003, December 31, 2004 and September 30, 2005.

  Income Taxes

     The Company accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amount at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

  Comprehensive Income

     The Company has adopted SFAS No. 130, “Reporting Comprehensive Income” which establishes standards for reporting comprehensive income and its components in a financial statement. Comprehensive income as defined includes all changes in equity (net assets) during a period from non-owner sources. Examples of items to be included in comprehensive income, which are excluded from net income, include foreign currency translation adjustments, minimum pension liability adjustments, and unrealized gains and losses on available-for-sale securities. The Company did not have any items of other comprehensive income as of December 31, 2003 and 2004 or for the nine months ended September 30, 2004 and 2005.

  Revenue Recognition

     Revenue is based on contracts for agreed upon fees entered into with customers for the services to be completed and is recognized when the service is completed, the amount of the service and contract value is determinable and collection is reasonably assured. The resulting accounts receivable are reported at their principal amounts adjusted for an estimated allowance for uncollectible amounts, if appropriate. The Company does not require collateral on its accounts receivable.

  Product Warranties

     The Company provides a general warranty on its services that extends for the entire “statute of repose,” the period during which, under the various state laws, builders have continuing liability for construction defects. In general, the period of continuing liability is between ten and fifteen years depending upon the state in which the service has been provided. The warranty covers both property damage and personal injury arising from mold contamination on any surface treated by the Company. The personal injury portion of the warranty is supported by a $2 million pollution liability mold giveback provision under the Company’s general liability policy. The Company estimates its exposure to warranty claims based upon historical warranty claim costs. Management reviews these estimates on a regular basis and adjusts the warranty provisions as actual experience differs from historical esti-

F-11

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 3. Summary of Critical Accounting Policies (continued)

mates or other information becomes available. However, the Company does not have, at this time, sufficient experience to determine if a reserve is required and/or if the coverage under the general liability policy is sufficient should claims be filed against the Company. To date, the Company has not been required to perform under the terms of its warranty provisions, and management is not aware of any pending or threatened claims. As a result, the accompanying consolidated financial statements do not include any accruals or provisions associated with future product warranty expenditures.

  Stock-based Compensation

     SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure,” defines a fair value based method of accounting for stock-based compensation for stock options granted to employees and non-employees. The Company measures employee compensation cost under the intrinsic method provided by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”) whereby compensation expense is recognized for the excess, if any, of the fair value of the Company’s common stock over the option price on the date the option is granted. No such compensation expense was recognized during the period from inception, January 13, 2003, through September 30, 2005. The Company recognizes expense related to grants of options/warrants to non-employees in accordance with the fair value provisions of SFAS No. 123.

     If the Company had adopted the fair value provisions of SFAS No. 123 for employee stock options, in connection with options issued during the year ended December 31, 2004, the Company would have recorded deferred compensation of $181,919 (using the Black-Sholes method of valuation with a volatility ranging from 44.6% to 48.9%, a discount rate ranging from 2.184% and 3.109%, a term of five years and no dividends). If the Company had adopted the fair value provisions of SFAS No. 123 for employee stock options, in connection with the options issued during the nine months ended September 30, 2005, the Company would have recorded compensation of $70,511 (using a Black-Sholes method of valuation with a volatility ranging from 48.2% to 54.7%, discount rate of 3.109%, a term of five years and no dividends). The grants vest over a period of three years with one-third vesting after one year and the remaining two-thirds vesting ratably over the eight remaining quarters.

     The pro forma loss assuming implementation of SFAS No. 123 is as follows:

							Nine Months			Nine Months
	From January 13, 2003			Year Ended			Ended			Ended
	(inception) through			December 31,			September 30,			September 30,
	December 31, 2003			2004			2004			2005
							(unaudited)
Net loss, as reported	$	(1,184,047	)	$	(3,290,449	)	$	(1,982,610	)	$	(3,000,699	)
Add: Stock-based compensation
expense recorded in accordance
with APB No. 25		—			—			—			65,253
Deduct: Additional stock-based
employee compensation expense
determined under fair value
based method for all awards,
net of tax effects		—			(181,919	)		(171,997	)		(70,551	)
Pro forma net loss	$	(1,184,047	)	$	(3,472,368	)	$	(2,154,607	)	$	(3,005,997	)
Weighted average number
of shares outstanding –
basic and diluted		1,717,748			2,272,711			2,204,644			2,668,228

F-12

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 3. Summary of Critical Accounting Policies (continued)

							Nine Months			Nine Months
	From January 13, 2003			Year Ended			Ended			Ended
	(inception through			December 31,			September 30,			September 30,
	December 31, 2003			2004			2004			2005
							(unaudited)
Net loss per share:
Basic – as reported		$(0.69	)		$(1.45	)		$(0.90	)		$(1.12	)
Basic – pro forma		$(0.69	)		$(1.53	)		$(0.98	)		$(1.13	)

Deferred compensation as of December 31, 2004 and September 30, 2005 is $181,929 and $177,254, respectively.

Risk Management

     The Company is not exposed to significant credit concentration risk, interest rate or hedging risks. The Company’s functional currency is the US dollar. The Company is not exposed to foreign exchange risk and the Company is not a party to any derivative transactions.

Fair Value of Financial Instruments

     The carrying values of cash, accounts receivable, other current assets, accounts payable and accrued liabilities, accrued salary and wages, accrued interest payable and short term debt approximates their fair value because of the short maturity of these instruments.

Per Share Information

     The Company presents basic earnings (loss) per share (“EPS”) and diluted EPS on the face of the statements of operations. Basic EPS is computed as net income (loss) divided by the weighted average number of shares of Common Stock outstanding for the period. Diluted EPS reflects the potential dilution that could occur from shares of Common Stock issuable through stock options, warrants, and other convertible securities which are exercisable during or after the reporting period. In the event of a net loss, such incremental shares are not included in EPS since their effects are anti-dilutive. Securities that could potentially dilute basic EPS in the future, that were not included in the calculation of diluted EPS because to do so would have been antidilutive, aggregate -0- for the period beginning January 13, 2003 (inception) and ended December 31, 2003 and 400,000, 400,000 and 2,449,369 for the periods ended December 31, 2004, September 30, 2004 and September 30, 2005, respectively.

Recent Accounting Pronouncements

     In November 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 151, “Inventory Costs” which amends the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) under the guidance in APB Opinion No. 43, Chapter 4, “Inventory Pricing”. Paragraph 5 of APB 43, Chapter 4, previously stated that “. . .under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges. . . .” SFAS 151 requires that those items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, SFAS 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management does not expect adoption of SFAS 151 to have a material impact on the Company’s financial statements.

     In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets”, and an amendment to APB Opinion No. 29, “Accounting for Nonmonetary Transactions”. SFAS 153 eliminates certain differences in the guidance in APB 29 as compared to the guidance contained in standards issued by the International Accounting Standards Board. The amendment to APB 29 eliminates the fair value exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. Such an exchange has commercial substance if the future cash flows of the entity are

F-13

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 3. Summary of Critical Accounting Policies (continued)

expected to change significantly as a result of the exchange. SFAS 153 is effective for nonmonetary asset exchanges occurring in periods beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges occurring in periods beginning after December 16, 2004. The adoption of SFAS No. 153 did not have a material impact on the Company’s financial statements.

     In December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment” which amends SFAS 123 and APB 25. SFAS 123(R) requires that the cost of share-based payment transactions (including those with employees and non-employees) be recognized in the financial statements based on estimated fair values. SFAS 123(R) applies to all share-based payment transactions in which an entity acquires goods or services by issuing (or offering to issue) its shares, share options, or other equity instruments (except for those held by an ESOP) or by incurring liabilities (1) in amounts based (even in part) on the price of the entity’s shares or other equity instruments, or (2) that require (or may require) settlement by the issuance of an entity’s shares or other equity instruments. This statement is effective (1) for public companies qualifying as “small business issuers” (as defined by the Securities and Exchange Commission), as of the first interim period or fiscal year beginning after December 15, 2005, or (2) for all other public companies, as of the first interim period or fiscal year beginning after June 15, 2005, or (3) for all nonpublic entities, as of the first fiscal year beginning after December 15, 2005. Management intends to adopt this policy for the quarter ending March 31, 2006. Management is currently assessing the effect of SFAS 123(R) on the Company’s financial statements, however, management expects the adoption of this statement to increase the Company’s stock-based compensation charges.

Note 4. Property and Equipment

     Property and equipment consisted of the following:

	December31,			September 30,
	2004			2005
				(unaudited)
Vehicles	$	220,327		$	419,248
Office furniture and fixtures		73,807			86,796
Accumulated depreciation		(63,841	)		(171,006	)
Property and equipment, net	$	230,293		$	335,038

Note 5. Income Taxes

     The Company had net operating losses during the period from inception to December 31, 2003, for the year ended December 31 2004 and for the nine months ended September 30, 2005 and, as a result, has not recorded a provision for federal income taxes in the accompanying Consolidated Statements of Operations.

     For the periods ended December 31, 2003 and 2004, the Company incurred net losses of $1,184,047 and $3,290,449, respectively. For the nine months ended September 30, 2004 and 2005, the Company incurred net losses of $1,982,610 and $3,000,699, respectively.

     For the periods ended December 31, 2003 and 2004 and for the nine months ended September 30, 2005, the income tax computed at the Federal Statutory rate of 34.0% was fully offset by changes in the valuation allowance.

     The accumulated net operating losses for federal tax purposes was $900,867, $3,221,462 and $6,059,580 as of December 31, 2003, December 31, 2004 and September 30, 2005, respectively. The Company has fully offset the net operating loss carryforward by a valuation allowance of an equal amount and the carryforwards will begin to expire in 2023. The utilization of net operating loss carry forwards may be limited based on past and future issuances of common and preferred stock due to the ownership change provisions of Internal Revenue Code Section 382. The net deferred income tax assets have been fully reserved for as of December 31, 2004 and September 30, 2005, as management determined that it is more likely than not that such assets would not be realized. Accordingly, a deferred income tax benefit has not been recorded for any of the periods presented in the accompanying Consolidated Statements of Operations.

F-14

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 6. Notes Payable

     Notes payable consist of the following:

	December 31,			September 30,
	2004			2005
				(unaudited)
Short term loans:
Unsecured loans	$	479,245		$	451,207
Secured loan		170,000			170,000
Unsecured notes		—			2,000,000
Additional securities		—			1,500,000
Deferred interest costs		—			(1,500,000	)
Total short term loans payable	$	649,245		$	2,621,207
Long term loans:
10% Convertible notes	$	1,000,000		$	1,950,000
Less: Debt discount		(724,682	)		(1,247,733	)
Total long term loans payable	$	275,318		$	702,267

Short Term Loans:

2003

Unsecured Loans

     On November 1, 2003, the Company borrowed $75,000 from a relative of the president of the Company. Under its original terms, this loan was to be repaid in 90 days. If not, the loan would bear interest at the rate of 10,000 shares of common stock of the Company per month until paid in full. The loan was not repaid and on January 3, 2005, the parties entered into a Settlement Agreement and Mutual General Release under which the Company issued a new $75,000 Promissory Note bearing interest at 7% per annum and a maturity date of December 31, 2006 or 10 business days after the completion of an initial public offering by the Company of its Common Stock, whichever occurs first. The Company also issued a Common Stock purchase warrant covering 250,000 shares of common stock (the “January 2005 Warrants”) in exchange for 110,000 shares of common stock previously earned as interest by the lender. The Company has recorded the estimated fair value of the warrant at $128,000 during the year ended December 31, 2004 as interest expense and additional paid-in capital. As of September 30, 2005, the loan, plus accrued interest of $10,487, remains outstanding. (See Note 9 - Common Stock Purchase Warrants.)

     On November 10, 2003, the Company borrowed $25,000 from a shareholder. This loan bears interest at the rate of 7% per annum without an established due date. Interest is accrued monthly and is payable upon the payment of the principal amount. On August 31, 2004, the Company borrowed an additional $15,000 from this investor on the same terms as the November 10, 2003 loan. As of September 30, 2005, the entire $40,000 principal amount remains outstanding. The entire principal amount of the loan and accrued interest will be paid from the net proceeds of the IPO.

2004

Unsecured Loans

     During 2004, the Company borrowed an aggregate of $350,000 from five individual investors. The loans bear interest at rates ranging between 7% and 12% per annum which is payable monthly. The loans are past their contractual due dates, however, by oral agreement, the parties have extended the maturity dates of the borrowings until the completion of the IPO. As of December 31, 2004, the aggregate balances of these loans was $344,820. As of September 30, 2005 the aggregate balances was $334,626.

F-15

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 6. Notes Payable (continued)

     In May 2004, the Company’s president loaned the Company $25,000 on an unsecured basis with interest accruing at the rate of 3% per month. During the period from May 2004 through March 2005, additional advances were made and the loan balance ranged from $53,006 to $7,772. The loan was fully repaid in March 2005. The principal balance of the loan at December 31, 2004 was $19,425.

Secured Loan

     In April 2004, the Company borrowed $170,000 secured by accounts receivable of the Company. The loan bears an interest rate of 3% per month. As of December 31, 2004 and September 30, 2005, the outstanding balance was $170,000. The loan was due upon the Company receiving payment from the customer for the applicable customer receivables. By verbal agreement the due date has been extended to be repaid in full from the proceeds of the IPO.

2005
Unsecured Notes

     On each of July 11, 2005 and August 9, 2005, the Company issued 10% unsecured promissory notes in the principal amount of $200,000 ($400,000 in the aggregate) to the Underwriter. The July note is due July 11, 2006 and the August note is due October 15, 2006. Both notes are payable out of the proceeds of the IPO. As of September 30, 2005, both notes remain outstanding. (See Note 12.)

     In September 2005, the Company issued a 10% unsecured promissory notes in the aggregate amount of $100,000 to an individual investor. The note is due on August 31, 2006, or, if earlier, out of the proceeds of a $3 million equity financing. As of September 30, 2005, the note remained outstanding. In order to induce the investor to make this loan, the Company’s chief executive officer agreed to personally guarantee repayment of the note and to transfer $150,000 worth of common stock that he personally owns to the investor.

     On September 20, 2005, the Company issued $1.5 million aggregate principal amount of its 10% unsecured promissory notes due August 31, 2006 (the “Unsecured Notes”) and the right to receive $1.5 million worth of the Company’s securities (the “Additional Securities”). The purchase price for the notes and the Additional Securities was $1.5 million in cash (the “Purchase Price”), all of which has been received by the Company. The Additional Securities will be issued to the holders of the Unsecured Notes at such time as the Company completes a financing with gross proceeds of $5 million or more (a “Qualified Sale”) and will be identical to the securities issued in the Qualified Sale. The Additional Securities have been valued at $1.5 million and deferred interest costs (debt discount), which will be amortized over the life of the Unsecured Notes, has been valued at $1.5 million. If a Qualified Sale does not occur by December 31, 2006, then the holders of the Unsecured Notes will receive an aggregate of 1,200,000 shares of the Common Stock. The Unsecured Notes and the accrued but unpaid interest thereon, are due and payable on the earlier of August 31, 2006 or three business days following the date which the Company completes an equity financing resulting in gross proceeds of at least $3 million.

Long Term Debt

Convertible Notes

     On September 30, 2004, the Company entered into a Note Purchase Agreement with an accredited investor under which the investor agreed to purchase up to $4,250,000 aggregate principal amount of the Company’s 10% secured convertible notes (the “Convertible Notes”). Pursuant to this agreement, the Company issued four Convertible Notes having an aggregate principal amount of $1,950,000. Convertible Notes having an original principal amount of $500,000 were issued on each of October 5 and December 9, 2004. A Convertible Note with a principal amount of $350,000 was issued on January 24, 2005 and a Convertible Note having an original principal amount of $600,000 was issued on April 15, 2005. Interest on the Convertible Notes is paid quarterly in arrears at March 31, June 30, September 30 and December 31 of each year beginning June 30, 2005. The Convertible Notes mature on September 30, 2007. After September 30, 2006, the Company may redeem all or a part of the

F-16

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 6. Notes Payable (continued)

Convertible Notes in minimum increments of $250,000. The holder of the Convertible Notes may convert such notes at any time into shares of the Company’s Series C Convertible Preferred Stock, which, in turn is convertible into shares of the Company’s Common Stock. The conversion price is $1.14.

     Simultaneously with its issuance of the $600,000 Convertible note on April 15, 2005, the Company also issued a warrant to purchase 500,000 shares of Common Stock exercisable at $2.00 per share (the “April 2005 Warrants”). The Company has recorded the relative estimated fair value of the warrant of $147,368 as debt discount and additional paid-in capital in the nine month period ended September 30, 2005. (See Note 8.)

     Based on the effective conversion rate, the Company calculated the estimated value of the beneficial conversion feature associated with the Convertible Notes to be $1,471,053. Such amount is accounted for as a debt discount and is being amortized to interest expense over the life of the notes. Interest expense charged for the year ended December 31, 2004 and for the nine months ended September 30, 2005 was $29,704 and $316,426, respectively.

     In September 2005, in order to facilitate the completion of the sale of the Unsecured Notes and the contemplated IPO, the Company and the holders of the Convertible Notes entered into an agreement that, among other things, provided as follows:

• The holders of Convertible Notes waived the right to convert those notes into shares of Series C Preferred Stock before February 17, 2006.
  
  
• The Convertible Notes will become immediately due and payable upon the completion a firm commitment underwritten public offering generating gross proceeds in excess of $4 million before February 17, 2006.
  
  
• Upon the successful completion of the IPO, the Company will issue to the holder of the Convertible Notes 666,667 Class A Warrants and 333,333 Class B Warrants in exchange for the April 2005 Warrants and to register those warrants and the underlying shares of common stock simultaneously with the registration of the securities to be offered in the IPO.

     Maturities of notes payable as of September 30, 2005 are as follows:

2005	$	-0-
2006		2,621,207
2007		1,950,000
	$	4,571,207

Note 7. Capitalization

Series A Preferred Stock

     On May 1, 2003, the Company sold 499,999 shares of its Series A Preferred Stock for $1.25 per share realizing gross proceeds of $625,000. The Series A Preferred Stock is convertible into shares of Common Stock at the ratio of one share of Common Stock for each Series A Preferred share. The Series A Preferred Stock has an 8% cash dividend rate if and when declared by the Board of Directors. The Series A Preferred Stock will automatically convert into shares of common stock upon the closing of the sale of the Company’s Common Stock in a firm commitment, underwritten public offering registered under the Securities Act of 1933, as amended, at a public offering price equal to or exceeding $4.00 per share of Common Stock and the aggregate net proceeds to the Company and/or any selling shareholders exceed $10,000,000. The Series A Preferred Stock has a liquidation preference equal to $1.25 per outstanding shares, or $624,999 (the “Series A Liquidation Value”), plus accrued and unpaid cumulative dividends. Dividends on the Series A Preferred Stock accrue cumulatively on a daily basis at 8% per annum of the Series A Liquidation Value. As of December 31, 2004 and September 30, 2005, dividends in arrears are $83,000 and $121,000, respectively. No dividends have been declared by the Board of Directors.

F-17

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 7. Capitalization (continued)

Series B Preferred Stock

     During the period February through September 2004, the Company sold 392,000 shares of its Series B Preferred Stock for $2.00 per share and another 62,500 shares of Series B Preferred Stock for $1.20 per share, resulting in gross proceeds of $859,000. The Series B Preferred Stock is convertible into shares of Common Stock at the ratio of one share of Common Stock for each Series B Preferred share. The Series B Preferred Stock will automatically convert into Common Stock upon the closing of the sale of the Company’s Common Stock in a firm commitment, underwritten public offering registered under the Securities Act of 1933, as amended, at a public offering price equal to or exceeding $4.00 per share of common stock and the aggregate net proceeds to the Company and/or selling shareholders exceed $10,000,000. The Series B Preferred Stock has a liquidation preference, after payment in full to the holders of Series A Preferred Stock, equal to $4.00 per outstanding share, or $2,272,500 (the “Series B Liquidation Value”). The Company has the right at any time to redeem all or a portion of the outstanding shares of the Series B Preferred Stock, at any time by paying to the holders the Series B Liquidation Value. Dividends on the Series B Preferred Stock accrue cumulatively on a daily basis at 8% per annum of the Series B Liquidation Value. As of December 31, 2004 and September 30, 2005, dividends in arrears are $68,000 and $120,000, respectively. No dividends have been declared by the Board of Directors.

     In September 2005, in order to facilitate the completion of the sale of the Unsecured Notes and the contemplated IPO, the holders of the Series A and Series B Preferred Stock agreed that if the Company completes a firm commitment underwritten public offering generating gross proceeds in excess of $4 million before February 17, 2006, the Series A and Series B Preferred Stock will automatically convert into shares of Common Stock at the then applicable conversion rate.

Series C Preferred Stock

     The Company has designated 5,000,000 shares of its Preferred Stock as Series C Convertible Preferred Stock to accommodate the conversion of the Convertible Notes Payable. (See Note 6 - Notes Payable.) As of September 30, 2005, no shares of Series C Preferred Stock have been issued.

Common Stock

2003

     During the period from January 13, 2003 through December 31, 2003, the Company issued 1,961,489 shares of Common Stock as follows:

• 1,520,000 shares to the two founders of the Company and an investor at $0.00625 per share in exchange for services provided.
  
  
• 33,000 shares at an average price of $0.94 per share in payment of legal services provided for a total of $10,618.
  
  
• 322,000 shares at $0.80 per share in payment of salaries for a total of $257,600.
  
  
• 20,000 shares at $0.80 per share in payment of interest expenses for a total of $16,000.

2004

     During the year ended December 31, 2004, the Company issued 739,061 shares of Common Stock as follows:

• 66,489 shares at an average price of $1.25 per share in payment of legal services for a total of $83,111.
  
  
• 428,572 shares at an average price of $1.14 per share in payment of salaries for a total of $490,264.
  
  
• 70,000 shares at an average price of $1.19 per share in payment of Board of Director fees for a total of $83,000.
  
  
• 174,000 shares at a price of $1.25 per share in payment of interest expenses for a total of $217,500.

F-18

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 7. Capitalization (continued)

2005

     During the nine months ended September 30, 2005, the Company issued 28,000 shares of Common Stock as follows:

• 10,000 shares at a price of $1.25 per share for the acquisition of Trust One. (See Note 1).
  
  
• 18,000 shares at a price of $1.25 per share in payment of interest expenses for a total of $22,500.

     Also during the period, the Company repurchased 125,000 shares of Common Stock at an average price of $1.02, for an aggregate of $128,000, which were previously issued in payment of interest and, in exchange, issued the January 2005 Warrants. The Company estimated the fair value of the warrant at $128,000 and recorded such amount as paid-in capital. (See Note 6 - Notes Payable.)

Note 8. Common Stock Purchase Warrants

     Listed below is the warrant activity of the Company for the periods presented;

			Weighted	Weighted
			Average	Average
	Underlying		Exercise	Contractual
	Shares		Price	Life
Balance, December 31, 2004	—	$	—	—
Granted during the period -
January 2005 Warrants	250,000	$	1.25	2.00 years
April 2005 Warrants	500,000	$	2.00	3.00 years
Balance, September 30, 2005	750,000	$	1.75	2.14 years

     The January 2005 Warrants entitle the holder thereof to purchase up to 250,000 shares of Common Stock at any time up to January 3, 2007 at a purchase price of $1.25 per share. In connection with the issuance of the January 2005 Warrants (see Notes 6 and 7), the Company estimated the fair value of such warrants to be $128,000 using the Black-Sholes valuation model (conversion price of $1.25, expected term of 5 years, volatility of 37.5%, discount rate of 5% and no dividends, present value of warrant $0.51 per share.)

     The April 2005 Warrants entitle the holder thereof to purchase up to 500,000 shares of Common Stock at any time until April 15, 2008 at a purchase price of $2.00 per share. In connection with the issuance of the April 2005 Warrants, the Company recorded $147,368 of debt discount, which it charged against the face value of the $600,000 Convertible Notes issued in April. (See Note 6 - Notes Payable.)

Note 9. Stock Option Plans

     The shareholders of the Company approved the Equity Incentive Plan (the “Plan”) on April 28, 2003, which provides for the issuance of up to an aggregate of 1,000,000 shares of Common Stock or options covering shares of Common Stock. Options granted under the Plan generally vest as to one-third after 12 months while the remainder vests ratably in quarterly installments over the next two years. All unexercised options expire after five years from the date of grant.

F-19

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 9. Stock Option Plans (continued)

     A summary of the status of the plan and changes during the period from inception, January 13, 2003, through September 30, 2005 is as follows:

	Option	Exercise
	Grants	Price
Beginning Balance, January 13, 2003 (inception)	—	—
Granted during period	—	—
Balance, December 31, 2003	—	—
Granted during the year	400,000	$1.25
Balance, December 31, 2004	400,000	$1.25
Granted during the period	236,500	$1.25
Cancelled during the period	(84,000	$1.25
Balance, September 30, 2005 (Unaudited)	552,500	$1.25

     A summary of stock options outstanding is as follows:

	Options Outstanding		Options Exercisable
		Weighted
		Average	Weighted		Weighted
		Remaining	Average		Average
	Number	Contractual	Exercise	Number	Exercise
Fixed Options Range	Outstanding	Life	Price	Exercisable	Price
As of December 31, 2004	400,000	4.70 years	$1.25	10,000	$1.25
As of September 30, 2005	552,500	4.16 years	$1.25	188,125	$1.25

     In connection with a stock option grant of 10,000 shares issued in the first quarter of 2004 to a consultant to the Company, compensation expense of $5,100 has been recorded using the Black-Sholes valuation model (expected term of 5 years, volatility of 37.5%, discount rate of 5% and no dividends and an option value of $0.51) .

     During the year ended December 31, 2004, the Company issued options to purchase a total of 400,000 shares of common stock to employees of the Company. The options vest over a three year period with one-third vesting after one year and the remaining two thirds vesting ratably over the 8 remaining quarters.

Note 10. Commitments and Contingencies

Lease Commitments

     The Company’s executive offices had been located in Irvine, California until November 2005 at which time it relocated to San Juan Capistrano, California. The Company’s executive offices will be housed in a temporary location until April 2006 at which time it expects to move into permanent quarters. The Company operates out of regional service centers under leases with terms ranging from 12 to 36 months and leases vehicles for terms ranging from 36 to 48 months.

     Future minimum lease payments under these leases as of September 30, 2005 are as follows:

2005	$	56,212
2006		211,534
2007		145,783
2008		93,422
2009		32,839
	$	539,790

     Rent expense was $38,849, $116,971, $80,051 and $145,260 for the period from inception through December 31, 2003, the year ended December 31, 2004 and for the nine months ended September 30, 2004 and 2005, respectively.

F-20

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 10. Commitments and Contingencies (continued)

Employment Agreements

     On January 1, 2004, the Company entered into employment agreements with its chief executive officer and its president, and on July 1, 2004 the Company entered into an employment agreement with its chief financial officer who, in August 2005, was also named chief operating officer. Each of the agreements have a term of five years and automatically renew for successive three-year terms unless either party to the agreement gives written notice, 90 days prior to the end of the agreement, not to renew the agreement. In the event the Company terminates the employment of an individual for any reason other than death, disability or “justifiable cause” (defined to include any willful breach by the executive of his duties under the agreement or the executive’s conviction of any crime involving the property of the company or any crime constituting a felony), the executives would be entitled to a severance payment of 24 months of the then current monthly base salary plus target bonus as in effect on the last day of his employment and reimbursement for the cost of maintaining his medical and dental insurance for 24 months. In the event of a termination in connection with a “change of control” or by the executive for “good reason’ (defined to include a relocation of the executive’s workplace to a location more than 30 miles from Irvine, California and a material reduction of the executive’s base salary, duties and authority of position), then the executive is entitled to a lump sum payment equal to his unpaid, annualized base salary for the remainder of the year in which the termination occurs and a lump sum payment equal to three times his highest annual compensation (salary plus bonus) for any of the three calendar years immediately preceding the date of termination.

     The initial base salary of the chief executive officer and the president is $170,000. The initial base salary of the chief financial/chief operating officer is $120,000.

     The base salaries of the executives increases based on the Company achieving various revenue milestones as set forth below:

CEO and President		Operating CFO/COO
Quarterly
Revenue	Base Salary	Base Salary
$   500,000	$170,000	$120,000
$1,000,000	$220,000	$150,000
$2,500,000	$270,000	$180,000
$4,000,000	$320,000	$210,000
$5,500,000	$370,000	$240,000
$7,000,000	$420,000	$270,000
$8,500,000	$470,000	$300,000

Success Fee

     Upon the successful completion of the IPO, the Company will issue to its counsel approximately 194,906 shares of Common Stock.

Note 11. Concentrations

Cash

     Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments. The Company maintains its cash balances at financial institutions that management believes possess high-credit quality, and related cash balances are insured by the Federal Deposit Insurance Corporation up to $100,000. At December 31, 2004 and September 30, 2005, the Company had $143,788 and $484,665, respectively, in excess of federally insured limits.

Customers

     Management believes that concentrations of credit, with respect to trade receivables, are minimized by the Company’s customer base. The table below reflects the percent of revenues that were derived by the number of

F-21

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 11. Concentrations (continued)

customers listed in the period, the period ending receivable from the customer(s) and the customers’ receivable balance as to total receivable balances for the period:

	Period
	Ended				Nine Months Ended
	December 31,				September 30,
	2003		2004		2004		2005
Revenue –
Percentage	35.7	%	30.0	%	25.9	%	30.9	%
Number of customers	2		1		2		1
Receivables of above customers	$14,490		$61,371		$222,320		$224,789
Percent of total receivables	28.2	%	5.3	%	42.5	%	21.1	%

Vendors

     The table below reflects the percent of raw materials consumed in cost of revenues are derived by the number of vendors listed in the period and the period ending payable to the vendors as a percentage of total accounts payable:

	Year Ended				Nine Months Ended
	December 31,				September 30,
	2003		2004		2004		2005
Material portion of cost of sales
Percentage	78	%	90	%	99	%	85	%
Number of vendors	1		2		2		3
Percent of total accounts payable	17.4	%	25.6	%	18.9	%	22.2	%

Note 12. Subsequent Events (audited)

     On November 28, 2005, the Company issued a 10% unsecured promissory note in the principal amount of $200,000 to an individual investor. The note is due on the earlier of January 1, 2007 or upon the completion of a public offering. As an inducement, the Company’s chief executive officer has agreed to transfer 58,864 shares of his common stock to the holder of the note upon the completion of a public offering.

     Effective November 30, 2005, the president of the Company resigned his position, but will continue to serve as a member of the Company’s Board of Directors. Under the terms of the Severance Agreement and Mutual General Release, the Company agreed as follows: (i) It will pay Mr. Barnes $244,481 on account of accrued but unpaid salary in semi-monthly installments of $7,500 beginning in December 2005 until the IPO is completed, at which time it will make a lump sum payment equal to the lesser of (x) the balance due and (y) $119,078. If any amount remains unpaid after the lump sum payment, it will be paid to Mr. Barnes in 12 consecutive equal monthly installments. (ii) It will pay Mr. Barnes $440,000 as severance pay in 12 consecutive monthly installments of $36,666.66, commencing 30 days after the IPO is completed. If the IPO is not completed by April 1, 2006, then the Company will begin making monthly payments of $25,000 on account of both accrued salary and severance pay commencing on that date until the total of Mr. Barnes’ accrued salary and severance payment has been paid in full. If the IPO is completed before the entire amount of accrued and unpaid salary and severance pay is paid in full, the monthly payments will increase so that the balance will be paid no later than the earlier of 12 months after the IPO date. (iii) It will pay Mr. Barnes a commission equal to 20% of the purchase price for the Company’s interest in Zero Plus. (iv) On April 1, 2006, the Company will make a payment to Mr. Barnes equal to all accrued and unreim-bursed business expenses incurred by him prior to that date and for up to $5,000 for the legal fees and other expenses incurred by him in connection with the preparation of the severance agreement. (v) Mr. Barnes will continue to participate in all of our benefit plans and programs until November 30, 2007. (vi) All of his unvested stock options immediately vested and became exercisable on November 30, 2005. (vii) Any payment under the agreement that is not timely paid will bear interest at a rate equal to the lower of (x) the prime rate in effect from time to time as published in The Wall Street Journal and (y) the highest rate of interest allowed by law.

F-22

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
for the Period from Inception (January 13, 2003) through
December 31, 2004 (Audited) and for the Nine Month Periods Ended
September 30, 2004 and 2005 (Unaudited)

Note 12. Subsequent Events (audited) (continued)

     On December 7, 2005, the Company sold its 50% interest in Zero Plus, LLC to Electric Aquagenics Unlimited (“EAU”) for $80,000. $20,000 of cash was received on December 14, 2005 and the remainder, which is in the form of a promissory note, is due the earlier of January 1, 2006 or the date upon which EAU raises an aggregate of $10 million of debt and/or equity capital. Under the terms of the agreement, all the assets of Zero Plus are assigned to EAU and all liabilities of Zero Plus are assumed by EAU.

Note 13. Subsequent Events (unaudited)

     On December 14, 2005, the Company entered into a Joint Marketing Cooperative Endeavor Agreement with Gulf Coast Mold Guard, LLC. The purpose of the agreement is to develop and maintain a public and private consumer awareness program of mold prevention and restoration services provided by the Company in the coastal regions of Louisiana, Mississippi and Alabama. Under the terms of the agreement, Gulf Coast Mold Guard, LLC paid the Company $300,000 so that the Company can hire and maintain personnel and purchase the equipment it needs to provide mold prevention and restoration services in the Gulf Coast region. Under the agreement Gulf Coast Mold Guard, LLC is also obligated, subject to certain conditions, to provide advertising and marketing services at its own cost and expense. In exchange, the Company will pay to Gulf Coast Mold Guard, LLC specified percentages of revenue it earns in the Gulf Coast region.

     In January and February 2006, the Company borrowed an aggregate of $150,000 on a demand basis from an institutional accredited investor. In order to induce the investor to make these loans, the Company’s chief executive officer and one of its directors agreed to transfer 5,000 and 25,000 shares of common stock, respectively, to the investor from their own personal holdings.

F-23

     You may rely on the information contained in this prospectus. We have not authorized anyone to provide information different from that contained in this prospectus. Neither the delivery of this prospectus nor sale of common shares means that information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or solicitation of an offer to buy our common shares in any circumstances under which the offer or solicitation is unlawful.

Table of Contents

	Page
Prospectus Summary	3
Risk Factors	7
Special Note Regarding Forward-Looking
Statements	15
Use of Proceeds	16
Dividend Policy	17
Capitalization	18
Dilution	19
Selected Consolidated Financial Data	20
Management’s Discussion and Analysis
of Financial Condition and Results
of Operations	21
Business	32
Management	38
Certain Relationships and Related
Transactions	45
Principal Shareholders	46
Description of Securities	48
Shares Eligible for Future Sale	51
Underwriting	53
Legal Matters	55
Experts	55
Where You Can Find More Information	55
Index to Financial Statements	F-1

     Until           , 2006 (the 25^th day after the date of this prospectus) all dealers effecting transactions in our units, whether or not participating in this distribution, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

1,100,000 Units

PROSPECTUS

PAULSON INVESTMENT
COMPANY, INC.

CAPITAL GROWTH FINANCIAL, LLC

CHICAGO INVESTMENT GROUP, LLC

, 2006

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Officers

     Section 317 of the California General Corporation Law grants us the power to indemnify our directors and officers against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation - a “derivative action”), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys’ fees) incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification in which the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s charter, bylaws, disinterested director vote, shareholder vote, agreement or otherwise.

     Our Articles of Incorporation provides that we indemnify and hold harmless each of our directors and officers to the fullest extent authorized by the California General Corporation Law, against all expense, liability and loss (including attorney’s fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith.

     Our Articles of Incorporation also provides that a director will not be personally liable to us or to our shareholders for monetary damages for breach of the fiduciary duty of care as a director. This provision does not eliminate or limit the liability of a director:

• for breach of his or her duty of loyalty to us or to our shareholders;
  
  
• for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
  
  
• under Section 316 of the California General Corporation Law (relating to unlawful payments or dividends or unlawful stock repurchases or redemptions); or
  
  
• for any improper benefit.

     Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons pursuant to our Articles of Incorporation, Bylaws and the California General Corporation Law, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy and is, therefore, unenforceable.

     The Underwriting Agreement provides for reciprocal indemnification between us and our controlling persons, on the one hand, and the underwriters and their respective controlling persons, on the other hand, against certain liabilities in connection with this offering, including liabilities under the Securities Act.

Item 25. Other Expenses of Issuance and Distribution.

     The following are the expenses of the issuance and distribution of the securities being registered, other than underwriting commissions and expenses, all of which will be paid by the Company. Other than the SEC registration fee and the NASD filing fees all of such expenses are estimated.

SEC Registration fee	$	7,242
NASD fee	$	7,671
Nasdaq Capital Market listing fee	$	45,000	*
Pacific Exchange listing fee	$	25,000
Printing expenses	$	120,000	*
Accounting fees and expenses	$	80,000	*
Legal fees and expenses	$	365,000	*
Blue sky filing fees and related attorney fees and expenses	$	70,000	*
Transfer agent and registrar fees and expenses	$	3,500	*
Miscellaneous	$	3,587	*
Total	$	727,000	*

*      Estimated.

II-1

Item 26. Recent Sales of Unregistered Securities.

In the last three years, we sold the following unregistered securities:

I. Debt Instruments

A.	10% Unsecured Notes Due August 31, 2006 —
	In September 2005, we sold $1.5 million aggregate principal amount of our 10% unsecured promissory notes due August 31, 2006 and the right to receive $1.5 million of units sold in this offering based on the initial public offering price per unit. Paulson Investment Company acted as placement agent. The Unsecured Notes were sold to 39 accredited investors. The gross proceeds were $1.5 million and the placement agent fee was 10% of the principal amount of the Unsecured Notes placed by Paulson, or $120,000.
B.	Other Unsecured Notes —
		In November 2005, we issued a $200,000 principal amount unsecured promissory note, bearing interest at 10% per annum to an accredited investor. The original principal amount and all accrued but unpaid interest is due January 1, 2007 but is prepayable out of the proceeds of a registered public offering by the company. No commission or placement agent fee was payable in connection with the issuance of this note. The gross proceeds from the sale of this note were $200,000.
		In September 2005, we issued a $100,000 principal amount unsecured promissory note bearing interest at 10% per annum to an accredited investor. The original principal amount and all accrued but unpaid interest is due August 31, 2006 but is prepayable out of the proceeds of a registered public offering by the company. No commission or placement agent fee was payable in connection with the issuance of this note. The gross proceeds from the sale of the note were $100,000.
		On August 9, 2005, we issued a $200,000 principal amount unsecured promissory note, bearing interest at 10% per annum to Paulson Investment Company, the underwriter of this offering. The original principal amount and all accrued but unpaid interest thereon is due and payable October 15, 2006 but is prepayable out of the proceeds of this offering. No commission or placement agent fee was payable in connection with the issuance of this note. The gross proceeds from the sale of this note were $200,000.
		On July 11, 2005, we issued a $200,000 principal amount unsecured promissory note, bearing interest at 10% per annum to Paulson Investment Company, the underwriter of this offering. The original principal amount and all accrued but unpaid interest thereon is due and payable July 11, 2006 but is prepayable out of the proceeds of this offering. No commission or placement agent fee was payable in connection with the issuance of this note. The gross proceeds from the sale of this note were $200,000.
		In November 2003, we issued a $75,000 principal amount unsecured promissory note bearing interest at 7% per annum to an accredited investor. The original principal amount and all accrued but unpaid interest is due December 31, 2006. No commission or placement agent fee was payable in connection with the issuance of this note. The gross proceeds from the sale of the note were $75,000.
C.	Convertible Notes and Warrants —
	From September 2004 through April 2005, we issued $1.95 million aggregate principal amount of our 10% secured convertible notes due September 30, 2007. In April 2005, simultaneously with the issuance of a $600,000 Convertible Note, we also issued warrants to purchase 500,000 shares of common stock (171,418 shares post-split). There was no placement agent involved in connection with the sale of the convertible notes. The purchaser of the convertible notes, Crestridge Investments AMG Moldguard, L.L.C., is an accredited investor. The aggregate offering price for the convertible notes and warrants was $1.95 million. No commissions, discounts or placement agent fees were incurred in connection with the sale of the convertible notes.

II-2

II. Equity Securities

A.	Series B Preferred Stock —
	From February 2004 through September 2004, we issued 467,000 shares of our Series B Preferred Stock to approximately 13 investors. There was no placement agent involved in connection with the sale of the Series B Preferred Stock. All of the purchasers of the Series B Preferred Stock were all accredited investors. The gross proceeds from the sale of the Series B Preferred stock were $934,000.
B.	Series A Preferred Stock —
	In July 2003, we issued 499,999 shares of our Series A Preferred Stock to seven investors. There was no placement agent involved in connection with the sale of the Series A Preferred Stock. All of the purchasers of the Series A Preferred Stock were accredited investors. The total gross proceeds from the sale of the Series A Preferred Stock was $625,000.
C.	Common Stock (All share amounts are pre-reverse stock split)
		On April 1, 2003, we issued 1,520,000 shares of our common stock to three persons in consideration for past services valued at $9,500 that were
		rendered to us by such persons. The shares were issued to the following persons/entities in the amounts and for the values indicated:

Name	Number of Shares	Consideration Received
Tom Blakeley	800,000	Past services valued at $5,000
KPC, LLC	400,000	Past services valued at $2,500
Brad Barnes	320,000	Past services valued at $2,000

• On June 26, 2003, we issued 33,000 shares of our common stock to John W. Martin in consideration for legal services valued at $10,618 that were rendered to us by Mr. Martin.
  
  
• On October 1, 2003, we issued 290,000 shares of our common to five persons in consideration for past services rendered to us by such persons. The shares were issued to the following persons/entities in the amounts and for the values indicated:

Name	Number of Shares	Consideration Received
Tom Blakeley	70,000	Past services valued at $56,000
KPC, LLC	50,000	Past services valued at $40,000
Brad Barnes	110,000	Past services valued at $88,000
Chris Dunk	50,000	Past services valued at $40,000
John W. Martin	10,000	Past services valued at $8,000

• On December 19, 2003, we issued 52,000 shares of our common stock to Tom Blakeley in consideration for past services valued at $41,000 that were rendered to us by Mr. Blakeley.
  
  
• On January 16, 2004, we issued 66,489 shares of our common stock to John W. Martin in consideration for legal services valued at $83,111 that were rendered to us by Mr. Martin.
  
  
• On January 29, 2004, we issued 17,500 shares of our common stock to two persons in consideration for past services rendered to us by such persons. The shares were issued to the following persons/entities in the amounts and for the values indicated:

Name	Number of Shares	Consideration Received
Mark Davidson	10,000	Past services valued at $8,000
Kevin Turner	7,500	Past services valued at $6,000

• On February 4, 2004, we issued 46,000 shares of our common stock to three persons in consideration for past services rendered to us by such persons. The shares were issued to the following persons/entities in the amounts and for the values indicated:

Name	Number of Shares	Consideration Received
Mark Hirschman	18,000	Past services valued at $14,400
Juan Escalante	18,000	Past services valued at $14,400
John W. Martin	10,000	Past services valued at $8,000

II-3

• On March 19, 2004, we issued 12,572 shares of our common stock to two persons in consideration for past services rendered to us by such persons. The shares were issued to the following persons/entities in the amounts and for the values indicated:

Name	Number of Shares	Consideration Received
Mark Davidson	5,715	Past services valued at $10,000
Gary Shrigley	6,875	Past services valued at $12,000

• On March 24, 2004, we issued 100,000 shares of our common stock to Brian Cowley in consideration for past services valued at $80,000 that were rendered to us by Mr. Cowley.
  
  
• On March 31, 2004, we issued 10,000 shares of our common stock to Adrian Turcott in satisfaction of an interest payment that was due to Mr. Turcott in the amount of $12,500.
  
  
• On April 15, 2004, we issued 30,000 shares of our common stock to Adrian Turcott in satisfaction of an interest payment that was due to Mr. Turcott in the amount of $37,500.
  
  
• On July 9, 2004, we issued 375,000 shares of our common stock to the following nine persons in the amounts and for the consideration indicated:

Name	Number of Shares	Consideration Received
Tom Blakeley	100,000	Past services valued at $125,000
Brad Barnes	110,000	Past services valued at $137,500
Chris Dunk	20,000	Past services valued at $25,000
Mark Davidson	85,000	Past services valued at $106,250
John W. Martin	30,000	Past services valued at $37,500
Brett Glava	5,000	Past services valued at $6,250
Robert Hurdle	5,000	Past services valued at $6,250
Brian Cowley	10,000	Interest payment due of $12,500
Adrian Turcott	10,000	Interest payment due of $12,500

• On December 14, 2004, we issued 54,000 shares of our common stock to the following four persons in the amounts and for the consideration indicated:

Name	Number of Shares	Consideration Received
Tom Blakeley	10,000	Past services valued at $12,500
Brad Barnes	10,000	Past services valued at $12,500
John W. Martin	10,000	Past services valued at $12,500
Brian Cowley	4,000	Interest payment due of $5,000

• On February 1, 2005, we issued 10,000 shares of our common stock to Ev Gallardo in exchange for all of the issued and outstanding common stock of Trust One Termite, Inc., a California corporation, which shares of common stock of Trust One Termite, Inc. were valued at $12,500.
  
  
• On March 31, 2005, we issued 6,000 shares of our common stock to Brian Cowley in satisfaction of an interest payment that was due to Mr. Cowley in the amount of $7,500.
  
  
• On June 30, 2005, we issued 6,000 shares of our common stock to Brian Cowley in satisfaction of an interest payment that was due to Mr. Cowley in the amount of $7,500.

     The foregoing securities were issued in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended, provided in Section 4(2) thereof, as a transaction by an issuer not involving a public offering. The registrant reasonably believed that each purchaser had such knowledge and experience in financial and business matters to be capable of valuating the merits and risks of the investment, each purchaser represented an intention to acquire the securities for investment only and not with a view to distribution thereof and appropriate legends were affixed to the stock certificates or warrants.

II-4

Item 27. Exhibits

Exhibit
No.		Description
	1	Form of Underwriting Agreement**
	3.1	Articles of Incorporation, as amended
	3.2	Bylaws
	4.1	Specimen stock certificate*
	4.2	Form of warrant agreement, including form of Class A and Class B warrants**
	4.3	Form of unit certificate*
	4.4	Form of representative’s warrant**
	5.1	Form of opinion of Morse, Zelnick, Rose & Lander, LLP
	10.1	American Mold Guard, Inc. Equity Incentive Plan
	10.2	Annual Reward Plan
	10.3	Employment Agreement - Tom Blakeley*
	10.4	Employment Agreement - Mark Davidson*
	10.5	Severance Agreement and Mutual General Release with Brad Barnes
	10.6	Joint Marketing Cooperative Endeavor Agreement with
		Gulf Coast Mold Guard, LLC**
	21	Subsidiary schedule**
	23.1	Consent of Haskell & White LLP
	23.2	Consent of Morse, Zelnick, Rose & Lander, LLP (included in Exhibit 5.1)
	24	Power of Attorney (included in signature page)**

*	To be filed by amendment.
**	Previously filed.

Item 28. Undertakings

     A.      The undersigned Registrant hereby undertakes:

               (1)      To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement to:

                         (a)      include any prospectus required by Section 10(a)(3) of the Securities Act;

                         (b)      reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

                         (c)      include any additional or changed material information with respect to the plan of distribution.

               (2)      That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

               (3)      To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

     B.      Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer of expenses incurred or paid by a director, officer or controlling person of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connec-

II-5

tion with the securities being registered, the small business issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

SIGNATURES

     In accordance with the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and authorized this Registration Statement to be signed on its behalf by the undersigned, in the City of San Juan Capistrano, State of California on February 13, 2006.

AMERICAN MOLD GUARD, INC.
By:	/s/ THOMAS BLAKELEY
	Thomas Blakeley, Chief Executive Officer

     In accordance with the requirements of the Securities Act of 1933, as amended, the following persons have signed this Registration Statement in the capacities indicated on the date set forth above.

Signature	Title	Date
/s/ THOMAS BLAKELEY	Chief Executive Officer and Chairman of the
Thomas Blakeley	Board of Directors (Principal Executive Officer)	February 13, 2006
/s/ MARK DAVIDSON	Chief Financial Officer
Mark Davidson	(Principal Accounting Officer)	February 13, 2006
/s/ BRAD BARNES*	Director	February 13, 2006
Brad Barnes
/s/ JOHN W. MARTIN*	Director	February 13, 2006
John W. Martin
* By: THOMAS BLAKELEY
Thomas Blakeley,
Attorney-in-fact

II-6

EX-3.1

                            ARTICLES OF INCORPORATION

                                       OF

                            AMERICAN MOLD GUARD, INC.

                                       I.

The name of the Corporation is American Mold Guard, Inc.

                                       II.

The purpose of the Corporation is to engage in any lawful act or activity for
which a corporation may be organized under the General Corporation Law of
California, other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.

                                      III.

The name and address in the State of California of the Corporation's initial
agent for service of process is Colyn Desatnik, 610 Newport Center Drive, Suite
700, Newport Beach, California, 92660.

                                       IV.

The Corporation is authorized to issue only one class of stock and the total
number of shares which the corporation is authorized to issue is One Hundred
Thousand (100,000).



                                       V.

The Corporation is authorized to provide indemnification of agents (as defined
in Section 317 of the California Corporations Code) for breach of duty to the
Corporation and its stockholders through bylaw provisions or through agreements
with the agents, or both, in excess of the indemnification otherwise permitted
by Section 317 of the California Corporations Code, subject to the limits on
such excess indemnification set forth in Section 204 of the California
Corporations Code.

IN WITNESS WHEREOF, the undersigned Incorporator has executed the foregoing
Articles of Incorporation on January 9, 2003

/s/ Colyn B. Desatnik
- ---------------------
Colyn B. Desatnik

The undersigned hereby declares that he is the person who executed the foregoing
Articles of Incorporation and that said instrument is the act and deed of the
undersigned.

/s/ Colyn B. Desatnik
- ---------------------
Colyn B. Desatnik



                            CERTIFICATE OF AMENDMENT

                                       OF

                            ARTICLES OF INCORPORATION

                                       OF

                            AMERICAN MOLD GUARD, INC.

      The undersigned certifies that:

            1.    He is the sole incorporator of American Mold Guard, Inc., a
            California corporation.

            2.    He hereby adopts the following amendment of the Articles of
            Incorporation of said corporation:

      Article IV. is amended to read as follows:

      "The Corporation is authorized to issue only one class of stock and the
total number of shares which the corporation is authorized to issue is Ten
Million (10,000,000)."

            3.    No directors were named in the original articles of
            incorporation of the above-named corporation and none have been
            elected.

            4.    The Corporation has issued no shares.

                  /s/ Colyn B. Desatnik
                  ---------------------
                  Colyn B. Desatnik

      The undersigned declares under penalty of perjury that the matters set
forth in the foregoing certificate are true and correct of his own knowledge.

      Executed at Newport Beach this 11th day of April, 2003.

                  /s/ Colyn B. Desatnik
                  ---------------------
                  Colyn B. Desatnik



                              AMENDED AND RESTATED
                            ARTICLES OF INCORPORATION
                                       OF
                            AMERICAN MOLD GUARD, INC.

      The undersigned, Tom Blakeley, hereby certifies that:

      FIRST. He is President and Secretary of AMERICAN MOLD GUARD, INC., a
California corporation (the "Corporation").

      SECOND. The Articles of Incorporation of the Corporation are amended and
restated to read as follows:

                                    ARTICLE I

      The name of the Corporation is AMERICAN MOLD GUARD, INC.

                                   ARTICLE II

      The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.

                                   ARTICLE III

      The name and address in the State of California of the Corporation's
initial agent for service of process is:

                                 Colyn Desatnik
                       610 Newport Center Drive, Suite 700
                         Newport Beach, California 92660

                                   ARTICLE IV

      The Corporation is authorized to issue two classes of shares designated
"Common Stock", no par value (the "Common Stock") and "Preferred Stock", no par
value (the "Preferred Stock").

      The total number of shares of Common Stock authorized to be issued is
50,000,000 and the total number of shares of Preferred Stock authorized to be
issued is 10,000,000. The Preferred Stock authorized by these Articles of
Incorporation may be issued from time to time in one or more series. The Board
of Directors is authorized to determine or alter any or all of the rights,



preferences, privileges and restrictions granted to or imposed upon any wholly
unissued series of Preferred Stock and to fix, alter or reduce (but not below
the number then outstanding) the number of shares comprising any such series and
the designation thereof, or any of them, and to provide for the rights and terms
of redemption or conversion of the shares of any such series, as shall be stated
and expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issue of such shares and as permitted by the General
Corporation Law of the State of California.

                                    ARTICLE V

      The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.

                                   ARTICLE VI

      The Corporation is authorized to provide indemnification of its agents (as
defined in Section 317 of the California Corporations Code) through bylaw
provisions, agreements with agents, vote of shareholders or disinterested
directors or otherwise, in excess of the indemnification otherwise permitted by
Section 317 of the California Corporations Code, subject only to the applicable
limits set forth in Section 204 of the California Corporations Code with respect
to actions for breach of duty to the Corporation and its shareholders. In
furtherance and not in limitation of the powers conferred by statute:

            (i)   the Corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
Corporation, or is serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
against such liability under the provision of law;

            (ii)  the Corporation may create a trust fund, grant a security
interest and/or use other means (including, without limitation, letters of
credit, surety bonds and/or other similar arrangements), as well as enter into
contracts providing indemnification to the fullest extent authorized or
permitted by law and including as part thereof provisions with respect to any or
all of the foregoing to ensure the payment of such amounts as may become
necessary to effect indemnification as provided therein, or elsewhere; and

            (iii) the Corporation shall have the power to purchase and maintain
insurance on behalf of any agent of the Corporation against any liability
asserted against or incurred by the agent in such capacity or arising out of the
agent's status as such, whether or not the Corporation would have the power to
indemnify the agent against such liability under the

                                        2



provisions of these Articles of Incorporation, or at law; and in furtherance
thereof, the Corporation is authorized to the fullest extent permissible under
California law (as now or hereafter in effect) to own all of any portion of the
shares of the company issuing any such policy of insurance.

      No such bylaw, agreement or other form of indemnification shall be
interpreted as limiting in any manner the rights which such agents would have to
indemnification in the absence of such bylaw, agreement or other form of
indemnification.

                                   ARTICLE VII

      Any repeal or modification of the foregoing provisions of Articles V and
VI by the shareholders of the Corporation shall not adversely affect any right
or protection of a director of the Corporation existing at the time of such
repeal or modification.

      THIRD. The foregoing amendment and restatement of Articles of
Incorporation has been duly approved by the required vote of shareholders in
accordance with Section 902 of the California Corporations Code. The total
number of outstanding shares of the corporation is 1,600,000. The number of
shares voting in favor of the amendment equaled or exceeded the vote required.
The percentage vote required was more than 50%.

      I further declare under penalty of perjury under the laws of the State of
California that the matters set forth on this certificate are true and correct
of my own knowledge.

Date: June 18, 2003                       /s/ Tom Blakeley
                                          --------------------------------------
                                          Tom Blakeley, President and Secretary

                                        3



                          CERTIFICATE OF DETERMINATION
                                       OF
                            SERIES A PREFERRED STOCK
                                       OF
                           AMERICAN MOLD GUARD, INC.,
                            A CALIFORNIA CORPORATION

      The undersigned, Tom Blakeley, hereby certifies that:

      1.    He is the President and Secretary of American Mold Guard, Inc., a
California corporation (the "Corporation").

      2.    Pursuant to authority given by the Corporation's Articles of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recitals and resolutions:

                  WHEREAS, the Articles of Incorporation of the Corporation
      provides for a class of shares known as Preferred Stock, issuable from
      time to time in one or more series; and

                  WHEREAS, the Board of Directors is authorized to determine or
      alter the rights, preferences, privileges and restrictions granted to or
      imposed upon any wholly unissued series of Preferred Stock, to fix the
      number of shares constituting any such series, and to determine the
      designation thereof, or any of them; and

                  WHEREAS, the Board of Directors desires, pursuant to its
      authority as aforesaid, to determine and fix the rights, preferences and
      restrictions relating to the initial series of said Preferred Stock and
      the number of shares constituting the designation of said series;

                  NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors
      hereby fixes and determines the designation of, the number of shares
      constituting, and the rights, preferences, privileges and restrictions
      relating to, said initial series of Preferred Stock as follows:

                  (a)   The initial series of Preferred Stock shall be
                        designated "Series A Preferred Stock".

                  (b)   The number of shares constituting the Series A Preferred
                        Stock shall be 600,000.



                  (c)   The rights, preferences, privileges and restrictions
                        relating to the Series A Preferred Stock shall be as set
                        forth on Exhibit A attached hereto and by this reference
                        incorporated herein.

                  RESOLVED, FURTHER, that the President, and any officer
      designated by him, shall be, and hereby are, authorized to execute, verify
      and file a Certificate of Determination of Preferred Stock in accordance
      with California law.

      The authorized number of shares of Preferred Stock of the Corporation is
ten million (10,000,000); the number of shares constituting the Series A
Preferred Stock is six hundred thousand (600,000), none of which has been
issued.

      IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Designation on the 18th day of June 2003.

                                          /s/ Tom Blakeley
                                          --------------------------------------
                                          Tom Blakeley, President and Secretary

      The undersigned, Tom Blakeley, the President and Secretary of American
Mold Guard, Inc. declares under penalty of perjury that the matters set forth in
the foregoing Certificate of Determination are true of his own knowledge.

      Executed at Irvine, California on the 18th day of June 2003.

                                          /s/ Tom Blakeley
                                          --------------------------------------
                                          Tom Blakeley, President and Secretary

                                        2



                             DESIGNATION AND AMOUNT

      An aggregate of six hundred thousand (600,000) shares of the Preferred
Stock of American Mold Guard, Inc., a California corporation (the "Corporation")
shall be designated as "Series A Preferred Stock."

      1.    DIVIDENDS.

            A.    GENERAL OBLIGATION. When and as declared by the Board of
Directors of the Corporation and to the extent permitted under the General
Corporation Law of California, the Corporation will pay preferential dividends
to the holders of the Series A Preferred Stock. Except as otherwise provided
herein, dividends on each share of Series A Preferred Stock (a "Share") will
accrue cumulatively on a daily basis at the rate of eight percent (8%) per annum
of the Liquidation Value thereof from and including the date of issuance of such
Share, whether or not such dividends have been declared and whether or not there
are profits, surplus or other funds of the Corporation legally available for the
payment of dividends. The date on which the Corporation initially issues any
Share will be deemed to be the "Series A Original Issue Date" regardless of the
number of times transfer of such Share is made on the stock records maintained
by or for the Corporation and regardless of the number of certificates which may
be issued to evidence such Shares.

            B.    DIVIDEND REFERENCE DATES. To the extent not paid on the 15th
day of each June and December, beginning December 15, 2003 (the "Dividend
Reference Dates"), all dividends which have accrued on each Share then
outstanding during the annual period ending upon such Dividend Reference Date
will be added to the Liquidation Value of such Share and will remain a part
thereof until such dividends are paid.

            C.    PAYMENT OF DIVIDENDS. Dividends shall be paid by forwarding a
check, postage prepaid, to the address of each such holder (or in the case of
joint holders, to the address of either such holder) of Series A Preferred Stock
as shown on the books of the Corporation, unless such holder specifies another
address by written notice to the Corporation. The forwarding of such check will
satisfy all obligations of the Corporation with respect to such dividends,
unless such check is not paid upon timely presentation.

            D.    DISTRIBUTION OF PARTIAL DIVIDEND PAYMENTS. If at any time the
Corporation pays less than the total amount of dividends then accrued with
respect to the Series A Preferred Stock, such payment will be distributed among
the holders of a Share so that an equal amount will be paid with respect to each
outstanding Share.

                                    EXHIBIT A



            E.    OTHER DIVIDENDS. No dividend or other distribution shall be
paid, or declared and set apart for payment, other than dividends of Common
Stock on the Common Stock of the Corporation, on the shares of any class or
series of capital stock of the Corporation, other than the Corporation's Series
A Preferred Stock, until the dividend provided for in Section 1A hereinabove is
declared and paid, nor shall any shares of any class or series of such capital
stock be purchased, redeemed or otherwise acquired for value by the Corporation
or any subsidiary of the Corporation and no money shall be paid into or set
aside and made available for a sinking fund for the purchase, redemption or
acquisition thereof, without the written consent of the holders of a majority of
the outstanding shares of Series A Preferred Stock, given in person or by proxy,
either in writing or by vote at a meeting called for that purpose.

      2.    VOTING.

            Except as otherwise required by law or as set forth herein, the
holders of the Series A Preferred Stock shall, together with the holders of
shares of Common Stock, all voting as one class, posses voting power for the
election of directors and for all other purposes. In the exercise of voting
powers, holders of the Series A Preferred Stock shall be entitled to one vote
for each such share held. Notwithstanding the foregoing, the consent of the
holders of a majority of the shares of Series A Preferred Stock at the time
outstanding, given in person or by proxy, by a vote at a meeting called for the
purpose at which the holders of shares of the Series A Preferred Stock shall
vote together as a separate class, shall be necessary for authorizing,
effecting, or validating either of the following:

            (i)   the creation, authorization or issue of any shares of any
                  class of stock of the Company ranking prior to the shares of
                  the Series A Preferred Stock as to dividends or upon
                  liquidation or otherwise, or the reclassification of any
                  authorized stock of the Company into any such prior shares, or
                  the creation, authorization or issue of any obligation or
                  security convertible into or evidencing the right to purchase
                  any such prior shares; or

            (ii)  the amendment, alteration or repeal of any of the provisions
                  of the Company's Articles of Incorporation, as amended, or of
                  any certificate amendatory thereof or supplemental thereto, or
                  of the Company's Bylaws, as amended, so as to affect adversely
                  the preferences, rights or privileges of the Series A
                  Preferred Stock.

      3.    LIQUIDATION.

            Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, before any distribution or payment shall be
made to any person holding Common Stock or of any shares ranking junior to the
Series A Preferred Stock in respect of distribution of assets, the persons
holding Series A Preferred Stock will be entitled to be paid

                                        2

                                    EXHIBIT A



an amount in cash equal to $1.25 per share, plus any accrued and unpaid
cumulative dividends. Thereafter, holders of Series A Preferred Stock will not
be entitled to any further payment. If upon such liquidation, dissolution or
winding up, the assets of the Corporation are insufficient to pay the holders of
the Series A Preferred Stock the full amount in cash to which they shall be
entitled, all legally available funds of the Corporation will be distributed to
the persons holding Series A Preferred Stock in proportion to the amounts to
which each such person shall be entitled as aforesaid. The Corporation will mail
written notice of such liquidation, dissolution or winding up, not less than 60
days prior to the payment dates stated therein, to each person of record holding
Series A Preferred Stock (by air mail if addressed outside the United States).
Neither the consolidation or merger of the Corporation into or with any other
corporation or corporations, nor the sale or transfer by the Corporation of all
or any part of its assets, nor the reduction of the capital stock of the
Corporation, will be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this Section 3.

      4.    CONVERSION RIGHTS.

            Each share shall be convertible, at the option of the holder
thereof, at any time after the issuance of such share, into one (1) fully paid
and nonassessable share of Common Stock.

            If the number of outstanding shares of Common Stock have been
increased or decreased since the initial subscription and payment for the Series
A Preferred Stock by the holders thereof, by reason of any additional Common
Stock issuance, split, stock dividend, merger, consolidation or other capital
change or reorganization affecting the number of shares of Common Stock, the
number of shares of Common Stock to be issued on conversion to the holders of
the Series A Preferred Stock shall be adjusted so as to preserve fairly and
equitably, as far as reasonably possible, the original conversion rights of the
shares being converted.

            No adjustment in the conversion rate is required unless it would
result in at least a one percent (1%) increase or decrease in the conversion
rate, however, any adjustment not made is carried forward.

            If any capital reorganization, reclassification, consolidation,
merger or any sale of all or substantially all of the Corporation's assets to
another individual, partnership or corporation (collectively, any "Organic
Change") is effected in such a way that holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock, securities or
assets with respect to or in exchange for Common Stock, then, as a condition to

                                        3

                                    EXHIBIT A



such Organic Change, lawful and adequate provision (in form and substance
satisfactory to the holders of a majority of the Series A Preferred Stock then
outstanding) will be made whereby each of the holders of Series A Preferred
Stock will thereafter have the right to acquire and receive in lieu of shares of
Common Stock immediately theretofore acquirable and receivable upon the
conversion of such holder's Series A Preferred Stock, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for the number of shares of Common Stock immediately theretofore acquirable and
receivable upon conversion of the Series A Preferred Stock had such Organic
Change not taken place. In any such case, appropriate provision will be made
with respect to such holder's rights and interests to the end that the
provisions of this Section 4 and Section 3 will thereafter be applicable in
relation to any shares of stock, securities or assets thereafter deliverable
upon the conversion of the Series A Preferred Stock (including, in the case of
any consolidation, merger or sale in which the successor corporation or
purchasing corporation is other than the Corporation, an immediate adjustment of
the conversion ratio or price to the value for the Common Stock reflected by the
terms of such consolidation, merger or sale, and a corresponding immediate
adjustment in the number of shares of Common Stock acquirable and receivable
upon conversion of the Series A Preferred Stock, if the value so reflected is
less than the conversion ratio or price in effect immediately prior to such
consolidation, merger or sale). The Corporation will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets assumes by
written instrument (in form reasonably satisfactory to the holders of a majority
of the Series A Preferred Stock then outstanding), the obligation to deliver to
each such holder such shares of stock, securities, or assets as, in accordance
with the foregoing provision, such holder may be entitled to acquire.

            The holder of any shares of Series A Preferred Stock may exercise
the conversion rights granted by this Section by delivering to the Corporation
during regular business hours, the certificate or certificates for the shares to
be converted, duly endorsed for transfer to the Corporation (if required by it),
accompanied by written notice stating that the holder elects to convert such
shares. Conversion shall be deemed to have been effected on the date when such
delivery is made, and such date is referred to herein as the "Conversion Date."
As promptly as practicable thereafter the Corporation shall issue and deliver
to, or upon the written order of such holder, at such office or other place
designated by the Corporation, a certificate or certificates for the number of
full shares of Common Stock to which such holder is entitled together with a
scrip certificate or cash in lieu of any fraction of a share as provided
hereunder. The holder shall be deemed to have become a shareholder of record on
the next succeeding date on which the transfer books are open. Upon conversion
of only a portion of the number of shares of Series A Preferred Stock
represented by a certificate surrendered for conversion, the Corporation, upon
written order and at its own expense, shall issue and deliver to the holder of
the certificate so surrendered for conversion, a new certificate covering the
number of shares of Series A Preferred Stock representing the unconverted
portion of the certificate so surrendered.

                                        4

                                    EXHIBIT A



            No fractional shares of Common Stock shall be issued upon conversion
of shares of Series A Preferred Stock. If more than one share of Series A
Preferred Stock shall be surrendered for conversion at any one time by the same
holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
Series A Preferred Stock so surrendered. Instead of any fractional shares of
Common Stock which would otherwise be issuable upon conversion of any shares of
Series A Preferred Stock, the Corporation shall, in lieu of delivering the
fractional share therefor, at its option either (i) adjust the fractional
interest by payment to the holder of the converted Series A Preferred Stock in
an amount equal (computed to the nearest cent) to the then current market value
of the fractional interest or (ii) issue nondividend bearing and nonvoting scrip
certificates for fractions of a share which would otherwise be issuable, in form
and containing terms and conditions as determined by the Board of Directors, and
exchangeable, within the period following the date of issue as the Board of
Directors shall fix, together with other unexpired scrip certificates or like
tenor aggregating one or more full shares, for share certificates representing
the full share or shares.

            The Corporation shall at all times reserve and keep available, out
of its authorized but unissued Common Stock, solely for the purpose of effecting
the conversion of the Series A Preferred Stock, the full number of shares of
Common Stock deliverable upon the conversion of all Series A Preferred Stock
from time to time (subject to obtaining necessary director and shareholder
action), and in accordance with the laws of the State of California, increase
the authorized amount of its Common Stock if at any time the authorized number
of shares of its Common Stock remaining unissued shall not be sufficient to
permit the conversion of all of the shares of Series A Preferred Stock at the
time outstanding.

      5.    REDEMPTIONS.

            A.    REDEMPTION PRICE. For each Share which is to be redeemed, the
Corporation will be obligated to pay to the holder thereof an amount equal to
the Liquidation Value thereof (the "Redemption Price").

            B.    OPTIONAL REDEMPTIONS. The Corporation may at any time redeem
all or any portion of the Series A Preferred Stock then outstanding, at a price
per Share equal to the Redemption Price (the "Optional Redemptions"). Optional
Redemptions may be made only for all Shares then outstanding or for 50 Shares or
any whole multiple thereof. For any Optional Redemption, the "Number of Shares
to be Redeemed" for purposes of Section 5C hereinbelow will be the number of
Shares set forth in the Notice of Redemption referred to Section 5C hereinbelow.

                                        5

                                    EXHIBIT A



            C.    NOTICE OF REDEMPTION; PAYMENT OF REDEMPTION PRICE. The
Corporation will mail written notice (the "Notice of Redemption") of each
Optional Redemption to each Person who is the record holder of Shares (sometimes
referred to herein as the "Stockholders") not more than 120 nor less than 90
days prior to the date on which such redemption is to be made. Upon mailing any
Notice of Redemption which relates to an Optional Redemption, the Corporation
will become obligated (A) to redeem from each Stockholder the number of Shares
required to be redeemed from such Stockholder pursuant to Section 5B hereinabove
and (B) to send such Stockholder a cashier's or certified check in an amount
equal to the Redemption Price of such number of Shares at least 15 days prior to
the date specified for redemption in the notice. Upon receipt of such check, the
person holding the Shares to be redeemed will become obligated to surrender the
certificate(s) representing such number of Shares on or before the date
specified for redemption in the notice. In case fewer than the total number of
Shares represented by any certificate are redeemed, a new certificate
representing the number of unredeemed Shares will be issued to the person
holding the Shares thereof in such holder's or such holder's nominee's name,
without cost to such holder.

            D.    DIVIDENDS AFTER REDEMPTION DATE. No Share is entitled to any
dividends accruing after its Redemption Date. On such Redemption Date all rights
of the person holding such Share will cease, and such Share will not be deemed
to be outstanding.

            E.    REDEEMED OR OTHERWISE ACQUIRED SHARES. Any Shares which are
redeemed or otherwise acquired by the Corporation will be canceled and will not
be reissued, sold or transferred.

            F.    OTHER REDEMPTIONS OR ACQUISITIONS. The Corporation will
neither redeem nor otherwise acquire any Preferred Stock, except as expressly
authorized herein or pursuant to a purchase offer made pro rata to all holders
of Series A Preferred Stock.

            G.    REDEMPTION PURSUANT TO CALIFORNIA GENERAL CORPORATION LAW. The
Corporation will neither redeem nor otherwise acquire any Preferred Stock except
as expressly authorized under Sections 402, 500, 501, 502 and 503 of the
California General Corporation Law.

            H.    ACCRUED DIVIDENDS MUST BE PAID PRIOR TO ANY REDEMPTION. The
Corporation will not redeem any Series A Preferred Stock, unless all dividends
accrued on the outstanding Series A Preferred Stock through the immediately
preceding Dividend Reference Date have been paid in full.

                                        6

                                    EXHIBIT A



      6.    FULLY PAID AND NONASSESSABLE.

            The shares of Series A Preferred Stock, when issued, will be duly
and validly issued, fully paid and nonassessable.

      7.    RESTRICTIONS AND LIMITATIONS.

            A.    RESTRICTIONS AND LIMITATIONS. So long as any shares of
Series A Preferred Stock remain outstanding, the Corporation shall not, without
obtaining approval (by vote or written consent, as provided by law) of the
holders of all of the outstanding shares of Series A Preferred Stock:

                  (i)   Authorize or issue, or obligate itself to issue, any
other equity security (including any security convertible into or exercisable
for any equity security) on parity with, or senior to, the Series A Preferred
Stock as to dividend rights or liquidation preferences;

                  (ii)  Redeem, purchase or otherwise acquire (or pay into or
set aside for a sinking fund for such purpose) any of the Common Stock otherwise
than as permitted herein;

                  (iii) Effect any sale, lease, assignment, transfer, or other
conveyance of all or substantially all of the assets of the Corporation, or any
consolidation or merger involving the Corporation, unless the Corporation shall
be the continuing or surviving entity of such consolidation or merger; or

                  (iv)  Effect any reclassification or other change of any of
the Corporation's outstanding capital stock, or any recapitalization.

            B.    NO REISSUANCE OF SERIES A PREFERRED STOCK. No share or shares
of Series A Preferred Stock acquired by the Corporation by reason of purchase or
otherwise shall be reissued, and all such shares shall be canceled, retired and
eliminated from the shares which the Corporation shall be authorized to issue.

      8.    MISCELLANEOUS.

            A.    CERTAIN DEFINITIONS.

                  "COMMON STOCK" means collectively, the Corporation's common
stock and any capital stock of any class of the Corporation hereafter authorized
which is not limited to a fixed sum or percentage of par or stated value in
respect to the rights of the

                                        7

                                    EXHIBIT A



holders thereof to participate in dividends or in the distribution of assets
upon any liquidation, dissolution or winding up of the Corporation.

                  "LIQUIDATION VALUE" of any Share as of any particular date
will be equal to the sum of $1.25 plus any unpaid dividends on such Share added
to the Liquidation Value of such Share on any Dividend Reference Date and not
thereafter paid; and, in the event of any liquidation, dissolution or winding up
of the Corporation or the redemption of such Shares, unpaid dividends on such
Shares will be added to the Liquidation Value of such Share on the payment date
in any liquidation, dissolution or winding up, or on the Redemption Date, as the
case may be, accrued to the close of business on such payment date or Redemption
Date.

                  "PERSON" means an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.

                  "REDEMPTION DATE" as to any Share means the date specified in
the notice of any redemption at the Corporation's option; PROVIDED that no such
date will be a Redemption Date unless the applicable Redemption Price is
actually paid in full on or before such date, and if not so paid in full, the
Redemption Date will be the date on which such Redemption Price is fully paid.

                  "SUBSIDIARY" means any corporation of which shares of stock
having at least a majority of the general voting power in electing the board of
directors is, at the time as of which any determination is being made, owned by
the Corporation either directly or indirectly through Subsidiaries.

            B.    NOTICES. All notices referred to herein, except as otherwise
expressly provided, will be hand delivered or made by registered or certified
mail, return receipt requested, postage prepaid and shall be deemed to have been
given when so hand delivered or mailed.

            C.    REGISTRATION OF TRANSFER. The Corporation will keep at its
principal office a register for the registration of Series A Preferred Stock.
Upon the surrender of any certificate representing Series A Preferred Stock at
such place, the Corporation will, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefore representing in the aggregate
the number of shares of Series A Preferred Stock represented by the surrendered
certificate. Each such new certificate will be registered in such name and will
represent such number of shares of Series A Preferred Stock as is requested by
the holder of the surrendered certificate.

                                        8

                                    EXHIBIT A



            D.    REPLACEMENT. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit of the registered holder, without bond, will be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of Series A Preferred Stock, the
Corporation will (at its expense) execute and deliver in lieu of such
certificate a new certificate representing the number of shares of Series A
Preferred Stock represented by such lost, stolen, destroyed or mutilated
certificate.

            E.    AMENDMENT AND WAIVER. No amendment, modification or waiver of
this Certificate of Determination will be binding or effective with respect to
(i) any provision affecting or relating to dividends, conversion or redemption
without the prior written consent of holders of at least 60% of the Series A
Preferred Stock outstanding at the time such action is taken, or (ii) any other
provision of this Certificate of Determination without the prior written consent
of holders of two-thirds of the Series A Preferred Stock outstanding at the time
such action is taken.

                                        9

                                    EXHIBIT A



                                     AMENDED
                          CERTIFICATE OF DETERMINATION
                                       OF
                            SERIES A PREFERRED STOCK
                                       OF
                           AMERICAN MOLD GUARD, INC.,
                            A CALIFORNIA CORPORATION

      The undersigned, Tom Blakeley, hereby certifies that:

      1.    He is the President and Secretary of American Mold Guard, Inc., a
California corporation (the "Corporation").

      2.    Pursuant to authority given by the Corporation's Articles of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recitals and resolutions:

                  WHEREAS, the Articles of Incorporation of the Corporation
      provides for a class of shares known as Preferred Stock, issuable from
      time to time in one or more series; and

                  WHEREAS, the Board of Directors is authorized to determine or
      alter the rights, preferences, privileges and restrictions granted to or
      imposed upon any wholly unissued series of Preferred Stock, to fix the
      number of shares constituting any such series, and to determine the
      designation thereof, or any of them; and

                  WHEREAS, pursuant to its authority to determine the rights,
      preferences, privileges and restrictions granted to or imposed upon any
      wholly unissued series of Preferred Stock, to fix the number of shares
      constituting any such series, and to determine the designation thereof, or
      any of them, the Board of Directors, on or about June 23, 2003, fixed the
      rights, preferences and restrictions relating to an initial series of
      Preferred Stock designated as "Series A Preferred Stock"; and

                  WHEREAS, the Board of Directors now desire to amend and change
      the rights, preferences and privileges or restrictions of the Series A
      Preferred Stock;

                  NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors
      hereby amends and changes the number of shares constituting, and the
      rights, preferences, privileges and restrictions relating to, the Series A
      Preferred Stock as follows:



                  (a)   The number of shares constituting the Series A Preferred
                        Stock shall be 480,000.

                  (c)   The rights, preferences, privileges and restrictions
                        relating to the Series A Preferred Stock shall be
                        amended and changed as set forth on Exhibit A attached
                        hereto and by this reference incorporated herein.

                  RESOLVED, FURTHER, that the President, and any officer
      designated by him, shall be, and hereby are, authorized to execute, verify
      and file an Amended Certificate of Determination of Preferred Stock in
      accordance with California law.

      The foregoing amendment to the Certificate of Determination of Series A
Preferred Stock has been duly approved by the required vote of shareholders in
accordance with Section 902 and 903 of the California Corporations Code. The
total number of outstanding shares of common stock of the corporation is
1,600,000 and the total number of outstanding shares of Series A Preferred Stock
is 260,000. The number of shares of common stock voting in favor of the
amendment equaled or exceeded the vote required and the total number of shares
of Series A Preferred Stock voting in favor of the amendment equaled or exceeded
the vote required. The percentage vote required of common stock was more than
50% and the percentage vote of Series A Preferred Stock was more than 50%.

      IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Designation on the 25th day of August 2003.

                                           /s/ Tom Blakeley
                                           -------------------------------------
                                           Tom Blakeley, President and Secretary

      The undersigned, Tom Blakeley, the President and Secretary of American
Mold Guard, Inc. declares under penalty of perjury that the matters set forth in
the foregoing Certificate of Determination are true of his own knowledge.

      Executed at Irvine, California on the 25th day of August 2003.

                                           /s/ Tom Blakeley
                                           -------------------------------------
                                           Tom Blakeley, President and Secretary

                                       2



                             DESIGNATION AND AMOUNT

      An aggregate of four hundred eighty thousand (480,000) shares of the
Preferred Stock of American Mold Guard, Inc., a California corporation (the
"Corporation") shall be designated as "Series A Preferred Stock."

      1.    DIVIDENDS.

            A.    GENERAL OBLIGATION. When and as declared by the Board of
Directors of the Corporation and to the extent permitted under the General
Corporation Law of California, the Corporation will pay preferential dividends
to the holders of the Series A Preferred Stock. Except as otherwise provided
herein, dividends on each share of Series A Preferred Stock (a "Share") will
accrue cumulatively on a daily basis at the rate of eight percent (8%) per annum
of the Liquidation Value thereof from and including the date of issuance of such
Share, whether or not such dividends have been declared and whether or not there
are profits, surplus or other funds of the Corporation legally available for the
payment of dividends. The date on which the Corporation initially issues any
Share will be deemed to be the "Series A Original Issue Date" regardless of the
number of times transfer of such Share is made on the stock records maintained
by or for the Corporation and regardless of the number of certificates which may
be issued to evidence such Shares.

            B.    DIVIDEND REFERENCE DATES. To the extent not paid on the 15th
day of each June and December, beginning December 15, 2003 (the "Dividend
Reference Dates"), all dividends which have accrued on each Share then
outstanding during the annual period ending upon such Dividend Reference Date
will be added to the Liquidation Value of such Share and will remain a part
thereof until such dividends are paid.

            C.    PAYMENT OF DIVIDENDS. Dividends shall be paid by forwarding a
check, postage prepaid, to the address of each such holder (or in the case of
joint holders, to the address of either such holder) of Series A Preferred Stock
as shown on the books of the Corporation, unless such holder specifies another
address by written notice to the Corporation. The forwarding of such check will
satisfy all obligations of the Corporation with respect to such dividends,
unless such check is not paid upon timely presentation.

            D.    DISTRIBUTION OF PARTIAL DIVIDEND PAYMENTS. If at any time the
Corporation pays less than the total amount of dividends then accrued with
respect to the Series A Preferred Stock, such payment will be distributed among
the holders of a Share so that an equal amount will be paid with respect to each
outstanding Share.

            E.    OTHER DIVIDENDS. No dividend or other distribution shall be
paid, or declared and set apart for payment, other than dividends of Common
Stock on the Common Stock of the Corporation, on the shares of any class or
series of capital stock of the Corporation,

                                    EXHIBIT A



other than the Corporation's Series A Preferred Stock, until the dividend
provided for in Section 1A hereinabove is declared and paid, nor shall any
shares of any class or series of such capital stock be purchased, redeemed or
otherwise acquired for value by the Corporation or any subsidiary of the
Corporation and no money shall be paid into or set aside and made available for
a sinking fund for the purchase, redemption or acquisition thereof, without the
written consent of the holders of all of the outstanding shares of Series A
Preferred Stock, given in person or by proxy, either in writing or by vote at a
meeting called for that purpose.

      2.    VOTING.

            Except as otherwise required by law or as set forth herein, the
holders of the Series A Preferred Stock shall, together with the holders of
shares of Common Stock, all voting as one class, posses voting power for the
election of directors and for all other purposes. In the exercise of voting
powers, holders of the Series A Preferred Stock shall be entitled to one vote
for each such share held. Notwithstanding the foregoing, the consent of the
holders of all the shares of Series A Preferred Stock at the time outstanding,
given in person or by proxy, by a vote at a meeting called for the purpose at
which the holders of shares of the Series A Preferred Stock shall vote together
as a separate class, shall be necessary for authorizing, effecting, or
validating either of the following:

            (i)   the creation, authorization or issue of any shares of any
                  class of stock of the Corporation ranking prior to or on
                  parity with the shares of the Series A Preferred Stock as to
                  dividends or upon liquidation or otherwise, or the
                  reclassification of any authorized stock of the Corporation
                  into any such prior shares, or the creation, authorization or
                  issue of any obligation or security convertible into or
                  evidencing the right to purchase any such prior shares; or

            (ii)  take any action so as to affect adversely the preferences,
                  rights or privileges of the Series A Preferred Stock.

      3.    LIQUIDATION.

            (a)   Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any distribution or
payment shall be made to any person holding Common Stock or of any shares
ranking junior to the Series A Preferred Stock in respect of distribution of
assets, the persons holding Series A Preferred Stock will be entitled to be paid
an amount in cash equal to $1.25 per share, plus any accrued and unpaid
cumulative dividends. If upon such liquidation, dissolution or winding up, the
assets of the Corporation are insufficient to pay the holders of the Series A
Preferred Stock the full amount in cash to which they shall be entitled, all
legally available funds of the Corporation will be distributed to the persons
holding Series A Preferred Stock in proportion to the amounts to which each such
person shall be entitled as aforesaid. The Corporation will mail written notice
of such

                                        2

                                    EXHIBIT A



liquidation, dissolution or winding up, not less than 60 days prior to the
payment dates stated therein, to each person of record holding Series A
Preferred Stock (by air mail if addressed outside the United States).

            (b)   After payment to the holders of Series A Preferred Stock of
the amounts set forth in Section 3 (a) above, the entire remaining assets and
funds of the Corporation legally available for distribution, if any, shall be
distributed among the holders of the Common Stock and the Series A Preferred
Stock in proportion to the shares of Common Stock then held by them and the
shares of Common Stock which they then have the right to acquire upon conversion
of the shares of Series A Preferred Stock then held by them.

            (c)   For purposes of this Section 3, (i) any acquisition of the
Corporation by means of merger or other form of corporate reorganization in
which outstanding shares of the Corporation are exchanged for securities or
other consideration issued, or caused to be issued, by the acquiring corporation
(other than a mere reincorporation transaction) or (ii) a sale of all or
substantially all of the assets of the Corporation, shall be treated as a
liquidation, dissolution or winding up of the Corporation and shall entitle the
holders of Series A Preferred Stock and Common Stock to receive at the closing
in cash, securities or other property (valued as provided in Section 3(d) below)
amounts as specified in Sections 3(a) through 3(b) above.

            (d)   Whenever the distribution provided for in this Section 3 shall
be payable in securities or property other than cash, the value of such
distribution shall be the fair market value of such securities or other property
as determined in good faith by the Board of Directors.

      4.    CONVERSION.

            A.    Right to Convert. Each share shall be convertible, at the
option of the holder thereof, at any time after the issuance of such share, into
one (1) fully paid and nonassessable share of Common Stock.

            B.    AUTOMATIC CONVERSION. Each share shall automatically be
converted into one (1) fully paid and nonassessable share of Common Stock
immediately upon the closing of the sale of the Corporation's Common Stock in a
firm commitment, underwritten public offering registered under the Securities
Act of 1933, as amended ("Securities Act"), other than a registration relating
solely to a transaction under Rule 145 under such Act (or any successor thereto)
or to an employee benefit plan of the Corporation, at a public offering price
(prior to underwriters' discounts and expenses) equal to or exceeding $4.00 per
share of Common Stock (as adjusted for any stock dividends, combinations or
splits with respect to such shares) and the aggregate proceeds to the
Corporation and/or to any selling shareholders (after deduction for
underwriters' discounts and expenses relating to the issuance, including without
limitation fees of the Corporation's counsel) of which exceed $10,000,000.

                                        3

                                    EXHIBIT A



            C.    MECHANICS OF CONVERSION.

                  (i)   If the number of outstanding shares of Common Stock have
been increased or decreased since the initial subscription and payment for the
Series A Preferred Stock by the holders thereof, by reason of any additional
Common Stock issuance, split, stock dividend, merger, consolidation or other
capital change or reorganization affecting the number of shares of Common Stock,
the number of shares of Common Stock to be issued on conversion to the holders
of the Series A Preferred Stock shall be adjusted so as to preserve fairly and
equitably, as far as reasonably possible, the original conversion rights of the
shares being converted.

                  (ii)  No adjustment in the conversion rate is required unless
it would result in at least a one percent (1%) increase or decrease in the
conversion rate, however, any adjustment not made is carried forward.

                  (iii) If any capital reorganization, reclassification,
consolidation, merger or any sale of all or substantially all of the
Corporation's assets to another individual, partnership or corporation
(collectively, any "Organic Change") is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition to such Organic Change, lawful and adequate
provision (in form and substance satisfactory to the holders of a majority of
the Series A Preferred Stock then outstanding) will be made whereby each of the
holders of Series A Preferred Stock will thereafter have the right to acquire
and receive in lieu of shares of Common Stock immediately theretofore acquirable
and receivable upon the conversion of such holder's Series A Preferred Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon conversion of the Series A Preferred
Stock had such Organic Change not taken place. In any such case, appropriate
provision will be made with respect to such holder's rights and interests to the
end that the provisions of this Section 4 and Section 3 will thereafter be
applicable in relation to any shares of stock, securities or assets thereafter
deliverable upon the conversion of the Series A Preferred Stock (including, in
the case of any consolidation, merger or sale in which the successor corporation
or purchasing corporation is other than the Corporation, an immediate adjustment
of the conversion ratio or price to the value for the Common Stock reflected by
the terms of such consolidation, merger or sale, and a corresponding immediate
adjustment in the number of shares of Common Stock acquirable and receivable
upon conversion of the Series A Preferred Stock, if the value so reflected is
less than the conversion ratio or price in effect immediately prior to such
consolidation, merger or sale). The Corporation will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such

                                        4

                                    EXHIBIT A



assets assumes by written instrument (in form reasonably satisfactory to the
holders of a majority of the Series A Preferred Stock then outstanding), the
obligation to deliver to each such holder such shares of stock, securities, or
assets as, in accordance with the foregoing provision, such holder may be
entitled to acquire.

                  (iv)  In the event the Corporation, at any time after the
Original Issue Date, shall issue Additional Shares of Common Stock without
consideration or for a consideration per share less than the Threshold Amount
(as defined below), then and in such event the number of shares of Common Stock
to be issued on conversion to the holders of Series A Preferred Stock shall be
adjusted to reflect such issuance of Additional Shares of Common Stock by
multiplying the Threshold Amount by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such issue
plus the number of shares of Common Stock which the aggregate consideration
received by the Corporation for the total number of Additional Shares of Common
Stock so issued would purchase for the Threshold Amount per share, and the
denominator of which shall be number of shares of Common Stock outstanding
immediately prior to such issue plus the number of such Additional Shares of
Common Stock so issued. For the purpose of the above calculation, the number of
shares of Common Stock outstanding immediately prior to such issue shall be
calculated on a fully diluted basis, as if all shares of Series A Preferred
Stock and all Convertible Securities had been fully converted into shares of
Common Stock immediately prior to such issuance and any outstanding warrants,
options or other rights for the purchase of shares of stock or convertible
securities had been fully exercised immediately prior to such issuance (and the
resulting securities fully converted into shares of Common Stock, if so
convertible) as of such date, but not including in such calculation any
additional shares of Common Stock issuable with respect to shares of Series A
Preferred Stock, Convertible Securities, or outstanding options, warrants or
other rights for the purchase of shares of stock or convertible securities,
solely as a result of the adjustment of the conversion ratio for the Series A
Preferred Stock resulting from the issuance of Additional Shares of Common Stock
causing such adjustment. The "Threshold Amount" shall initially be $1.25 and
shall be adjusted from time to time commensurately with each change in the
conversion ratio, as initially specified in Section 4(A), including without
limitation, changes contemplated under Section 4(C)(i), so as to preserve fairly
and equitably, as far as reasonably possible, the original rights of the holders
of the Series A Preferred Stock.

                  (v)   The holder of any shares of Series A Preferred Stock may
exercise the conversion rights granted by this Section by delivering to the
Corporation during regular business hours, the certificate or certificates for
the shares to be converted, duly endorsed for transfer to the Corporation (if
required by it), accompanied by written notice stating that the holder elects to
convert such shares. Conversion shall be deemed to have been effected on the
date when such delivery is made, and such date is referred to herein as the
"Conversion Date." As promptly as practicable thereafter the Corporation shall
issue and deliver to, or upon the written order of such holder, at such office
or other place designated by the Corporation, a

                                        5

                                    EXHIBIT A



certificate or certificates for the number of full shares of Common Stock to
which such holder is entitled together with a scrip certificate or cash in lieu
of any fraction of a share as provided hereunder. The holder shall be deemed to
have become a shareholder of record on the next succeeding date on which the
transfer books are open. Upon conversion of only a portion of the number of
shares of Series A Preferred Stock represented by a certificate surrendered for
conversion, the Corporation, upon written order and at its own expense, shall
issue and deliver to the holder of the certificate so surrendered for
conversion, a new certificate covering the number of shares of Series A
Preferred Stock representing the unconverted portion of the certificate so
surrendered.

                  (vi)  No fractional shares of Common Stock shall be issued
upon conversion of shares of Series A Preferred Stock. If more than one share of
Series A Preferred Stock shall be surrendered for conversion at any one time by
the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Series A Preferred Stock so surrendered. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion of any
shares of Series A Preferred Stock, the Corporation shall, in lieu of delivering
the fractional share therefor, at its option either (i) adjust the fractional
interest by payment to the holder of the converted Series A Preferred Stock in
an amount equal (computed to the nearest cent) to the then current market value
of the fractional interest or (ii) issue nondividend bearing and nonvoting scrip
certificates for fractions of a share which would otherwise be issuable, in form
and containing terms and conditions as determined by the Board of Directors, and
exchangeable, within the period following the date of issue as the Board of
Directors shall fix, together with other unexpired scrip certificates or like
tenor aggregating one or more full shares, for share certificates representing
the full share or shares.

                  (vii) The Corporation shall at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the
purpose of effecting the conversion of the Series A Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of all Series A
Preferred Stock from time to time (subject to obtaining necessary director and
shareholder action), and in accordance with the laws of the State of California,
increase the authorized amount of its Common Stock if at any time the authorized
number of shares of its Common Stock remaining unissued shall not be sufficient
to permit the conversion of all of the shares of Series A Preferred Stock at the
time outstanding.

      5.    FULLY PAID AND NONASSESSABLE.

            The shares of Series A Preferred Stock, when issued, will be duly
and validly issued, fully paid and nonassessable.

                                        6

                                    EXHIBIT A



      6.    RESTRICTIONS AND LIMITATIONS.

            A.    RESTRICTIONS AND LIMITATIONS. So long as any shares of Series
A Preferred Stock remain outstanding, the Corporation shall not, without
obtaining approval (by vote or written consent, as provided by law) of the
holders of all of the outstanding shares of Series A Preferred Stock:

                  (i)   Authorize or issue, or obligate itself to issue, any
other equity security (including any security convertible into or exercisable
for any equity security) on parity with, or senior to, the Series A Preferred
Stock as to dividend rights or liquidation preferences;

                  (ii)  Redeem, purchase or otherwise acquire (or pay into or
set aside for a sinking fund for such purpose) any of the Common Stock otherwise
than as permitted herein;

                  (iii) Effect any sale, lease, assignment, transfer, or other
conveyance of all or substantially all of the assets of the Corporation, or any
consolidation or merger involving the Corporation, unless the Corporation shall
be the continuing or surviving entity of such consolidation or merger; or

                  (iv)  Effect any reclassification or other change of any of
the Corporation's outstanding capital stock, or any recapitalization.

            B.    NO REISSUANCE OF SERIES A PREFERRED STOCK. No share or shares
of Series A Preferred Stock acquired by the Corporation by reason of purchase or
otherwise shall be reissued, and all such shares shall be canceled, retired and
eliminated from the shares which the Corporation shall be authorized to issue.

      7.    MISCELLANEOUS.

            A.    CERTAIN DEFINITIONS.

                  "ADDITIONAL SHARES OF COMMON STOCK" means all shares of Common
Stock issued by the Corporation after the Original Issue Date, including,
without limitation, shares of Common Stock to be issued after the Original Issue
Date upon exercise or conversion of any option, warrant or other security
exchangeable for or convertible into shares of Common Stock, other than shares
of Common Stock issued or issuable:

                  (i)   upon conversion of shares of Series A Preferred Stock;

                  (ii)  to officers, directors or employees of, or consultants
to, the Corporation pursuant to stock option, equity incentive or stock purchase
plans or agreements on terms approved by the Board of Directors; or

                                        7

                                    EXHIBIT A



                  (iii) as a dividend or distribution on Series A Preferred
Stock.

                  "COMMON STOCK" means collectively, the Corporation's common
stock and any capital stock of any class of the Corporation hereafter authorized
which is not limited to a fixed sum or percentage of par or stated value in
respect to the rights of the holders thereof to participate in dividends or in
the distribution of assets upon any liquidation, dissolution or winding up of
the Corporation.

                  "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares (other than Common Stock and Series A Preferred Stock) or
other securities convertible into or exchangeable for Common Stock.

                  "LIQUIDATION VALUE" of any Share as of any particular date
will be equal to the sum of $1.25 plus any accrued, but unpaid dividends on such
Share which otherwise would be added to the Liquidation Value of such Share on
that date if that date were deemed a Dividend Reference Date; and, in the event
of any liquidation, dissolution or winding up of the Corporation or the
redemption of such Shares, unpaid dividends on such Shares will be added to the
Liquidation Value of such Share on the payment date in any liquidation,
dissolution or winding up (as contemplated in Section 3 hereof), accrued to the
close of business on such payment date.

                  "ORIGINAL ISSUE DATE" shall mean the date on which the first
share of Series A Preferred Stock was issued.

                  "PERSON" means an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.

                  "SUBSIDIARY" means any corporation of which shares of stock
having at least a majority of the general voting power in electing the board of
directors is, at the time as of which any determination is being made, owned by
the Corporation either directly or indirectly through Subsidiaries.

            B.    NOTICES. All notices referred to herein, except as otherwise
expressly provided, will be hand delivered or made by registered or certified
mail, return receipt requested, postage prepaid and shall be deemed to have been
given when so hand delivered or mailed.

            C.    REGISTRATION OF TRANSFER. The Corporation will keep at its
principal office a register for the registration of Series A Preferred Stock.
Upon the surrender of any certificate representing Series A Preferred Stock at
such place, the Corporation will, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's

                                        8

                                    EXHIBIT A



expense) a new certificate or certificates in exchange therefore representing in
the aggregate the number of shares of Series A Preferred Stock represented by
the surrendered certificate. Each such new certificate will be registered in
such name and will represent such number of shares of Series A Preferred Stock
as is requested by the holder of the surrendered certificate.

            D.    REPLACEMENT. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit of the registered holder, without bond, will be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of Series A Preferred Stock, the
Corporation will (at its expense) execute and deliver in lieu of such
certificate a new certificate representing the number of shares of Series A
Preferred Stock represented by such lost, stolen, destroyed or mutilated
certificate.

            E.    AMENDMENT AND WAIVER. No amendment, modification or waiver of
this Certificate of Determination will be binding or effective with respect to
(i) any provision affecting or relating to dividends, conversion or redemption
without the prior written consent of holders of at least 60% of the Series A
Preferred Stock outstanding at the time such action is taken, or (ii) any other
provision of this Certificate of Determination without the prior written consent
of holders of two-thirds of the Series A Preferred Stock outstanding at the time
such action is taken.

                                        9

                                    EXHIBIT A



                          CERTIFICATE OF DETERMINATION
                                       OF
                            SERIES B PREFERRED STOCK
                                       OF
                           AMERICAN MOLD GUARD, INC.,
                            A CALIFORNIA CORPORATION

      The undersigned, Bradley Barnes and Tom Blakeley, hereby certify,
respectively, that:

      1.    They are the President and Secretary respectively, of American Mold
Guard, Inc., a California corporation (the "Corporation").

      2.    Pursuant to authority given by the Corporation's Articles of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recitals and resolutions:

                  WHEREAS, the Articles of Incorporation of the Corporation
      provides for a class of shares known as Preferred Stock, issuable from
      time to time in one or more series; and

                  WHEREAS, the Articles of Incorporation provide that the
      initial series of Preferred Stock shall consist of 480,000 shares
      designated "Series A Preferred Stock," which series has been issued, and
      that the Board of Directors is authorized within the limitations and
      restrictions stated in the Articles of Incorporation to determine or alter
      the rights, preferences, privileges, and restrictions granted to or
      imposed upon any wholly unissued series of Preferred Stock, to fix the
      number of shares constituting any such series, and to determine the
      designation thereof, except Series A; and

                  WHEREAS, the Board of Directors of the Corporation desires,
      pursuant to its authority, to fix the terms of a second series of
      Preferred Stock, the number of shares constituting that series, and the
      designation of that series.

                  NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors
      hereby fixes and determines the designation of, the number of shares
      constituting, and the rights, preferences, privileges and restrictions
      relating to, the second series of Preferred Stock as follows:

                  (a)   The second series of Preferred Stock of this Corporation
                        shall be designated and known as "Series B Preferred
                        Stock."



                  (b)   The number of shares constituting the Series B Preferred
                        Stock shall be 500,000.

                  (c)   The rights, preferences, privileges and restrictions
                        relating to the Series B Preferred Stock shall be as set
                        forth on Exhibit A attached hereto and by this reference
                        incorporated herein.

                  RESOLVED, FURTHER, that the President, and any officer
      designated by him, shall be, and hereby are, authorized to execute, verify
      and file a Certificate of Determination of Series B Preferred Stock in
      accordance with California law.

      3.    The authorized number of shares of Preferred Stock of the
Corporation is 10,000,000, and the number of shares of Preferred Stock
constituting Series B Preferred Stock, none of which has been issued, is
500,000.

      IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Designation on the 28th day of February 2004.

                                             /s/ Bradley Barnes
                                             -----------------------------------
                                             Bradley Barnes, President

                                             /s/ Tom Blakeley
                                             -----------------------------------
                                             Tom Blakeley, Secretary

      The undersigned, Bradley Barnes and Tom Blakeley, the President and
Secretary, respectively, of American Mold Guard, Inc. declare under penalty of
perjury that the matters set forth in the foregoing Certificate of Determination
of Series B Preferred Stock are true of their own knowledge.

      Executed at Irvine, California on the 28th day of February 2004.

                                             /s/ Bradley Barnes
                                             -----------------------------------
                                             Bradley Barnes, President

                                             /s/ Tom Blakeley
                                             -----------------------------------
                                             Tom Blakeley, Secretary

                                        2



                             DESIGNATION AND AMOUNT

      An aggregate of five hundred thousand (500,000) shares of the Preferred
Stock of American Mold Guard, Inc., a California corporation (the "Corporation")
shall be designated as "Series B Preferred Stock."

      1.    DIVIDENDS.

            A.    GENERAL OBLIGATION. When and as declared by the Board of
Directors of the Corporation and to the extent permitted under the General
Corporation Law of California, the Corporation will pay preferential dividends
to the holders of the Series B Preferred Stock. Except as otherwise provided
herein, dividends on each share of Series B Preferred Stock. (a "Series B
Share") will accrue cumulatively on a daily basis at the rate of eight percent
(8%) per annum of the Liquidation Value thereof from and including the date of
issuance of such Series B Share, whether or not such dividends have been
declared and whether or not there are profits, surplus or other funds of the
Corporation legally available for the payment of dividends. The date on which
the Corporation initially issues any Series B Share will be deemed to be the
"Series B Original Issue Date" regardless of the number of times transfer of
such Series B Share is made on the stock records maintained by or for the
Corporation and regardless of the number of certificates which may be issued to
evidence such Series B Shares.

            B.    DIVIDEND REFERENCE DATES. To the extent not paid on the 15th
day of each June and December, beginning June 15, 2004 (the "Dividend Reference
Dates"), all dividends which have accrued on each Series B Share then
outstanding during the annual period ending upon such Dividend Reference Date
will be added to the Liquidation Value of such Series B Share and will remain a
part thereof until such dividends are paid.

            C.    PAYMENT OF DIVIDENDS. Dividends shall be paid by forwarding a
check, postage prepaid, to the address of each such holder (or in the case of
joint holders, to the address of either such holder) of Series B Preferred Stock
as shown on the books of the Corporation, unless such holder specifies another
address by written notice to the Corporation. The forwarding of such check will
satisfy all obligations of the Corporation with respect to such dividends,
unless such check is not paid upon timely presentation.

            D.    DISTRIBUTION OF PARTIAL DIVIDEND PAYMENTS. If at any time the
Corporation pays less than the total amount of dividends then accrued with
respect to the Series B Preferred Stock, such payment will be distributed among
the holders of a Series B Share so that an equal amount will be paid with
respect to each outstanding Series B Share.

            E.    RESTRICTIONS ON DIVIDEND PAYMENTS. All shares of Common Stock
shall rank junior to the Series B Preferred Stock as to dividends. The Series B
Preferred Stock shall rank junior to the Series A Preferred Stock as to
dividends.

                                    EXHIBIT A



      So long as any Series B Shares remain outstanding, no dividend shall be
paid or declared, or declared and set apart for payment, or other distribution
made, on the shares of any class of stock ranking, as to dividend rights, junior
to the Series B Preferred Stock, nor shall any shares of any class of stock (or
series thereof) of the corporation ranking, as to dividend rights, junior to, or
on parity with the Series B Preferred Stock, be purchased, redeemed or otherwise
acquired for value by the Corporation, unless dividends on the Series B
Preferred Stock shall have been declared and paid, or declared and set apart for
payment, for all past Series B Dividend Reference Dates ending immediately prior
to the date on which such dividend, distribution, purchase, redemption or
acquisition is to occur and the then current Series B Dividend Reference Date;
provided, however, that the foregoing restriction shall not apply (a) to the
declaration and payment, on shares ranking junior to the Series B Preferred
Stock as to dividends rights, of dividends payable solely in shares of stock of
any class of shares ranking junior to the Series B Preferred Stock as to
dividend rights or, (b) to the acquisition of any shares ranking junior to the
Series B Preferred Stock as to dividend rights through application of the
proceeds of the issue and sale of any class of any shares ranking junior to, or
on a parity, with the Series B Preferred Stock as to dividends rights sold at or
about the time of such acquisition. No dividends shall be paid or declared, or
declared and set apart for payment, or other distribution made on any shares of
any class of stock (or series thereof) of the Corporation ranking, as to
dividend rights, on a parity with the Series B Preferred Stock for any dividend
period unless, at the same time, a like proportion of dividends for the same or
similar dividend period, ratably in proportion to the respective annual dividend
rate fixed therefore, shall be paid or declared, or declared and set apart for
payment, on all shares of Series B Preferred Stock.

      2.    VOTING.

            Except as otherwise required by law or as set forth herein, the
holders of the Series B Preferred Stock shall, together with the holders of
shares of Common Stock, all voting as one class, posses voting power for the
election of directors and for all other purposes. In the exercise of voting
powers, holders of the Series B Preferred Stock shall be entitled to one vote
for each such share held. Notwithstanding the foregoing, the consent of the
holders of all the shares of Series B Preferred Stock at the time outstanding,
given in person or by proxy, by a vote at a meeting called for the purpose at
which the holders of shares of the Series B Preferred Stock shall vote together
as a separate class, shall be necessary for authorizing, effecting, or
validating either of the following:

            (i)   the creation, authorization or issue of any shares of any
                  class of stock of the Corporation ranking prior to or on
                  parity with the shares of the Series B Preferred Stock as to
                  dividends or upon liquidation or otherwise, or the
                  reclassification of any authorized stock of the Corporation
                  into any such prior shares, or the creation, authorization or
                  issue of any obligation or security convertible into or
                  evidencing the right to purchase any such prior shares; or

                                        2

                                    EXHIBIT A



            (ii)  take any action so as to affect adversely the preferences,
                  rights or privileges of the Series B Preferred Stock.

      3.    LIQUIDATION. In the event of a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, each holder of Series B Preferred
Stock shall be entitled to receive out of the assets of the Corporation
available for distribution to shareholders, after payment in full to the holders
of Series A Preferred Stock an amount per share equal to, but no more than, the
Series A Liquidation Value (as hereinafter defined), and after payment in full
of all amounts owing to the holders of all shares of all classes or series of
stock having rights senior to the Series B Preferred Stock upon the liquidation,
dissolution or winding up of the Corporation, an amount per share equal to, but
no more than, the Series B Liquidation Value (as hereinafter defined). Until
payment to the holders of the Series B Preferred Stock of all amounts owing as
aforesaid, or until money or other assets sufficient for such payment shall have
been set apart from its other funds and assets for payment by the Corporation,
for the account of such holders, so as to be and continue to be available for
payment to such holders, no payment or distribution upon such liquidation,
dissolution or winding up shall be made to holders of shares ranking junior to,
or on a parity with, the Series B Preferred Stock as to rights upon the
liquidation, dissolution or winding up. The Common Stock shall be junior to the
Series B Preferred Stock as to rights upon the liquidation, dissolution or
liquidation or winding up of the Corporation. The Series A Preferred Stock shall
be senior to the Series B Preferred Stock with respect to the right to receive
payment or distribution equal to the Series A Liquidation Value upon the
liquidation, dissolution or winding up of the Corporation. If upon any such
liquidation, dissolution or winding up, the assets of the Corporation available
for payment and distribution to shareholders are insufficient to make payment in
full, as hereinabove provided, to the holders of the Series B Preferred Stock
and the holders of all other shares of all classes or series of stock which rank
on a parity with the Series B Preferred Stock as to rights upon the liquidation,
dissolution or winding up of the Corporation, payment shall be made to such
holders ratably in accordance with the liquidation value of shares hold by them,
respectively.

      For purposes of this Section 3, (i) any acquisition of the Corporation by
means of merger or other form of corporate reorganization in which outstanding
shares of the Corporation are exchanged for securities or other consideration
issued, or caused to be issued, by the acquiring corporation (other than a mere
reincorporation transaction) or (ii) a sale of all or substantially all of the
assets of the Corporation, shall be treated as a liquidation, dissolution or
winding up of the Corporation and shall entitle the holders of Series A
Preferred Stock, Series B Preferred Stock and Common Stock to receive at the
closing in cash, securities or other property amounts as specified in this
Section 3.

      Whenever the distribution provided for in this Section 3 shall be payable
in securities or property other than cash, the value of such distribution shall
be the fair market value of such securities or other property as determined in
good faith by the Board of Directors.

                                        3

                                    EXHIBIT A



      4.    REDEMPTION. The Corporation shall have the right at any time to
redeem the Series B Shares, or any number of shares thereof, issued and
outstanding, at any time by paying to the holders thereof the Series B
Liquidation Value per Series B Share. The Board of Directors shall have the full
power and discretion to select from the outstanding Series B Preferred Stock
particular Series B Shares for redemption. In all instances, the Board of
Directors shall have complete authority to determine and take all necessary
action to effect the cancellation of the certificates representing such Series B
Shares. Upon completion of such actions, the rights of holders of shares of
Series B Preferred Stock which have been redeemed shall in all respects cease,
provided that such holders shall be entitled to receive the redemption price for
such Series B Shares. Notice of redemption shall be mailed by the Secretary of
the Corporation to holders of record of the Series B Preferred Stock to be
redeemed, at their addresses as they shall appear on the records of the
Corporation. The Board of Directors shall have the power to the extent permitted
by law to determine the source of funds to be used for redeeming such stock.

      5.    CONVERSION.

            A.    Right to Convert. Each Series B Share shall be convertible, at
the option of the holder thereof, at any time after the issuance of such Series
B Share, into one (1) fully paid and nonassessable share of Common Stock.

            B.    AUTOMATIC CONVERSION. Each Series B Share shall automatically
be converted into one (1) fully paid and nonassessable share of Common Stock
immediately upon the closing of the sale of the Corporation's Common Stock in a
firm commitment, underwritten public offering registered under the Securities
Act of 1933, as amended ("Securities Act"), other than a registration relating
solely to a transaction under Rule 145 under such Act (or any successor thereto)
or to an employee benefit plan of the Corporation, at a public offering price
(prior to underwriters' discounts and expenses) equal to or exceeding $4.00 per
share of Common Stock (as adjusted for any stock dividends, combinations or
splits with respect to such shares) and the aggregate proceeds to the
Corporation and/or to any selling shareholders (after deduction for
underwriters' discounts and expenses relating to the issuance, including without
limitation fees of the Corporation's counsel) of which exceed $10,000,000.

            C.    MECHANICS OF CONVERSION.

                  (i)   If the number of outstanding shares of Common Stock have
been increased or decreased since the initial subscription and payment for the
Series B Preferred Stock by the holders thereof, by reason of any additional
Common Stock issuance, split, stock dividend, merger, consolidation or other
capital change or reorganization affecting the number of shares of Common Stock,
the number of shares of Common Stock to be issued on conversion to the holders
of the Series B Preferred Stock shall be adjusted so as to preserve fairly and
equitably, as far as reasonably possible, the original conversion rights of the
shares being converted.

                                        4

                                    EXHIBIT A



                  (ii)  No adjustment in the conversion rate is required unless
it would result in at least a one percent (1%) increase or decrease in the
conversion rate, however, any adjustment not made is carried forward.

                  (iii) If any capital reorganization, reclassification,
consolidation, merger or any sale of all or substantially all of the
Corporation's assets to another individual, partnership or corporation
(collectively, any "Organic Change") is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition to such Organic Change, lawful and adequate
provision (in form and substance satisfactory to the holders of a majority of
the Series B Preferred Stock then outstanding) will be made whereby each of the
holders of Series B Preferred Stock will thereafter have the right to acquire
and receive in lieu of shares of Common Stock immediately theretofore acquirable
and receivable upon the conversion of such holder's Series B Preferred Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon conversion of the Series B Preferred
Stock had such Organic Change not taken place. In any such case, appropriate
provision will be made with respect to such holder's rights and interests to the
end that the provisions of this Section 5 and Section 3 will thereafter be
applicable in relation to any shares of stock, securities or assets thereafter
deliverable upon the conversion of the Series B Preferred Stock (including, in
the case of any consolidation, merger or sale in which the successor corporation
or purchasing corporation is other than the Corporation, an immediate adjustment
of the conversion ratio or price to the value for the Common Stock reflected by
the terms of such consolidation, merger or sale, and a corresponding immediate
adjustment in the number of shares of Common Stock acquirable and receivable
upon conversion of the Series B Preferred Stock, if the value so reflected is
less than the conversion ratio or price in effect immediately prior to such
consolidation, merger or sale). The Corporation will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets assumes by
written instrument (in form reasonably satisfactory to the holders of a majority
of the Series B Preferred Stock then outstanding), the obligation to deliver to
each such holder such shares of stock, securities, or assets as, in accordance
with the foregoing provision, such holder may be entitled to acquire.

                  (iv)  The holder of any shares of Series B Preferred Stock may
exercise the conversion rights granted by this Section by delivering to the
Corporation during regular business hours, the certificate or certificates for
the shares to be converted, duly endorsed for transfer to the Corporation (if
required by it), accompanied by written notice stating that the holder elects to
convert such shares. Conversion shall be deemed to have been effected on the
date when such delivery is made, and such date is referred to herein as the
"Conversion Date." As promptly as practicable thereafter the Corporation shall
issue and deliver to, or upon the written order of such holder, at such office
or other place designated by the Corporation, a

                                        5

                                    EXHIBIT A



certificate or certificates for the number of full shares of Common Stock to
which such holder is entitled together with a scrip certificate or cash in lieu
of any fraction of a share as provided hereunder. The holder shall be deemed to
have become a shareholder of record on the next succeeding date on which the
transfer books are open. Upon conversion of only a portion of the number of
shares of Series B Preferred Stock represented by a certificate surrendered for
conversion, the Corporation, upon written order and at its own expense, shall
issue and deliver to the holder of the certificate so surrendered for
conversion, a new certificate covering the number of shares of Series B
Preferred Stock representing the unconverted portion of the certificate so
surrendered.

                  (vi)  No fractional shares of Common Stock shall be issued
upon conversion of shares of Series B Preferred Stock. If more than one share of
Series B Preferred Stock shall be surrendered for conversion at any one time by
the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Series B Preferred Stock so surrendered. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion of any
shares of Series B Preferred Stock, the Corporation shall, in lieu of delivering
the fractional share therefor, at its option either (i) adjust the fractional
interest by payment to the holder of the converted Series B Preferred Stock in
an amount equal (computed to the nearest cent) to the then current market value
of the fractional interest or (ii) issue nondividend bearing and nonvoting scrip
certificates for fractions of a share which would otherwise be issuable, in form
and containing terms and conditions as determined by the Board of Directors, and
exchangeable, within the period following the date of issue as the Board of
Directors shall fix, together with other unexpired scrip certificates or like
tenor aggregating one or more full shares, for share certificates representing
the full share or shares.

                  (vii) The Corporation shall at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the
purpose of effecting the conversion of the Series B Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of all Series B
Preferred Stock from time to time (subject to obtaining necessary director and
shareholder action), and in accordance with the laws of the State of California,
increase the authorized amount of its Common Stock if at any time the authorized
number of shares of its Common Stock remaining unissued shall not be sufficient
to permit the conversion of all of the shares of Series B Preferred Stock at the
time outstanding.

      6.    FULLY PAID AND NONASSESSABLE.

            The Series B Shares, when issued, will be duly and validly issued,
fully paid and nonassessable.

                                        6

                                    EXHIBIT A



      7.    RESTRICTIONS AND LIMITATIONS.

            RESTRICTIONS AND LIMITATIONS. So long as any shares of Series B
Preferred Stock remain outstanding, the Corporation shall not, without obtaining
approval (by vote or written consent, as provided by law) of the holders of all
of the outstanding shares of Series B Preferred Stock:

                  (i)   Authorize or issue, or obligate itself to issue, any
other equity security (including any security convertible into or exercisable
for any equity security) on parity with, or senior to, the Series B Preferred
Stock as to dividend rights or liquidation preferences;

                  (ii)  Redeem, purchase or otherwise acquire (or pay into or
set aside for a sinking fund for such purpose) any of the Common Stock otherwise
than as permitted herein;

                  (iii) Effect any sale, lease, assignment, transfer, or other
conveyance of all or substantially all of the assets of the Corporation, or any
consolidation or merger involving the Corporation, unless the Corporation shall
be the continuing or surviving entity of such consolidation or merger; or

                  (iv)  Effect any reclassification or other change of any of
the Corporation's outstanding capital stock, or any recapitalization.

            B.    NO REISSUANCE OF SERIES B PREFERRED STOCK. No share or
shares of Series B Preferred Stock acquired by the Corporation by reason of
purchase or otherwise shall be reissued, and all such shares shall be canceled,
retired and eliminated from the shares which the Corporation shall be authorized
to issue.

      8.    MISCELLANEOUS.

            A.    CERTAIN DEFINITIONS.

                  "ADDITIONAL SHARES OF COMMON STOCK" means all shares of
Common Stock issued by the Corporation after the Original Issue Date, including,
without limitation, shares of Common Stock to be issued after the Original Issue
Date upon exercise or conversion of any option, warrant or other security
exchangeable for or convertible into shares of Common Stock, other than shares
of Common Stock issued or issuable:

                  (i)   upon conversion of shares of Series B Preferred Stock;

                                        7

                                    EXHIBIT A



                  (ii)  to officers, directors or employees of, or consultants
to, the Corporation pursuant to stock option, equity incentive or stock purchase
plans or agreements on terms approved by the Board of Directors; or

                  (iii) as a dividend or distribution on Series B Preferred
Stock.

                  "COMMON STOCK" means collectively, the Corporation's common
stock and any capital stock of any class of the Corporation hereafter authorized
which is not limited to a fixed sum or percentage of par or stated value in
respect to the rights of the holders thereof to participate in dividends or in
the distribution of assets upon any liquidation, dissolution or winding up of
the Corporation.

                  "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares (other than Common Stock, Series A Preferred Stock and
Series B Preferred Stock) or other securities convertible into or exchangeable
for Common Stock.

                  "PERSON" means an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.

                  "SERIES A LIQUIDATION VALUE" of any share of Series A
Preferred Stock as of any particular date shall be equal to the sum of $1.25
plus any accrued, but unpaid dividends on such share of Series A Preferred Stock
which otherwise would be added to the Series A Liquidation Value of such share.

                  "SERIES B LIQUIDATION VALUE" of any share of Series B
Preferred Stock as of any particular date will be equal to the sum of $2.50 plus
any accrued, but unpaid dividends on such share of Series B Preferred Stock
which would otherwise be added to the Series B Liquidation Value of such share
on that date if that date were deemed a Dividend Reference Date; and, in the
event of any liquidation, dissolution or winding up of the Corporation or the
redemption of such shares of Series B Preferred Stock, unpaid dividends on such
shares of Series B Preferred Stock will be added to the Series B Liquidation
Value of such shares of Series B Preferred Stock on the payment date in any
liquidation, dissolution or winding up (as contemplated in Section 3 hereof),
accrued to the close of business on such payment date.

                  "SERIES B ORIGINAL ISSUE DATE" shall mean the date on which
the first share of Series B Preferred Stock was issued.

                  "SUBSIDIARY" means any corporation of which shares of stock
having at least a majority of the general voting power in electing the board of
directors is, at the time as of which any determination is being made, owned by
the Corporation either directly or indirectly through Subsidiaries.

                                        8

                                    EXHIBIT A



            B.    NOTICES. All notices referred to herein, except as otherwise
expressly provided, will be hand delivered or made by registered or certified
mail, return receipt requested, postage prepaid and shall be deemed to have been
given when so hand delivered or mailed.

            C.    REGISTRATION OF TRANSFER. The Corporation will keep at its
principal office a register for the registration of Series B Preferred Stock.
Upon the surrender of any certificate representing Series B Preferred Stock at
such place, the Corporation will, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefore representing in the aggregate
the number of shares of Series B Preferred Stock represented by the surrendered
certificate. Each such new certificate will be registered in such name and will
represent such number of shares of Series B Preferred Stock as is requested by
the holder of the surrendered certificate.

            D.    REPLACEMENT. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit of the registered holder, without bond, will be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of Series B Preferred Stock, the
Corporation will (at its expense) execute and deliver in lieu of such
certificate a new certificate representing the number of shares of Series B
Preferred Stock represented by such lost, stolen, destroyed or mutilated
certificate.

            E.    AMENDMENT AND WAIVER. No amendment, modification or waiver of
this Certificate of Determination will be binding or effective with respect to
(i) any provision affecting or relating to dividends, conversion or redemption
without the prior written consent of holders of at least 60% of the Series B
Preferred Stock outstanding at the time such action is taken, or (ii) any other
provision of this Certificate of Determination without the prior written consent
of holders of two-thirds of the Series B Preferred Stock outstanding at the time
such action is taken.

                                        9

                                    EXHIBIT A



                              AMENDED AND RESTATED
                          CERTIFICATE OF DETERMINATION
                                       OF
                            SERIES B PREFERRED STOCK
                                       OF
                           AMERICAN MOLD GUARD, INC.,
                            A CALIFORNIA CORPORATION

      The undersigned, Bradley Barnes and Tom Blakeley, hereby certify,
respectively, that:

      1.    They are the President and Secretary, respectively, of American Mold
Guard, Inc., a California corporation (the "Corporation").

      2.    Pursuant to authority given by the Corporation's Articles of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recitals and resolutions:

                  WHEREAS, the Articles of Incorporation of the Corporation
      provides for a class of shares known as Preferred Stock, issuable from
      time to time in one or more series; and

                  WHEREAS, the Articles of Incorporation provide that the
      initial series of Preferred Stock shall consist of 480,000 shares
      designated "Series A Preferred Stock," which series has been issued, and
      that the Board of Directors is authorized within the limitations and
      restrictions stated in the Articles of Incorporation to determine or alter
      the rights, preferences, privileges, and restrictions granted to or
      imposed upon any wholly unissued series of Preferred Stock, to fix the
      number of shares constituting any such series, and to determine the
      designation thereof, except Series A: and

                  WHEREAS, the Board of Directors of the Corporation desires,
      pursuant to its authority, to fix the terms of a second series of
      Preferred Stock, the number of shares constituting that series, and the
      designation of that series.

                  NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors
      hereby fixes and determines the designation of, the number of shares
      constituting, and the rights, preferences, privileges and restrictions
      relating to, the second series of Preferred Stock as follows:

                  (a)   The second series of Preferred Stock of this Corporation
                        shall be designated and known as "Series B Preferred
                        Stock."



                  (b)   The number of shares constituting the Series B Preferred
                        Stock shall be 1,210,000.

                  (c)   The rights, preferences, privileges and restrictions
                        relating to the Series B Preferred Stock shall be as set
                        forth on Exhibit A attached hereto and by this reference
                        incorporated herein.

                  RESOLVED, FURTHER, that the President, and any officer
      designated by him, shall be, and hereby are, authorized to execute, verify
      and file a Certificate of Determination of Series B Preferred Stock in
      accordance with California law.

      3.    The foregoing amendment to the Certificate of Determination of
Series B Preferred Stock has been duly approved by the required vote of
shareholders in accordance with Section 902 and 903 of the California
Corporations Code. The total number of outstanding shares of common stock of the
corporation is 2,971,581 and the total number of outstanding shares of Series B
Preferred Stock is 164,000. The number of shares of common stock voting in favor
of the amendment equaled or exceeded the vote required and the total number of
shares of Series B Preferred Stock voting in favor of the amendment equaled or
exceeded the vote required. The percentage vote required of common stock was
more than 50% and the percentage vote of Series B Preferred Stock was more than
50%.

      IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Designation on the 12th day of July 2004.

                                                  /s/ Bradley Barnes
                                                  ------------------------------
                                                  Bradley Barnes, President

                                                  /s/ Tom Blakeley
                                                  ------------------------------
                                                  Tom Blakeley, Secretary

                                       2



      The undersigned, Bradley Barnes and Tom Blakeley, the President and
Secretary, respectively, of American Mold Guard, Inc. declare under penalty of
perjury that the matters set forth in the foregoing Amended and Restated
Certificate of Determination of Series B Preferred Stock are true of their own
knowledge.

      Executed at Irvine, California on the 12th day of July 2004.

                                                  /s/ Bradley Barnes
                                                  ------------------------------
                                                  Bradley Barnes, President

                                                  /s/ Tom Blakeley
                                                  ------------------------------
                                                  Tom Blakeley, Secretary

                                        3



                             DESIGNATION AND AMOUNT

      An aggregate of one million two hundred ten thousand (1,210,000) shares of
the Preferred Stock of American Mold Guard, Inc., a California corporation (the
"Corporation") shall be designated as "Series B Preferred Stock."

      1.    DIVIDENDS.

            A.    GENERAL OBLIGATION. When and as declared by the Board of
Directors of the Corporation and to the extent permitted under the General
Corporation Law of California, the Corporation will pay preferential dividends
to the holders of the Series B Preferred Stock. Except as otherwise provided
herein, dividends on each share of Series B Preferred Stock (a "Share") will
accrue cumulatively on a daily basis at the rate of eight percent (8%) per annum
of the Liquidation Value thereof from and including the date of issuance of such
Share, whether or not such dividends have been declared and whether or not there
are profits, surplus or other funds of the Corporation legally available for the
payment of dividends. The date on which the Corporation initially issues any
Share will be deemed to be the "Series B Original Issue Date" regardless of the
number of times transfer of such Share is made on the stock records maintained
by or for the Corporation and regardless of the number of certificates which may
be issued to evidence such Shares.

            B.    DIVIDEND REFERENCE DATES. To the extent not paid on the 15th
day of each June and December, beginning June 15, 2004 (the "Dividend Reference
Dates"), all dividends which have accrued on each Share then outstanding during
the annual period ending upon such Dividend Reference Date will be added to the
Liquidation Value of such Share and will remain a part thereof until such
dividends are paid.

            C.    PAYMENT OF DIVIDENDS. Dividends shall be paid by forwarding a
check, postage prepaid, to the address of each such holder (or in the case of
joint holders, to the address of either such holder) of Series B Preferred Stock
as shown on the books of the Corporation, unless such holder specifies another
address by written notice to the Corporation. The forwarding of such check will
satisfy all obligations of the Corporation with respect to such dividends,
unless such check is not paid upon timely presentation.

            D.    DISTRIBUTION OF PARTIAL DIVIDEND PAYMENTS. If at any time the
Corporation pays less than the total amount of dividends then accrued with
respect to the Series B Preferred Stock, such payment will be distributed among
the holders of a Share so that an equal amount will be paid with respect to each
outstanding Share.

            E.    RESTRICTIONS ON DIVIDEND PAYMENTS. All shares of Common Stock
shall rank junior to the Series B Preferred Stock as to dividends. The Series B
Preferred Stock shall rank junior to the Series A Preferred Stock as to
dividends.

                                    EXHIBIT A



            So long as any Shares remain outstanding, no dividend shall be paid
or declared, or declared and set apart for payment, or other distribution made,
on the shares of any class of stock ranking, as to dividend rights, junior to
the Series B Preferred Stock, nor shall any shares of any class of stock (or
series thereof) of the corporation ranking, as to dividend rights, junior to, or
on parity with the Series B Preferred Stock, be purchased, redeemed or otherwise
acquired for value by the Corporation, unless dividends on the Series B
Preferred Stock shall have been declared and paid, or declared and set apart for
payment, for all past Series B Dividend Reference Dates ending immediately prior
to the date on which such dividend, distribution, purchase, redemption or
acquisition is to occur and the then current Series B Dividend Reference Date;
provided, however, that the foregoing restriction shall not apply (a) to the
declaration and payment, on shares ranking junior to the Series B Preferred
Stock as to dividends rights, of dividends payable solely in shares of stock of
any class of shares ranking junior to the Series B Preferred Stock as to
dividend rights or, (b) to the acquisition of any shares ranking junior to the
Series B Preferred Stock as to dividend rights through application of the
proceeds of the issue and sale of any class of any shares ranking junior to, or
on a parity, with the Series B Preferred Stock as to dividends rights sold at or
about the time of such acquisition. No dividends shall be paid or declared, or
declared and set apart for payment, or other distribution made on any shares of
any class of stock (or series thereof) of the Corporation ranking, as to
dividend rights, on a parity with the Series B Preferred Stock for any dividend
period unless, at the same time, a like proportion of dividends for the same or
similar dividend period, ratably in proportion to the respective annual dividend
rate fixed therefore, shall be paid or declared, or declared and set apart for
payment, on all shares of Series B Preferred Stock.

      2.    VOTING.

            Except as otherwise required by law or as set forth herein, the
holders of the Series B Preferred Stock shall, together with the holders of
shares of Common Stock, all voting as one class, posses voting power for the
election of directors and for all other purposes. In the exercise of voting
powers, holders of the Series B Preferred Stock shall be entitled to one vote
for each such share held. Notwithstanding the foregoing, the consent of the
holders of all the shares of Series B Preferred Stock at the time outstanding,
given in person or by proxy, by a vote at a meeting called for the purpose at
which the holders of shares of the Series B Preferred Stock shall vote together
as a separate class, shall be necessary for authorizing, effecting, or
validating either of the following:

            (i)   the creation, authorization or issue of any shares of any
                  class of stock of the Corporation ranking prior to or on
                  parity with the shares of the Series B Preferred Stock as to
                  dividends or upon liquidation or otherwise, or the
                  reclassification of any authorized stock of the Corporation
                  into any such prior shares, or the creation, authorization or
                  issue of any obligation or security convertible into or
                  evidencing the right to purchase any such prior shares; or

                                        2

                                    EXHIBIT A



            (ii)  take any action so as to affect adversely the preferences,
                  rights or privileges of the Series B Preferred Stock.

      3.    LIQUIDATION. In the event of a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, each holder of Series B Preferred
Stock shall be entitled to receive out of the assets of the Corporation
available for distribution to shareholders, after payment in full to the holders
of Series A Preferred Stock an amount per share equal to, but no more than, the
Series A Liquidation Value (as hereinafter defined), and after payment in full
of all amounts owing to the holders of all shares of all classes or series of
stock having rights senior to the Series B Preferred Stock upon the liquidation,
dissolution or winding up of the Corporation, an amount per share equal to, but
no more than, the Series B Liquidation Value (as hereinafter defined). Until
payment to the holders of the Series B Preferred Stock of all amounts owing as
aforesaid, or until money or other assets sufficient for such payment shall have
been set apart from its other funds and assets for payment by the Corporation,
for the account of such holders, so as to be and continue to be available for
payment to such holders, no payment or distribution upon such liquidation,
dissolution or winding up shall be made to holders of shares ranking junior to,
or on a parity with, the Series B Preferred Stock as to rights upon the
liquidation, dissolution or winding up. The Common Stock shall be junior to the
Series B Preferred Stock as to rights upon the liquidation, dissolution or
liquidation or winding up of the Corporation. The Series A Preferred Stock shall
be senior to the Series B Preferred Stock with respect to the right to receive
payment or distribution equal to the Series A Liquidation Value upon the
liquidation, dissolution or winding up of the Corporation. If upon any such
liquidation, dissolution or winding up, the assets of the Corporation available
for payment and distribution to shareholders are insufficient to make payment in
full, as hereinabove provided, to the holders of the Series B Preferred Stock
and the holders of all other shares of all classes or series of stock which rank
on a parity with the Series B Preferred Stock as to rights upon the liquidation,
dissolution or winding up of the Corporation, payment shall be made to such
holders ratably in accordance with the liquidation value of shares hold by them,
respectively.

      For purposes of this Section 3, (i) any acquisition of the Corporation by
means of merger or other form of corporate reorganization in which outstanding
shares of the Corporation are exchanged for securities or other consideration
issued, or caused to be issued, by the acquiring corporation (other than a mere
reincorporation transaction) or (ii) a sale of all or substantially all of the
assets of the Corporation, shall be treated as a liquidation, dissolution or
winding up of the Corporation and shall entitle the holders of Series A
Preferred Stock, Series B Preferred Stock and Common Stock to receive at the
closing in cash, securities or other property amounts as specified in this
Section 3.

      Whenever the distribution provided for in this Section 3 shall be payable
in securities or property other than cash, the value of such distribution shall
be the fair market value of such securities or other property as determined in
good faith by the Board of Directors.

                                        3

                                    EXHIBIT A



      4.    REDEMPTION. The Corporation shall have the right at any time to
redeem the Shares, or any number of shares thereof, issued and outstanding, at
any time by paying to the holders thereof the Series B Liquidation Value per
Share. The Board of Directors shall have the full power and discretion to select
from the outstanding Series B Preferred Stock particular Shares for redemption.
In all instances, the Board of Directors shall have complete authority to
determine and take all necessary action to effect the cancellation of the
certificates representing such Shares. Upon completion of such actions, the
rights of holders of shares of Series B Preferred Stock which have been redeemed
shall in all respects cease, provided that such holders shall be entitled to
receive the redemption price for such Shares. Notice of redemption shall be
mailed by the Secretary of the Corporation to holders of record of the Series B
Preferred Stock to be redeemed, at their addresses as they shall appear on the
records of the Corporation. The Board of Directors shall have the power to the
extent permitted by law to determine the source of funds to be used for
redeeming such stock.

      5.    CONVERSION.

            A.    RIGHT TO CONVERT. Each Share shall be convertible, at the
option of the holder thereof, at any time after the issuance of such Share, into
one (1) fully paid and nonassessable share of Common Stock.

            B.    AUTOMATIC CONVERSION. Each Share shall automatically be
converted into one (1) fully paid and nonassessable share of Common Stock
immediately upon the closing of the sale of the Corporation's Common Stock in a
firm commitment, underwritten public offering registered under the Securities
Act of 1933, as amended ("Securities Act"), other than a registration relating
solely to a transaction under Rule 145 under such Act (or any successor thereto)
or to an employee benefit plan of the Corporation, at a public offering price
(prior to underwriters' discounts and expenses) equal to or exceeding $4.00 per
share of Common Stock (as adjusted for any stock dividends, combinations or
splits with respect to such shares) and the aggregate proceeds to the
Corporation and/or to any selling shareholders (after deduction for
underwriters' discounts and expenses relating to the issuance, including without
limitation fees of the Corporation's counsel) of which exceed $10,000,000.

            C.    MECHANICS OF CONVERSION.

                  (i)   If the number of outstanding shares of Common Stock have
been increased or decreased since the initial subscription and payment for the
Series B Preferred Stock by the holders thereof, by reason of any additional
Common Stock issuance, split, stock dividend, merger, consolidation or other
capital change or reorganization affecting the number of shares of Common Stock,
the number of shares of Common Stock to be issued on conversion to the holders
of the Series B Preferred Stock shall be adjusted so as to preserve fairly and
equitably, as far as reasonably possible, the original conversion rights of the
shares being converted.

                                        4

                                    EXHIBIT A



                  (ii)  No adjustment in the conversion rate is required unless
it would result in at least a one percent (1%) increase or decrease in the
conversion rate, however, any adjustment not made is carried forward.

                  (iii) If any capital reorganization, reclassification,
consolidation, merger or any sale of all or substantially all of the
Corporation's assets to another individual, partnership or corporation
(collectively, any "Organic Change") is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition to such Organic Change, lawful and adequate
provision (in form and substance satisfactory to the holders of a majority of
the Series B Preferred Stock then outstanding) will be made whereby each of the
holders of Series B Preferred Stock will thereafter have the right to acquire
and receive in lieu of shares of Common Stock immediately theretofore acquirable
and receivable upon the conversion of such holder's Series B Preferred Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon conversion of the Series B Preferred
Stock had such Organic Change not taken place. In any such case, appropriate
provision will be made with respect to such holder's rights and interests to the
end that the provisions of this Section 5 and Section 3 will thereafter be
applicable in relation to any shares or stock, securities or assets thereafter
deliverable upon the conversion of the Series B Preferred Stock (including, in
the case of any consolidation, merger or sale in which the successor corporation
or purchasing corporation is other than the Corporation, an immediate adjustment
of the conversion ratio or price to the value for the Common Stock reflected by
the terms of such consolidation, merger or sale, and a corresponding immediate
adjustment in the number of shares of Common Stock acquirable and receivable
upon conversion of the Series B Preferred Stock, if the value so reflected is
less than the conversion ratio or price in effect immediately prior to such
consolidation, merger or sale). The Corporation will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets assumes by
written instrument (in form reasonably satisfactory to the holders of a majority
of the Series B Preferred Stock then outstanding), the obligation to deliver to
each such holder such shares of stock, securities, or assets as, in accordance
with the foregoing provision, such holder may be entitled to acquire.

                  (iv)  The holder of any shares of Series B Preferred Stock may
exercise the conversion rights granted by this Section by delivering to the
Corporation during regular business hours, the certificate or certificates for
the shares to be converted, duly endorsed for transfer to the Corporation (if
required by it), accompanied by written notice stating that the holder elects to
convert such shares. Conversion shall be deemed to have been effected on the
date when such delivery is made, and such date is referred to herein as the
"Conversion Date." As promptly as practicable thereafter the Corporation shall
issue and deliver to, or upon the written order of such holder, at such office
or other place designated by the Corporation, a

                                        5

                                    EXHIBIT A



certificate or certificates for the number of full shares of Common Stock to
which such holder is entitled together with a scrip certificate or cash in lieu
of any fraction of a share as provided hereunder. The holder shall be deemed to
have become a shareholder of record on the next succeeding date on which the
transfer books are open. Upon conversion of only a portion of the number of
shares of Series B Preferred Stock represented by a certificate surrendered for
conversion, the Corporation, upon written order and at its own expense, shall
issue and deliver to the holder of the certificate so surrendered for
conversion, a new certificate covering the number of shares of Series B
Preferred Stock representing the unconverted portion of the certificate so
surrendered.

                  (vi)  No fractional shares of Common Stock shall be issued
upon conversion of shares of Series B Preferred Stock. If more than one share of
Series B Preferred Stock shall be surrendered for conversion at any one time by
the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Series B Preferred Stock so surrendered. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion of any
shares of Series B Preferred Stock, the Corporation shall, in lieu of delivering
the fractional share therefor, at its option either (i) adjust the fractional
interest by payment to the holder of the converted Series B Preferred Stock in
an amount equal (computed to the nearest cent) to the then current market value
of the fractional interest or (ii) issue nondividend bearing and nonvoting scrip
certificates for fractions of a share which would otherwise be issuable, in form
and containing terms and conditions as determined by the Board of Directors, and
exchangeable, within the period following the date of issue as the Board of
Directors shall fix, together with other unexpired scrip certificates or like
tenor aggregating one or more full shares, for share certificates representing
the full share or shares.

                  (vii) The Corporation shall at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the
purpose of effecting the conversion of the Series B Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of all Series B
Preferred Stock from time to time (subject to obtaining necessary director and
shareholder action), and in accordance with the laws of the State of California,
increase the authorized amount of its Common Stock if at any time the authorized
number of shares of its Common Stock remaining unissued shall not be sufficient
to permit the conversion of all of the shares of Series B Preferred Stock at the
time outstanding.

      6.    FULLY PAID AND NONASSESSABLE.

            The Shares, when issued, will be duly and validly issued, fully paid
and nonassessable.

      7.    RESTRICTIONS AND LIMITATIONS.

            A.    RESTRICTIONS AND LIMITATIONS. So long as any shares of Series
B

                                        6

                                    EXHIBIT A



Preferred Stock remain outstanding, the Corporation shall not, without obtaining
approval (by vote or written consent, as provided by law) of the holders of all
of the outstanding shares of Series B Preferred Stock:

                  (i)   Authorize or issue, or obligate itself to issue, any
other equity security (including any security convertible into or exercisable
for any equity security) on parity with, or senior to, the Series B Preferred
Stock as to dividend rights or liquidation preferences;

                  (ii)  Redeem, purchase or otherwise acquire (or pay into or
set aside for a sinking fund for such purpose) any of the Common Stock otherwise
than as permitted herein;

                  (iii) Effect any sale, lease, assignment, transfer, or other
conveyance of all or substantially all of the assets of the Corporation, or any
consolidation or merger involving the Corporation, unless the Corporation shall
be the continuing or surviving entity of such consolidation or merger; or

                  (iv)  Effect any reclassification or other change of any of
the Corporation's outstanding capital stock, or any recapitalization.

            B.    NO REISSUANCE OF SERIES B PREFERRED STOCK. No share or shares
of Series B Preferred Stock acquired by the Corporation by reason of purchase or
otherwise shall be reissued, and all such shares shall be canceled, retired and
eliminated from the shares which the Corporation shall be authorized to issue.

      8.    MISCELLANEOUS.

            A.    CERTAIN DEFINITIONS.

                  "ADDITIONAL SHARES OF COMMON STOCK" means all shares of Common
Stock issued by the Corporation after the Original Issue Date, including,
without limitation, shares of Common Stock to be issued after the Original Issue
Date upon exercise or conversion of any option, warrant or other security
exchangeable for or convertible into shares of Common Stock, other than shares
of Common Stock issued or issuable:

                  (i)   upon conversion of shares of Series B Preferred Stock;

                  (ii)  to officers, directors or employees of, or consultants
to, the Corporation pursuant to stock option, equity incentive or stock purchase
plans or agreements on terms approved by the Board of Directors; or

                  (iii) as a dividend or distribution on Series B Preferred
Stock.

                                        7

                                    EXHIBIT A



                  "COMMON STOCK" means collectively, the Corporation's common
stock and any capital stock of any class of the Corporation hereafter authorized
which is not limited to a fixed sum or percentage of par or stated value in
respect to the rights of the holders thereof to participate in dividends or in
the distribution of assets upon any liquidation, dissolution or winding up of
the Corporation.

                  "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares (other than Common Stock, Series A Preferred Stock and
Series B Preferred Stock) or other securities convertible into or exchangeable
for Common Stock.

                  "ORIGINAL ISSUE DATE" shall mean the date on which the first
share of Series B Preferred Stock was issued.

                  "PERSON" means an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.

                  "SERIES A LIQUIDATION VALUE" of any share of Series A
Preferred Stock as of any particular date shall be equal to the sum of $1.25
plus any accrued, but unpaid dividends on such share of Series A Preferred Stock
which otherwise would be added to the Series A Liquidation Value of such share.

                  "SERIES B LIQUIDATION VALUE" of any share of Series B
Preferred Stock as of any particular date will be equal to the sum of $2.00 plus
any accrued, but unpaid dividends on such share of Series B Preferred Stock
which would otherwise be added to the Series B Liquidation Value of such share
on that date if that date were deemed a Dividend Reference Date; and, in the
event of any liquidation, dissolution or winding up of the Corporation or the
redemption of such shares of Series B Preferred Stock, unpaid dividends on such
shares of Series B Preferred Stock will be added to the Series B Liquidation
Value of such shares of Series B Preferred Stock on the payment date in any
liquidation, dissolution or winding up (as contemplated in Section 3 hereof),
accrued to the close of business on such payment date.

                  "SUBSIDIARY" means any corporation of which shares of stock
having at least a majority of the general voting power in electing the board of
directors is, at the time as of which any determination is being made, owned by
the Corporation either directly or indirectly through Subsidiaries.

            B.    NOTICES. All notices referred to herein, except as otherwise
expressly provided, will be hand delivered or made by registered or certified
mail, return receipt requested, postage prepaid and shall be deemed to have been
given when so hand delivered or mailed.

                                        8

                                    EXHIBIT A



            C.    REGISTRATION OF TRANSFER. The Corporation will keep at its
principal office a register for the registration of Series B Preferred Stock.
Upon the surrender of any certificate representing Series B Preferred Stock at
such place, the Corporation will, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefore representing in the aggregate
the number of shares of Series B Preferred Stock represented by the surrendered
certificate. Each such new certificate will be registered in such name and will
represent such number of shares of Series B Preferred Stock as is requested by
the holder of the surrendered certificate.

            D.    REPLACEMENT. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit of the registered holder, without bond, will be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of Series B Preferred Stock, the
Corporation will (at its expense) execute and deliver in lieu of such
certificate a new certificate representing the number of shares of Series B
Preferred Stock represented by such lost, stolen, destroyed or mutilated
certificate.

            E.    AMENDMENT AND WAIVER. No amendment, modification or waiver
of this Certificate of Determination will be binding or effective with respect
to (i) any provision affecting or relating to dividends, conversion or
redemption without the prior written consent of holders of at least 60% of the
Series B Preferred Stock outstanding at the time such action is taken, or (ii)
any other provision of this Certificate of Determination without the prior
written consent of holders of two-thirds of the Series B Preferred Stock
outstanding at the time such action is taken.

                                        9

                                    EXHIBIT A



                                     AMENDED
                          CERTIFICATE OF DETERMINATION
                                       OF
                            SERIES A PREFERRED STOCK
                                       OF
                           AMERICAN MOLD GUARD, INC.,
                            A CALIFORNIA CORPORATION

      The undersigned, Bradley Barnes and Thomas Blakeley, hereby certify,
respectively, that:

      1.    They are the President and Secretary, respectively, of American Mold
Guard, Inc., a California corporation (the "Corporation").

      2.    Pursuant to authority given by the Corporation's Articles of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recitals and resolutions:

            WHEREAS, the Articles of Incorporation of the Corporation provides
      for a class of shares known as Preferred Stock, issuable from time to time
      in one or more series; and

            WHEREAS, the Board of Directors is authorized to determine or alter
      the rights, preferences, privileges and restrictions granted to or imposed
      upon any wholly unissued series of Preferred Stock, to fix the number of
      shares constituting any such series, and to determine the designation
      thereof, or any of them; and

            WHEREAS, pursuant to its authority to determine the rights,
      preferences, privileges and restrictions granted to or imposed upon any
      wholly unissued series of Preferred Stock, to fix the number of shares
      constituting any such series, and to determine the designation thereof, or
      any of them, the Board of Directors, on or about June 23, 2003 and
      November 20, 2003, fixed the rights, preferences and restrictions relating
      to an initial series of Preferred Stock designated as "Series A Preferred
      Stock"; and

            WHEREAS, the Board of Directors now desire to amend and change the
      rights, preferences and privileges or restrictions of the Series A
      Preferred Stock.

            NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby
      amends and changes the rights, preferences and privileges of the Series A
      Preferred Stock as set forth on Exhibit A attached hereto and by this
      reference incorporated herein.



            RESOLVED, FURTHER, that the President, and any officer designated by
      him, shall be, and hereby are, authorized to execute, verify and file an
      Amended Certificate of Determination of Series A Preferred Stock in
      accordance with California law.

      3.    The foregoing amendment to the Certificate of Determination of
Series A Preferred Stock has been duly approved by the required vote of
shareholders in accordance with Section 902 and 903 of the California
Corporations Code. The total number of outstanding shares of common stock of the
corporation is 2,631,754. The total number of outstanding shares of Series A
Preferred Stock is 480,000. The total number of outstanding shares of Series B
Preferred Stock is 465,000. The number of shares of common stock voting in favor
of the amendment equaled or exceeded the vote required. The total number of
shares of Series A Preferred Stock voting in favor of the amendment equaled or
exceeded the vote required. The total number of shares of Series B Preferred
Stock voting in favor of the amendment equaled or exceeded the vote required.
The total number of outstanding shares of common stock, Series A Preferred Stock
and Series B Preferred Stock, voting together as one class, equaled or exceeded
the vote required. The percentage vote required of common stock was more than
50%. The percentage vote required of Series A Preferred Stock was 100%. The
percentage vote required of Series B Preferred Stock was 100%. The percentage
vote required of the common stock, Series A Preferred Stock and Series B
Preferred Stock voting together as one class was more than 50%.

      IN WITNESS WHEREOF, the undersigned have executed this Amended Certificate
of Determination on the 1st day of November 2004.

                                                     /s/ Bradley Barnes
                                                     ---------------------------
                                                     Bradley Barnes, President

                                                     /s/ Tom Blakeley
                                                     ---------------------------
                                                     Tom Blakeley, Secretary

                                        2



      The undersigned, Bradley Barnes and Tom Blakeley, the President and
Secretary, respectively, of American Mold Guard, Inc. declare under penalty of
perjury that the matters set forth in the foregoing Amended Certificate of
Determination of Series A Preferred Stock are true of their own knowledge.

      Executed at Irvine, California on the 1st day of November 2004.

                                                     /s/ Bradley Barnes
                                                     ---------------------------
                                                     Bradley Barnes, President

                                                     /s/ Tom Blakeley
                                                     ---------------------------
                                                     Tom Blakeley, Secretary

                                        3



                             DESIGNATION AND AMOUNT

      An aggregate of four hundred eighty thousand (480,000) shares of the
Preferred Stock of American Mold Guard, Inc., a California corporation (the
"Corporation") shall be designated as "Series A Preferred Stock."

      1.    DIVIDENDS.

            A.    GENERAL OBLIGATION. When and as declared by the Board of
Directors of the Corporation and to the extent permitted under the General
Corporation Law of California, the Corporation will pay preferential dividends
to the holders of the Series A Preferred Stock. Except as otherwise provided
herein, dividends on each share of Series A Preferred Stock (a "Share") will
accrue cumulatively on a daily basis at the rate of eight percent (8%) per annum
of the Liquidation Value thereof from and including the date of issuance of such
Share, whether or not such dividends have been declared and whether or not there
are profits, surplus or other funds of the Corporation legally available for the
payment of dividends. The date on which the Corporation initially issues any
Share will be deemed to be the "Series A Original Issue Date" regardless of the
number of times transfer of such Share is made on the stock records maintained
by or for the Corporation and regardless of the number of certificates which may
be issued to evidence such Shares.

            B.    DIVIDEND REFERENCE DATES. To the extent not paid on the 15th
day of each June and December, beginning December 15, 2003 (the "Dividend
Reference Dates"), all dividends which have accrued on each Share then
outstanding during the annual period ending upon such Dividend Reference Date
will be added to the Liquidation Value of such Share and will remain a part
thereof until such dividends are paid.

            C.    PAYMENT OF DIVIDENDS. Dividends shall be paid by forwarding a
check, postage prepaid, to the address of each such holder (or in the case of
joint holders, to the address of either such holder) of Series A Preferred Stock
as shown on the books of the Corporation, unless such holder specifies another
address by written notice to the Corporation. The forwarding of such check will
satisfy all obligations of the Corporation with respect to such dividends,
unless such check is not paid upon timely presentation.

            D.    DISTRIBUTION OF PARTIAL DIVIDEND PAYMENTS. If at any time the
Corporation pays less than the total amount of dividends then accrued with
respect to the Series A Preferred Stock, such payment will be distributed among
the holders of a Share so that an equal amount will be paid with respect to each
outstanding Share.

            E.    OTHER DIVIDENDS. No dividend or other distribution shall be
paid, or declared and set apart for payment, other than dividends of Common
Stock on the Common Stock of the Corporation, on the shares of any class or
series of capital stock of the Corporation,

                                    EXHIBIT A



other than the Corporation's Series A Preferred Stock, until the dividend
provided for in Section 1A hereinabove is declared and paid, nor shall any
shares of any class or series of such capital stock be purchased, redeemed or
otherwise acquired for value by the Corporation or any subsidiary of the
Corporation and no money shall be paid into or set aside and made available for
a sinking fund for the purchase, redemption or acquisition thereof, without the
written consent of the holders of all of the outstanding shares of Series A
Preferred Stock, given in person or by proxy, either in writing or by vote at a
meeting called for that purpose.

      2.    VOTING.

            Except as otherwise required by law or as set forth herein, the
holders of the Series A Preferred Stock shall, together with the holders of
shares of Common Stock, all voting as one class, posses voting power for the
election of directors and for all other purposes. In the exercise of voting
powers, holders of the Series A Preferred Stock shall be entitled to one vote
for each such share held. Notwithstanding the foregoing, the consent of the
holders of a majority of the shares of Series A Preferred Stock and all other
shares ranking on parity with the Series A Preferred Stock as voting as one
class, at the time outstanding, given in person or by proxy, by a vote at a
meeting called for the purpose at which the holders of shares of the Series A
Preferred Stock and other shares ranking on parity with the Series A Preferred
Stock shall vote together as a separate class, shall be necessary for
authorizing, effecting, or validating either of the following:

            (i)   the creation, authorization or issue of any shares of any
                  class of stock of the Corporation ranking prior to or on
                  parity with the shares of the Series A Preferred Stock as to
                  dividends or upon liquidation or otherwise, or the
                  reclassification of any authorized stock of the Corporation
                  into any such prior shares, or the creation, authorization or
                  issue of any obligation or security convertible into or
                  evidencing the right to purchase any such prior shares; or

            (ii)  take any action so as to affect adversely the preferences,
                  rights or privileges of the Series A Preferred Stock.

      3.    LIQUIDATION.

            (a)   Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any distribution or
payment shall be made to any person holding Common Stock or of any shares
ranking junior to the Series A Preferred Stock in respect of distribution of
assets but after any distribution or payment is made to any person holding any
shares ranking prior to the Series A Preferred Stock, the persons holding Series
A Preferred Stock will be entitled to be paid an amount in cash equal to $1.25
per share, plus any accrued and unpaid cumulative dividends. If upon such
liquidation, dissolution or winding up, the assets of the Corporation are
insufficient to pay the holders of the Series A Preferred Stock the full amount

                                        2

                                    EXHIBIT A



in cash to which they shall be entitled, all legally available funds of the
Corporation will be distributed to the persons holding Series A Preferred Stock
and all other shares ranking on parity with the Series A Preferred Stock, on a
pro rata basis, and in proportion to the amounts to which each such person shall
be entitled. The Corporation will mail written notice of such liquidation,
dissolution or winding up, not less than 60 days prior to the payment dates
stated therein, to each person of record holding Series A Preferred Stock (by
air mail if addressed outside the United States).

            (b)   After payment to the holders of Series A Preferred Stock of
the amounts set forth in Section 3 (a) above, and after payment in full of all
amounts owing to the holders of all shares of all classes or series of stock
having rights on parity with the Series A Preferred Stock, and after payment in
full of all amounts owing to the holders of all shares of all classes or series
of stock having rights junior to the Series A Preferred Stock and all other
shares ranking on parity with the Series A Preferred Stock, but senior to the
Common Stock, the entire remaining assets and funds of the Corporation legally
available for distribution, if any, shall be distributed among the holders of
the Common Stock, the Series A Preferred Stock, and the shares having rights on
parity with the Series A Preferred Stock, in proportion to the shares of Common
Stock then held by them, the shares of Common Stock which they then have the
right to acquire upon conversion of the shares of Series A Preferred Stock then
held by them, and the shares of Common Stock which they then have the right to
acquire upon conversion of the shares having rights on parity with the Series A
Preferred Stock.

            (c)   For purposes of this Section 3, (i) any acquisition of the
Corporation by means of merger or other form of corporate reorganization in
which outstanding shares of the Corporation are exchanged for securities or
other consideration issued, or caused to be issued, by the acquiring corporation
(other than a mere reincorporation transaction) or (ii) a sale of all or
substantially all of the assets of the Corporation, shall be treated as a
liquidation, dissolution or winding up of the Corporation and shall entitle the
holders of Series A Preferred Stock and Common Stock to receive at the closing
in cash, securities or other property (valued as provided in Section 3(d) below)
amounts as specified in Sections 3(a) through 3(b) above.

            (d)   Whenever the distribution provided for in this Section 3 shall
be payable in securities or property other than cash, the value of such
distribution shall be the fair market value of such securities or other property
as determined in good faith by the Board of Directors.

      4.    CONVERSION.

            A.    Right to Convert. Each share shall be convertible, at the
option of the holder thereof, at any time after the issuance of such share, into
one (1) fully paid and nonassessable share of Common Stock.

            B.    AUTOMATIC CONVERSION. Each share shall automatically be

                                        3

                                    EXHIBIT A



converted into one (1) fully paid and nonassessable share of Common Stock
immediately upon the closing of the sale of the Corporation's Common Stock in a
firm commitment, underwritten public offering registered under the Securities
Act of 1933, as amended ("Securities Act"), other than a registration relating
solely to a transaction under Rule 145 under such Act (or any successor thereto)
or to an employee benefit plan of the Corporation, at a public offering price
(prior to underwriters' discounts and expenses) equal to or exceeding $4.00 per
share of Common Stock (as adjusted for any stock dividends, combinations or
splits with respect to such shares) and the aggregate proceeds to the
Corporation and/or to any selling shareholders (after deduction for
underwriters' discounts and expenses relating to the issuance, including without
limitation fees of the Corporation's counsel) of which exceed $10,000,000.

            C.    MECHANICS OF CONVERSION.

                  (i)   If the number of outstanding shares of Common Stock have
been increased or decreased since the initial subscription and payment for the
Series A Preferred Stock by the holders thereof, by reason of any additional
Common Stock issuance, split, stock dividend, merger, consolidation or other
capital change or reorganization affecting the number of shares of Common Stock,
the number of shares of Common Stock to be issued on conversion to the holders
of the Series A Preferred Stock shall be adjusted so as to preserve fairly and
equitably, as far as reasonably possible, the original conversion rights of the
shares being converted.

                  (ii)  No adjustment in the conversion rate is required unless
it would result in at least a one percent (1%) increase or decrease in the
conversion rate, however, any adjustment not made is carried forward,

                  (iii) If any capital reorganization, reclassification,
consolidation, merger or any sale of all or substantially all of the
Corporation's assets to another individual, partnership or corporation
(collectively, any "Organic Change") is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition to such Organic Change, lawful and adequate
provision (in form and substance satisfactory to the holders of a majority of
the Series A Preferred Stock then outstanding) will be made whereby each of the
holders of Series A Preferred Stock will thereafter have the right to acquire
and receive in lieu of shares of Common Stock immediately theretofore acquirable
and receivable upon the conversion of such holder's Series A Preferred Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon conversion of the Series A Preferred
Stock had such Organic Change not taken place. In any such case, appropriate
provision will be made with respect to such holder's rights and interests to the
end that the provisions of this Section 4 and Section 3 will thereafter be
applicable in relation to any shares of stock, securities or assets thereafter
deliverable upon the conversion of the Series A Preferred Stock (including, in
the case of any consolidation, merger or sale in which the successor corporation
or purchasing corporation is other than the Corporation, an immediate adjustment
of

                                        4

                                    EXHIBIT A



the conversion ratio or price to the value for the Common Stock reflected by the
terms of such consolidation, merger or sale, and a corresponding immediate
adjustment in the number of shares of Common Stock acquirable and receivable
upon conversion of the Series A Preferred Stock, if the value so reflected is
less than the conversion ratio or price in effect immediately prior to such
consolidation, merger or sale). The Corporation will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets assumes by
written instrument (in form reasonably satisfactory to the holders of a majority
of the Series A Preferred Stock then outstanding), the obligation to deliver to
each such holder such shares of stock, securities or assets as, in accordance
with the foregoing provision, such holder may be entitled to acquire.

                  (iv)  In the event the Corporation, at any time after the
Original Issue Date, shall issue Additional Shares of Common Stock without
consideration or for a consideration per share less than the Threshold Amount
(as defined below), then and in such event, the number of shares of Common Stock
to be issued on conversion to the holders of Series A Preferred Stock shall be
adjusted to reflect such issuance of Additional Shares of Common Stock by
multiplying the Threshold Amount by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such issue
plus the number of shares of Common Stock which the aggregate consideration
received by the Corporation for the total number of Additional Shares of Common
Stock so issued would purchase for the Threshold Amount per share, and the
denominator of which shall be number of shares of Common Stock outstanding
immediately prior to such issue plus the number of such Additional Shares of
Common Stock so issued. For the purpose of the above calculation, the number of
shares of Common Stock outstanding immediately prior to such issue shall be
calculated on a fully diluted basis, as if all shares of Series A Preferred
Stock and all Convertible Securities had been fully converted into shares of
Common Stock immediately prior to such issuance and any outstanding warrants,
options or other rights for the purchase of shares of stock or convertible
securities had been fully exercised immediately prior to such issuance (and the
resulting securities fully converted into shares of Common Stock, if so
convertible) as of such date, but not including in such calculation any
additional shares of Common Stock issuable with respect to shares of Series A
Preferred Stock, Convertible Securities, or outstanding options, warrants or
other rights for the purchase of shares of stock or convertible securities,
solely as a result of the adjustment of the conversion ratio for the Series A
Preferred Stock resulting from the issuance of Additional Shares of Common Stock
causing such adjustment. The "Threshold Amount" shall initially be $1.25 and
shall be adjusted from time to time commensurately with each change in the
conversion ratio, as initially specified in Section 4(A), including without
limitation, changes contemplated under Section 4(C)(i), so as to preserve fairly
and equitably, as far as reasonably possible, the original rights of the holders
of the Series A Preferred Stock.

                  (v)   The holder of any shares of Series A Preferred Stock may
exercise the conversion rights granted by this Section by delivering to the
Corporation during regular business hours, the certificate or certificates for
the shares to be converted, duly endorsed

                                        5

                                    EXHIBIT A



for transfer to the Corporation (if required by it), accompanied by written
notice stating that the holder elects to convert such shares. Conversion shall
be deemed to have been effected on the date when such delivery is made, and such
date is referred to herein as the "Conversion Date." As promptly as practicable
thereafter the Corporation shall issue and deliver to, or upon the written order
of such holder, at such office or other place designated by the Corporation, a
certificate or certificates for the number of full shares of Common Stock to
which such holder is entitled together with a scrip certificate or cash in lieu
of any fraction of a share as provided hereunder. The holder shall be deemed to
have become a shareholder of record on the next succeeding date on which the
transfer books are open. Upon conversion of only a portion of the number of
shares of Series A Preferred Stock represented by a certificate surrendered for
conversion, the Corporation, upon written order and at its own expense, shall
issue and deliver to the holder of the certificate so surrendered for
conversion, a new certificate covering the number of shares of Series A
Preferred Stock representing the unconverted portion of the certificate so
surrendered.

                  (vi)  No fractional shares of Common Stock shall be issued
upon conversion of shares of Series A Preferred Stock. If more than one share of
Series A Preferred Stock shall be surrendered for conversion at any one time by
the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Series A Preferred Stock so surrendered. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion of any
shares of Series A Preferred Stock, the Corporation shall, in lieu of delivering
the fractional share therefor, at its option either (i) adjust the fractional
interest by payment to the holder of the converted Series A Preferred Stock in
an amount equal (computed to the nearest cent) to the then current market value
of the fractional interest or (ii) issue nondividend bearing and nonvoting scrip
certificates for fractions of a share which would otherwise be issuable, in form
and containing terms and conditions as determined by the Board of Directors, and
exchangeable, within the period following the date of issue as the Board of
Directors shall fix, together with other unexpired scrip certificates or like
tenor aggregating one or more full shares, for share certificates representing
the full share or shares.

                  (vii) The Corporation shall at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the
purpose of effecting the conversion of the Series A Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of all Series A
Preferred Stock from time to time (subject to obtaining necessary director and
shareholder action), and in accordance with the laws of the State of California,
increase the authorized amount of its Common Stock if at any time the authorized
number of shares of its Common Stock remaining unissued shall not be sufficient
to permit the conversion of all of the shares of Series A Preferred Stock at the
time outstanding.

      5.    FULLY PAID AND NONASSESSABLE.

            The shares of Series A Preferred Stock, when issued, will be duly
and validly issued, fully paid and nonassessable.

                                        6

                                    EXHIBIT A



      6.    RESTRICTIONS AND LIMITATIONS.

            A.    RESTRICTIONS AND LIMITATIONS. So long as any shares of Series
A Preferred Stock remain outstanding, the Corporation shall not, without
obtaining approval (by vote or written consent, as provided by law) of the
holders of a majority of the outstanding shares of Series A Preferred Stock and
all other shares ranking on parity with the Series A Preferred Stock:

                  (i)   Authorize or issue, or obligate itself to issue, any
other equity security (including any security convertible into or exercisable
for any equity security) on parity with, or senior to, the Series A Preferred
Stock as to dividend rights or liquidation preferences;

                  (ii)  Redeem, purchase or otherwise acquire (or pay into or
set aside for a sinking fund for such purpose) any of the Common Stock otherwise
than as permitted herein;

                  (iii) Effect any sale, lease, assignment, transfer, or other
conveyance of all or substantially all of the assets of the Corporation, or any
consolidation or merger involving the Corporation, unless the Corporation shall
be the continuing or surviving entity of such consolidation or merger; or

                  (iv)  Effect any reclassification or other change of any of
the Corporation's outstanding capital stock, or any recapitalization.

            B.    NO REISSUANCE OF SERIES A PREFERRED STOCK. No share or shares
of Series A Preferred Stock acquired by the Corporation by reason of purchase or
otherwise shall be reissued, and all such shares shall be canceled, retired and
eliminated from the shares which the Corporation shall be authorized to issue.

      7.    MISCELLANEOUS.

            A.    CERTAIN DEFINITIONS.

                  "ADDITIONAL SHARES OF COMMON STOCK" means all shares of Common
Stock issued by the Corporation after the Original Issue Date, including,
without limitation, shares of Common Stock to be issued after the Original Issue
Date upon exercise or conversion of any option, warrant or other security
exchangeable for or convertible into shares of Common Stock, other than shares
of Common Stock issued or issuable:

                  (i)   upon conversion of shares of Series A Preferred Stock;

                                        7

                                    EXHIBIT A



                  (ii)  to officers, directors or employees of, or consultants
to, the Corporation pursuant to stock option, equity incentive or stock purchase
plans or agreements on terms approved by the Board of Directors; or

                  (iii) as a dividend or distribution on Series A Preferred
Stock.

                  "COMMON STOCK" means collectively, the Corporation's common
stock and any capital stock of any class of the Corporation hereafter authorized
which is not limited to a fixed sum or percentage of par or stated value in
respect to the rights of the holders thereof to participate in dividends or in
the distribution of assets upon any liquidation, dissolution or winding up of
the Corporation.

                  "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares (other than Common Stock and Series A Preferred Stock) or
other securities convertible into or exchangeable for Common Stock.

                  "LIQUIDATION VALUE" of any Share as of any particular date
will be equal to the sum of $1.25 plus any accrued, but unpaid dividends on such
Share which otherwise would be added to the Liquidation Value of such Share on
that date if that date were deemed a Dividend Reference Date; and, in the event
of any liquidation, dissolution or winding up of the Corporation or the
redemption of such Shares, unpaid dividends on such Shares will be added to the
Liquidation Value of such Share on the payment date in any liquidation,
dissolution or winding up (as contemplated in Section 3 hereof), accrued to the
close of business on such payment date.

                  "ORIGINAL ISSUE DATE" shall mean the date on which the first
share of Series A Preferred Stock was issued.

                  "PERSON" means an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.

                  "SUBSIDIARY" means any corporation of which shares of stock
having at least a majority of the general voting power in electing the board of
directors is, at the time as of which any determination is being made, owned by
the Corporation either directly or indirectly through Subsidiaries.

            B.    NOTICES. All notices referred to herein, except as otherwise
expressly provided, will be hand delivered or made by registered or certified
mail, return receipt requested, postage prepaid and shall be deemed to have been
given when so hand delivered or mailed.

                                        8

                                    EXHIBIT A



            C.    REGISTRATION OF TRANSFER. The Corporation will keep at its
principal office a register for the registration of Series A Preferred Stock.
Upon the surrender of any certificate representing Series A Preferred Stock at
such place, the Corporation will, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefore representing in the aggregate
the number of shares of Series A Preferred Stock represented by the surrendered
certificate. Each such new certificate will be registered in such name and will
represent such number of shares of Series A Preferred Stock as is requested by
the holder of the surrendered certificate.

            D.    REPLACEMENT. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit of the registered holder, without bond, will be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of Series A Preferred Stock, the
Corporation will (at its expense) execute and deliver in lieu of such
certificate a new certificate representing the number of shares of Series A
Preferred Stock represented by such lost, stolen, destroyed or mutilated
certificate.

            E.    AMENDMENT AND WAIVER. No amendment, modification or waiver
of this Certificate of Determination will be binding or effective with respect
to (i) any provision affecting or relating to dividends, conversion or
redemption without the prior written consent of holders of at least 60% of the
Series A Preferred Stock outstanding at the time such action is taken, or (ii)
any other provision of this Certificate of Determination without the prior
written consent of holders of two-thirds of the Series A Preferred Stock
outstanding at the time such action is taken.

                                        9

                                    EXHIBIT A



                                     AMENDED
                          CERTIFICATE OF DETERMINATION
                                       OF
                            SERIES B PREFERRED STOCK
                                       OF
                           AMERICAN MOLD GUARD, INC.,
                            A CALIFORNIA CORPORATION

      The undersigned, Bradley Barnes and Thomas Blakeley, hereby certify,
respectively, that:

      1.    They are the President and Secretary, respectively, of American Mold
Guard, Inc., a California corporation (the "Corporation").

      2.    Pursuant to authority given by the Corporation's Articles of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recitals and resolutions:

                  WHEREAS, the Articles of Incorporation of the Corporation
      provides for a class of shares known as Preferred Stock, issuable from
      time to time in one or more series; and

                  WHEREAS, the Board of Directors is authorized to determine or
      alter the rights, preferences, privileges and restrictions granted to or
      imposed upon any wholly unissued series of Preferred Stock, to fix the
      number of shares constituting any such series, and to determine the
      designation thereof, or any of them; and

                  WHEREAS, the Articles of incorporation provide that the
      initial series of Preferred Stock shall consist of 480,000 shares
      designated "Series A Preferred Stock," which series has been issued, and
      that the Board of Directors is authorized within the limitations and
      restrictions stated in the Articles of Incorporation to determine or alter
      the rights, preferences, privileges, and restrictions granted to or
      imposed upon any wholly unissued series of Preferred Stock, to fix the
      number of shares constituting any such series, and to determine the
      designation thereof, except Series A; and

                  WHEREAS, pursuant to its authority to determine the rights,
      preferences, privileges and restrictions granted to or imposed upon any
      wholly unissued series of Preferred Stock, to fix the number of shares
      constituting any such series, and to determine the designation thereof, or
      any of them, the Board of Directors, on or about March 3, 2004 and
      September 1, 2004, fixed the rights, preferences and restrictions relating
      to a second series of Preferred Stock designated as "Series B Preferred
      Stock"; and



                  WHEREAS, the Board of Directors of the Corporation now desire
      to amend and change the rights, preferences and privileges or restrictions
      of the Series B Preferred Stock.

                  NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors
      hereby amends and changes the rights, preferences and privileges of the
      Series B Preferred Stock as set forth on Exhibit A attached hereto and by
      this reference incorporated herein.

                  RESOLVED, FURTHER, that the President, and any officer
      designated by him, shall be, and hereby are, authorized to execute, verify
      and file an Amended Certificate of Determination of Series B Preferred
      Stock in accordance with California law.

      3.    The foregoing amendment to the Certificate of Determination of
Series B Preferred Stock has been duly approved by the required vote of
shareholders in accordance with Section 902 and 903 of the California
Corporations Code. The total number of outstanding shares of common stock of the
corporation is 2,631,754. The total number of outstanding shares of Series A
Preferred Stock is 480,000. The total number of outstanding shares of Series B
Preferred Stock is 465,000. The number of shares of common stock voting in favor
of the amendment equaled or exceeded the vote required. The total number of
shares of Series A Preferred Stock voting in favor of the amendment equaled or
exceeded the vote required. The total number of shares of Series B Preferred
Stock voting in favor of the amendment equaled or exceeded the vote required.
The total number of outstanding shares of common stock, Series A Preferred Stock
and Series B Preferred Stock, voting together as one class, equaled or exceeded
the vote required. The percentage vote required of common stock was more than
50%. The percentage vote required of Series A Preferred Stock was 100%. The
percentage vote required of Series B Preferred Stock was l00%. The percentage
vote required of the common stock, Series A Preferred Stock and Series B
Preferred Stock, voting together as one class, was more than 50%.

      IN WITNESS WHEREOF, the undersigned have executed this Amended Certificate
of Determination on the 1st day of November 2004.

                                                   /s/ Bradley Barnes
                                                   -----------------------------
                                                   Bradley Barnes, President

                                                   /s/ Tom Blakeley
                                                   -----------------------------
                                                   Tom Blakeley, Secretary

                                        2



      The undersigned, Bradley Barnes and Thomas Blakeley, the President and
Secretary, respectively, of American Mold Guard, Inc. declare under penalty of
perjury that the matters set forth in the foregoing Amended Certificate of
Determination of Series B Preferred Stock are true of their own knowledge.

      Executed at Irvine, California on the 1st day of November 2004.

                                                   /s/ Bradley Barnes
                                                   -----------------------------
                                                   Bradley Barnes, President

                                                   /s/ Tom Blakeley
                                                   -----------------------------
                                                   Tom Blakeley, Secretary

                                        3



                             DESIGNATION AND AMOUNT

      An aggregate of one million two hundred ten thousand (1,210,000) shares of
the Preferred Stock of American Mold Guard, Inc., a California corporation (the
"Corporation") shall be designated as "Series B Preferred Stock."

      1.    DIVIDENDS.

            A.    GENERAL OBLIGATION. When and as declared by the Board of
Directors of the Corporation and to the extent permitted under the General
Corporation Law of California, the Corporation will pay preferential dividends
to the holders of the Series B Preferred Stock. Except as otherwise provided
herein, dividends on each share of Series B Preferred Stock (a "Share") will
accrue cumulatively on a daily basis at the rate of eight percent (8%) per annum
of the Liquidation Value thereof from and including the date of issuance of such
Share, whether or not such dividends have been declared and whether or not there
are profits, surplus or other funds of the Corporation legally available for the
payment of dividends. The date on which the Corporation initially issues any
Share will be deemed to be the "Series B Original Issue Date" regardless of the
number of times transfer of such Share is made on the stock records maintained
by or for the Corporation and regardless of the number of certificates which may
be issued to evidence such Shares.

            B.    DIVIDEND REFERENCE DATES. To the extent not paid on the 15th
day of each June and December, beginning June 15, 2004 (the "Dividend Reference
Dates"), all dividends which have accrued on each Share then outstanding during
the annual period ending upon such Dividend Reference Date will be added to the
Liquidation Value of such Share and will remain a part thereof until such
dividends are paid.

            C.    PAYMENT OF DIVIDENDS. Dividends shall be paid by forwarding a
check, postage prepaid, to the address of each such holder (or in the case of
joint holders, to the address of either such holder) of Series B Preferred Stock
as shown on the books of the Corporation, unless such holder specifies another
address by written notice to the Corporation. The forwarding of such check will
satisfy all obligations of the Corporation with respect to such dividends,
unless such check is not paid upon timely presentation.

            D.    DISTRIBUTION OF PARTIAL DIVIDEND PAYMENTS. If at any time the
Corporation pays less than the total amount of dividends then accrued with
respect to the Series B Preferred Stock, such payment will be distributed among
the holders of a Share so that an equal amount will be paid with respect to each
outstanding Share.

            E.    RESTRICTIONS ON DIVIDEND PAYMENTS. All shares of Common Stock
shall rank junior to the Series B Preferred Stock as to dividends. The Series B
Preferred Stock shall rank junior to the Series A Preferred Stock as to
dividends.

                                    EXHIBIT A



      So long as any Shares remain outstanding, no dividend shall be paid or
declared, or declared and set apart for payment, or other distribution made, on
the shares of any class of stock ranking, as to dividend rights, junior to the
Series B Preferred Stock, nor shall any shares of any class of stock (or series
thereof) of the corporation ranking, as to dividend rights, junior to, or on
parity with the Series B Preferred Stock, be purchased, redeemed or otherwise
acquired for value by the Corporation, unless dividends on the Series B
Preferred Stock shall have been declared and paid, or declared and set apart for
payment, for all past Series B Dividend Reference Dates ending immediately prior
to the date on which such dividend, distribution, purchase, redemption or
acquisition is to occur and the then current Series B Dividend Reference Date;
provided, however, that the foregoing restriction shall not apply (a) to the
declaration and payment, on shares ranking junior to the Series B Preferred
Stock as to dividends rights, of dividends payable solely in shares of stock of
any class of shares ranking junior to the Series B Preferred Stock as to
dividend rights or, (b) to the acquisition of any shares ranking junior to the
Series B Preferred Stock as to dividend rights through application of the
proceeds of the issue and sale of any class of any shares ranking junior to, or
on a parity, with the Series B Preferred Stock as to dividends rights sold at or
about the time of such acquisition. No dividends shall be paid or declared, or
declared and set apart for payment, or other distribution made on any shares of
any class of stock (or series thereof) of the Corporation ranking, as to
dividend rights, on a parity with the Series B Preferred Stock for any dividend
period unless, at the same time, a like proportion of dividends for the same or
similar dividend period, ratably in proportion to the respective annual dividend
rate fixed therefore, shall be paid or declared, or declared and set apart for
payment, on all shares of Series B Preferred Stock.

      2.    VOTING.

            Except as otherwise required by law or as set forth herein, the
holders of the Series B Preferred Stock shall, together with the holders of
shares of Common Stock, all voting as one class, posses voting power for the
election of directors and for all other purposes. In the exercise of voting
powers, holders of the Series B Preferred Stock shall be entitled to one vote
for each such share held. Notwithstanding the foregoing, the consent of the
holders of a majority of the shares of Series B Preferred Stock and Series C
Preferred Stock, voting as one class, at the time outstanding, given in person
or by proxy, by a vote at a meeting called for the purpose at which the holders
of shares of the Series B Preferred Stock and Series C Preferred Stock shall
vote together as a separate class, shall be necessary for authorizing,
effecting, or validating either of the following:

            (i)   the creation, authorization or issue of any shares of any
                  class of stock of the Corporation ranking prior to or on
                  parity with the shares of the Series B Preferred Stock as to
                  dividends or upon liquidation or otherwise, or the
                  reclassification of any authorized stock of the Corporation
                  into any such prior shares, or the creation, authorization or
                  issue of any obligation or security convertible into or
                  evidencing the right to purchase any such prior shares; or

                                        2

                                    EXHIBIT A



            (ii)  take any action so as to affect adversely the preferences,
                  rights or privileges of the Series B Preferred Stock.

      3.    LIQUIDATION. In the event of a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, each holder of Series B Preferred
Stock shall be entitled to receive out of the assets of the Corporation
available for distribution to shareholders, after payment in full to the holders
of Series A Preferred Stock an amount per share equal to, but no more than, the
Series A Liquidation Value (as hereinafter defined), and after payment in full
of all amounts owing to the holders of all shares of all classes or series of
stock having rights senior to the Series B Preferred Stock upon the liquidation,
dissolution or winding up of the Corporation, an amount per share equal to, but
no more than, the Series B Liquidation Value (as hereinafter defined). Until
payment to the holders of the Series B Preferred Stock of all amounts owing as
aforesaid, or until money or other assets sufficient for such payment shall have
been set apart from its other funds and assets for payment by the Corporation,
for the account of such holders, so as to be and continue to be available for
payment to such holders, no payment or distribution upon such liquidation,
dissolution or winding up shall be made to holders of shares ranking junior to,
or on a parity with, the Series B Preferred Stock as to rights upon the
liquidation, dissolution or winding up. The Common Stock shall be junior to the
Series B Preferred Stock as to rights upon the liquidation, dissolution or
liquidation or winding up of the Corporation. The Series A Preferred Stock shall
be senior to the Series B Preferred Stock with respect to the right to receive
payment or distribution equal to the Series A Liquidation Value upon the
liquidation, dissolution or winding up of the Corporation. If upon any such
liquidation, dissolution or winding up, the assets of the Corporation available
for payment and distribution to shareholders are insufficient to make payment in
full, as hereinabove provided, to the holders of the Series B Preferred Stock
and the holders of all other shares of all classes or series of stock which rank
on a parity with the Series B Preferred Stock as to rights upon the liquidation,
dissolution or winding up of the Corporation, payment shall be made to such
holders ratably in accordance with the liquidation value of shares hold by them,
respectively.

      For purposes of this Section 3, (i) any acquisition of the Corporation by
means of merger or other form of corporate reorganization in which outstanding
shares of the Corporation are exchanged for securities or other consideration
issued, or caused to be issued, by the acquiring corporation (other than a mere
reincorporation transaction) or (ii) a sale of all or substantially all of the
assets of the Corporation, shall be treated as a liquidation, dissolution or
winding up of the Corporation and shall entitle the holders of Series A
Preferred Stock, Series B Preferred Stock and Common Stock to receive at the
closing in cash, securities or other property amounts as specified in this
Section 3.

      Whenever the distribution provided for in this Section 3 shall be payable
in securities or property other than cash, the value of such distribution shall
be the fair market value of such securities or other property as determined in
good faith by the Board of Directors.

                                        3

                                    EXHIBIT A



      4.    REDEMPTION. The Corporation shall have the right at any time to
redeem the Shares, or any number of shares thereof, issued and outstanding, at
any time by paying to the holders thereof the Series B Liquidation Value per
Share. The Board of Directors shall have the full power and discretion to select
from the outstanding Series B Preferred Stock particular Shares for redemption.
In all instances, the Board of Directors shall have complete authority to
determine and take all necessary action to effect the cancellation of the
certificates representing such Shares. Upon completion of such actions, the
rights of holders of shares of Series B Preferred Stock which have been redeemed
shall in all respects cease, provided that such holders shall be entitled to
receive the redemption price for such Shares. Notice of redemption shall be
mailed by the Secretary of the Corporation to holders of record of the Series B
Preferred Stock to be redeemed, at their addresses as they shall appear on the
records of the Corporation. The Board of Directors shall have the power to the
extent permitted by law to determine the source of funds to be used for
redeeming such stock.

      5.    CONVERSION.

            A.    RIGHT TO CONVERT. Each Share shall be convertible, at the
option of the holder thereof, at any time after the issuance of such Share, into
one (1) fully paid and nonassessable share of Common Stock.

            B.    AUTOMATIC CONVERSION. Each Share shall automatically be
converted into one (1) fully paid and nonassessable share of Common Stock
immediately upon the closing of the sale of the Corporation's Common Stock in a
firm commitment, underwritten public offering registered under the Securities
Act of 1933, as amended ("Securities Act"), other than a registration relating
solely to a transaction under Rule 145 under such Act (or any successor thereto)
or to an employee benefit plan of the Corporation, at a public offering price
(prior to underwriters' discounts and expenses) equal to or exceeding $4.00 per
share of Common Stock (as adjusted for any stock dividends, combinations or
splits with respect to such shares) and the aggregate proceeds to the
Corporation and/or to any selling shareholders (after deduction for
underwriters' discounts and expenses relating to the issuance, including without
limitation fees of the Corporation's counsel) of which exceed $10,000,000.

            C.    MECHANICS OF CONVERSION.

                  (i)   If the number of outstanding shares of Common Stock have
been increased or decreased since the initial subscription and payment for the
Series B Preferred Stock by the holders thereof, by reason of any additional
Common Stock issuance, split, stock dividend, merger, consolidation or other
capital change or reorganization affecting the number of shares of Common Stock,
the number of shares of Common Stock to be issued on conversion to the holders
of the Series B Preferred Stock shall be adjusted so as to preserve fairly and
equitably, as far as reasonably possible, the original conversion rights of the
shares being converted.

                                        4

                                    EXHIBIT A



                  (ii)  No adjustment in the conversion rate is required unless
it would result in at least a one percent (1%) increase or decrease in the
conversion rate, however, any adjustment not made is carried forward.

                  (iii) If any capital reorganization, reclassification,
consolidation, merger or any sale of all or substantially all of the
Corporation's assets to another individual, partnership or corporation
(collectively, any "Organic Change") is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition to such Organic Change, lawful and adequate
provision (in form and substance satisfactory to the holders of a majority of
the Series B Preferred Stock then outstanding) will be made whereby each of the
holders of Series B Preferred Stock will thereafter have the right to acquire
and receive in lieu of shares of Common Stock immediately theretofore acquirable
and receivable upon the conversion of such holder's Series B Preferred Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon conversion of the Series B Preferred
Stock had such Organic Change not taken place. In any such case, appropriate
provision will be made with respect to such holder's rights and interests to the
end that the provisions of this Section 5 and Section 3 will thereafter be
applicable in relation to any shares of stock, securities or assets thereafter
deliverable upon the conversion of the Series B Preferred Stock (including, in
the case of any consolidation, merger or sale in which the successor corporation
or purchasing corporation is other than the Corporation, an immediate adjustment
of the conversion ratio or price to the value for the Common Stock reflected by
the terms of such consolidation, merger or sale, and a corresponding immediate
adjustment in the number of shares of Common Stock acquirable and receivable
upon conversion of the Series B Preferred Stock, if the value so reflected is
less than the conversion ratio or price in effect immediately prior to such
consolidation, merger or sale). The Corporation will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets assumes by
written instrument (in form reasonably satisfactory to the holders of a majority
of the Series B Preferred Stock then outstanding), the obligation to deliver to
each such holder such shares of stock, securities, or assets as, in accordance
with the foregoing provision, such holder may be entitled to acquire.

                  (iv)  The holder of any shares of Series B Preferred Stock may
exercise the conversion rights granted by this Section by delivering to the
Corporation during regular business hours, the certificate or certificates for
the shares to be converted, duly endorsed for transfer to the Corporation (if
required by it), accompanied by written notice stating that the holder elects to
convert such shares. Conversion shall be deemed to have been effected on the
date when such delivery is made, and such date is referred to herein as the
"Conversion Date." As promptly as practicable thereafter the Corporation shall
issue and deliver to, or upon the written order of such holder, at such office
or other place designated by the Corporation, a certificate or

                                        5

                                    EXHIBIT A



certificates for the number of full shares of Common Stock to which such holder
is entitled together with a scrip certificate or cash in lieu of any fraction of
a share as provided hereunder. The holder shall be deemed to have become a
shareholder of record on the next succeeding date on which the transfer books
are open. Upon conversion of only a portion of the number of shares of Series B
Preferred Stock represented by a certificate surrendered for conversion, the
Corporation, upon written order and at its own expense, shall issue and deliver
to the holder of the certificate so surrendered for conversion, a new
certificate covering the number of shares of Series B Preferred Stock
representing the unconverted portion of the certificate so surrendered.

                  (vi)  No fractional shares of Common Stock shall be issued
upon conversion of shares of Series B Preferred Stock. If more than one share of
Series B Preferred Stock shall be surrendered for conversion at any one time by
the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Series B Preferred Stock so surrendered. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion of any
shares of Series B Preferred Stock, the Corporation shall, in lieu of delivering
the fractional share therefor, at its option either (i) adjust the fractional
interest by payment to the holder of the converted Series B Preferred Stock in
an amount equal (computed to the nearest cent) to the then current market value
of the fractional interest or (ii) issue nondividend bearing and nonvoting scrip
certificates for fractions of a share which would otherwise be issuable, in form
and containing terms and conditions as determined by the Board of Directors, and
exchangeable, within the period following the date of issue as the Board of
Directors shall fix, together with other unexpired scrip certificates or like
tenor aggregating one or more full shares, for share certificates representing
the full share or shares.

                  (vii) The Corporation shall at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the
purpose of effecting the conversion of the Series B Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of all Series B
Preferred Stock from time to time (subject to obtaining necessary director and
shareholder action), and in accordance with the laws of the State of California,
increase the authorized amount of its Common Stock if at any time the authorized
number of shares of its Common Stock remaining unissued shall not be sufficient
to permit the conversion of all of the shares of Series B Preferred Stock at the
time outstanding.

      6.    FULLY PAID AND NONASSESSABLE.

            The Shares, when issued, will be duly and validly issued, fully paid
and nonassessable.

      7.    RESTRICTIONS AND LIMITATIONS.

            A.    RESTRICTIONS AND LIMITATIONS. So long as any shares of
Series B Preferred Stock remain outstanding, the corporation shall not, without
obtaining approval (by

                                        6

                                    EXHIBIT A



vote or written consent, as provided by law) of a majority of the outstanding
shares of Series B Preferred Stock and Series C Preferred Stock:

                  (i)   Authorize or issue, or obligate itself to issue, any
other equity security (including any security convertible into or exercisable
for any equity security) on parity with, or senior to, the Series B Preferred
Stock as to dividend rights or liquidation preferences;

                  (ii)  Redeem, purchase or otherwise acquire (or pay into or
set aside for a sinking fund for such purpose) any of the Common Stock otherwise
than as permitted herein;

                  (iii) Effect any sale, lease, assignment, transfer, or other
conveyance of all or substantially all of the assets of the Corporation, or any
consolidation or merger involving the Corporation, unless the Corporation shall
be the continuing or surviving entity of such consolidation or merger; or

                  (iv)  Effect any reclassification or other change of any of
the Corporation's outstanding capital stock, or any recapitalization.

            B.    NO REISSUANCE OF SERIES B PREFERRED STOCK. No share or shares
of Series B Preferred Stock acquired by the Corporation by reason of purchase or
otherwise shall be reissued, and all such shares shall be canceled, retired and
eliminated from the shares which the Corporation shall be authorized to issue.

      8.    MISCELLANEOUS.

            A.    CERTAIN DEFINITIONS.

                  "ADDITIONAL SHARES OF COMMON STOCK" means all shares of Common
Stock issued by the Corporation after the Original Issue Date, including,
without limitation, shares of Common Stock to be issued after the Original Issue
Date upon exercise or conversion of any option, warrant or other security
exchangeable for or convertible into shares of Common Stock, other than shares
of Common Stock issued or issuable:

                  (i)   upon conversion of shares of Series B Preferred Stock;

                  (ii)  to officers, directors or employees of, or consultants
to, the Corporation pursuant to stock option, equity incentive or stock purchase
plans or agreements on terms approved by the Board of Directors; or

                  (iii) as a dividend or distribution on Series B Preferred
Stock.

                                        7

                                    EXHIBIT A



                  "COMMON STOCK" means collectively, the Corporation's common
stock and any capital stock of any class of the Corporation hereafter authorized
which is not limited to a fixed sum or percentage of par or stated value in
respect to the rights of the holders thereof to participate in dividends or in
the distribution of assets upon any liquidation, dissolution or winding up of
the Corporation.

                  "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares (other than Common Stock, Series A Preferred Stock and
Series B Preferred Stock) or other securities convertible into or exchangeable
for Common Stock.

                  "ORIGINAL ISSUE DATE" shall mean the date on which the first
share of Series B Preferred Stock was issued.

                  "PERSON" means an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.

                  "SERIES A LIQUIDATION VALUE" of any share of Series A
Preferred Stock as of any particular date shall be equal to the sum of $1.25
plus any accrued, but unpaid dividends on such share of Series A Preferred Stock
which otherwise would be added to the Series A Liquidation Value of such share.

                  "SERIES B LIQUIDATION VALUE" of any share of Series B
Preferred Stock as of any particular date will be equal to the sum of $2.00 plus
any accrued, but unpaid dividends on such share of Series B Preferred Stock
which would otherwise be added to the Series B Liquidation Value of such share
on that date if that date were deemed a Dividend Reference Date; and, in the
event of any liquidation, dissolution or winding up of the Corporation or the
redemption of such shares of Series B Preferred Stock, unpaid dividends on such
shares of Series B Preferred Stock will be added to the Series B Liquidation
Value of such shares of Series B Preferred Stock on the payment date in any
liquidation, dissolution or winding up (as contemplated in Section 3 hereof),
accrued to the close of business on such payment date.

                  "SUBSIDIARY" means any corporation of which shares of stock
having at least a majority of the general voting power in electing the board of
directors is, at the time as of which any determination is being made, owned by
the Corporation either directly or indirectly through Subsidiaries.

            B.    NOTICES. All notices referred to herein, except as otherwise
expressly provided, will be hand delivered or made by registered or certified
mail, return receipt requested, postage prepaid and shall be deemed to have been
given when so hand delivered or mailed.

                                        8

                                    EXHIBIT A



            C.    REGISTRATION OF TRANSFER. The Corporation will keep at its
principal office a register for the registration of Series B Preferred Stock.
Upon the surrender of any certificate representing Series B Preferred Stock at
such place, the Corporation will, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefore representing in the aggregate
the number of shares of Series B Preferred Stock represented by the surrendered
certificate. Each such new certificate will be registered in such name and will
represent such number of shares of Series B Preferred Stock as is requested by
the holder of the surrendered certificate.

            D.    REPLACEMENT. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit of the registered holder, without bond, will be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of Series B Preferred Stock, the
Corporation will (at its expense) execute and deliver in lieu of such
certificate a new certificate representing the number of shares of series B
Preferred Stock represented by such lost, stolen, destroyed or mutilated
certificate.

            E.    AMENDMENT AND WAIVER. No amendment, modification or waiver of
this Certificate of Determination will be binding or effective with respect to
(i) any provision affecting or relating to dividends, conversion or redemption
without the prior written consent of holders of at least 60% of the Series B
Preferred Stock outstanding at the time such action is taken, or (ii) any other
provision of this Certificate of Determination without the prior written consent
of holders of two-thirds of the Series B Preferred Stock outstanding at the time
such action is taken.

                                        9

                                    EXHIBIT A



                          CERTIFICATE OF DETERMINATION
                                       OF
                            SERIES C PREFERRED STOCK
                                       OF
                           AMERICAN MOLD GUARD, INC.,
                            A CALIFORNIA CORPORATION

      The undersigned, Bradley Barnes and Thomas Blakeley, hereby certify,
respectively, that:

      1.    They are the President and Secretary, respectively, of American Mold
Guard, Inc., a California corporation (the "CORPORATION").

      2.    Pursuant to authority given by the Corporation's Articles of
Incorporation, the Board of Directors of the Corporation has duly adopted the
following recitals and resolutions:

                  WHEREAS, the Articles of Incorporation of the Corporation
      provides for a class of shares known as Preferred Stock, issuable from
      time to time in one or more series; and

                  WHEREAS, pursuant to its authority to determine the rights,
      preferences, privileges and restrictions granted to or imposed upon any
      wholly unissued series of Preferred Stock, to fix the number of shares
      constituting any such series, and to determine the designation thereof, or
      any of them, the Board of Directors, on or about June 23, 2003, fixed the
      rights, preferences, privileges and restrictions relating to an initial
      series of Preferred Stock designated as "SERIES A PREFERRED STOCK"; and,
      on or about November 20, 2003, restated the rights, preferences,
      privileges and restrictions related to the Corporation's Series A
      Preferred Stock;

                  WHEREAS, pursuant to its authority to determine the rights,
      preferences, privileges and restrictions granted to or imposed upon any
      wholly unissued series of Preferred Stock, to fix the number of shares
      constituting any such series, and to determine the designation thereof, or
      any of them, the Board of Directors, on or about May 3, 2004, fixed the
      rights, preferences and restrictions relating to a second series of
      Preferred Stock designated as "SERIES B PREFERRED STOCK"; and

                  WHEREAS, the Board of Directors desires, pursuant to its
      authority, to fix the terms of a third series of Preferred Stock, the
      number of shares constituting that series, and the designation of that
      series.

                  NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors
      hereby fixes and determines the designation of, the number of shares
      constituting, and the rights, preferences, privileges and restrictions
      relating to, a third series of Preferred Stock as follows:

                  (a)   The third series of Preferred Stock of this Corporation
                        shall be designated and known as "SERIES C PREFERRED
                        STOCK."



                  (b)   The number of shares constituting the Series C Preferred
                        Stock shall be 5,000,000.

                  (c)   The rights, preferences, privileges and restrictions
                        relating to the Series C Preferred Stock shall be as set
                        forth on Exhibit A attached hereto and by this reference
                        incorporated herein.

                  RESOLVED, FURTHER, that the President, and any officer
      designated by him, shall be, and hereby are, authorized to execute, verify
      and file a Certificate of Determination of Series C Preferred Stock in
      accordance with California law.

      3.    The authorized number of shares of Preferred Stock of the
Corporation is 10,000,000, and the number of shares of Preferred Stock
constituting Series C Preferred Stock, none of which has been issued, is
5,000,000.

      IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Designation on the 1st day of November 2004.

                                                    /s/ Bradley Barnes
                                                    ----------------------------
                                                    Bradley Barnes, President

                                                    /s/ Thomas Blakeley
                                                    ----------------------------
                                                    Thomas Blakeley, Secretary

      The undersigned, Bradley Barnes and Thomas Blakeley, the President and
Secretary, respectively, of American Mold Guard, Inc., declares under penalty of
perjury that the matters set forth in the foregoing Certificate of Determination
are true of his own knowledge.

      Executed at Irvine, California on the 1st day of November 2004.

                                                    /s/ Bradley Barnes
                                                    ----------------------------
                                                    Bradley Barnes, President

                                                    /s/ Thomas Blakeley
                                                    ----------------------------
                                                    Thomas Blakeley, Secretary

                                        2



                             DESIGNATION AND AMOUNT

      An aggregate of five million (5,000,000) shares of the Preferred Stock of
American Mold Guard, Inc., a California corporation (the "CORPORATION"), shall
be designated as "SERIES C PREFERRED STOCK."

      1.    DIVIDENDS.

            A.    GENERAL OBLIGATION. When and as declared by the Board of
Directors of the Corporation and to the extent permitted under the General
Corporation Law of California, the Corporation will pay preferential dividends
to the holders of the Series C Preferred Stock. Except as otherwise provided
herein, dividends on each share of Series C Preferred Stock (a "SERIES C SHARE")
will accrue cumulatively on a daily basis at the rate of eight percent (8%) per
annum of the Liquidation Value thereof from and including the date of issuance
of such Series C Share, whether or not such dividends have been declared and
whether or not there are profits, surplus or other funds of the Corporation
legally available for the payment of dividends. The date on which the
Corporation initially issues any Series C Share will be deemed to be the
"ORIGINAL ISSUE DATE" regardless of the number of times transfer of such Series
C Share is made on the stock records maintained by or for the Corporation and
regardless of the number of certificates which may be issued to evidence such
Series C Shares.

            B.    DIVIDEND REFERENCE DATES. To the extent not paid on the 15th
day of each June and December, beginning December 15, 2004 (the "DIVIDEND
REFERENCE DATES"), all dividends which have accrued on each Series C Share then
outstanding during the annual period ending upon such Dividend Reference Date
will be added to the Liquidation Value of such Series C Share and will remain a
part thereof until such dividends are paid.

            C.    PAYMENT OF DIVIDENDS. Dividends shall be paid by forwarding a
check, postage prepaid, to the address of each such holder (or in the case of
joint holders, to the address of either such holder) of Series C Preferred Stock
as shown on the books of the Corporation, unless such holder specifies another
address by written notice to the Corporation. The forwarding of such check will
satisfy all obligations of the Corporation with respect to such dividends,
unless such check is not paid upon timely presentation.

            D.    DISTRIBUTION OF PARTIAL DIVIDEND PAYMENTS. If at any time the
Corporation pays less than the total amount of dividends then accrued with
respect to the Series C Preferred Stock, such payment will be distributed among
the holders of a Series C Share so that an equal amount will be paid with
respect to each outstanding Series C Share.

            E.    OTHER DIVIDENDS. So long as any Series C Shares remain
outstanding, no dividend shall be paid or declared, or declared and set apart
for payment, or other distribution made, on the shares of any class of stock
ranking, as to dividend rights, junior to the Series C Preferred Stock, nor
shall any shares of any class of stock (or series thereof) of the Corporation
ranking, as to dividend rights, junior to, or on parity with the Series C
Preferred Stock, be purchased, redeemed or otherwise acquired for value by the
Corporation, unless dividends on the Series C Preferred Stock shall have been
declared and paid, or declared and set apart for payment, for all past Series C
Dividend Reference Dates ending immediately prior to the date on which such
dividend, distribution,

                                    EXHIBIT A



purchase, redemption or acquisition is to occur and the then current Series C
Dividend Reference Date: provided, however, that the foregoing restriction shall
not apply (a) to the declaration and payment, on shares ranking junior to the
Series C Preferred Stock as to dividends rights, of dividends payable solely in
shares of stock of any class of shares ranking junior to the Series C Preferred
Stock as to dividend rights or, (b) to the acquisition of any shares ranking
junior to the Series C Preferred Stock as to dividend rights through application
of the proceeds of the issue and sale of any class of any shares ranking junior
to, or on a parity, with the Series C Preferred Stock as to dividends rights
sold at or about the time of such acquisition. No dividends shall be paid or
declared, or declared and set apart for payment, or other distribution made on
any shares of any class of stock (or series thereof) of the Corporation ranking,
as to dividend rights, on a parity with the Series C Preferred Stock for any
dividend period unless, at the same time, a like proportion of dividends for the
same or similar dividend period, ratably in proportion to the respective annual
dividend rate fixed therefore, shall be paid or declared, or declared and set
apart for payment, on all Series C Shares.

            F.    RESTRICTIONS ON DIVIDEND PAYMENTS. All shares of Common Stock
and Series B Preferred Stock shall, rank junior to the Series C Preferred Stock
as to dividends. All shares of Series A Preferred Stock shall rank on parity to
the Series C Preferred Stock as to dividends.

      2.    VOTING.

            Except as otherwise required by law or as set forth herein, the
holders of the Series C Preferred Stock shall, together with the holders of
shares of Common Stock, all voting as one class, possess voting power for the
election of directors and for all other purposes. In the exercise of voting
powers, holders of the Series C Preferred Stock shall be entitled to one vote
for each such share held. Notwithstanding the foregoing, the consent of the
holders of a majority of the Series C Shares at the time outstanding, given in
person or by proxy, by a vote at a meeting called for the purpose at which the
holders of Series C Shares shall vote together as a separate class, shall be
necessary for authorizing, effecting or validating either of the following:

            (i)   the creation, authorization or issue of any shares of any
                  class of stock of the Corporation ranking prior to or on
                  parity with the Series C Shares as to dividends or upon
                  liquidation or otherwise, or the reclassification of any
                  authorized stock of the Corporation into any such prior
                  shares, or the creation, authorization or issue of any
                  obligation or security convertible into or evidencing the
                  right to purchase any such prior shares; or

            (ii)  take any action so as to affect adversely the preferences,
                  rights or privileges of the Series C Preferred Stock.

      3.    LIQUIDATION.

            (a)   In the event of a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, each holder of Series C Preferred
Stock shall be entitled to receive out of the assets of the Corporation
available for distribution to shareholders, after payment in full of all amounts
owing to the holders of all shares of all classes or series of stock having
rights senior to

                                        2

                                    EXHIBIT A



the Series C Preferred Stock upon the liquidation, dissolution or winding up of
the Corporation, an amount per share equal to, but no more than, the Series C
Liquidation Value (as hereafter defined), Until payment to the holders of the
Series C Preferred Stock of all amounts owing as aforesaid, or until money or
other assets sufficient for such payment shall have been set apart from its
other funds and assets for payment by the Corporation, for the account of such
holders, so as to be and continue to be available for payment to such holders,
no payment or distribution upon such liquidation, dissolution or winding up
shall be made to holders of shares ranking junior to the Series C Preferred
Stock as to rights upon the liquidation, dissolution or winding up. The Common
Stock and the Series B Preferred Stock shall be junior to the Series C Preferred
Stock as to rights upon the liquidation, dissolution or liquidation or winding
up of the Corporation. The Series A Preferred Stock shall rank on parity with
the Series C Preferred Stock as to rights upon the liquidation, dissolution or
liquidation or winding up of the Corporation. If upon any such liquidation,
dissolution or winding up, the assets of the Corporation available for payment
and distribution to shareholders are insufficient to make payment in full, as
hereinabove provided, to the holders of the Series C Preferred Stock and the
holders of all other shares of all classes or series of stock which rank on a
parity with the Series C Preferred Stock as to rights upon the liquidation,
dissolution or winding up of the Corporation, payment shall be made to such
holders ratably in accordance with the liquidation value of shares held by them,
respectively. The Corporation will mail written notice of such liquidation,
dissolution or winding up, not less than 60 days prior to the payment dates
stated therein, to each person of record holding Series C Preferred Stock (by
air mail if addressed outside the United States).

            (b)   After payment to the holders of Series C Preferred Stock of
the amounts set forth in Section 3(a) above, the entire remaining assets and
funds of the Corporation legally available for distribution, if any, shall be
distributed among the holders of the Common Stock, the Series C Preferred Stock
and all other holders of capital stock of the Corporation then entitled to
participate in such distribution in proportion to the shares of Common Stock
then held by each thereof and the shares of Common Stock which each thereof then
have the right to acquire upon conversion of the Series C Shares or such other
shares of capital stock of the Corporation, as the case may be, then held by
such holder.

            (c)   For purposes of this Section 3,(i) any acquisition of the
Corporation by means of merger or other form of corporate reorganization in
which outstanding shares of the Corporation are exchanged for securities or
other consideration issued, or caused to be issued, by the acquiring corporation
(other than a mere reincorporation transaction) or (ii) a sale of all or
substantially all of the assets of the Corporation, shall be treated as a
liquidation, dissolution or winding up of the Corporation and shall entitle the
holders of Series C Preferred Stock to receive at the closing in cash,
securities or other property (valued as provided in Section 3(d) below) amounts
as specified in Sections 3(a) through 3(b) above.

            (d)   Whenever the distribution provided for in this Section 3 shall
be payable in securities or property other than cash, the value of such
distribution shall be the fair market value of such securities or other property
as determined in good faith by the Board of Directors.

      4.    CONVERSION.

                                        3

                                    EXHIBIT A



            A.    RIGHT TO CONVERT. Each Series C Share shall be convertible, at
the option of the holder thereof, at any time after the issuance of such share,
into one (1) fully paid and nonassessable share of Common Stock.

            B.    AUTOMATIC CONVERSION. Each Series C Share shall automatically
be converted into one (1) fully paid and nonassessable share of Common Stock
immediately upon the closing of the sale of the Corporation's Common Stock in a
firm commitment, underwritten public offering registered under the Securities
Act of 1933, as amended ("SECURITIES ACT"), other than a registration relating
solely to a transaction under Rule 145 under such Act (or any successor thereto)
or to an employee benefit plan of the Corporation, at a public offering price
(prior to underwriters' discounts and expenses) equal to or exceeding $4.00 per
share of Common Stock (as adjusted for any stock dividends, combinations or
splits with respect to such shares) and the aggregate proceeds to the
Corporation and/or to any selling shareholders (after deduction for
underwriters' discounts and expenses relating to the issuance, including without
limitation fees of the Corporation's counsel) of which exceed $10,000,000.

            C.    MECHANICS OF CONVERSION.

                  (i)   If the number of outstanding shares of Common Stock have
been increased or decreased since the initial subscription and payment for the
Series C Preferred Stock by the holders thereof, by reason of any additional
Common Stock issuance, split, stock dividend, merger, consolidation or other
capital change or reorganization affecting the number of shares of Common Stock,
the number of shares of Common Stock to be issued on conversion to the holders
of the Series C Preferred Stock shall be adjusted so as to preserve fairly and
equitably, as far as reasonably possible, the original conversion rights of the
Series C Shares being converted.

                  (ii)  No adjustment in the conversion rate is required unless
it would result in at least a one percent (1%) increase or decrease in the
conversion rate, however, any adjustment not made is carried forward.

                  (iii) If any capital reorganization, reclassification,
consolidation, merger or any sale of all or substantially all of the
Corporation's assets to another individual, partnership or corporation
(collectively, any "ORGANIC CHANGE") is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition to such Organic Change, lawful and adequate
provision (in form and substance satisfactory to the holders of a majority of
the Series C Preferred Stock then outstanding) will be made whereby each of the
holders of Series C Preferred Stock will thereafter have the right to acquire
and receive in lieu of shares of Common Stock immediately theretofore acquirable
and receivable upon the conversion of such holder's Series C Preferred Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon conversion of the Series C Preferred
Stock had such Organic Change not taken place. In any such case, appropriate
provision will be made with respect to such holder's rights and interests to the
end that the provisions of this Section 4 and Section 3 will thereafter be
applicable in relation to any

                                        4

                                    EXHIBIT A



shares of stock, securities or assets thereafter deliverable upon the conversion
of the Series C Preferred Stock (including, in the case of any consolidation,
merger or sale in which the successor corporation or purchasing corporation is
other than the Corporation, an immediate adjustment of the conversion ratio or
price to the value for the Common Stock reflected by the terms of such
consolidation, merger or sale, and a corresponding immediate adjustment in the
number of shares of Common Stock acquirable and receivable upon conversion of
the Series C Preferred Stock, if the value so reflected is less than the
conversion ratio or price in effect immediately prior to such consolidation,
merger or sale). The Corporation will not effect any such consolidation, merger
or sale, unless prior to the consummation thereof, the successor corporation (if
other than the Corporation) resulting from such consolidation or merger or the
corporation purchasing such assets assumes by written instrument (in form
reasonably satisfactory to the holders of a majority of the Series C Preferred
Stock then outstanding), the obligation to deliver to each such holder such
shares of stock, securities, or assets as, in accordance with the foregoing
provision, such holder may be entitled to acquire.

                  (iv)  In the event the Corporation, at any time after the
Original Issue Date, shall issue Additional Shares of Common Stock without
consideration or for a consideration per share less than the Threshold Amount
(as defined below), then and in such event, the number of shares of Common Stock
to be issued on conversion to the holders of Series C Preferred Stock shall be
adjusted to reflect such issuance of Additional Shares of Common Stock by
multiplying the Threshold Amount by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such issue
plus the number of shares of Common Stock which the aggregate consideration
received by the Corporation for the total number of Additional Shares of Common
Stock so issued would purchase for the Threshold Amount per share, and the
denominator of which shall be number of shares of Common Stock outstanding
immediately prior to such issue plus the number of such Additional Shares of
Common Stock so issued. For the purpose of the above calculation, the number of
shares of Common Stock outstanding immediately prior to such issue shall be
calculated on a fully diluted basis, as if all Series C Shares and all
Convertible Securities had been fully converted into shares of Common Stock
immediately prior to such issuance and any outstanding warrants, options or
other rights for the purchase of shares of stock or Convertible Securities had
been fully exercised immediately prior to such issuance (and the resulting
securities fully converted into shares of Common Stock, if so convertible) as of
such date, but not including in such calculation any additional shares of Common
Stock issuable with respect to Series C Shares, Convertible Securities, or
outstanding options, warrants or other rights for the purchase of shares of
stock or Convertible Securities, solely as a result of the adjustment of the
conversion ratio for the Series C Preferred Stock resulting from the issuance of
Additional Shares of Common Stock causing such adjustment. The "Threshold
Amount" shall initially be $1.14 and shall be adjusted from time to time
commensurately with each change in the conversion ratio, as initially specified
in Section 4(A), including without limitation, changes contemplated under
Section 4(C)(i), so as to preserve fairly and equitably, as far as reasonably
possible, the original rights of the holders of the Series C Preferred Stock.

                                        5

                                    EXHIBIT A



                  (v)   The holder of any Series C Shares may exercise the
conversion rights granted by this Section by delivering to the Corporation
during regular business hours, the certificate or certificates for the Series C
Shares to be converted, duly endorsed for transfer to the Corporation (if
required by it), accompanied by written notice stating that the holder elects to
convert such Series C Shares. Conversion shall be deemed to have been effected
on the date when such delivery is made, and such date is referred to herein as
the "CONVERSION DATE." As promptly as practicable thereafter the Corporation
shall issue and deliver to, or upon the written order of such holder, at such
office or other place designated by the Corporation, a certificate or
certificates for the number of full shares of Common Stock to which such holder
is entitled together with a scrip certificate or cash in lieu of any fraction of
a share as provided hereunder. The holder shall be deemed to have become a
shareholder of record on the next succeeding date on which the transfer books
are open. Upon conversion of only a portion of the number of Series C Shares
represented by a certificate surrendered for conversion, the Corporation, upon
written order and at its own expense, shall issue and deliver to the holder of
the certificate so surrendered for conversion, a new certificate covering the
number of Series C Shares representing the unconverted portion of the
certificate so surrendered.

                  (vi)  No fractional shares of Common Stock shall be issued
upon conversion of Series C Shares. If more than one Series C Share shall be
surrendered for conversion at any one time by the same holder, the number of
full shares of Common Stock issuable upon conversion thereof shall be computed
on the basis of the aggregate number of Series C Shares so surrendered. Instead
of any fractional shares of Common Stock which would otherwise be issuable upon
conversion of any Series C Shares, the Corporation shall, in lieu of delivering
the fractional share therefor, at its option either (i) adjust the fractional
interest by payment to the holder of the converted Series C Preferred Stock in
an amount equal (computed to the nearest cent) to the then current market value
of the fractional interest or (ii) issue nondividend bearing and nonvoting scrip
certificates for fractions of a share which would otherwise be issuable, in form
and containing terms and conditions as determined by the Board of Directors, and
exchangeable, within the period following the date of issue as the Board of
Directors shall fix, together with other unexpired scrip certificates or like
tenor aggregating one or more full shares, for share certificates representing
the full share or shares.

                  (vii) The Corporation shall at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the
purpose of effecting the conversion of the Series C Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of all Series C
Preferred Stock from time to time (subject to obtaining necessary director and
shareholder action), and in accordance with the laws of the State of California,
increase the authorized amount of its Common Stock if at any time the authorized
number of shares of its Common Stock remaining unissued shall not be sufficient
to permit the conversion of all of the Series C Shares at the time outstanding.

      5.    FULLY PAID AND NONASSESSABLE.

            The Series C Shares, when issued, will be duly and validly issued,
fully paid and nonassessable.

                                        6

                                    EXHIBIT A



      6.    RESTRICTIONS AND LIMITATIONS.

            A.    RESTRICTIONS AND LIMITATIONS. So long as any Series C Shares
remain outstanding, the Corporation shall not, without obtaining approval (by
vote or written consent, as provided by law) of the holders of a majority of the
outstanding Series C Shares:

                  (i)   Authorize or issue, or obligate itself to issue, any
other equity security (including any security convertible into or exercisable
for any equity security) on parity with, or senior to, the Series C Preferred
Stock as to dividend rights or liquidation preferences;

                  (ii)  Redeem, purchase or otherwise acquire (or pay into or
set aside for a sinking fund for such purpose) any equity security of the
Corporation junior to the Series C Preferred Stock as to dividend rights or
liquidation preferences;

                  (iii) Effect any sale, lease, assignment, transfer, or other
conveyance of all or substantially all of the assets of the Corporation, or any
consolidation or merger involving the Corporation, unless the Corporation shall
be the continuing or surviving entity of such consolidation or merger; or

                  (iv)  Effect any reclassification or other change of any of
the Corporation's outstanding capital stock, or any recapitalization.

            B.    NO REISSUANCE OF SERIES C PREFERRED STOCK. No share or shares
of Series C Preferred Stock acquired by the Corporation by reason of purchase or
otherwise shall be reissued, and all such shares shall be canceled, retired and
eliminated from the shares which the Corporation shall be authorized to issue.

      7.    REDEMPTION.

      The Series C Shares shall not be redeemable.

      8.    MISCELLANEOUS.

            A.    CERTAIN DEFINITIONS.

                  "ADDITIONAL SHARES OF COMMON STOCK" means all shares of Common
Stock issued by the Corporation after the Original Issue Date, including,
without limitation, shares of Common Stock to be issued after the Original Issue
Date upon exercise or conversion of any option, warrant or other security
exchangeable for or convertible into shares of Common Stock, other than shares
of Common Stock issued or issuable:

                  (i)   upon conversion of any Series C Shares;

                  (ii)  to officers, directors or employees of, or consultants
to, the Corporation pursuant to stock option, equity incentive or stock purchase
plans or agreements on terms approved by the Board of Directors; or

                                        7

                                    EXHIBIT A



                  (iii) as a dividend or distribution on Series C Preferred
Stock.

                  "COMMON STOCK" means collectively, the Corporation's common
stock and any capital stock of any class of the Corporation hereafter authorized
which is not limited to a fixed sum or percentage of par or stated value in
respect to the rights of the holders thereof to participate in dividends or in
the distribution of assets upon any liquidation, dissolution or winding up of
the Corporation.

                  "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares or other securities convertible into or exchangeable for
Common Stock.

                  "LIQUIDATION VALUE" of any Series C Share as of any particular
date will be equal to the sum of $1.14 plus any accrued, but unpaid dividends on
such Series C Share which otherwise would be added to the Liquidation Value of
such Series C Share on that date if that date were deemed a Dividend Reference
Date; and, in the event of any liquidation, dissolution or winding up of the
Corporation or the redemption of such Series C Shares, unpaid dividends on such
Series C Shares will be added to the Liquidation Value of such Series C Share on
the payment date in any liquidation, dissolution or winding up (as contemplated
in Section 3 hereof), accrued to the close of business on such payment date.

                  "PERSON" means an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.

                  "SUBSIDIARY" means any corporation of which shares of stock
having at least a majority of the general voting power in electing the board of
directors is, at the time as of which any determination is being made, owned by
the Corporation either directly or indirectly through Subsidiaries.

            B.    NOTICES. All notices referred to herein, except as otherwise
expressly provided, will be hand delivered or made by registered or certified
mail, return-receipt requested, postage prepaid and shall be deemed to have been
given when so hand delivered or mailed.

            C.    REGISTRATION OF TRANSFER. The Corporation will keep at its
principal office a register for the registration of Series C Preferred Stock.
Upon the surrender of any certificate representing Series C Preferred Stock at
such place, the Corporation will, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefor representing in the aggregate
the number of Series C Preferred Stock represented by the surrendered
certificate. Each such new certificate will be registered in such name and will
represent such number of Series C Shares as is requested by the holder of the
surrendered certificate.

            D.    REPLACEMENT. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit of the registered holder, without bond, will be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more Series C Shares, the Corporation will (at
its expense) execute and deliver in lieu of such

                                        8

                                    EXHIBIT A



certificate a new certificate representing the number of Series C Shares
represented by such lost, stolen, destroyed or mutilated certificate.

            E.    AMENDMENT AND WAIVER. No amendment, modification or waiver of
this Certificate of Determination will be binding or effective with respect to
(i) any provision affecting or relating to dividends, conversion or redemption
without the prior written consent of holders of at least 60% of the Series C
Preferred Stock outstanding at the time such action is taken, or (ii) any other
provision of this Certificate of Determination without the prior written consent
of holders of two-thirds of the Series C Preferred Stock outstanding at the time
such action is taken.

                                        9

                                    EXHIBIT A

EX-3.2

                                                                     Exhibit 3.2


                                     BYLAWS
                                       OF
                            AMERICAN MOLD GUARD, INC.
                            a California corporation












                              Adopted April 1, 2003




                                     BYLAWS

                                       OF

                            AMERICAN MOLD GUARD, INC.
                            A CALIFORNIA CORPORATION

                          ARTICLE I GENERAL PROVISIONS

SECTION 1.01 PRINCIPAL OFFICE

           The principal executive office of the Corporation shall be located at
9272 Jeronimo Road, Suite 122, Irvine, California 92618. Directors may fix and
locate one or more subsidiary offices within or without the State of California.
The Corporation may have other offices, either within or without the State of
California, at such place or places as the Board of Directors may from time to
time appoint or the business of the Corporation may require.

                       ARTICLE II MEETINGS OF SHAREHOLDERS

SECTION 2.01 PLACE OF MEETINGS

           The Board of Directors may designate any place within or without the
State of California for the holding of any meeting or meetings of shareholders;
in the absence of such a designation by the Board of Directors, the shareholders
may designate the place for such meeting or meetings by obtaining written
consent of all the persons entitled to vote thereat; provided, that, in the
absence of any such designation, shareholders' meetings shall be held at the
principal executive office of the Corporation.

SECTION 2.02 ANNUAL MEETINGS

           The annual meeting of shareholders shall be held at the principal
executive office of the Corporation or at such other place as may be designated
by the Board of Directors or the shareholders pursuant to the provisions of
Section 2.01 of these Bylaws at 10:00 o'clock a.m. on the 1st day of June, if
not a legal holiday, and if a legal holiday, then on the next business day
thereafter following; provided, however, that any annual meeting may be
adjourned as provided in Section 2.06 of these Bylaws. If the annual meeting of
shareholders shall not be held on the date specified above, then the Board of
Directors shall cause a meeting in lieu thereof to be held as soon thereafter as
convenient, and in any case not later than sixty (60) days after the date
designated above, and any business transacted or election held at such meeting
shall be as valid as if transacted at the annual meeting.



SECTION 2.03 SPECIAL MEETINGS

           Special meetings of shareholders may be called at any time, for any
purpose or purposes whatsoever, by resolution of the Board of Directors, or by
one or more shareholders holding not less than ten (10%) percent of the voting
shares of the Corporation.

SECTION 2.04 NOTICE OF MEETING

                  (A)      Written notice of all meetings of shareholders shall
be given to each shareholder entitled to vote by the Secretary or by any
Assistant Secretary, or by any other person whom the Board of Directors may
charge with that duty. Such notice shall be given, either personally or by mail
or other means of written communication, addressed to the shareholder at the
address of such shareholder appearing on the books of the Corporation or given
by the shareholder to the Corporation for the purpose of notice; or if no such
address appears or is given, at the place where the principal executive office
of the Corporation is located or by publication at least once in a newspaper of
general circulation in the county in which the principal executive office is
located. The notice or report shall be deemed to have been given when delivered
personally or deposited in the mail or sent by other means of written
communication. An affidavit of mailing of any notice or report in accordance
with these Bylaws executed by the Secretary, Assistant Secretary or any transfer
agent shall be PRIMA FACIE evidence of the giving of the notice or report. If
any notice or report addressed to the shareholder at the address of such
shareholder appearing on the books of the Corporation is returned to the
Corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice or report to the
shareholder at such address, then all future notices shall be deemed to have
been duly given without further mailing if the same shall be available for the
shareholder upon written demand at the principal executive office of the
Corporation for a period of one year from the date of giving of the notice or
report to the other shareholders.

                  (B)      All notices shall be given not fewer than ten (10)
nor more than sixty (60) days before the date of the meeting to each shareholder
entitled to vote thereat. Such notice shall state the place, date and hour of
the meeting and (1) in the case of a special meeting, the general nature of the
business to be transacted, and no other business may be transacted, or (2) in
the case of the annual meeting, those matters that the Board of Directors, at
the time of the mailing of the notice, intends to present for action by the
shareholders; provided, however, that any shareholder approval at an annual
meeting, other than unanimous approval by those entitled to vote, pursuant to
Section 310, 902, 1201, 1900 or 2007 of the California General Corporation Law,
shall be valid only if the general nature of the proposal so approved was stated
in the notice of meeting or in any written waiver of notice, and provided
further, that any unanimous shareholder approval at an annual meeting by those
entitled to vote, pursuant to Section 310, 902, 1201, 1900 of 2007 of the
California General Corporation Law shall be valid even though the general nature
of the proposal so approved was not stated in the notice of meeting or in any
written waiver of notice. A notice of any meeting at which directors are to be
elected shall include the names of nominees intended at the time of the notice
to be presented by management for election.

                                       2


SECTION 2.05 QUORUM

           The presence in person or by proxy of the persons entitled to vote a
majority of the voting shares of the Corporation at any meeting shall constitute
a quorum for the transaction of business. The affirmative vote of the majority
of the shares represented and voting at a duly held meeting at which a quorum is
present (provided that shares voting affirmatively also constitute at least a
majority of the required quorum) shall be the act of the shareholders, unless
the vote of a greater number or voting by classes is required by law or by the
Articles of Incorporation of the Corporation and except as provided in the
following sentence. The shareholders present at a duly called or held meeting at
which a quorum is present may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum, if any action taken (other than adjournment) is approved by at least a
majority of the shares required to constitute a quorum.

SECTION 2.06 ADJOURNED MEETING AND NOTICE THEREOF

           Any shareholders' meeting, annual or special, whether or not a quorum
 is present, may be adjourned from time to time by the vote of a majority of the
 shares represented either in person or by proxy, but in the absence of a quorum
 no other business may be transacted at such meeting, except as provided in
 Section 2.05 of these Bylaws. It shall not be necessary to give any notice of
 the time and place of the adjourned meeting or of the business to be transacted
 thereat, other than by announcement at the meeting at which such adjournment is
 taken except that, when any meeting is adjourned for more than forty-five (45)
 days or if after the adjournment a new record date is fixed for the adjourned
 meeting, a notice of the adjourned meeting shall be given to each shareholder
 of record entitled to vote thereat. At the adjourned meeting the Corporation
 may transact any business which could have been transacted at the original
 meeting.

SECTION 2.07 VOTING AT MEETINGS

                  (A)      The Shareholders entitled to notice of any meeting or
to vote at any such meeting shall be the persons in whose name shares stand on
the stock records of the Corporation on the record date determined in accordance
with Section 2.08 of these Bylaws.

                  (B)      Voting of shares of the Corporation shall in all
cases be subject to the provisions of Chapter 7 of the California General
Corporation Law and to the following provisions:

                           (1)      subject to clause (8), below, shares held by
an administrator, executor, guardian, conservator or custodian may be voted by
such holder either in person or by proxy, without transfer of the shares into
the holder's name,

                           (2)      subject to clause (8), below, shares
standing in the name of a trustee may be voted by the trustee, either in person
or by proxy, but no trustee shall be entitled to vote shares so held without a
transfer of them into the trustee's name;

                                       3


                           (3)      shares standing in the name of a receiver
may be voted by such receiver, and shares held by or under the control of a
receiver may be voted by such receiver without the transfer thereof into the
receiver's name if authority to do so is contained in the order of the court by
which such receiver was appointed;

                           (4)      subject to the provisions of Section 705 of
the California General Corporation Law and of Section 2.09 of these Bylaws, and
except where otherwise agreed in writing between the parties, a shareholder
whose shares are pledged shall be entitled to vote such shares until the shares
have been transferred into the name of the pledgee, and thereafter the pledgee
shall be entitled to vote the shares so transferred;

                           (5)      shares standing in the name of a minor may
be voted and the Corporation may treat all rights incident thereto as
exercisable by the minor, in person or by proxy, whether or not the Corporation
has notice, actual or constructive, of the minority, unless a guardian of the
minor's property has been appointed and written notice of such appointment has
been given to the Corporation;

                           (6)      shares standing in the name of another
corporation, domestic or foreign, may be voted by such officer, agent or
proxyholder as the bylaws of such other corporation may prescribe or, in the
absence of such provision, as the board of directors of such other corporation
may determine or, in the absence of such determination, by the chairman of the
board, president or any vice president of such other corporation, or by any
other person authorized to do so by the chairman of the board, president or any
vice president of such other corporation. Shares which are purported to be voted
or any proxy purported to be executed in the name of a corporation (whether or
not any title of the person signing is indicated) shall be presumed to be voted
or the proxy executed in accordance with the provisions of this clause, unless
the contrary is shown;

                           (7)      shares of the Corporation owned by any
subsidiary of the Corporation shall not be entitled to vote on any matter;

                           (8)      shares held by the Corporation in a
fiduciary capacity, and shares of the Corporation held in a fiduciary capacity
by any subsidiary of the Corporation, shall not be entitled to vote on any
matter, except (i) to the extent that the settlor or beneficial owner possesses
and exercises a right to vote or to give the Corporation binding instructions as
to how to vote such shares and (ii) when there are one or more co-trustees who
are not affected by the prohibition of this clause, in which case the shares may
be voted by the co-trustee(s) as if it or they are the sole trustee; and

                           (9)      if shares stand of record in the names of
two or more persons, whether fiduciaries, members of a partnership, joint
tenants, tenants in common, husband and wife as community property, tenants by
the entirety, voting trustees, persons entitled to vote under a shareholder
voting agreement or otherwise, or if two or more persons (including
proxyholders) have the same fiduciary relationship respecting the same shares,
unless the Secretary of the

                                       4


Corporation is given written notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall have the following
effect:

                                    (a)      if only one votes, such act binds
all;

                                    (b)      if more than one vote, the act of
the majority so voting binds all;

                                    (c)      if more than one vote, but the vote
is evenly split on any particular matter, each fraction may vote the securities
in question proportionately.

If the instrument so filed or the registration of the shares shows that any such
tenancy is held in unequal interests, a majority or even split for the purpose
of the above shall be a majority or even split in interest.

                  (C)      Subject to the following sentence and to the
provisions of Section 708 of the California General Corporation Law and except
as otherwise provided in the Articles of Incorporation of the Corporation,
every shareholder entitled to vote at any election of directors may cumulate his
votes and give one candidate a number of votes equal to the number of directors
to be elected multiplied by the number of votes to which his shares are
entitled, or distribute his votes on the same principle among as many candidates
as he thinks fit. No shareholder shall be entitled to cumulate votes for any
candidate or candidates pursuant to the preceding sentence unless such candidate
or candidates' names have been placed in nomination before the voting and the
shareholder has given notice, at the meeting and before the voting, of his
intention to cumulate his votes. If any one shareholder has given such notice,
then all shareholders may accumulate their votes for candidates in nomination.

                  (D)      Elections need not be by ballot; provided however,
that all elections for directors must be by ballot upon demand made by a
shareholder at the meeting and before the voting begins.

                  (E)      In any election of directors, the candidates
receiving the highest number of votes of the shares entitled to be voted for
them up to the number of directors to be elected by such shares are elected.

SECTION  2.08 RECORD DATE

                  (A)      The Board of Directors may fix a time in the future
as a record date for the determination of the shareholders entitled to notice
of, and to vote at, any meeting of shareholders or entitled to receive any
dividend or distribution, or any allotment of rights, or to exercise rights in
respect of any change, conversion or exchange of shares. The record date so
fixed shall not be more than sixty (60) nor fewer than ten (10) days before the
date of the meeting, nor more than sixty (60) days before any other action. When
a record date is so fixed, only shareholders of

                                       5


record on that date shall be entitled to notice of, and to vote at, the meeting,
or to receive the dividend, distribution or allotment of rights, or to exercise
the rights, as the case may be, notwithstanding any transfer of shares on the
books of the Corporation after the record date. A determination of shareholders
of record entitled to notice of, or to vote at, a meeting of the shareholders
shall apply to any adjournment of the meeting unless the Board of Directors
fixes a new record date or the meeting is adjourned for more than forty-five
(45) days from the date set for the original meeting.

                  (B)      If the Board of Directors does not fix a record date,
then the record date for determining which shareholders are entitled to notice
of, or to vote at, a meeting of shareholders shall be at the close of business

on the business day next preceding the day on which notice is given or, if
notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held. The record date for determining
shareholders for any purpose other than those set forth in this Section and
Section 2.12 of these Bylaws shall be at the close of business on the day on
which the Board of Directors adopts the resolutions relating thereto, or on the
60th day before the date of such other action, whichever is later.

SECTION 2.09 PROXIES

                  (A)      Every person entitled to vote or to execute consents
shall have the right to do so either in person or by one or more agents
authorized by a written proxy executed by such person or his duly authorized
agent and filed with the Secretary of the Corporation. No proxy shall be valid
after the expiration of eleven (11) months from the date thereof unless provided
in the proxy. Every proxy continues in full force and effect until revoked by
the person executing it before the vote pursuant thereto, except as otherwise
provided in this Section or these Bylaws. Revocation may be effected by a
writing delivered to the Corporation stating that the proxy is revoked or by a
subsequent proxy executed by, or by attendance at the meeting and voting in
person by, the person who executed the proxy. The dates contained on the forms
of proxy presumptively determine the order of execution, regardless of the
postmarked date on the envelopes in which they are mailed. A proxy is not
revoked by the death or incapacity of the maker unless, before the vote is
counted, written notice of the death or incapacity is received by the
Corporation.

                  (B)      Except when other provision shall have been made by
written agreement between the parties, the record holder of shares held by a
pledgee or otherwise as security or belonging to another shall issue to the
pledgor or to the owner of such shares, upon demand therefore and payment of
necessary expenses thereof, a proxy to vote or take other action.

                  (C)      A proxy stating that it is irrevocable is irrevocable
for the period specified therein when it is held by any of the following or a
nominee of any of the following:

                           (1)      a pledgee;

                           (2)      a person who has bought or agreed to buy or
holds an option to buy the shares of a person who has sold a portion of such
person's shares in the Corporation to the maker of the proxy;

                                       6


                           (3)      a creditor or creditors of the Corporation
or the shareholder who extended or continued credit to the Corporation or the
shareholder in consideration of the proxy, if the proxy states that it was given
in consideration of such extension or continuation of credit and the name of the
person extending or continuing credit;

                           (4)      a person who has contracted to perform
services as an employee of the Corporation, if a proxy is required by the
contract of employment and if the proxy states that it was given in
consideration of such contract of employment, the name of the employee and the
period of employment contracted for;

                           (5)      a person designated by or under an agreement
under Section 706 of the California General Corporation Law; or

                           (6)      a beneficiary of a trust with respect to
shares held by the trust.

                  (D)      Notwithstanding the period of irrevocability
specified, the proxy becomes revocable when the pledge is redeemed, the option
or the agreement to buy is terminated or the seller no longer owns any shares of
the Corporation or dies, the debt of the Corporation or the shareholder is paid,
or the period of employment provided for in the contract of employment has
terminated, the agreement under Section 706 has terminated, or the person ceases
to be a beneficiary of the trust. In addition to the foregoing clauses (1)
through (5), a proxy may be made irrevocable (notwithstanding subsection (C)) if
it is given to secure the performance of a duty or to protect a title, either
legal or equitable, until the happening of events which, by its terms, discharge
the obligations secured by it.

                  (E)      A proxy may be revoked, notwithstanding a provision
making it irrevocable, by a buyer of shares without knowledge of the existence
of the provision unless the existence of the proxy and its irrevocability appear
on the certificate representing such shares, or in the case of uncertificated
securities, on the initial transaction statement and written statements.

SECTION 2.10 INSPECTORS OF ELECTION

                  (A)      In advance of any meeting of shareholders, the Board
of Directors may appoint inspectors of election to act at such meeting and any
adjournment thereof. If the Board of Directors does not appoint inspectors of
election, then the chairman of any such meeting may, and on the request of any
shareholder or his proxy shall, make such appointment at the meeting. The number
of inspectors shall be either one or three. If appointed at a meeting on the
request of one or more shareholders or proxies, the majority of shares present
shall determine whether one or three inspectors are to be appointed. In case any
person appointed as inspector fails to appear or fails or refuses to act, the
vacancy may be filled by appointment by the Board of Directors before the
meeting, or at the meeting by the chairman.

                  (B)      The inspectors of election, impartially, in good
faith, to the best of their ability, and as expeditiously as is practical, shall
determine the number of shares outstanding and the voting power of each, the
shares represented at the meeting, the existence of a quorum, the

                                       7


authenticity, validity and effect of proxies, shall receive votes, ballots or
consents, hear and determine all challenges and questions in any way arising in
connection with the right to vote, shall count and tabulate all votes or
consents, determine the result, and do such acts as may be proper to conduct the
election or vote with fairness to all shareholders. If there are three
inspectors of election the decision, act or certificate of a majority of them
shall be effective in all respects as the decision, act or certificate of all.
On request of the chairman of the meeting or of any shareholder or his proxy,
the inspectors shall make a report in writing of any challenge or question or
matter determined by them and shall execute a certificate of any fact found by
them. Any report or certificate made by them shall be PRIMA FACIE evidence of
the facts stated therein.

SECTION 2.11 CONSENT OF ABSENTEES

           The transactions of any meeting of the shareholders, however called
and noticed, and wherever held, are as valid as though had at a meeting duly
held after regular call and notice, if a quorum is present either in person or
by proxy, and if either before or after the meeting, each of the persons
entitled to vote, not present in person or by proxy, signs a written waiver of
notice, or a consent to the holding of the meeting or an approval of the minutes
thereof. All such waivers, consents and approvals shall be filed with the
corporate records or made a part of the minutes of the meeting. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of shareholders need be specified in any written waiver of notice, except as
provided in subdivision (f) of Section 601 of the California General Corporation
Law.

SECTION 2.12 ACTION WITHOUT MEETING

           Subject to Section 603 of the California General Corporation Law, any
action which may be taken at any annual or special meeting of shareholders may
be taken without a meeting or without prior notice, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or take such action in a meeting at which all shares entitled to
vote thereon were present and voted. Notwithstanding the previous sentence and
subject to Section 3.05 of these Bylaws, directors may not be elected by written
consent except by unanimous written consent of all shares entitled to vote for
the election of directors. Unless a record date for voting purposes has been
fixed as provided in Section 2.08 of these Bylaws, the record date for
determining shareholders entitled to give consent pursuant to this Section, when
no action has been taken by the Board of Directors, shall be the day on which
the first written consent is given.

SECTION 2.13 SHAREHOLDER'S RIGHT TO INSPECT CORPORATE RECORDS

                  (A)      The accounting books and records and minutes of
proceedings of the shareholders, Board of Directors and committees of the Board
of Directors of the Corporation shall be open to inspection and copying upon the
written demand on the Corporation of any shareholder or holder of a voting trust
certificate at any reasonable time during usual business hours, for a purpose
reasonably related to such holder's interest as a shareholder or as a holder of
such voting trust certificate.

                                       8


                  (B)      The record of shareholders shall also be open to
inspection and copying by any shareholder or holder of a voting trust
certificate at any time during usual business hours upon written demand on the
Corporation, for a purpose reasonably related to such holder's interests as a
shareholder or holder of a voting trust certificate.

                  (C)      Any inspection and copying under this Section may be
made in person or by an agent or attorney, and the right to inspect and copy
includes the right to make extracts.

SECTION 2.14 INSPECTION OF BYLAWS

           The Corporation shall keep at its principal executive office, if in
the State of California, and if not, at its principal business office in the
State of California, the original or a copy of the Bylaws, as amended or
otherwise altered to date, certified by the Secretary, which shall be open to
inspection by the shareholders at all reasonable times during office hours.

                             ARTICLE III DIRECTORS

SECTION 3.01 POWERS

           Subject to the limitation of the Articles of Incorporation of the
Corporation, of these Bylaws, and of the California General Corporation Law
relating to action required to be approved by the shareholders or the
outstanding shares, the business and affairs of the Corporation shall be
managed, and all corporate powers shall be exercised, by or under the direction
of the Board of Directors. The Board of Directors may delegate the management of
the day-to-day operation of the business of the Corporation to a management
company or other person, provided that the business and affairs of the
Corporation shall be managed and all corporate powers shall be exercised under
the ultimate direction of the Board of Directors. Without prejudice to these
general powers, but subject to the same provisions, it is hereby expressly
declared that the Board shall have the following powers in addition to the other
powers enumerated in these Bylaws:

                  (a)      To select and remove all of the officers, agents, and
employees of the Corporation, prescribe powers and duties for them not
inconsistent with law, the Articles of Incorporation of the Corporation or these
Bylaws, fix their compensation, and require from them security for faithful
service;

                  (b)      To conduct, manage, and control the affairs and
business of the Corporation and to make rules and regulations therefore not
inconsistent with law, the Articles of Incorporation of the Corporation or these
Bylaws, as they may deem best;

                  (c)      To adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock, and to alter the form of seal and
stock certificates from time to time as they may deem best;

                                       9


                  (d)      To authorize the issuance of shares of stock of the
Corporation from time to time, upon such terms and for such consideration as may
be lawful; and

                  (e)      To borrow money and incur indebtedness for the
purposes of the Corporation, and to cause to be executed and delivered
therefor, in the corporate name, promissory notes, bonds, debentures, deeds of
trust, mortgages, pledges, hypothecations, or other evidences of debt and
security therefor.

SECTION 3.02 NUMBER OF DIRECTORS

           The Corporation shall have no fewer than three (3) nor more than five
(5) directors; the exact number to be determined from time to time by resolution
adopted by approval of the outstanding shares or by the affirmative vote of a
majority of the whole Board of Directors, and such exact number shall be three
(3) until otherwise determined. Notwithstanding the foregoing, before the
issuance of any shares and so long as the Corporation has only one shareholder,
the number of directors may be one or two, and so long as the Corporation has
two shareholders, the number may be two. As used in these Bylaws, the term
"whole Board" means the number of directors that the Corporation would have if
there were no vacancies. After the issuance of shares, Bylaws specifying or
changing the maximum or minimum number of directors or changing from a variable
to a fixed board or vice versa may be adopted only by approval of the
outstanding shares. No reduction of the authorized number of directors shall
have the effect of removing any director before the expiration of his or her
term of office.

SECTION 3.03 ELECTION AND TERM OF OFFICE

           The directors shall be elected at each annual meeting of
shareholders, but if any such annual meeting is not held or the directors are
not elected thereat, then the directors may be elected at any special meeting of
shareholders held for that purpose. Each director shall hold office until the
next annual meeting and until a successor has been elected and qualified.

SECTION 3.04 VACANCIES

                  (A)      A vacancy or vacancies in the Board of Directors
shall be deemed to exist in case of death, resignation or removal of any
director, or if the authorized number of directors is increased, or if the
shareholders fail, at any annual or special meeting of shareholders at which any
director or directors are elected, to elect the full authorized number of
directors to be voted for at that meeting.

                  (B)      The Board of Directors may declare vacant the office
of a director who has been declared of unsound mind by an order of court,
convicted of a felony, or if within sixty (60) days after notice of his
election, he does not accept the office either in writing or by attending a
meeting of the Board of Directors. Vacancies in the Board of Directors may be
filled by a majority of the remaining directors, though less than a quorum, or
by a sole remaining director, and each director so elected shall hold office
until his successor is elected at an annual or a special meeting of the
shareholders. The shareholders may elect a director or directors at any time to
fill

                                       10


any vacancy or vacancies not filled by the directors. Any such election by
written consent other than to fill a vacancy created by removal shall require
the consent of a majority of the outstanding shares entitled to vote. If, after
the filling of any vacancy by the directors, the directors then in office who
have been elected by the shareholders constitute less than a majority of the
directors then in office, then any holder or holders of an aggregate of five
percent or more of the total number of shares at the time outstanding having the
right to vote for such directors may call a special meeting of shareholders to
elect the entire Board of Directors. The term of office of any director not
elected by the shareholders shall terminate upon such election of a successor.

                  (C)      Any director may resign, effective upon giving
written notice to the Chairman of the Board, the President, the Secretary or the
Board of Directors of the Corporation, unless the notice specifies a later time
for the effectiveness of such resignation. If the resignation is effective at a
future time, then a successor may be elected to take office when the resignation
becomes effective.

SECTION 3.05 REMOVAL

                  (A)      Any or all of the directors may be removed without
cause if such removal is approved by the outstanding shares of the Corporation,
subject to the following; (1) no director may be removed (unless the entire
Board of Directors is removed) when the votes cast against removal, or not
consenting in writing to such removal, would be sufficient to elect such
director if voted cumulatively at an election at which the same total number of
votes were cast (or, if such action is taken by written consent, all shares
entitled to vote were voted) and the entire number of directors authorized at
the time of the director's most recent election were then being elected; and (2)
when, by the provisions of the Articles of Incorporation of the Corporation, the
holders of the shares of any class or series, voting as a class or series, are
entitled to elect one or more directors, any director so elected may be removed
only by the applicable vote of the holders of the shares of that class or
series.

                  (B)      No reduction of the authorized number of directors
shall have the effect of removing any director before the expiration of his term
of office.

SECTION 3.06 PLACE OF MEETING

           Regular meetings of the Board of Directors shall be held at any place
within or without the State of California which has been designated from time to
time by resolution of the Board of Directors or by written consent of all
members of the Board of Directors given either before or after the meeting and
filed with the Secretary of the Corporation. In the absence of such designation
regular meetings shall be held at the principal executive office of the
Corporation. Special meetings of the Board of Directors may be held either at a
place so designated or at the principal executive office.

                                       11


SECTION 3.07 MEETINGS OF THE BOARD OF DIRECTORS

           Regular meetings of the Board of Directors shall be held on the day
of the annual meeting of shareholders after adjournment of such meeting, if not
a legal holiday, and if a legal holiday, then on a date fixed by the Board of
Directors. No notice shall be required for any such regular meeting of the
board.

SECTION 3.08 SPECIAL MEETINGS

                  (A)      Special meetings of the Board of Directors for any
purpose or purposes may be called at any time by the Chairman of the Board of
Directors, or, if he is absent or unable or refuses to act, by any Vice
Chairman, or the President, or one-third of the directors then in office.

                  (B)      Special meetings of the Board of Directors shall be
held upon four days' written notice or 48 hours' notice given personally or by
telephone, telegraph, telex or other similar means of communication. Any such
notice shall be addressed or delivered to each director at his address as it is
shown upon the records of the Corporation or as may have been given to the
Corporation by the director for purposes of notice or, if such address is not
shown on such records or is not readily ascertainable, then at the place where
the meetings of the directors are regularly held.

                  (C)      Notice by mail shall be deemed to have been given at
the time written notice is deposited in the United States mail, postage
pre-paid. Any other written notice shall be deemed to have been given at the
time when it is personally delivered to the recipient or delivered to a common
carrier for transmission, or actually transmitted by the person giving the
notice by electronic means, to the recipient. Oral notice shall be deemed to
have been given at the time it is communicated, in person or by telephone or
wireless, to the recipient or a person at the office of the recipient who the
person giving the notice has reason to believe will promptly communicate it to
the recipient.

SECTION 3.09 WAIVER OF NOTICE

           The transactions of any meeting of the Board of Directors, however
called and noticed and wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice, if a quorum is present and if,
either before or after the meeting, each of the directors not present signs a
written waiver of notice or a consent to the holding of such meeting or an
approval of the minutes thereof. All such waivers, consents or approvals shall
be filed with the corporate records or made a part of the minutes of the
meeting.

SECTION 3.10 NOTICE OF ADJOURNMENT

           A majority of the directors present, whether or not a quorum is
present, may adjourn any meeting to another time and place. Notice of the time
and place of holding an adjourned meeting

                                       12


need not be given to absent directors if the time and place are fixed at the
meeting adjourned, except as provided in the next sentence. If the meeting is
adjourned for more than 24 hours, notice of any adjournment to another time or
place shall be given before the adjourned meeting to the directors who are not
present at the time of the adjournment,

SECTION 3.11 QUORUM

           A majority of the authorized number of directors constitutes a quorum
of the Board of Directors for the transaction of business, except to adjourn as
hereinafter provided. Except as otherwise provided in the Articles of
Incorporation or these Bylaws or in the California General Corporation Law,
every act or decision done or made by the majority of the directors present at a
meeting duly held at which a quorum is present shall be regarded as the act of
the Board of Directors. A meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of directors, if
any action taken is approved by at least a majority of the required quorum for
such meeting.

SECTION 3.12 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE

           Members of the Board of Directors may participate in a meeting
through use of conference telephone or similar communications equipment, so long
as all members participating in such a meeting can hear one another.
Participation in a meeting pursuant to this section constitutes presence in
person at such meeting.

SECTION 3.13 ACTION WITHOUT MEETING

           Any action under any provision of the California General Corporation
Law required or permitted to be taken by the Board of Directors, may be taken
without a meeting if all members of the Board of Directors individually or
collectively consent in writing to such action. Such written consent or consents
shall be filed with the minutes of the proceedings of the Board of Directors.
Such action by written consent shall have the same force and effect as a
unanimous vote of the Board of Directors.

SECTION 3.14 FEES AND COMPENSATION

           Each director of the Corporation who is not a salaried officer or
employee of the Corporation, or of a subsidiary of the Corporation, shall
receive such allowances for serving as a director and such fees for attendance
at meetings of the Board of Directors or the Investment Committee or any other
committee appointed by the board as the board may from time to time determine.

SECTION 3.15 DIRECTOR'S RIGHT TO INSPECT CORPORATE RECORDS

           Every director shall have the absolute right at any time to inspect
and copy all books, records, documents of every kind, and to inspect the
physical properties, of the Corporation and also of its subsidiary corporations,
if any. Such inspection by a director may be made in person or by agent or
attorney, and the right to inspect and copy includes the right to make extracts.

                                       13


SECTION 3.16 ELECTION OF OFFICERS

           At the first regular meeting of the Board of Directors in each year
(at which a quorum shall be present) held next after the annual meeting, the
Board of Directors shall proceed to the election of the principal officers of
the Corporation under the provisions of Article IV of these Bylaws.


                               ARTICLE IV OFFICERS


SECTION 4.01 OFFICERS

           The officers of the Corporation shall consist of a President, a
Secretary, a Chief Financial Officer, and such additional officers as may be
elected or appointed in accordance with Section 4.03 of these Bylaws. One person
may hold two or more offices, including the offices of President and Secretary.


SECTION 4.02 ELECTION

           All officers of the Corporation, except such officers as may be
appointed in accordance with Section 4.03 of these Bylaws, shall be chosen
annually by the Board of Directors, and each shall hold office until he resigns
or is removed or otherwise disqualified to serve, or until his successor is
chosen and qualified.

SECTION 4.03 OTHER OFFICERS

           The Board of Directors, at its discretion, may choose a Chairman of
the Board, and may appoint, or empower the President to appoint, one or more
Vice Presidents, one or more Assistant Secretaries, one or more Assistant
Financial Officers, or such other officers as the business of the Corporation
may require, each of whom shall hold office for such period, have such authority
and perform such duties as the Board of Directors may from time to time
determine.

SECTION 4.04 REMOVAL AND RESIGNATION

                  (A)      Any officer may be removed, either with or without
cause, by the Board of Directors, at any regular or special meeting thereof, or,
except in the case of an officer chosen by the Board of Directors, by any
officer upon whom such power of removal may be conferred by the Board of
Directors. Any such removal shall be without prejudice to the rights, if any, of
the officer under his contract of employment, if any.

                                       14


                  (B)      Any officer may resign at any time by giving written
notice to the Board of Directors, the President, or the Secretary of the
Corporation. Any such resignation shall be without prejudice to the rights, if
any, of the Corporation under any contract to which the officer is a party, and
shall take effect upon receipt of such notice or at any later time specified
therein.

                  (C)      Unless otherwise specified therein, acceptance of
such resignation shall not be necessary to make it effective.

SECTION 4.05 VACANCIES

           A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
the Bylaws for regular appointments to such office.

SECTION 4.06 CHAIRMAN OF THE BOARD

           The Chairman of the Board, if there is such an officer, shall, if
present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to the
Chairman of the Board by the Board of Directors or prescribed by the Bylaws.

SECTION 4.07 PRESIDENT

           Subject to such supervisory powers, if any, as may be given by the
Board of Directors to the Chairman of the Board, if there is such an officer,
the President shall be the general manager and chief executive officer of the
Corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of the
Corporation. The President shall preside at all meetings of shareholders and, in
the absence of the Chairman of the Board, or if there is no such officer, at all
meetings of the Board of Directors. The President shall be EX OFFICIO a member
of all the standing committees, including the executive committee, if any, and
shall have the general powers and duties of management usually vested in the
office of president of a corporation, and shall have such other powers and
duties as may be prescribed by the Board of Directors or the Bylaws.

SECTION 4.08 VICE PRESIDENT

           In the absence or disability of the President, the Vice Presidents,
if any, in order of their rank as fixed by the Board of Directors or, if not
ranked, the Vice President designated by the Board of Directors, shall perform
all the duties of the President, and when so acting shall have all the powers
of, and be subject to all the restrictions upon, the President. The Vice
Presidents shall have such other powers and perform such other duties as from
time to time may be prescribed for them by the Board of Directors or the Bylaws.

                                       15


SECTION 4.09 SECRETARY

                  (A)      The Secretary shall keep or cause to be kept, at the
principal executive office or such other place as the Board of Directors may
order, a book of minutes of all meetings of shareholders, the Board of
Directors, and its committees with the time and place of holding, whether
regular or special, and if special, how authorized, the notice thereof given,
the names of those present at directors' meetings, the number of shares present
or represented at shareholders' meetings, and the proceedings thereof.

                  (B)      The Secretary shall keep, or cause to be kept, at the
principal executive office or at the office of the Corporation transfer agent, a
share register, or a duplicate share register, showing the names of the
shareholders and their addresses, the number and classes of shares held by each,
the number and date of certificates issued for shares, and the number and date
of cancellation of every certificate surrendered for cancellation.

                  (C)      The corporate minutes shall be kept in written form.
The other information that the Secretary shall keep or cause to be kept shall be
kept either in written form or in a form capable of being converted into written
form.

                  (D)      The Secretary shall give, or cause to be given,
notice of all the meetings of shareholders and of the Board of Directors and of
any committees thereof required by the Bylaws or bylaw to be given, and shall
have such other powers and perform such other duties as may be prescribed by the
Board of Directors or by the Bylaws.

SECTION 4.10 CHIEF FINANCIAL OFFICER

                  (A)      The Chief Financial Officer shall keep and maintain,
or cause to be kept and maintained, adequate and correct accounts of the
properties and business transactions of the Corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
surplus and shares. Any surplus, including earned surplus, paid-in surplus and
surplus arising from a reduction of stated capital, shall be classified
according to source and shown in a separate account. The books of account shall
at all reasonable times be open to inspection by any director.

                  (B)      The Chief Financial Officer shall deposit all moneys
and other valuables in the name and to the credit of the Corporation with such
depositories as may be designated by the Board of Directors. The Chief Financial
Officer shall disburse the funds of the Corporation as may be ordered by the
Board of Directors, shall render to the President and directors, whenever they
request it, an account of all transactions as Chief Financial Officer and of the
financial condition of the Corporation, and shall have such other powers and
perform such other duties as may be prescribed by the Board of Directors or the
Bylaws.

                                       16



                            ARTICLE V INDEMNIFICATION

SECTION 5.01 DEFINITIONS

           For the purposes of this Article, "agent" includes any person who is
or was a director, officer, employee or other agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee
or other agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of a foreign or domestic
corporation, partnership, joint venture, trust or other enterprise, or was a
director, officer, employee or agent of a foreign or domestic corporation which
was a predecessor Corporation of the Corporation or of another enterprise at the
request of such predecessor corporation; "proceeding" includes any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative; and "expenses" includes attorneys' fees and any
expenses of establishing a right to indemnification under Section 5.04 or
Section 5.05(C) of these Bylaws.

 SECTION 5.02 INDEMNIFICATION IN ACTIONS BY THIRD PARTIES

           The Corporation shall have the power to indemnify any person who was
or is a party or is threatened to be made a party to any proceeding (other than
an action by, or in the right of, the Corporation) by reason of the fact that
such person is or was an agent of the Corporation, against expenses, judgments,
fines, settlements, and other amounts actually and reasonably incurred in
connection with such proceeding if that person acted in good faith and in a
manner the person reasonably believed to be in the best interests of the
Corporation and, in the case of a criminal proceeding, had no reasonable cause
to believe the conduct of such person was unlawful. The termination of any
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which the person reasonably
believed to be in the best interests of the Corporation or that the person had
reasonable cause to believe that his conduct was unlawful.

SECTION 5.03 INDEMNIFICATION IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION

           The Corporation shall have the power to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending, or
completed action by, or in the right of, the Corporation to procure a judgment
in its favor by reason of the fact that such person is or was an agent of the
Corporation against expenses actually and reasonably incurred in connection with
the defense or settlement of such action if he acted in good faith, in a manner
he believed to be in the best interests of the Corporation, and with such care,
including reasonable inquiry, as an ordinarily prudent person in a like position
would use under similar circumstances. No indemnification shall be made under
this Section:

                                       17


                  (A)      in respect of any claim, issue, or matter as to which
such person shall have been adjudged to be liable to the Corporation in the
performance of his duty to the Corporation, unless and only to the extent that
the court in which such action was brought shall determine upon application
that, in view of all the circumstances of the case, he is fairly and reasonably
entitled to indemnity for the expenses which such court shall determine;

                  (B)      of amounts paid in settling or otherwise disposing of
a threatened or pending action, with or without court approval; or

                  (C)      of expenses incurred in defending a threatened or
pending action which is settled or otherwise disposed of without court approval.

SECTION 5.04 INDEMNIFICATION AGAINST EXPENSES

           To the extent that an agent of the Corporation has been successful on
the merits in any proceeding referred to in Section 5.02 or 5.03 of these Bylaws
or in defense of any claim, issue or matter therein, he shall be indemnified
against his expenses actually and reasonably incurred in connection therewith.

SECTION 5.05 REQUIRED DETERMINATIONS

           Except as provided in Section 5.04 of these Bylaws, any
indemnification under this Article shall be made by the Corporation only if
authorized in the specific case, upon a determination that indemnification of
the agent is proper under the circumstances because the agent has met the
applicable standard of conduct set forth in Section 5.02 or 5.03 of these Bylaws
by:

                  (A)      a majority vote of a quorum consisting of directors
who are not parties to such proceeding;

                  (B)      approval of the shareholders, with the shares owned
by the person to be indemnified not being entitled to vote thereon; or

                  (C)      the court in which such proceeding is or was pending
upon application made by the Corporation or the agent or the attorney or other
person rendering services in connection with the defense, whether or not such
application by the agent, attorney or other person is opposed by the
Corporation.

SECTION 5.06 ADVANCE OF EXPENSES

           Expenses incurred in defending any proceeding may be advanced by the
Corporation before the final disposition of such proceeding upon receipt of an
undertaking by or on behalf of the agent to repay such amount unless it shall be
determined ultimately that the agent is entitled to be indemnified as authorized
in this Article.

                                       18


SECTION 5.07 OTHER INDEMNIFICATION

           The indemnification authorized by this Article shall not be exclusive
of any additional rights to indemnification for breach of duty to the
Corporation and its shareholders, while acting in the capacity of a director or
officer of the Corporation, to the extent the additional rights to
indemnification are authorized in a provision of the articles adopted pursuant
to Section 204(a)(11) of the California General Corporation Law. The
indemnification provided by this Article for acts, omissions, or transactions
while acting in the capacity of, or while serving as, a director, or officer of
the corporation, but not involving any breach of duty to the Corporation and its
shareholders, shall not be exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, to the extent the additional rights to
indemnification are authorized in the Articles of Incorporation of the
Corporation. A provision in the Articles of Incorporation of the Corporation
authorizing indemnification "in excess of that otherwise permitted by Section
317" or "to the fullest extent permissible under California law," or a
substantial equivalent, shall be construed to be both a provision for additional
indemnification for breach of duty to the Corporation and its shareholders as
referred to in, and with the limitations required by, Section 204(a)(11) of the
California General Corporation Law, and a provision for additional
indemnification as referred to in Section 317(g) of the California General
Corporation Law. The rights to indemnity under this Article shall continue as to
a person who has ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of the person.
Nothing contained in this Article shall affect any right to indemnification to
which persons other than the directors and officers may be entitled by contract
or otherwise.

SECTION 5.08 FORMS OF INDEMNIFICATION NOT PERMITTED

           No indemnification or advance shall be made under this Article,
except as provided in Section 6.04 or Section 6.05(C) of these Bylaws in any
circumstance where it appears:

                  (A)      that it would be inconsistent with a provision of the
Articles of Incorporation of the Incorporation, Bylaws, a resolution of the
Board of Directors or shareholders or an agreement in effect at the time of the
accrual of the alleged cause of action asserted in the proceeding in which the
expenses were incurred or other amounts were paid, which prohibits or otherwise
limits indemnification; or

                  (B)      that it would be inconsistent with any condition
expressly imposed by a court in approving a settlement.

SECTION 5.09 INSURANCE

           The Corporation shall have the power to buy and maintain insurance on
behalf of any agent of the Corporation against any liability asserted against or
incurred by the agent in such capacity or arising out of the agents status as
such whether or not the Corporation would have the power to indemnify the agent
against such liability under the provisions of this Article.

                                       19


                      ARTICLE VI STOCK AND STOCK PROVISIONS

SECTION 6.01 STOCK

           The amount of authorized stock of the Corporation shall consist of
10,000,000 shares of no par value common stock.

Section 6.0 Common Stock Provisions

         The rights, preferences and voting powers of the common stock of the
Corporation shall be as follows:

                  (A)      Dividends. Dividends may be paid on shares of the
common stock, out of funds legally available for the purpose, when and as
declared by the Board of Directors.

                  (B)      Payment on Liquidation. In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the assets of the Corporation available for payment and
distribution to shareholders shall be paid and distributed to the holders of
shares of the common stock, ratably.

                  (C)      Voting Rights. The holders of shares of common stock
shall, in the election of directors and upon each other matter coming before any
meeting of stockholders, be entitled to one vote for each share of such stock
standing in his or her name on the books of the Corporation.

                  (D)      Preemptive Rights. The holders of shares of the
common stock shall have no preemptive rights

                  (E)      Issuance of Shares of Common Stock. The authorized
but unissued shares of common stock may be issued and sold or otherwise disposed
of by the Corporation, at any time or from time to time, for such consideration,
and for such purpose or purposes, as may be determined by the Board of
Directors.

                  (F)      Acquisition by Corporation of its Own Stock. Unless
any statute of the State of California shall expressly provide to the contrary
and subject to the provisions of these Bylaws, the Corporation may acquire, hold
and dispose of any shares of its common stock or stock of any other class issued
and outstanding.

                                       20


                            ARTICLE VII MISCELLANEOUS


SECTION 7.01 ANNUAL REPORT TO SHAREHOLDERS

           The annual report to shareholders referred to in Section 1501 of the
California General Corporation Law is expressly waived, but nothing herein shall
be interpreted as prohibiting the Board of Directors from issuing annual or
other periodic reports to shareholders.

SECTION 7.02 MONTHLY REPORT TO DIRECTORS

           The Corporation shall cause a monthly report to be sent to the
directors not later than ten (10) days after the close of each calendar month.
The monthly report shall contain a balance sheet as of the end of that calendar
month and an income statement and statement of changes in financial position for
that calendar month, accompanied by a full and clear statement of the business
and condition of the Corporation.

SECTION 7.03 CHECKS, DRAFTS, ETC.

           All checks, drafts or other orders for payment of money, notes or
other evidences of indebtedness, issued in the name of the Corporation, shall be
signed or endorsed by such person or persons and in such manner as, from time to
time, shall be determined by resolution of the Board of Directors.

SECTION 7.04 AUTHORITY TO EXECUTE CONTRACTS

           Subject to the provisions of applicable law, any note, mortgage,
evidence of indebtedness, contract, share certificate, conveyance or other
instrument in writing, and any assignment or endorsements thereof, executed or
entered into between this Corporation and any other person, when signed by the
Chairman of the Board, if there is such an officer, the President or any Vice
President, the Secretary, any Assistant Secretary, the Chief Financial Officer
or any Assistant Financial Officer of the Corporation shall be valid and binding
on this Corporation unless the other person knew that the signing officers had
no authority to execute the same. Any such instruments may be signed by any
other person or persons and in such manner as from time to time shall be
determined by the Board of Directors and, unless so authorized or subsequently
ratified by the Board of Directors, no officer, agent or employee shall have any
power or authority to bind the Corporation by any contract or engagement or to
pledge its credit or to render it liable for any purpose or amount.

SECTION 7.05 CERTIFICATES

                  (A)      Every holder of shares of the Corporation shall be
entitled to have a certificate signed in the name of the Corporation by the
Chairman of the Board, if there is such an officer, the President or a Vice
President and by the Chief Financial Officer or an Assistant Financial Officer
or the Secretary or an Assistant Secretary, certifying the number of shares and
the class or series of shares owned by the shareholder. Any or all of the
signatures on the

                                       21


certificate may be facsimiles. If any officer, transfer agent, or registrar who
has signed or a facsimile of whose signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were an officer, transfer agent or registrar at the date of
issue.

                  (B)      Certificates for shares may be issued before full
payment under such restrictions and for such purposes as the Board of Directors
may provide; provided, however, that on any certificate issued to represent any
partly paid shares, the total amount of the consideration to be paid therefor
and the amount paid thereon shall be stated.

                  (C)      If the shares of the Corporation are ever classified
or if any class of shares has two or more series, there shall appear on the
certificate one of the following:

                           (1)      a statement of the rights, preferences,
privileges and restrictions granted to or imposed upon each class or series of
shares authorized to be issued upon the holders thereof,

                           (2)      a summary of such rights, preferences,
privileges and restrictions with references to the provisions of the Articles of
Incorporation of the Corporation and any certificates of determination
establishing the same; or

                           (3)      a statement setting forth the office or
agency of the Corporation from which shareholders may obtain, upon request and
without charge, a copy of the statement referred to in clause (1), above.

                  (D)      There shall also appear on the certificate (unless
stated or summarized pursuant to clause (1) or (2), above, or Section 417 of the
California General Corporation Law) the statements required by all of the
following clauses to the extent applicable:

                           (1)      the fact that the shares are subject to
restrictions on transfer,

                           (2)      if the shares are assessable or are not
fully paid, a statement that they are assessable or the statements required by
subdivision (d) of Section 409 of the California General Corporation Law if they
are not fully paid;

                           (3)      the fact that the shares are subject to a
voting agreement under subdivision (a) of Section 706 of the California General
Corporation Law or an irrevocable proxy under subdivision (e) of Section 705 of
the California General Corporation Law or restrictions upon voting rights
contractually imposed by the Corporation;

                           (4)      the fact that shares are redeemable; and

                           (5)      the fact that the shares are convertible and
the period of conversion.

                                       22


Unless stated on the certificate as required by this paragraph, no restriction
upon transfer, liability for assessment or for the unpaid portion of the
subscription price, right of redemption, voting agreement under subdivision (a)
of Section 706 of the California General Corporation Law, irrevocable proxy
under subdivision (e) of Section 705 of the California General Corporation Law
or voting restriction imposed by the Corporation shall be enforceable against a
transferee of the shares without actual knowledge of such restriction,
liability, right, agreement or proxy.

SECTION 7.06 TRANSFER OF CERTIFICATES

           When a certificate for shares is presented to the Corporation or its
transfer clerk or transfer agent with a request to register the transfer, the
Corporation shall register the transfer, cancel the certificate presented, and
issue a new certificate if; (A) the security is endorsed by the appropriate
person or persons; (B) reasonable assurance is given that those endorsements are
genuine and effective; (C) the Corporation has no notice of adverse claims or
has discharged any duty to inquire into such adverse claims; (D) any applicable
law relating to the collection of taxes has been complied with; and (E) is not
in violation of any federal or state law. Where a certificate has been lost,
destroyed or wrongfully taken, the Corporation shall issue a new certificate in
place of the original if the owner; (X) so requests before the Corporation has
notice that the certificate has been acquired by a bona fide purchaser, (Y)
files with the Corporation a sufficient indemnity bond; and (Z) satisfies any
other reasonable requirements as may be imposed by the Board of Directors.
Except as provided above, no new certificate for shares shall be issued in lieu
of an old certificate unless the Corporation is ordered to do so by a judgment
of a court in an action brought under subdivision (b) of Section 419 of the
California General Corporation Law.

SECTION 7.07 REPRESENTATION OF SHARES OF OTHER CORPORATIONS

           The President or any Vice President and the Secretary or Assistant
Secretary of this Corporation are authorized to vote, represent and exercise on
behalf of this Corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of this Corporation. The
authority herein granted to said officers to vote or represent on behalf of this
Corporation any and all shares held by this Corporation in any other corporation
or corporations may be exercised either by such officers in person or by any
other person authorized so to do by proxy or power of attorney duly executed by
said officers.

SECTION 7.08 CONSTRUCTION AND DEFINITIONS

           Unless the context otherwise requires, the general provisions, rules
of construction and definitions contained in the California General Corporation
Law shall govern the construction of these Bylaws. Without limiting the
generality of the foregoing, the masculine gender includes the feminine and
neuter, the singular number includes the plural and the plural number includes
the singular, and the term "person" includes a corporation as well as a natural
person.

                                       23


           THIS IS TO CERTIFY,

           That I am the duly elected, qualified and acting Secretary of
American Mold Guard, Inc., a California corporation (the "Company"), and that
the foregoing Bylaws were adopted as the Bylaws of the Company on April 1, 2003,
by the duly elected directors of the Company.

           IN WITNESS WHEREOF, I have hereunto set my hand as of this 1" day of
April 2003.



                                         /s/ Tom Blakeley
                                        ----------------------------------------
                                             Tom Blakeley

                                       24

EX-5.1

                                                                     Exhibit 5.1

                       MORSE, ZELNICK, ROSE & LANDER, LLP
                                405 PARK AVENUE
                            NEW YORK, NEW YORK 10022




                                                                  (212) 838-1177

                               February 10, 2006

American Mold Guard, Inc.
30200 Rancho Viejo Road, Suite G
San Juan Capistrano, California 92675

Dear Sirs:

     We have acted as counsel to American Mold Guard, Inc., a California
corporation (the "Company"), in connection with the preparation of a
registration statement on Form SB-2 (the "Registration Statement") filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), to register the offering by the Company, including
securities which may be issued on the exercise of the over-allotment option, of
(a) 1,265,000 units (the "Units"), each consisting of two shares of the
Company's common stock, no par value (the "Common Stock"), two Class A warrants
(each a "Unit Class A Warrant"), each to purchase one share of Common Stock, and
one Class B warrant (a "Unit Class B Warrant") to purchase one share of Common
Stock; (b) 2,530,000 shares of Common Stock included in the Units; (c) 2,530,000
Unit Class A Warrants; (d) 1,265,000 Unit Class B Warrants; (e) 2,530,000 shares
of Common Stock underlying the Unit Class A Warrants; (f) 1,265,000 shares of
Common Stock underlying the Unit Class B Warrants; (g) the warrants to be issued
to the representative of the several underwriters to purchase up to 110,000
units identical to the Units (the "Representative's Warrants"); (h)110,000 units
underlying the Representative's Warrants; (i) 220,000 shares of Common Stock
underlying the units underlying the Representative's Warrant; (j) 220,000 Class
A warrants underlying the units underlying the Representative's Warrant; (k)
110,000 Class B warrants underlying the units underlying the Representative's
Warrant; (l) 220,000 shares of Common Stock underlying the Class A warrants
underlying the units underlying the Representative's Warrant; (m) 110,000 shares
of Common Stock underlying the Class B warrants underlying the units underlying
the Representative's Warrant; and (n) any additional securities issued pursuant
to Rule 462(b) of the Act. The securities described in clauses (a) through (m)
above are hereinafter referred to as the "Securities."

     In this regard, we have reviewed the Company's Articles of Incorporation,
as amended, resolutions adopted by the Company's Board of Directors, the
Registration Statement, the exhibits to the Registration Statement and such
other records, documents, statutes and decisions, as we have deemed relevant in
rendering this opinion. Based upon the foregoing, we are of the opinion that the
Securities (i) have been duly and validly authorized for issuance; (ii) when
issued as contemplated by the Registration Statement and, in the case of those
Securities underlying warrants, when issued in accordance with the terms of the
applicable warrants, will be legally issued, fully paid and non-assessable. All
of the warrants included in the Securities, including without limitation the
warrants referred to in clauses (c), (d), (g), (j), (k), (n) and (o) above will,
when issued as contemplated in the warrant agreement attached as an exhibit to
the Registration Statement, be validly issued and constitute a legally valid and
binding obligation of the Company. This opinion is limited to (i) the federal
laws of the United States of America, including statutory provisions and
reported judicial decisions interpreting those laws and (ii) the laws of the
State of California, including statutory provisions, applicable provisions of
the California Constitution and reported judicial decisions interpreting those
laws.



     Our affiliates will own 110,000 shares of Common Stock once the offering is
completed.

     We hereby consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm in the related
prospectus under the heading "Legal Matters." In giving such opinion, we do not
thereby admit that we are acting within the category of persons whose consent is
required under Section 7 of the Act or the rules or regulations of the
Securities and Exchange Commission thereunder.

                                       Very truly yours,

                                       /S/ MORSE, ZELNICK, ROSE & LANDER, LLP
                                       --------------------------------------
                                       MORSE, ZELNICK, ROSE & LANDER, LLP

EX-10.1

                                                                    Exhibit 10.1

                            AMERICAN MOLD GUARD, INC.
                              EQUITY INCENTIVE PLAN

                                    SECTION I
                                  INTRODUCTION

          1.1 ESTABLISHMENT. American Mold Guard, Inc., a California corporation
(hereinafter referred to, as the "Company"), hereby establishes the American
Mold Guard, Inc. Equity Incentive Plan (the "Plan") for certain key employees
and consultants of the Company.

          1.2 PURPOSES. The purposes of the Plan are to attract and retain the
best available personnel for positions of substantial responsibility, to provide
additional incentive to Eligible Employees and Consultants of the Company and to
create in such Eligible Employees and Consultants a more direct interest in the
future success of the operations of the Company by relating incentive
compensation to increases in stockholder value, so that the income of Eligible
Employees and Consultants is more closely aligned with the income of the
Company's stockholders.

                                    SECTION 2
                                   DEFINITIONS

          2.1 DEFINITIONS. The following terms shall have the meanings set forth
below:

                (a) "Award" means a grant made under this Plan in the form of
Stock, Options, or Restricted Stock.

                (b) "Board" means the Board of Directors of the Company.

                (c) "Consultant" means any person, including an advisor, who is
engaged by the Company to render services and is compensated for such services,
and any director of the Company whether compensated for such services or not;
provided that the term Consultant shall not include directors who are not
compensated for their services or are paid only a director's fee by the Company.

                (d) "Effective Date" means the effective date of the Plan.

                (e) "Eligible Employees" means full-time key employees
(including, without limitation, officers and directors who are also employees)
of the Company upon whose judgment, initiative and efforts the Company is, or
will be, important to the successful conduct of its business.

                                       1


                (f) "Fair Market Value" means the officially quoted closing
price of the Stock on the Nasdaq Stock Market, or if the Stock is listed on a
securities exchange, the last reported sales price of the Stock on such exchange
which shall be for consolidated trading if applicable to such exchange, or if
neither so reported or listed, the last reported bid price of the Stock. If the
Stock is not publicly traded, the Fair Market Value of the Stock on any date
shall be determined in good faith by the Incentive Plan Committee after such
consultation with outside legal, accounting and other experts as the Incentive
Plan Committee may deem advisable, and the Committee shall maintain a written
record of its method of determining such value.

                (g) "Incentive Plan Committee" means a committee consisting of
at least two disinterested members of the Board who are empowered hereunder to
take actions in the administration of the Plan. The Incentive Plan Committee
shall be so constituted at all times as to permit the Plan to comply with Rule
16b-3 or any successor rule promulgated under the Securities Exchange Act of
1934 (the "1934 Act"). Members of the Incentive Plan Committee shall be
appointed from time to time by the Board, shall serve at the pleasure of the
Board, and may resign at any time upon written notice to the Board.

                (h) "Incentive Stock Option" means any Option designated as such
and granted in accordance with the requirements of Section 422 of the Internal
Revenue Code.

                (i) "Internal Revenue Code" means the Internal Revenue Code of
1986, as it may be amended from time to time.

                (j) "Non-Statutory Option" means any Option other than an
Incentive Stock Option.

                (k) "Option" means a right to purchase Stock at a stated price
for a specified period of time.

                (l) "Option Price" means the price at which shares of Stock
subject to an Option may be purchased, determined in accordance with subsection
7.2(b).

                (m) "Participant" means an Eligible Employee or Consultant to
the Company designated by the Incentive Plan Committee from time to time during
the term of the Plan to receive one or more Awards under the Plan.

                (n) "Plan Year" means each 12-month period beginning January I
and ending December 31, except that for the first year of the Plan it shall
begin on the Effective Date.

                (o) "Restricted Stock" means Stock granted under Section 9 that
is subject to restrictions imposed pursuant to said Section.

                (p) "Share" means a share of Stock.

                                       2


                (q) "Stock" means the common stock, no par value, of the
Company.

          2.2 GENDER AND NUMBER. Except when otherwise indicated by the context,
the masculine gender shall also include the feminine gender, and the definition
of any term herein in the singular shall also include the plural.


                                    SECTION 3
                               PLAN ADMINISTRATION

          The Plan shall be administered by the Incentive Plan Committee. In
accordance with the provisions of the Plan, the Incentive Plan Committee shall,
in its sole discretion, select Participants from among the Eligible Employees
and Consultants to whom Awards will be granted, the form of each Award, the
amount of each Award and any other terms and conditions of each Award as the
Incentive Plan Committee may deem necessary or desirable and consistent with the
terms of the Plan. The Incentive Plan Committee shall determine the form or
forms of the agreements with participants which shall evidence the particular
provisions, terms, conditions, rights and duties of the Company and the
Participants with respect to Awards granted pursuant to the Plan, which
provisions need not be identical except as may be provided herein. The Incentive
Plan Committee may from time to time adopt such rules and regulations for
carrying out the purposes of the Plan as it may deem proper and in the best
interests of the Company. The Incentive Plan Committee may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or in any
agreement entered into hereunder in the manner and to the extent it shall deem
expedient and it shall be the sole and final judge of such expediency. No member
of the Incentive Plan Committee shall be liable for any action or determination
made in good faith, and all members of the Committee shall, in addition to their
rights as directors, be fully protected by the Company with respect to any such
action, determination or interpretation. The determination, interpretations and
other actions of the Incentive Plan Committee pursuant to the provisions of the
Plan shall be binding and conclusive for all purposes and on all persons.


                                    SECTION 4
                            STOCK SUBJECT TO THE PLAN

          4.1 NUMBER OF SHARES. The maximum aggregate number of Shares which may
be authorized for issuance under the Plan in accordance with the provisions of
the Plan and subject to such restrictions or other provisions as the Incentive
Plan Committee may from time to time deem necessary is one million (1,000,000).
The Shares may be divided among the various Plan components as the Incentive
Plan Committee shall determine. Shares which may be issued upon the exercise of
Options shall be applied to reduce the maximum number of

                                       3


Shares remaining available for use under the Plan. The Company shall at all
times during the term of the Plan and while any Options are outstanding retain
as authorized and unissued Stock, or as treasury Stock, at least the number of
Shares from time to time required under the provisions of the Plan, or otherwise
assure itself of its ability to perform its obligations hereunder.

          4.2 UNUSED AND FORFEITED STOCK. Any Shares that are subject to an
Award under this Plan which are not used because the terms and conditions of the
Award are not met, including any Shares that are subject to an Option which
expires or is terminated for any reason, any Shares which are used for full or
partial payment of the purchase price of Shares with respect to which an Option
is exercised and any Shares retained by the Company pursuant to Section 15.2
shall automatically become available for use under the Plan.

          4.3 ADJUSTMENTS FOR STOCK SPLIT, STOCK DIVIDEND, ETC. If the Company
shall at any time increase or decrease the number of its outstanding Shares or
change in any way the rights and privileges of such Shares by means of the
payment of a stock dividend or any other distribution upon such Shares payable
in Stock, or through a stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, then in relation to
the Stock that is affected by one or more of the above events, the numbers,
rights and privileges of the following shall be increased, decreased or changed
in like manner as if they had been issued and outstanding, fully paid and
nonassessable at the time of such occurrence: (i) the shares of Stock as to
which Awards may be granted under the Plan; and (ii) the Shares of Stock then
included in each outstanding Option granted hereunder.

          4.4 DIVIDEND PAYABLE IN STOCK OF ANOTHER CORPORATION ETC. If the
Company shall at any time pay or make any dividend or other distribution upon
the Stock payable in securities of another corporation or other property (except
money or Stock), a proportionate part of such securities or other property shall
be set aside and delivered to any Participant then holding an Award for the
particular type of Stock for which the dividend or other distribution was made,
upon exercise thereof in the case of Options, and the vesting thereof in the
case of other Awards. Prior to the time that any such securities or other
property are delivered to a Participant in accordance with the foregoing, the
Company shall be the owner of such securities or other property and shall have
the right to vote the securities, receive any dividends payable on such
securities, and in all other respects shall be treated as the owner. If
securities or other property which have been set aside by the Company in
accordance with this Section are not delivered to a Participant because an Award
is not exercised or otherwise vested, then such securities or other property
shall remain the property of the Company and shall be dealt with by the Company
as it shall determine in its sole discretion.

          4.5 OTHER CHANGES IN STOCK. In the event there shall be any change,
other than as specified in Sections 4.3 and 4.4, in the number or kind of
outstanding shares of Stock or of any stock or other securities into which the
Stock shall be changed or for which it shall have been exchanged, and if the
Incentive Plan Committee shall in its discretion determine that such change
equitably requires an adjustment in the number or kind of Shares subject to
outstanding

                                       4


Awards or which have been reserved for issuance pursuant to the Plan but are not
then subject to an Award, then such adjustments shall be made by the Incentive
Plan Committee and shall be effective for all purposes of the Plan and on each
outstanding Award that involves the particular type of stock for which a change
was effected.

          4.6 RIGHTS TO SUBSCRIBE. If the Company shall at any time grant to the
holders of its Stock rights to subscribe pro rata for additional shares thereof
or for any other securities of the Company or of any other corporation, there
shall be reserved with respect to the Shares then subject to an Award held by
any Participant of the particular class of Stock involved, the Stock or other
securities which the Participant would have been entitled to subscribe for if
immediately prior to such grant the Participant had exercised his entire Option,
or otherwise vested in his entire Award. If, upon exercise of any such Option or
the vesting of any other Award, the Participant subscribes for the additional
Stock or other securities, the Participant shall pay to the Company the price
that is payable by the Participant for such Stock or other securities.

          4.7 GENERAL ADJUSTMENT RULES. If any adjustment or substitution
provided for in this Section 4 shall result in the creation of a fractional
Share under any Award, the Company shall, in lieu of selling or otherwise
issuing such fractional Share, pay to the Participant a cash sum in an amount
equal to the product of such fraction multiplied by the Fair Market Value of a
Share on the date the fractional Share would otherwise have been issued. In the
case of any such substitution or adjustment affecting an Option, the total
Option Price for the shares of Stock then subject to an Option shall remain
unchanged but the Option Price per share under each such Option shall be
equitably adjusted by the Incentive Plan Committee to reflect the greater or
lesser number of shares of Stock or other securities into which the Stock
subject to the Option may have been changed.

          4.8 DETERMINATION BY INCENTIVE PLAN COMMITTEE, ETC. Adjustments under
this Section 4 shall be made by the Incentive Plan Committee, whose
determinations with regard thereto shall be final and binding upon all parties
thereto.


                                    SECTION 5
                          REORGANIZATION OR LIQUIDATION

          In the event that the Company is merged or consolidated with another
corporation (other than a merger or consolidation in which the Company is the
continuing corporation and which does not result in any reclassification or
change of outstanding Shares), or if all or substantially all of the assets or
more than 50% of the outstanding voting stock of the Company is acquired by any
other corporation, business entity or person (other than a sale or conveyance in
which the Company continues as a holding company of an entity or entities that
conduct the business or businesses formerly conducted by the Company), or in
case of a reorganization (other than a reorganization under the United States
Bankruptcy Code) or liquidation of the Company, and if the provisions of Section
11 do not apply, the Incentive

                                       5


Plan Committee, or the board of directors of any corporation assuming the
obligations of the Company, shall have the power and discretion to prescribe the
terms and conditions for the exercise of, or modification of, any outstanding
Awards granted hereunder. By way of illustration, and not by way of limitation,
the Incentive Plan Committee may provide for the complete or partial
acceleration of the dates of exercise of the Options, or may provide that such
Options will be exchanged or converted into options to acquire securities of the
surviving or acquiring corporation, or may provide for a payment or distribution
in respect of outstanding Options (or the portion thereof that is currently
exercisable) in cancellation thereof. The Incentive Plan Committee may remove
restrictions on Restricted Stock and may modify the performance requirements for
any other Awards. The Incentive Plan Committee may provide that Stock or other
Awards granted hereunder must be exercised in connection with the closing of
such transaction, and that if not so exercised such Awards will expire. Any such
determinations by the Incentive Plan Committee may be made generally with
respect to all Participants, or may be made on a case-by-case basis with respect
to particular Participants. The provisions of this Section 5 shall not apply to
any transaction undertaken for the purpose of reincorporating the Company under
the laws of another jurisdiction, if such transaction does not materially affect
the beneficial ownership of the Company's capital stock.


                                    SECTION 6
                                  PARTICIPATION

          Participants in the Plan shall be those Eligible Employees or
Consultants who, in the judgment of the Incentive Plan Committee, are
performing, or during the term of their incentive arrangement will perform,
important services in the management, operation and development of the Company,
and significantly contribute, or are expected to significantly contribute, to
the achievement of long-term corporate economic objectives. Participants may be
granted from time to time one or more Awards; provided, however, that the grant
of each such Award shall be separately approved by the Incentive Plan Committee,
and receipt of one such Award shall not result in automatic receipt of any other
Award, and written notice shall be given to such person, specifying the terms,
conditions, rights and duties related thereto; and further provided that
Incentive Stock Options shall not be granted to Consultants or to Eligible
Employees who are not permitted to receive Incentive Stock Options under the
Internal Revenue Code. Each Participant shall enter into an agreement with the
Company, in such form as the Incentive Plan Committee shall determine and which
is consistent with the provisions of the Plan, specifying such terms,
conditions, rights and duties. Awards shall be deemed to be granted as of the
date specified in the grant resolution of the Incentive Plan Committee, which
date shall be the date of any related agreement with the Participant. In the
event of any inconsistency between the provisions of the Plan and any such
agreement entered into hereunder, the provisions of the Plan shall govern.

                                       6


                                    SECTION 7
                                  STOCK OPTIONS

          7.1 GRANT OF OPTIONS. Coincident with the following designation for
participation in the Plan, a Participant may be granted one or more Options. The
Incentive Plan Committee in its sole discretion shall designate whether an
Option is to be considered an Incentive Stock Option or a Non-Statutory Option.
The Incentive Plan Committee may grant both an Incentive Stock Option and a
Non-Statutory Option to the same Participant at the same time or at different
times. Incentive Stock Options and Non-Statutory Options, whether granted at the
same or different times, shall be deemed to have been awarded in separate
grants, shall be clearly identified, and in no event shall the exercise of one
Option affect the right to exercise any other Option or affect the number of
Shares for which any other Option may be exercised.

          7.2 OPTION AGREEMENTS. Each Option granted under the Plan shall be
evidenced by a written stock option agreement which shall be entered into by the
Company and the Participant to whom the Option is granted (the "Option Holder"),
and which shall contain the following terms and conditions, as well as such
other terms and conditions not inconsistent therewith, as the Incentive Plan
Committee may consider appropriate in each case.

                (a) Number of Shares. Each stock option agreement shall state
that it covers a specified number of Shares, as determined by the Incentive Plan
Committee. Notwithstanding any other provision of the Plan, the aggregate Fair
Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by an Option Holder in any calendar year, under
the Plan or otherwise, shall not exceed $100,000. For this purpose, the Fair
Market Value of the Shares shall be determined as of the time an Option is
granted.

                (b) Price. The price at which each Share covered by an Option
may be purchased shall be determined in each case by the Incentive Plan
Committee and set forth in the stock option agreement, but in no event shall the
Option Price for each Share covered by an Incentive Stock Option be less than
the Fair Market Value of the Stock on the date the Option is granted; provided
that the Option Price for each Share covered by a Non-Statutory Option may be
granted at any price less than Fair Market Value, in the sole discretion of the
Incentive Plan Committee. In addition, the Option Price for each Share covered
by an Incentive Stock Option granted to an Eligible Employee who then owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any parent or subsidiary corporation of the Company must
be at least 110% of the Fair Market Value of the Stock subject to the Incentive
Stock Option on the date the Option is granted.

                (c) Duration of Options. Each stock option agreement shall state
the period of time, determined by the Incentive Plan Committee, within which the
Option may be exercised by the Option Holder (the "Option Period"). The Option
Period must expire, in all cases, not more than 10 years from the date an Option
is granted; provided, however, that the Option Period of an Option granted to an
Eligible Employee or Consultant who then owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the

                                       7


Company or any parent or subsidiary corporation of the Company must expire not
more than five years from the date such an Option is granted. Each stock option
agreement shall also state the periods of time, if any, as determined by the
Incentive Plan Committee, when incremental portions of each Option shall vest.
Except as provided in Sections 5 and 10, no portion of any Option shall vest
before six months after the date of grant of the Option.

                (d) Termination of Employment, Death, Disability, Etc. Except as
otherwise determined by the Incentive Plan Committee, each stock option
agreement shall provide as follows with respect to the exercise of the Option
upon termination of the employment or the death of the Option Holder:

                        (i) If the employment of the Option Holder is terminated
within the Option Period for cause, as determined by the Company, the Option
shall thereafter be void for all purposes. As used in this subsection 7.2(d),
"cause" shall mean a gross violation, as determined by the Company, of the
Company's established policies and procedures. The effect of this subsection
7.2(d)(i) shall be limited to determining the consequences of a termination, and
nothing in this subsection 7.2(d)(i) shall restrict or otherwise interfere with
the Company's discretion with respect to the termination of any employee.

                        (ii) If the Option Holder terminates his employment with
the Company in a manner determined by the Board, in its sole discretion, to
constitute retirement (which determination shall be communicated to the Option
Holder within 10 days of such termination), the Option may be exercised by the
Option Holder, or in the case of death by the persons specified in subsection
(iii) of this subsection 7.2(d), within three months following his or her
retirement if the Option is an Incentive Stock Option or within twelve months
following his or her retirement if the Option is a Non-Statutory Stock Option
(provided in each case that such exercise must occur within the Option Period),
but not thereafter. In any such case, the Option may be exercised only as to the
Shares as to which the Option had become exercisable on or before the date of
the Option Holder's termination of employment.

                        (iii) If the Option Holder dies, or if the Option Holder
becomes disabled (within the meaning of Section 22(e) of the Internal Revenue
Code), during the Option Period while still employed, or within the three-month
period referred to in (iv) below, or within the three or 12-month period
referred to in (ii) above, the Option may be exercised by those entitled to do
so under the Option Holder's will or by the laws of descent and distribution
within 12 months following the Option Holder's death or disability, but not
thereafter. In any such case, the Option may be exercised only as to the Shares
as to which the Option had become exercisable on or before the date of the
Option Holder's death or disability.

                        (iv) If the employment of the Option Holder by the
Company is terminated (which for this purpose means that the Option Holder is no
longer employed by the Company) within the Option Period for any reason other
than cause, retirement as provided in (ii) above, disability or the Option
Holder's death, the Option may be exercised by the Option Holder within three
months following the date of such termination (provided that such exercise

                                       8


must occur within the Option Period), but not thereafter. In any such case, the
Option may be exercised only as to the Shares as to which the Option had become
exercisable on or before the date of termination of employment.

                (e) Transferability. Each stock option agreement shall provide
that the Option granted therein is not transferable by the Option Holder except
by will or pursuant to the laws of descent and distribution, and that such
Option is exercisable during the Option Holder's lifetime only by him or her, or
in the event of disability or incapacity, by his or her guardian or legal
representative.

                (f) Exercise, Payments, Etc.

                        (i) Each stock option agreement shall provide that the
method for exercising the Option granted therein shall be by delivery to the
Corporate Secretary of the Company of written notice specifying the number of
Shares with respect to which such Option is exercised (which must be in an
amount evenly divisible by 100) and payment of the Option Price. Such notice
shall be in a form satisfactory to the Incentive Plan Committee and shall
specify the particular Option (or portion thereof) which is being exercised and
the number of Shares with respect to which the Option is being exercised. The
exercise of the Option shall be deemed effective upon receipt of such notice by
the Corporate Secretary and payment to the Company. The purchase of such Stock
shall take place at the principal offices of the Company upon delivery of such
notice, at which time the purchase price of the Stock shall be paid in full by
any of the methods or any combination of the methods set forth in (ii) below. A
properly executed certificate or certificates representing the Stock shall be
issued by the Company and delivered to the Option Holder. If certificates
representing Stock are used to pay all or part of the Option Price, separate
certificates for the same number of shares of Stock shall be issued by the
Company and delivered to the Option Holder representing each certificate used to
pay the Option Price, and an additional certificate shall be issued by the
Company and delivered to the Option Holder representing the additional shares,
in excess of the Option Price, to which the Option Holder is entitled as a
result of the exercise of the Option.

                        (ii) The exercise price shall be paid by any of the
following methods or any combination of the following methods:

                                (A)     in cash;

                                (B)     by cashier's check payable to the order
of the Company;

                                (C)     by delivery to the Company of
certificates representing the number of Shares then owned by the Option Holder,
the Fair Market Value of which equals the purchase price of the Stock purchased
pursuant to the Option, properly endorsed for transfer to the Company; provided
however, that Shares used for this purpose must have been held by the Option
Holder for such minimum period of time as may be established from time

                                       9


to time by the Incentive Plan Committee; for purposes of this Plan, the Fair
Market Value of any Shares delivered in payment of the purchase price upon
exercise of the Option shall be the Fair Market Value as of the exercise date;
the exercise date shall be the day the delivery of the certificates for the
Stock used as payment of the Option Price; or

                                (D)     by delivery to the Company of a properly
executed notice of exercise together with irrevocable instructions to a broker
to deliver to the Company promptly the amount of the proceeds of the sale of all
or a portion of the Stock or of a loan from the broker to the Option Holder
necessary to pay the exercise price.

                        (iii) In the discretion of the Incentive Plan Committee,
the Company may guaranty a third-party loan obtained by a Participant to pay
part or all of the Option Price of the Shares provided that such loan or the
Company's guaranty is secured by the Shares.

                (g) Date of Grant. An option shall be considered as having been
granted on the date specified in the grant resolution of the Incentive Plan
Committee.

                (h) Withholding.

                        (A) Non-Statutory Options. Each stock option agreement
covering Non-Statutory Options shall provide that, upon exercise of the Option,
the Option Holder shall make appropriate arrangements with the Company to
provide for the amount of additional withholding required by applicable federal
and state income tax laws, including payment of such taxes through delivery of
Stock or by withholding Stock to be issued under the Option, as provided in
Section 15.

                        (B) Incentive Options. In the event that a Participant
makes a disposition (as defined in Section 424(c) of the Internal Revenue Code)
of any Stock acquired pursuant to the exercise of an Incentive Stock Option
prior to the expiration of two years from the date on which the Incentive Stock
Option was granted or prior to the expiration of one year from the date on which
the Option was exercised, the Participant shall send written notice to the
Company at its principal office in Irvine, California (Attention: Corporate
Secretary) of the date of such disposition, the number of shares disposed of,
the amount of proceeds received from such disposition, and any other information
relating to such disposition as the Company may reasonably request. The
Participant shall, in the event of such a disposition, make appropriate
arrangements with the Company to provide for the amount of additional
withholding, if any, required by applicable federal and state income tax laws.

                (i) Adjustment of Options. Subject to the limitations contained
in Sections 7 and 14, the Incentive Plan Committee may make any adjustment in
the Option Price, the number of shares subject to, or the terms of, an
outstanding Option and a subsequent granting of an Option by amendment or by
substitution of an outstanding Option. Such amendment, substitution, or re-grant
may result in terms and conditions (including Option Price, number of shares
covered, vesting schedule or exercise period) that differ from the terms and
conditions

                                       10


of the original Option. The Incentive Plan Committee may not, however, adversely
affect the rights of any Participant to previously granted Options without the
consent of such Participant. If such action is affected by amendment, the
effective date of such amendment shall be the date of the original grant.

          7.3 STOCKHOLDER PRIVILEGES. No Option Holder shall have any rights as
a stockholder with respect to any Shares covered by an Option until the Option
Holder becomes the holder of record of such Stock, and no adjustments shall be
made for dividends or other distributions or other rights as to which there is a
record date preceding the date such Option Holder becomes the holder of record
of such Stock, except as provided in Section 4.


                                    SECTION 8
                            STOCK APPRECIATION RIGHTS

          If an agreement evidencing an Option so provides, an Option granted
under this Plan (herein sometimes referred to as the "corresponding option") may
include the right (a "Stock Appreciation Right") to receive an amount equal to
some or all of the excess of the Fair Market Value of the Shares subject to
unexercised portions of the corresponding option over the aggregate exercise
price for such Shares under the corresponding option as of the date the Stock
Appreciation Right is exercised. The amount payable upon exercise of a Stock
Appreciation Right may be paid in cash or in shares of the class then subject to
the corresponding option (valued on the basis of their Fair Market Value), or
in a combination of cash and such shares so valued. No Stock Appreciation Right
may be exercised in whole or in part (a) other than in connection with the
contemporaneous surrender without exercise of such corresponding option, or the
portion thereof that corresponds to the portion of the Stock Appreciation Right
being exercised, or (b) except to the extent that the corresponding option or
such portion thereof is exercisable on the date of exercise of the Stock
Appreciation Right by the person exercising the Stock Appreciation Right, or (c)
unless the class of stock then subject to the corresponding option is then
"publicly traded". For this purpose, a class of stock is "publicly traded" if it
is listed or admitted to unlisted trading privileges on a national securities
exchange or if sales or bid and offer quotations therefor are reported on the
Nasdaq Stock Market or on any then operative successor to the Nasdaq Stock
Market.


                                    SECTION 9
                             RESTRICTED STOCK AWARDS

          9.1 AWARDS GRANTED BY INCENTIVE PLAN COMMITTEE. Coincident with or
following designation for participation in the Plan, a Participant may be
granted one or more Restricted Stock Awards consisting of Shares. The number of
Shares granted as a Restricted Stock Award shall be determined by the Incentive
Plan Committee.

                                       11


          9.2 RESTRICTIONS. A Participant's right to retain a Restricted Stock
Award granted to him under Section 9.1 shall be subject to such restrictions,
including but not limited to his continuous employment by the Company for a
restriction period specified by the Incentive Plan Committee, or the attainment
of specified performance goals and objectives, as may be established by the
Incentive Plan Committee with respect to such award. The Incentive Plan
Committee may in its sole discretion require different periods of employment or
different performance goals and objectives with respect to different
Participants, to different Restricted Stock Awards or to separate, designated
portions of the Shares constituting a Restricted Stock Award.

          9.3 PRIVILEGES OF A STOCKHOLDER, TRANSFERABILITY. A Participant shall
have all voting, dividend, liquidation and other rights with respect to Stock in
accordance with its terms received by him as a Restricted Stock Award under this
Section 9 upon his becoming the holder of record of such Stock; provided,
however, that the Participant's right to sell, encumber or otherwise transfer
such Stock shall be subject to the limitations of Section 11.2 hereof.

          9.4 ENFORCEMENT OF RESTRICTIONS. The Incentive Plan Committee may in
its sole discretion require one or more of the following methods of enforcing
the restrictions referred to in Sections 9.2 and 9.3:

                (a) Placing a legend on the stock certificates referring to the
restrictions;

                (b) Requiring the Participant to keep the stock certificates,
duly endorsed, in the custody of the Company while the restrictions remain in
effect; or

                (c) Requiring that the stock certificates, duly endorsed, be
held in the custody of a third party while the restrictions remain in effect.

          9.5 TERMINATION OF EMPLOYMENT, DEATH, DISABILITY, ETC. In the event of
the death or disability (within the meaning of Section 22(e) of the Internal
Revenue Code) of a Participant, or the retirement of a Participant as provided
in Section 7.2(d)(ii), all employment period and other restrictions applicable
to Restricted Stock Awards then held by him shall lapse, and such awards shall
become fully nonforfeitable. Subject to Sections 5 and 10, in the event of a
Participant's termination of employment for any other reason, any Restricted
Stock Awards as to which the employment period or other restrictions have not
been satisfied shall be forfeited.


                                   SECTION 10
                                CHANGE IN CONTROL

          10.1 OPTIONS, RESTRICTED STOCK. In the event of a change in control of
the Company as defined in Section 10.2, then the Incentive Plan Committee may,
in its sole discretion, without obtaining stockholder approval, to the extent
permitted in Section 14, take any or all of the

                                       12


following actions: (a) accelerate the exercise dates of any outstanding Options
or make all such Options fully vested and exercisable; (b) grant a cash bonus
award to any Option Holder in an amount necessary to pay the Option Price of all
or any portion of the Options then held by such Option Holder; (c) pay cash to
any or all Option Holders in exchange for the cancellation of their outstanding
Options in an amount equal to the difference between the Option Price of such
Options and the greater of the tender offer price for the underlying Stock or
the Fair Market Value of the Stock on the date of the cancellation of the
Options; (d) make any other adjustments or amendments to the outstanding Options
and (e) eliminate all restrictions with respect to Restricted Stock and deliver
Shares free of restrictive legends to any Participant.

          10.2 DEFINITION. For purposes of the Plan, a "change in control" shall
be deemed to have occurred if (a) any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the 1934 Act), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company
becomes the "beneficial owner" (as defined in Rule l3d-3 under the 1934 Act),
directly or indirectly, of more than 33-1/3 percent of the then outstanding
voting stock of the Company; or (b) at any time during any period of three
consecutive years (not including any period prior to the Effective Date),
individuals who at the beginning of such period constitute the Board (and any
new director whose election by the Board or whose nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority thereof; or (c) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 80% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or the
stockholders approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets.


                                   SECTION 11
                        RIGHTS OF EMPLOYEES; PARTICIPANTS

          11.1 EMPLOYMENT. Nothing contained in the Plan or in any Award
granted under the Plan shall confer upon any Participant any right with respect
to the continuation of his or her employment by the Company, or interfere in any
way with the right of the Company, subject to the terms of any separate
employment agreement to the contrary, at any time to terminate such employment
or to increase or decrease the compensation of the Participant from the rate in
existence at the time of the grant of an Award. Whether an authorized leave of
absence, or absence in military or government service, shall constitute a
termination of employment shall be determined by the Incentive Plan Committee at
the time.

                                       13


          11.2 NONTRANSFERABILITY. No right or interest of any Participant in an
Award granted pursuant to the Plan shall be assignable or transferable during
the lifetime of the Participant, either voluntarily or involuntarily, or be
subjected to any lien, directly or indirectly, by operation of law, or
otherwise, including execution, levy, garnishment, attachment, pledge or
bankruptcy. In the event or a Participant's death, a Participant's rights and
interests in Options shall, to the extent provided in Section 7, be transferable
by testamentary will or the laws of descent and distribution, and payment of any
amounts due under the Plan shall be made to, and exercise of any Options may be
made by, the Participant's legal representatives, heirs or legatees. If in the
opinion of the Incentive Plan Committee a person entitled to payments or to
exercise rights with respect to the Plan is disabled from caring for his affairs
because of mental condition, physical condition or age, payment due such person
may be made to, and such rights shall be exercised by, such person's guardian,
conservator or other legal personal representative upon furnishing the Incentive
Plan Committee with evidence satisfactory to the Incentive Plan Committee of
such status.


                                   SECTION 12
                              GENERAL RESTRICTIONS

          12.1 INVESTMENT REPRESENTATIONS. The Company may require any person to
whom an Option or other Award is granted, as a condition of exercising such
Option or receiving Stock under the Award, to give written assurances in
substance and form satisfactory to the Company and its counsel to the effect
that such person is acquiring the Stock subject to the Option or the Award for
his own account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
securities laws. Legends evidencing such restrictions may be placed on the
certificates evidencing the Stock.

          12.2 COMPLIANCE WITH SECURITIES LAWS. Each Award shall be subject to
the requirement that, if at any time counsel to the Company shall determine that
the listing, registration or qualification of the Shares subject to such Award
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, is necessary as a condition
of, or in connection with, the issuance or purchase of Shares thereunder, such
Award may not be accepted or exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained on conditions acceptable to the Incentive Plan Committee. Nothing
herein shall be deemed to require the Company to apply for or to obtain such
listing, registration or qualification.

          12.3 STOCK RESTRICTION AGREEMENT. The Incentive Plan Committee may
provide that shares of Stock issuable upon the exercise of an Option shall,
under certain conditions, be subject to restrictions whereby the Company has a
right of first refusal with respect to such

                                       14


shares or a right or obligation to repurchase all or a portion of such shares,
which restrictions may survive a Participant's term of employment with the
Company. The acceleration of time or times at which an Option becomes
exercisable may be conditioned upon the Participant's agreement to such
restrictions.


                                   SECTION 13
                             OTHER EMPLOYEE BENEFITS

          The amount of any compensation deemed to be received by a Participant
as a result of the exercise of an Option or the grant or vesting of any other
Award shall not constitute "earnings" with respect to which any other employee
benefits of such employee are determined, including without limitation benefits
under any pension, profit sharing, life insurance or salary continuation plan.


                                   SECTION 14
                  PLAN AMENDMENT, MODIFICATION AND TERMINATION

          The Board may at any time terminate, and from time-to-time may amend
or modify, the Plan provided, however, that no amendment or modification may
become effective without approval of the amendment or modification by the
stockholders if stockholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements, or if the Company, on the
advice of counsel, determines that stockholder approval is otherwise necessary
or desirable.

          No amendment, modification or termination of the Plan shall in any
manner adversely affect any Awards theretofore granted under the Plan, without
the consent of the Participant holding such Awards.


                                   SECTION 15
                                   WITHHOLDING

          15.1 WITHHOLDING REQUIREMENT. The Company's obligations to deliver
Shares upon the exercise of an Option, or upon the vesting of any other Award,
shall be subject to the Participant's satisfaction of all applicable federal,
state and local income and other tax withholding requirements.

          15.2 WITHHOLDING WITH STOCK. At the time the Incentive Plan Committee
grants an Award, it may, in its sole discretion, grant the Participant an
election to pay all such amounts of tax withholding, or any part thereof, by
electing to transfer to the Company, or to have the Company withhold from Shares
otherwise issuable to the Participant, Shares having a value equal to the
amount required to be withheld or such lesser amount as may be elected by the

                                       15


Participant. All elections shall be subject to the approval or disapproval of
the Incentive Plan Committee. The value of Shares to be withheld shall be based
on the Fair Market Value of the Stock on the date that the amount of tax to be
withheld is to be determined (the "Tax Date"). Any such elections by
Participants to have Shares withheld for this purpose will be subject to the
following restrictions:

                (a) All elections must be made prior to the Tax Date.

                (b) All elections shall be irrevocable.


                                   SECTION 16
                             BROKERAGE ARRANGEMENTS

          The Incentive Plan Committee, in its discretion, may enter into
arrangements with one or more banks, brokers or other financial institutions to
facilitate the disposition of shares acquired upon exercise of Stock Options,
including, without limitation, arrangements for the simultaneous exercise of
Stock Options and sale of the Shares acquired upon such exercise.

                                   SECTION 17
                           NONEXCLUSIVITY OF THE PLAN

          Neither the adoption of the Plan by the Board nor the submission of
the Plan to stockholders of the Company for approval shall be construed as
creating any limitations on the power or authority of the Board to adopt such
other or additional incentive or other compensation arrangements of whatever
nature as the Board may deem necessary or desirable or preclude or limit the
continuation of any other plan, practice or arrangement for the payment of
compensation or fringe benefits to employees generally, or to any class or group
of employees, which the Company now has lawfully put into effect, including,
without limitation, any retirement, pension, savings and stock purchase plan,
insurance, death and disability benefits and executive short-term incentive
plans.

                                   SECTION 18
                               REQUIREMENTS OF LAW

          18.1 REQUIREMENTS OF LAW. The issuance of stock and the payment of
cash pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.

          18.2 GOVERNING LAW. The Plan and all agreements hereunder shall be
construed in accordance with and governed by the laws of the State of
California.

                                       16


                                   SECTION 19
                              DURATION OF THE PLAN

          The Plan shall terminate at such time as may be determined by the
Board of Directors, and no Award shall be granted after such termination. If not
sooner terminated under the preceding sentence, the Plan shall fully cease and
expire at midnight on December 31, 2013. Awards outstanding at the time of the
Plan termination may continue to be exercised or earned in accordance with their
terms.

                                       17


                                  CERTIFICATION

          I, the undersigned, being the duly elected President of the Company,
do hereby certify that the foregoing Equity Incentive Plan was adopted by the
Board of Directors and by a majority of the outstanding shares of the Company
entitled to vote on April 28, 2003.


 By:
    ---------------------------------------
      Tom Blakeley, President

                                       18

EX-10.2

                                                                    Exhibit 10.2


                  AMERICAN MOLD GUARD, INC. ANNUAL REWARD PLAN

                                    ARTICLE I

                                     PURPOSE

          The purpose of the American Mold Guard, Inc. (the "Company") Annual
Reward Plan (the "Plan") is to reward senior management for improving financial
results that drive the creation of shareholder value, and thereby, serve to
attract, motivate, reward and retain senior management talent. The Plan provides
a means to link total and individual cash compensation to Company performance,
as measured by Company earnings before interest, taxes, depreciation and
amortization ("EBITDA") on the basis of Participant sharing in the Company's
EBITDA, a demonstrated driver of shareholder value.

                                   ARTICLE II

                                  DEFINITIONS

          2.1 DEFINITIONS. Where the following words and phrases appear in the
Plan, they shall have the respective meanings set forth below, unless their
context clearly indicates to the contrary.

          "Affiliate" shall mean any Subsidiary, division or designated group of
the Company.

          "Beneficiary" shall mean the person, persons, trust or trusts
entitled by Will or the laws of descent and distribution to receive the benefits
specified under the Plan in the event of the Participant's death prior to full
payment of a Reward.

          "Board of Directors" shall mean the Board of Directors of the Company.

          "Bonus Shares" shall mean a specified number of units assigned to a
Participant for a particular Plan Year that are used to calculate the Reward for
such Plan Year. The value of each Bonus Share is determined by dividing the
total number of Bonus Shares for all Participants into the Bonus Pool as of the
and of a particular Plan Year; provided, however, that the Committee may, in its
discretion, in lieu of the foregoing, establish, as of the beginning of a Plan
Year, a formula pursuant to which the value of a Bonus Share can be determined
at given levels of EBITDA performance, regardless of changes during such Plan
Year in the aggregate number of Bonus Shares.

          "Bonus Pool" shall mean the amount available for payment of Rewards
based upon the amount of EBITDA generated by the Company for a particular Plan
Year as established by the committee,



          "Cause" shall mean (i) the conviction of the Participant of a felony
under Federal law or the law of the state in which such action occurred, (ii)
dishonesty in course of fulfilling the Participant's employment duties or (iii)
the disclosure by the Participant to any unauthorized person or competitor of
any confidential information or confidential knowledge as to the business or
affairs of the Company.

          "CEO" shall mean the Chief Executive Officer of the Company.

          "Committee" shall mean the Compensation Committee of Directors of the
Company, appointed by the Board of Directors from among its members.

          "Corporate Change" shall have the meaning ascribed in the Company's
Equity Incentive Plan, as amended.

          "Deferred Payment Date" shall mean, with respect to a particular Plan
Year, the last business day of February of the second and third years following
the end of such Plan Year.

          "EBITDA" shall mean earnings before interest, taxes, depreciation and
amortization.

          "Key Employees" shall mean regular, full-time management employees of
the Company below the Company officer level.

          "Participant Category" shall mean a grouping of Participants, as
determined by the Committee, based on level of responsibility.

          "Participants" shall mean any employee of the Company or a Subsidiary
who participates in the Plan pursuant to the provisions of Article III hereof.

          "Payment Date" shall mean, with respect to a particular Plan Year, the
last business day of February of the year next following the end of such Plan
Year.

          "Plan" shall mean the American Mold Guard, Inc. Annual Reward Plan.

          "Plan Year" shall mean the calendar year ending December 31, 2005 and
each subsequent calendar year thereafter.

          "Reward" shall mean the dollar amount of incentive compensation
payable to a Participant under the Plan for a Plan Year determined in accordance
with Section 5.2.

          "Reward Opportunity" shall mean, with respect to each Participant, the
aggregate value of such Participant's Bonus Shares.

          "Reward Schedule" shall mean the schedule setting forth the basis on
which each of the Participants will share in the Bonus Pool for a particular
Plan Year.

                                       2


          "Section 16 Officer" mean an officer who is subject to Section 16 of
the Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder.

          "Subsidiary" shall mean any corporation fifty percent (50%) or more of
whose voting power is owned, directly or indirectly, by the Company.

          2.2 NUMBER. Wherever appropriate herein, words used in the singular
shall be considered to include the plural and words used in the plural shall be
considered to include the singular.

          2.3 HEADINGS. The headings of Articles and Sections herein are
included solely for convenience, and if there is any conflict between headings
and the text of the Plan, the text shall control.

                                   ARTICLE III

                                  PARTICIPATION

          3.1 PARTICIPANTS. Employees who are Company officers as of the
beginning of each Plan Year shall be Participants for such Plan Year. In
addition, such other Key Employees as may be designated annually as Participants
by the CEO prior to the last day of February of each Plan Year shall be
Participants under the Plan for such Plan Year.

          3.2 PARTIAL PLAN YEAR PARTICIPATION. If, after the beginning of a Plan
Year, an employee who was not previously a Participant is newly appointed as an
officer of the Company, such employee shall become a Participant effective with
such appointment or election for the balance of the Plan Year, on a prorated
basis, unless the Committee shall determine, in its sole discretion, that the
participation shall be delayed until the beginning of the next Plan Year. If
after the beginning of the Plan Year, a person is newly hired, promoted or
transferred into a position in which he or she is a Key Employee, the CEO may
designate in writing such person as a Participant for the balance of such Plan
Year, an a prorated basis. Contemporaneously with the promotion, demotion,
reassignment or transfer of a Participant which involves a change in Participant
Category, the CEO (except with respect to any action or status change involving
himself or other Section 16 Officers, in which case such determination shall be
made by the Committee) shall, in his sole and absolute discretion, make
appropriate adjustment in the number of Bonus Shares assigned to such
Participant, on a prorated basis for the balance of the Plan Year, effective as
of such change in status; provided, however, that if such change in status
involves a transfer to an Affiliate whose employees do not participate in the
Plan, such Participant's participation in the Plan will be terminated effective
with such transfer for the remainder of the Plan Year without otherwise
affecting such person's employment status, and such Participant shall be
entitled to receive a prorated Reward for the Plan Year based on the time he or
she was a Participant.

          3.3 NO RIGHT TO PARTICIPATE. Except as provided in Sections 3.1 and
3.2, no Participant or other employee of the Company shall, at any time, have a
right to participate in the Plan for any Plan Year, notwithstanding having
previously participated in the Plan.

                                       3


          3.4 PLAN EXCLUSIVE. No employee shall simultaneously participant in
this Plan and in any short-term incentive plan of an Affiliate.

                                   ARTICLE IV

                                 ADMINISTRATION

          Following the end of each Plan Year, the Committee shall determine the
actual Reward payable to each Participant. The Committee is authorized to
construe and interpret the Plan, to prescribe, amend and rescind rules,
regulations and procedures relating to its administration and to make all other
determinations necessary or advisable for administration of the Plan. The CEO
shall have such authority as is expressly provided in the Plan. In addition, as
permitted by law, the Committee may delegate such of its authority granted under
the Plan (except with respect to matters relating to the CEO and other Section
16 Officers) as it deems appropriate to the CEO or a committee, which committee
need not be composed entirely of members of the Board Directors. The
determinations of the Committee, the CEO or any committee to which authority has
been delegated pursuant hereto shall be conclusive and binding. Subject only to
compliance with the express provisions hereof, the Committee, the CEO and any
other committee to which responsibility has been delegated may act in their sole
and absolute discretion with respect to the Plan.

                                    ARTICLE V

                              REWARD DETERMINATIONS

          5.1 FUNDING OF BONUS POOL. On the: last day of each Plan Year, the
Company shall contribute a sum equal to twenty percent (20%) of the Company's
EBITDA occurring during such Plan Year.

          5.2 REWARD OPPORTUNITIES. The established Reward Opportunities may
vary in relation to the Participant Categories and within the Participant
Categories. In the event a Participant changes Participant Categories during a
Plan Year, the Participant's Bonus Shares shall be adjusted to reflect the
amount of time in each Participant Category during the Plan Year.

          5.3 DISCRETIONARY ADJUSTMENTS. If the Committee, in its sole and
absolute discretion, determines that a change in the Company's business,
operations, corporate or capital structure, the manner in which it conducts
business or any other material change or event will have a consequence the
Committee did not intend which affects the Company's level of contribution to
the Bonus Pool, then the Committee may, reasonably contemporaneously with such
change or event, make such adjustments as it shall deem appropriate and
equitable in the manner of computing EBITDA for purposes of Bonus Pool
contribution for the Plan Year.

          5.4 DISCRETIONARY BONUSES. Notwithstanding any other provision
contained herein to the contrary, the Committee may, in its sole discretion,
make such other or additional bowls payments to a Participant as it shall deem
appropriate.

                                       4


                                   ARTICLE VI

                             DISTRIBUTION OF REWARDS

          6.1 FORM AND TIMING OF PAYMENT. All annual Reward amounts shall be
paid in cash on the Payment Date.

          6.2 MANDATORY DEFERRAL. Notwithstanding the provisions of Section 6.1,
with respect to a Participant who is a "covered employee" for purposes of
Section 162(m) of the Internal Revenue Code of 1986, as amended, payment of that
portion of a Reward which would otherwise cause such Participant's compensation
to exceed the limitation on the amount of compensation deductible by the
Company in any taxable year pursuant to such Section 162(m), shall be deferred
until such Participant is no longer a "covered employee," unless the Committee,
in its discretion, determines that such deferral should not be required.

          6.3 ELECTIVE DEFERRAL. Nothing herein shall be deemed to preclude a
Participant election to defer receipt of a percentage of his or her Reward
beyond the time such amount would have been payable hereunder.

          6.4 TAX WITHHOLDING. The Company or employing Subsidiary through which
payment of a Reward is to be made shall have the right to deduct from any
payment hereunder any amounts that Federal, state, local or foreign tax laws
require with respect to such payments.

          6.5 NO INTEREST OR DIVIDEND EQUIVALENTS. No interest or dividend
equivalents shall be accrued or paid under this Plan on the amount of any
portion of a Reward as to which distribution is deferred.

          6.6 SMALL ACCOUNTS. Notwithstanding the provisions of Section 6.1 and
Article VII, the Committee may, on a case-by-case basis to facilitate Plan
administration, authorize a lump sum cash payment of a Reward or the remaining
portion of a Reward if it deems the amount thereof to be too small to justify
its deferral.

                                   ARTICLE VII

                            TERMINATION OF EMPLOYMENT

          7.1 TERMINATION OF SERVICE DURING PLAN YEAR. In the event a
Participant's employment is terminated during a Plan Year for any reason other
than termination for Cause, provided that a Reward would have been payable under
the Plan for such Plan Year, such Participant's Reward for such Plan Year shall
be prorated based upon the portion of the Plan Year during which he or she was a
Participant and paid in accordance with Section 6.1, except in the case of
death, in which case the entire amount of prorated Reward shall be paid to the
Participant's estate on the Payment Date. If Participant's employment is
terminated for Cause during a Plan Year, all of such Participant's rights to a
Reward for such Plan Year shall be forfeited.

                                       5


          7.2 TERMINATION OF SERVICE AFTER END OF PLAN YEAR BUT PRIOR TO FULL
PAYMENT. If a Participant's employment is terminated for any reason other than
termination for Cause subsequent to the end of an applicable Plan Year but prior
to the payment of a Reward in full, the amount of the Reward then unpaid shall
be paid to the Participant in accordance with Section 6.1, except in the case of
death, in which case the amount of the Reward then unpaid shall be paid
immediately to such Participant's estate. If a Participant's employment is
terminated for Cause subsequent to the end of an applicable Plan Year but prior
to the payment of a Reward in full, all of such Participant's rights to the
amount of the Reward then unpaid shall be forfeited.

                                  ARTICLE VIII

                    RIGHTS OF PARTICIPANTS AND BENEFICIARIES

          8.1 STATUS AS A PARTICIPANT OR BENEFICIARY. Neither status as a
Participant or Beneficiary shall be construed as a commitment that any Reward
will be paid or payable under the Plan.

          8.2 EMPLOYMENT. Nothing contained in the Plan or in any document
related to the Plan or to any Reward shall confer upon any Participant any right
to continue as an employee or in the employ of the Company or a Subsidiary or
constitute any contract or agreement of employment or interfere in any way with
the right of the Company or a Subsidiary to reduce such person's compensation,
to change the position held by such person or to terminate the employment of
such person; with or without Cause.

          8.3. NONTRANSFERABILITY. No benefit payable under, or interest in,
this Plan shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge and any such attempted
action shall be void and no such benefit or interest shall be, in any manner,
liable for, or subject to, debts, contracts, liabilities or torts of any
Participant or Beneficiary. Any attempt at transfer, assignment or other
alienation prohibited by the preceding sentence shall be disregarded and all
amounts payable hereunder shall be paid only in accordance with the provisions
of the Plan. The foregoing notwithstanding, nothing in this Section 8.3 shall
prevent transfer by Will or by applicable laws of descent and distribution

          8.4 NATURE OF PLAN. No participant, Beneficiary or other person shall
have any right, title or interest in my fund or in the specific asset of the
Company or any Subsidiary by reason of any Reward hereunder. There shall be no
funding of any benefits that may become payable hereunder. Nothing contained in
the Plan (or in any document related thereto), nor the creation or adoption of
the Plan, nor any action taken pursuant to the provisions of the Plan shall
create, or be construed to create, a trust of any kind or a fiduciary
relationship between the Company or a Subsidiary and any Participant,
Beneficiary or other person. To the extent that Participant, Beneficiary or
other person acquires a right to receive payment with respect to a Reward
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company or any Subsidiary. All amounts payable under the
Plan shall be paid from the general assets of the Company or a Subsidiary, as
applicable, and no special or separate fund or deposit shall be established and
no

                                       6


segregation of assets shall be made to assure payment of such amounts. Nothing
in the Plan shall be deemed to give any employee any right to participate in the
Plan except in accordance herewith.

                                   ARTICLE IX

                                CORPORATE CHANGE

          In the event of a Corporate Change, a Participant's Reward Opportunity
for the Plan Year in which the Corporate Change occurred shall be entitled to an
immediate cash payment equal to the maximum amount of Reward he or she would
have been entitled to receive for the Plan Year, prorated to the date of the
Corporate Change.

                                    ARTICLE X

                            AMENDMENT AND TERMINATION

          Notwithstanding anything herein to the contrary the Committee may, at
any time, terminate or, from time to time amend, modify or suspend the Plan;
provided, however, that, without the prior consent of the Participants affected,
no such action may adversely affect any rights or obligations with respect to
any Rewards theretofore earned for a particular Plan Year, whether or not the
amounts of such Rewards have been computed and whether or not such Rewards are
then payable.

                                   ARTICLE XI

                                  MISCELLANEOUS

          11.1 GOVERNING LAW. The Plan and all related documents shall be
governed by, and construed in accordance with, the laws of the State of
California, except to the extent preempted by federal law.

          11.2 SEVERABILITY. If any provision of the Plan shall be held illegal
or invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions hereof; instead, each provision shall be fully severable
and the Plan shall be construed and enforced as if said illegal or invalid
provision had never been included herein.

          11.3 SUCCESSOR. All obligations of the Company under the Plan shall be
binding upon and inure to the benefit of any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

          11.4 EFFECTIVE DATE. The Plan shall become effective as of January 1,
2005, for Plan Years beginning an and after January 1, 2005, and shall remain in
effect until such time as it may be terminated pursuant to Article X.

                                       7

EX-10.5

                                                                    Exhibit 10.5


                 SEVERANCE AGREEMENT AND MUTUAL GENERAL RELEASE

         This SEVERANCE AGREEMENT AND MUTUAL GENERAL RELEASE ("AGREEMENT") is
made as of November 30, 2005 by and between American Mold Guard, Inc., a
California corporation ("EMPLOYER") and Bradley Barnes ("Executive"). Employer
and Executive are referred to herein individually as a "PARTY" and collectively
as the "PARTIES."

                                    RECITALS

         A.       Executive has been employed by Employer in the position of
President, and has served as a member of Employer's Board of Directors.
Executive has resigned as President effective as of November 30, 2005, but shall
continue to serve Employer as a member of Employer's Board of Directors.

         B.       Executive and Employer are parties to that certain Employment
Agreement dated January 1, 2004, (the "EMPLOYMENT AGREEMENT"), which is
scheduled to expire on December 31, 2009. The Parties desire that
notwithstanding said scheduled expiration, the Employment Agreement shall be
superseded and effectively terminated by this Agreement except as set forth in
Section 6.5 below.

         C.       Executive and Employer have voluntarily entered into this
Agreement in view of its mutual benefits, the payment of valuable consideration
by Employer and the mutual release of any claims related to Executive's
employment with Employer.

         D.       In entering into this Agreement, the Parties contemplate that
Employer will presently commence and successfully complete an initial public
offering of 925,000 Units, each Unit consisting of two shares of Employer common
stock, two Class A Warrants and one Class B Warrant, or on such other terms as
Employer elects (such initial public offering is hereinafter referred to as the
"IPO").

                                    AGREEMENT

         NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

         1.       EMPLOYMENT TERMS AND DUTIES.

                  1.1      RESIGNATION. Effective November 30, 2005
("RESIGNATION DATE"), Executive voluntarily resigns as President of Employer.
Effective on the Resignation Date, Executive is relieved of all of his duties as
President of Employer.

                  1.2      CONTINUED MEMBERSHIP ON EMPLOYER'S BOARD OF
DIRECTORS; STOCKHOLDER RIGHTS. Executive will remain a member of Employer's
Board of Directors (the "BOARD") after the Resignation Date and will have rights
as a stockholder of Employer, each in accordance with, and subject to,
applicable provisions of law, and Employer's articles of incorporation and
bylaws, as in effect from time to time. For greater certainty, Employer shall
not withhold from Executive in his capacity as a director or stockholder of
Employer any information or access to personnel made available or given to any
other non-employee director or stockholder of Employer in their capacities as
such. Executive shall serve on the Board without remuneration until such time as
compensation becomes available to other directors.

                                       1


         2.       ACCRUED SALARY AND SEVERANCE PAYMENTS.

                  2.1      ACCRUED SALARY.

                           2.1.1    AMOUNT AND PAYMENT OF ACCRUED SALARY.
Employer shall pay Executive the sum of $244,481 as accrued but unpaid salary
earned by Executive during the term of his employment with Employer (such
$244,481 is hereinafter referred to as the "ACCRUED SALARY"). Commencing in
December, 2005, Employer shall pay Executive his Accrued Salary at the rate of
Fifteen Thousand Dollars ($15,000) per month, payable in equal semi-monthly
payments of Seven Thousand Five Hundred Dollars ($7,500).

                           2.1.2    PAYMENT OF ACCRUED SALARY UPON COMPLETION OF
IPO. Notwithstanding the provisions of subsection 2.1.1 hereinabove, and subject
to the provisions of Section 2.3 of this Agreement, Employer shall, on the date
that the IPO is deemed completed (hereinafter referred to as the "IPO DATE"),
pay to Executive the Accrued Salary amount of $119,078, which amount is intended
by the Parties to reduce Executive's outstanding Accrued Salary to an amount
equal to Employer's accrued but unpaid salary obligation to Tom Blakeley
(Employer's Chairman of the Board and CEO) on the IPO Date.

                           2.1.3    PAYMENT OF ACCRUED SALARY AFTER IPO DATE.
Notwithstanding the provisions of subsections 2.1.1 and 2.1.2 hereinabove, and
subject to the provisions of Section 2.3 of this Agreement, and after giving
effect to any payments made by Employer to Executive pursuant to the provisions
of subsections 2.1.1 and 2.1.2 hereof, Employer shall, commencing thirty (30)
days after the IPO Date, pay to Executive any remaining Accrued Salary amount in
twelve (12) consecutive equal monthly payments; PROVIDED, HOWEVER, that if
Employer pays any of Tom Blakeley's accrued but unpaid salary at a rate greater
than the equal monthly amounts paid to Executive pursuant to this subsection
2.1.3, then Executive's remaining Accrued Salary shall be paid at the same rate
that Tom Blakeley is paid his accrued but unpaid salary by Employer.

                  2.2      SEVERANCE PAYMENTS. Subject to Section 2.3 below, and
in addition to the payments made by Employer pursuant to Section 2.1 of this
Agreement, commencing thirty (30) days after the IPO Date, Employer shall pay to
Executive the sum of Four Hundred Forty Thousand Dollars ($440,000.00) in twelve
(12) consecutive equal monthly installments of Thirty-Six Thousand Six Hundred
Sixty-Six and 66/100 Dollars ($36,666.66) each (the "SEVERANCE PAYMENTS").

                  2.3      IPO CONTINGENCY. Notwithstanding the provisions of
Sections 2.1 and 2.2 of this Agreement, if the IPO Date has not occurred prior
to April 1, 2006, then Employer shall on April 1, 2006 commence paying
Executive's outstanding Accrued Salary and Severance Payments at the rate of
Twenty-Five Thousand Dollars ($25,000.00) per month until any and all
outstanding Accrued Salary and Severance Payments have been paid in full;
PROVIDED, HOWEVER, that if the IPO Date occurs at any time after April 1, 2006
but prior to the payment in full of all outstanding Accrued Salary and Severance
Payments, Employer shall increase its payments to Executive hereunder so that
all outstanding Accrued Salary and Severance Payments will be fully paid by no
later than the earlier of (i) twelve (12) months after the IPO Date or (ii) the
date all outstanding Accrued Salary and Severance Payments would have been fully
paid at the rate of $25,000.00 per month, commencing on April 1, 2006.

                  2.4      ZERO PLUS TRANSACTION. The Parties understand and
acknowledge that Employer owns fifty percent (50%) of the outstanding equity of
Zero Plus, LLC, a Nevada limited liability company ("ZERO Plus"). The owner of
the remaining fifty percent (50%) of the outstanding equity of Zero Plus is

                                       2


Electric Aquagenics Unlimited, Inc., a Delaware corporation ("EAU"). Employer
currently intends to sell its interest in Zero Plus to EAU. In this regard, the
Parties hereby agree that should Employer sell its interests in Zero Plus to
EAU, whether by stock purchase, asset purchase, merger, reverse merger or
otherwise (a "ZERO PLUS TRANSACTION"), Executive shall be entitled to a
commission in the amount of twenty percent (20%) of the compensation paid or
payable by EAU as a compensation for Executive's work on the Zero Plus
Transaction. Such compensation is to be paid in cash immediately upon the
receipt of any cash or other consideration by Employer as a result of the Zero
Plus Transaction.

                  2.5      PAYMENT OF ACCRUED SALARY AND SEVERANCE PAYMENTS. All
amounts to be paid by Employer to Executive on a monthly basis pursuant to this
Agreement shall be paid on the same dates as regular payroll for executives of
Employer is paid.

                  2.6      ACCRUED BUSINESS EXPENSES. On the earlier of the IPO
Date or April 1, 2006, Employer shall reimburse Executive for all accrued and
unreimbursed business expenses incurred by Executive prior to such date.

                  2.7      BENEFITS. Executive's participation in the life,
accident and health insurance, employee welfare benefit plans (as defined in the
Employee Retirement Income Security Act of 1974) and supplemental early
retirement plan, split dollar insurance program, personal health services
allowance health or social club benefits, and any other benefits ("BENEFITS")
provided to Executive prior to his resignation shall be continued or equivalent
benefits provided by Employer at no cost to Executive for a period of two (2)
years from Executive's resignation. If for any reason Employer is unable to
continue the Benefits, as required by the preceding sentence, Employer shall
reimburse Executive for the cost of COBRA for medical, dental and vision for a
period of twenty-four (24) months following Executive's last day of employment.

                  2.8      STOCK OPTIONS. Effective upon the Resignation Date,
one hundred percent (100%) of all unvested stock options, stock appreciation
rights, stock purchase rights, restricted stock rights and any similar rights
which Executive holds shall become fully vested and be exercisable.
Additionally, the AMG Board of Directors has extended the period required by you
to fully exercise your stock options to 12 months from the date of your
resignation.

                  2.9      FEES AND EXPENSES. Employer shall reimburse Executive
for, or pay directly on his behalf, the reasonable legal fees and expenses
incurred by Executive in connection with the negotiation, preparation and review
of this Agreement up to a maximum of $5,000.

                  2.10     EMPLOYER EQUIPMENT. Upon execution of this Agreement,
Executive will, return all physical property of any kind of Employer's in
Executive's possession, including, without limitation, directories, documents,
lists of any kind, including lists of prices, personnel, addresses, vendors,
suppliers or existing or potential customers, rolodexes, plans, files, software,
programs, tapes, materials, manuals, keys, access cards credit cards and
equipment. Executive shall not be required to turn over his computer, which
Employer acknowledges is owned by Executive.

         3.       LATE PAYMENTS.

                  3.1      INTEREST AND SERVICE CHARGE. Any amount due from
Employer to Executive hereunder which is not paid when due shall bear interest
at the lower of (i) the per annum interest rate announced by and quoted in the
Wall Street Journal from time-to-time as the prime or base rate plus six percent
(6%) or (ii) the highest rate of interest from time-to-time permitted under
applicable law.

                                       3


                  3.2      ACCELERATION. If interest is payable hereunder,
whether or not collected, for any two (2) consecutive installments of Accrued
Salary or Severance Payments, then all unpaid Accrued Salary and Severance
Payments shall automatically become immediately due and payable, notwithstanding
any provision of this Agreement to the contrary.

         4.       MUTUAL RELEASE OF CLAIMS.

                  4.1      EXECUTIVE'S RELEASE OF CLAIMS. Except as set forth in
Section 4.5 below, Executive on his own behalf, and on behalf of his successors
and assigns, releases Employer and its officers, directors, employees, agents
and representatives, and their respective successors and assigns from all causes
of action, judgments, liens, indebtedness, damages, losses, claims, liabilities,
and demands of every kind and character in any manner attributable to
Executive's employment by Employer which Executive may have based on, or
pertaining to Executive's employment with Employer occurring prior to the date
of this Agreement, including attorneys' fees and costs, whether or not
previously brought before any state or federal court or any other state or
federal governmental agency. This release includes but is not limited to any
claims Executive may have for wages, bonuses, or other compensation due, claims
under the Age Discrimination in Employment Act arising on or before the date
Executive signs this Agreement, Title VII of the Civil Rights Act, as amended,
which prohibits discrimination in employment based on race, color, sex, religion
or national origin, the Americans with Disabilities Act, the Family and Medical
Leave Act, or any other federal, state or local law or regulation affecting
employment rights or prohibiting employment discrimination. This release also
includes any claim for intentional or negligent infliction of emotional
distress, wrongful discharge, violation of any public policy or statute, breach
of the covenant of good faith and fair dealing, defamation, and breach of any
implied or express contract between Employer and Executive, including without
limitation the Employment Agreement and any policy of Employer occurring prior
to the date of this Agreement or any other matter or event occurring prior to
the date of this Agreement.

                  4.2      EMPLOYER'S RELEASE OF CLAIMS. Except as set forth in
Section 4.5 below, Employer hereby forever releases and discharges Executive
from any and all causes of action, judgments, liens, indebtedness, damages,
losses, claims, liabilities, and demands of every kind and character in any
manner attributable to Executive's employment by Employer, including, without
limitation, breach of the covenant of good faith and fair dealing, defamation,
and breach of any implied or express contract between Employer and Executive,
including without limitation the Employment Agreement and any policy of Employer
occurring prior to the date of this Agreement or any other matter or event
occurring prior to the date of this Agreement, including attorneys' fees and
costs, whether or not previously brought before any state or federal court or
any other state or federal governmental agency.

                  4.3      UNKNOWN CLAIMS. Executive and Employer each
understand that the claims set forth in Sections 4.1 and 4.2 above cover claims
which Executive and Employer know about and those Executive and Employer may not
know about. Executive and Employer each expressly waives all rights under
Section 1542 of the California Civil Code, which Section Executive and Employer
have read and understand, and which provides as follows:

                      A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
                      CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
                      THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
                      MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
                      DEBTOR.

                  4.4      AGREEMENT NOT TO SUE; WARRANTY OF NON-ASSIGNMENT.
Executive and Employer each promises never to file a lawsuit asserting any
claims that are released in Sections 4.1 and 4.2 above.

                                       4


Executive and Employer each represents and warrants to the other Party that he
or it has not assigned, and will not assign, to any other person or entity the
claims which are the subject of Sections 4.1 and 4.2.

                  4.5      NO RELEASE OF CLAIMS UNDER THIS AGREEMENT. Nothing in
the releases set forth in Sections 4.1 and 4.2 shall constitute a release of any
claims by either Party for breach of this Agreement by the other Party or
failure by either Party to perform its obligations under this Agreement.

                  4.6      EXECUTIVE'S RIGHT TO REVIEW AND REVOKE AGREEMENT.
Executive has been given a period of twenty-one (21) days within which to
consider whether to sign this Agreement and has freely elected to sign this
Agreement on the date set forth below. Executive has been encouraged to consult
with an attorney before signing this Agreement, and has done so to the extent he
so desires.

         5.       NONDISPARAGEMENT; REFERENCES.

                  5.1      NONDISPARAGEMENT BY EXECUTIVE. Executive agrees that
he will not disparage or make negative statements (or induce or encourage others
to disparage or make negative statements) about Employer or any of its past or
present officers, directors, agents, employees, attorneys, successors and
assigns, including, without limitation, disparaging any of such parties in
connection with disclosing the facts or circumstances surrounding his separation
from employment with Employer or criticizing Employer's business strategy. For
the purposes of this subparagraph, the term "disparage" means any comments or
statements which would adversely affect in any manner: (i) the conduct of
Employer's business; or (ii) the business reputation or relationships of
Employer and/or any of its past or present officers, directors, agents,
employees, attorneys, successors and assigns.

                  5.2      NONDISPARAGEMENT BY EMPLOYER. Employer agrees that it
will not to disparage or make negative statements (or induce or encourage others
to disparage or make negative statements) about Executive, including, without
limitation, disparaging Executive in connection with disclosing the facts or
circumstances surrounding his separation from employment with Employer or
criticizing his performance as an employee or executive officer of Employer. For
purposes of this subparagraph, the term "disparage" means any statements made by
Employer's executive officers or members of its Board, or any statements made
officially by Employer, as applicable, that adversely affect in any manner
Executive's personal or professional reputation.

                  5.3      REFERENCES. Employer shall give favorable references
regarding Executive to any person, company, entity or prospective future
employer of Executive.

         6.       GENERAL PROVISIONS.

                  6.1      OBLIGATIONS CONTINGENT ON PERFORMANCE. The
obligations of Executive hereunder are contingent upon the performance by
Employer of its obligations hereunder, including its obligations to pay the
compensation provided for herein.

                  6.2      WAIVER. The rights and remedies of the Parties to
this Agreement are cumulative and not alternative. Neither the failure nor any
delay by either Party in exercising any right, power, or privilege under this
Agreement will operate as a waiver of such right, power or privilege, and no
single or partial exercise of any such right, power or privilege will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege. To the maximum extent permitted by
applicable law (a) no claim or right arising out of this Agreement can be
discharged by one Party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other Party; (b) no waiver that
may be given by a Party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any

                                       5


obligation of such Party or of the right of the Party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement.

                  6.3      BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED. This
Agreement shall inure to the benefit of, and shall be binding upon, the Parties
hereto and their respective affiliates, successors, assigns, heirs and legal
representatives, including any entity with which Employer may merge or
consolidate or to which all or substantially all of its assets may be
transferred. References herein to Employer, Zero Plus and EAU include their
respective affiliates, successors, assigns and legal representatives. The duties
and covenants of Executive and Employer under this Agreement, being personal,
may not be delegated.

                  6.4      NOTICES. All notices, consents, waivers and other
communications under this Agreement will be deemed to have been duly given when
(a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt), provided that a copy is mailed
by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally or regionally recognized overnight delivery
service (receipt requested), in each case to the appropriate address and
facsimile number set forth below (or to such other address and facsimile number
as a Party may designate by notice to the other Party pursuant to the terms of
this Section 6.4.

                  If to Executive: Bradley Barnes, 208 Emerald Bay, Laguna
Beach, California 92651

                  If to Employer: American Mold Guard, Inc., 30200 Rancho Viejo
Road, Suite G, San Juan Capistrano, California 92675, Attention: Chief Executive
Officer, Facsimile No.: (949) 240-6144, or at such other address or addresses as
may have been furnished in writing by Employer to Executive.


                  6.5      PRIOR AGREEMENTS. Nothing in this Agreement shall be
deemed to relieve Executive or Employer of any of their respective obligations
set forth in Sections 8, 9, 10 and 11 of the Employment Agreement. The Parties
acknowledge and agree that Sections 8, 9, 10 and 11 of the Employment Agreement
survive the termination of the Employment Agreement and shall continue to be
operative throughout the Consulting Period.

                  6.6      ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains
the entire Agreement between the Parties with respect to the subject matter
hereof. Except as specifically provided in Section 6.5, this Agreement
supersedes all prior agreements and understandings, oral or written, between the
Parties hereto with respect to the subject matter hereof, including without
limitation, the Employment Agreement. This Agreement may not be amended orally,
but only by an agreement in writing signed by the Parties.

                  6.7      HEADINGS; CONSTRUCTION. The headings in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "section" or "sections" refer to the
corresponding section or sections of this Agreement unless otherwise specified.
All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.

                  6.8      SEVERABILITY. If any provision of this Agreement is
held invalid or unenforceable by any court of competent jurisdiction or
Arbitrator, then to the extent that the rights or obligations of the parties
under this Agreement will not be materially and adversely affected thereby, the
other provisions of this Agreement will remain in full force and effect. Any
provision of this Agreement held invalid and

                                       6


unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.

                  6.9      GOVERNING LAW; JURISDICTION AND VENUE. This Agreement
shall be governed by and construed in accordance with the laws of the State of
California.

                  6.10     ATTORNEY'S FEES. If any legal action is necessary to
enforce the terms and conditions of this Agreement, the prevailing party shall
be entitled to recover all costs of suit and reasonable attorneys' fees as
determined by the court or arbitrator.

                  6.11     COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.

         7.       ARBITRATION OF DISPUTES.

                  7.1      EXCLUSIVE REMEDY. Except as set forth in Section 7.3,
arbitration shall be the sole and exclusive remedy for any dispute, claim, or
controversy of any kind or nature (a "CLAIM") arising out of, related to, or
connected with the Executive's employment relationship with the Employer, or the
termination of the Executive's employment relationship with the Employer,
including any Claim against any parent, subsidiary or affiliated entity of the
Employer, or any director, officer, general or limited partner, employee or
agent of the Employer or of any such parent, subsidiary or affiliated entity.

                  7.2      CLAIMS SUBJECT TO ARBITRATION. This agreement to
arbitrate specifically includes (without limitation) any Claim for breach of
this Agreement; any Claim under or relating to any federal, state or local law
or regulation prohibiting discrimination, harassment or retaliation based on
race, color, religion, national origin, sex, age, disability or any other
condition or characteristic protected by law; demotion, discipline, termination
or other adverse action in violation of any contact, law or public policy;
entitlement to wages or other economic compensation; and any Claim for personal,
emotional, physical, economic or other injury.

                  7.3      CLAIMS NOT SUBJECT TO ARBITRATION. This Section 7
does not preclude either party from making an application to a court of
competent jurisdiction for: (a) provisional remedies (e.g., a temporary
restraining order or preliminary injunction) pursuant to California Code of
Civil Procedure section 1281.8; or (b) a temporary restraining order or an
injunction under California Code of Civil Procedure section 527.8. This Section
7 also does not apply to any claims by Executive: (i) for workers' compensation
benefits; (ii) for unemployment insurance benefits; (iii) under a benefit plan
where the plan specifies a separate arbitration procedure; (iv) filed with an
administrative agency which is not legally subject to arbitration under this
Agreement; or (v) which are otherwise expressly prohibited by law from being
subject to arbitration under this Agreement.

                  7.4      PROCEDURE. The arbitration proceedings shall be
conducted in Orange County, California. Any Claim submitted to arbitration shall
be decided by a single, neutral arbitrator (the "Arbitrator"). The parties to
the arbitration shall mutually select the Arbitrator not later than 45 days
after service of the demand for arbitration. If the parties for any reason do
not mutually select the arbitrator within the 45 day period, then any party may
apply to any court of competent jurisdiction to appoint a retired judge as the
Arbitrator. The parties agree that the arbitration shall be conducted in
accordance with California Code of Civil Procedure sections 1280 et seq., except
as modified by this Agreement. The Arbitrator shall apply the substantive
federal, state or local law and statute of limitations governing any Claim
submitted to arbitration. In ruling on any such Claim submitted to arbitration,
the Arbitrator shall have the authority to award only such remedies or forms of
relief as are provided for

                                       7


under the substantive law governing such Claim. The Arbitrator shall issue a
written decision revealing the essential findings and conclusions on which the
decision is based. Judgment on the Arbitrator's decision may be entered in any
court of competent jurisdiction.

                  7.5      COSTS. Employer shall be responsible for paying the
fees and costs incurred in the arbitration (e.g., filing fees, transcript costs
and Arbitrator's fees). The parties shall be responsible for their own
attorneys' fees and costs, except that the Arbitrator shall have the authority
to award attorneys' fees and costs to the prevailing party in accordance with
the applicable law governing the dispute.

                  7.6      INTERPRETATION OF ARBITRABILITY. The Arbitrator, and
not any federal or state court, shall have the exclusive authority to resolve
any issue relating to the interpretation, formation or enforceability of this
Agreement, or any issue relating to whether a Claim is subject to arbitration
under this Agreement, except that any party may be bring an action in any court
of competent jurisdiction to compel arbitration in accordance with the terms of
this Agreement.





                            [Signature page follows.]



                                       8


         IN WITNESS WHEREOF, Employer and Executive have executed and delivered
this Agreement as of the date first above written.


EXECUTIVE:



                /s/ Bradley Barnes
- -------------------------------------------------
Bradley Barnes


EMPLOYER:

AMERICAN MOLD GUARD, INC.,
a California corporation



By:             /s/ Mark A. Franzen
   ----------------------------------------------
Print Name:     Mark A. Franzen
           --------------------------------------
Title:          Chief Financial Officer
      -------------------------------------------


By:
   ----------------------------------------------
Print Name:
           --------------------------------------
Title:
      -------------------------------------------


                                       9

EX-23

                                                                           Ex-23

                                    HASKELL
                                       &
                                   WHITE LLP
                          ----------------------------
                          CERTIFIED PUBLIC ACCOUNTANTS




            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
American Mold Guard, Inc.

We consent to the use in this Amendment No. 1 to the Registration Statement of
American Mold Guard, Inc. (the "Company") on Form SB-2 of our report dated
December 8, 2005, appearing in the Prospectus, which is part of this Amendment
No. 1 to the Registration Statement.

We also consent to the reference to us under the headings "Selected Consolidated
Financial Data" and "Experts" in such Prospectus.

Our report dated December 8, 2005 contains an explanatory paragraph that states
the Company has incurred losses from operations since inception, has a working
capital deficit and a shareholder deficiency, and requires additional funds to
meet its obligations and fund the costs of its operations. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The consolidated financial statements do not include any adjustments that might
result from the outcome of that uncertainty.

                                                     /s/ HASKELL & WHITE LLP

                                                     HASKELL & WHITE LLP

Irvine, California
February 13, 2006

CORRESP

                          MORSE, ZELNICK, ROSE & LANDER
                         A LIMITED LIABILITY PARTNERSHIP

                                 405 PARK AVENUE
                          NEW YORK, NEW YORK 10022-2605
                                  212-838-1177
                               FAX - 212-838-9190


                                                            WRITER'S DIRECT LINE
                                                                  (212) 838-8269


                                February 13, 2006



Michael McTiernan, Special Counsel
United States Securities and Exchange Commission
Division of Corporation Finance
Mail Stop 4561
Washington, DC 20549

RE:      American Mold Guard, Inc.
         Registration Statement on Form SB-2
         Filed on January 6, 2006
         File No. 333-130889

Dear Mr. McTiernan

         This letter responds to your comments set forth in a letter dated
February 1, 2006 regarding the above-referenced registration statement (the
"Registration Statement") filed by American Mold Guard, Inc. (the "Company").
For ease of reference, your inquiries have been incorporated in this letter in
bold type and precede our responses. If you have any questions regarding the
responses to your comments, please feel free to call me at the number indicated
above.


GENERAL

         1.       PLEASE PROVIDE US WITH COPIES OF ANY GRAPHICS, MAPS,
                  PHOTOGRAPHS, AND RELATED CAPTIONS OR OTHER ARTWORK INCLUDING
                  LOGOS THAT YOU INTEND TO USE IN THE PROSPECTUS. SUCH GRAPHICS
                  AND PICTORIAL REPRESENTATIONS SHOULD NOT BE INCLUDED IN ANY
                  PRELIMINARY PROSPECTUS DISTRIBUTED TO PROSPECTIVE INVESTORS
                  PRIOR TO OUR REVIEW.

The only graphic that will be used in the prospectus is the Company's logo,
which was included in the prospectus that was part of the Registration Statement
filed on January 6, 2006. For your files, we are supplementally providing you
with a color copy of the Company's logo.

         2.       PLEASE PROVIDE US WITH COPIES OF THE RELEVANT PORTIONS OF
                  CITES FOUND WITHIN YOUR PROSPECTUS. WE NOTE, FOR EXAMPLE, THE
                  REFERENCE TO THE A.M. BEST



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

                  COMPANY RATING ON PAGE 3, AND THE REFERENCE TO THE CALIFORNIA
                  AIR RESOURCES BOARD AND BUILDING GREEN ON PAGE 30.

In support of the statements attributed to A.M. Best Company and Building Green,
enclosed with the courtesy copy of this letter are screen shots from their
respective web sites. We are also including a copy of the report issued by the
California Air Resources Board in July 2005. In particular, we call your
attention to the table on page 12.

         3.       WE NOTE THE SELLING-SHAREHOLDER COMPONENT OF YOUR REGISTRATION
                  STATEMENT. PLEASE IDENTIFY ANY SELLING SHAREHOLDER WHO IS A
                  REGISTERED BROKER-DEALERS OR AN AFFILIATE OF A BROKER DEALER.
                  ADDITIONALLY, TELL US IF THE BROKER-DEALER RECEIVED THE
                  SECURITIES AS UNDERWRITING COMPENSATION.

As will be explained more fully in response to comment 35, the selling
securityholder prospectus has been eliminated from the Registration Statement as
have all references to the Selling Securityholder in the primary prospectus.

         4.       PLEASE NOTE, A REGISTRATION STATEMENT REGISTERING THE RESALE
                  OF SHARES BEING OFFERED BY BROKER-DEALERS MUST IDENTIFY THE
                  BROKER DEALERS AS UNDERWRITERS IF THE SHARES WERE NOT ISSUED
                  AS UNDERWRITING COMPENSATION. ACCORDINGLY, YOUR STATEMENT ON
                  THE PLAN OF DISTRIBUTION ALTERNATE PAGE FOR THE SELLING
                  SECURITYHOLDER PROSPECTUS THAT THE SELLING SECURITY HOLDER
                  "MAY BE DEEMED AN UNDERWRITER" IS NOT SUFFICIENT IF THE
                  SELLING SHAREHOLDER IS A BROKER-DEALER.

The selling securityholder prospectus has been eliminated from the Registration
Statement as have all references to the Selling Securityholder in the primary
prospectus. See response to comment 35.

         5.       IF ANY OF THE SELLING SHAREHOLDERS ARE AFFILIATES OF
                  BROKER-DEALERS, PLEASE PROVIDE AN ANALYSIS SUPPORTING YOUR
                  POSITION THAT THE RESALE OF SECURITIES BY ANY AFFILIATES OF
                  BROKER-DEALERS IS NOT AN INDIRECT PRIMARY OFFERING. YOUR
                  ANALYSIS SHOULD ADDRESS THE FOLLOWING POINTS:

                           o        HOW LONG THE SELLING SHAREHOLDERS HAVE HELD
                                    THE SECURITIES,

                           o        THE CIRCUMSTANCES UNDER WHICH THE SELLING
                                    SHAREHOLDERS RECEIVED THE SECURITIES,

                           o        THE SELLING SHAREHOLDERS' RELATIONSHIP TO
                                    THE ISSUER,

                           o        THE AMOUNT OF SECURITIES INVOLVED,

                           o        WHETHER THE SELLERS ARE IN THE BUSINESS OF
                                    UNDERWRITING SECURITIES, AND

                           o        WHETHER UNDER ALL THE CIRCUMSTANCES IT
                                    APPEARS THAT THE SELLER IS ACTING AS A
                                    CONDUIT FOR THE ISSUER.

                  ASSUMING THE RESALE OF SECURITIES BY AFFILIATES OF
                  BROKER-DEALERS IS NOT AN INDIRECT PRIMARY OFFERING, YOU MUST
                  CLEARLY STATE IN YOUR PROSPECTUS:

                           o        THE SELLER PURCHASED IN THE ORDINARY COURSE
                                    OF BUSINESS AND



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

                           o        AT THE TIME OF THE PURCHASE OF THE
                                    SECURITIES TO BE RESOLD THE SELLER HAD NO
                                    AGREEMENTS OR UNDERSTANDINGS, DIRECTLY OR
                                    INDIRECTLY, WITH ANY PERSON TO DISTRIBUTE
                                    THE SECURITIES.


The selling securityholder prospectus has been eliminated from the Registration
Statement as have all references to the Selling Securityholder in the primary
prospectus. See response to comment 35.

PROSPECTUS COVER PAGE

         6.       WE NOTE THE DISCLOSURE REGARDING YOUR INTENTION TO APPLY TO
                  LIST THE SECURITIES ON THE NASDAQ AND THE PACIFIC EXCHANGE.
                  PLEASE ADVISE US WHETHER YOU ARE REASONABLY ASSURED THAT THE
                  SECURITIES WILL BE ACCEPTED FOR LISTING.

The Company has submitted listing applications to Nasdaq and to the Pacific
Exchange. The Company has received a response from Nasdaq requesting additional
information. Nasdaq has not raised any issue concerning the Company's listing
qualifications, although it did ask the Company for details on how it plans to
address the auditors "going concern opinion" and for detailed projections for
the current year, which the Company has prepared and which it will provide to
Nasdaq. The Company believes that a successful completion of this offering will
eliminate the need for a going concern comment in its auditor's report and
further believes that the net proceeds of this offering will enable it to
increase its revenue to the point where it will become cash flow positive and
profitable. Therefore, the Company is confident that its securities will be
accepted for listing on Nasdaq. The Company further believes that once it is
listed on Nasdaq it will also qualify for a Tier II listing on the Pacific
Exchange.

PROSPECTUS SUMMARY

         7.       WE NOTE THAT YOU INTEND TO CONVERT ALL OUTSTANDING SHARES OF
                  SERIES A AND SERIES B CONVERTIBLE PREFERRED STOCK INTO SHARES
                  OF COMMON STOCK ON THE DATE OF THE PROSPECTUS. PLEASE ADVISE
                  US WHETHER THE PREFERRED SHARES WILL BE CONVERTED INTO SHARES
                  REGISTERED PURSUANT TO THE INITIAL PUBLIC OFFERING, OR WHETHER
                  YOU ARE RELYING UPON AN EXEMPTION FROM REGISTRATION. UPON
                  REVIEWING YOUR RESPONSE, WE MAY HAVE FURTHER COMMENT.

None of the shares of common stock that will be issued upon conversion of the
Series A and Series B Preferred Stock will be registered. The Company believes
that this issuance is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Act") pursuant to Section 3(a)(9)
thereof. In addition, we note that the original issuance of the Series A and
Series B Preferred Stock were exempt from the registration requirement of the
Act pursuant to Section 4(2) thereof and that the convertibility of such stock
was an original term set forth in the Certificates of Determination of the
Series A and Series B Preferred Stock, respectively.

         8.       WE NOTE THE REFERENCE IN PARAGRAPH FOUR TO THE LENNAR
                  CORPORATION, DR HORTON, INC., THE WARMINGTON GROUP, AND CENTEX
                  CORPORATION. PLEASE CONFIRM THAT THE LIST OF BUILDERS YOU HAVE
                  INCLUDED IS REPRESENTATIVE OF YOUR CUSTOMER BASE. LISTING ONLY
                  THE LARGEST OR MOST WELL-KNOWN BUILDERS MAY NOT PROVIDE AN
                  ACCURATE PROFILE OF AMERICAN MOLD GUARD'S CUSTOMER BASE.



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

The disclosure referred to in your comment has been revised. Lennar, DR Horton
and Centex are large national builders for whom the Company provides services.
Warmington Group has been deleted, because, although the Company provides
services to Warmington, it is not a significant customer. We have also
identified three regional builders and four builders of multi-family homes to
balance out the disclosure. National and regional builders each accounted for
approximately 35% of the Company's revenue for the nine months ended September
30, 2005 while multi-family builders accounted for approximately 28% of revenue
for the period.

         9.       PLEASE REVISE YOUR SUMMARY TO PROVIDE A BALANCED VIEW OF THE
                  KEY ASPECTS OF YOUR OFFERING. DISCLOSURE THAT HIGHLIGHTS
                  CHARACTERISTICS OF THE OFFERING THAT YOU CONSIDER TO BE
                  ATTRACTIVE TO AN INVESTOR SHOULD BE BALANCED BY DISCLOSURES OF
                  THE MOST SIGNIFICANT RISKS OF THE OFFERING.

The Summary has been revised as per your comment. Please see page 4 of the
prospectus.

         10.      WE NOTE THE INCLUSION ON PAGE 1 OF DISCLOSURE WITH RESPECT TO
                  YOUR REVENUE GROWTH FROM 2003 THROUGH SEPTEMBER 30, 2005. IN
                  THE INTEREST OF PRESENTING A BALANCED VIEW OF AMERICAN
                  MOLDGUARD, INC., PLEASE REVISE TO INCLUDE DISCLOSURE WITH
                  RESPECT TO THE EXTENT OF YOUR LOSSES.

The Summary has been revised as per your comment. Please see page 3 of the
prospectus.

THE OFFERING - PAGE 4

         11.      PLEASE REVISE TO REFERENCE THE PAGE UPON WHICH RISK FACTOR
                  DISCLOSURE MAY BE FOUND.

The Summary has been revised as per your comment. Please see page 4 of the
prospectus.

SUMMARY FINANCIAL INFORMATION - PAGE 6

         12.      WE NOTE THAT YOU INTEND TO ISSUE 140,522 SHARES OF COMMON
                  STOCK PRIOR TO THE DATE OF THE PROSPECTUS IN SATISFACTION OF
                  $58,947 OF DEBT, AS AN INTEREST PAYMENT. PLEASE CLARIFY
                  WHETHER THIS ISSUANCE IS INTENDED TO SATISFY THE DEBT, OR IS
                  MERELY A PAYMENT AGAINST INTEREST. ALSO, PLEASE ADVISE US UPON
                  WHICH EXEMPTION FROM REGISTRATION YOU INTEND TO RELY FOR THE
                  ISSUANCE OF THE COMMON SHARES, AND PROVIDE US WITH THE LEGAL
                  ANALYSIS WHEREBY YOU DETERMINED THE EXEMPTION TO BE
                  APPROPRIATE. FINALLY, ADVISE US WHY YOU BELIEVE THIS ISSUANCE
                  OF COMMON STOCK OUGHT NOT BE DEEMED INTEGRATED WITH THE
                  OFFERING HERE BEING REGISTERED.

The disclosure on pages 5 and 6 of the prospectus has been revised to clarify
that in December 2005 (I.E., before the Registration Statement was filed) the
Company issued 74,146 shares of Common stock -- 16,022 shares in satisfaction of
approximately $59,000 of debt, 2,039 shares as an interest payment, and 56,085
shares for services. In addition, 1,359 shares will be issued in February 2006
as an interest payment (pursuant to a pre-arranged agreement with the holder of
the note under which the Company agree to issue 2,000 shares (pre-reverse split)
per month until the note is repaid) and 66,222 will be issued on the date of the
prospectus. Those shares will be issued to an affiliate of Morse, Zelnick, Rose
& Lander in consideration of legal services rendered by that firm relating to
the offering pursuant to a written fee arrangement that was



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

entered into in December 2005, before the Registration Statement was filed, in
which the precise number of shares was fixed. All of the issuances are exempt
under Section 4(2) of the Act. In addition, the issuance of the shares in
satisfaction of debt may also be exempt under Section 3(a)(9) of the Act.

RISK FACTORS - PAGE 7

GENERAL

         13.      PLEASE REVISE YOUR RISK FACTORS AS APPROPRIATE TO IDENTIFY THE
                  RISK INVESTORS FACE, RATHER THAN REFERRING GENERICALLY TO AN
                  "ADVERSE EFFECT." RISK FACTORS NEEDING REVISION INCLUDE:

                           o        WE HAVE A HISTORY OF LOSSES AND CASH FLOW
                                    DEFICITS AND WE EXPECT TO CONTINUE TO
                                    OPERATE AT A LOSS AND TO HAVE NEGATIVE CASH
                                    FLOW FOR THE FORESEEABLE FUTURE. THIS COULD
                                    HAVE AN ADVERSE IMPACT ON THE MARKET PRICE
                                    OF OUR SECURITIES. - PAGE 7

                           o        IF WE NEED TO RAISE ADDITIONAL CAPITAL IN
                                    THE FUTURE, WE MAY NOT BE ABLE TO DO SO ON
                                    TERMS THAT ARE REASONABLE, IF AT ALL. THIS
                                    COULD HAVE AN ADVERSE EFFECT ON OUR
                                    OPERATING AND FINANCIAL PERFORMANCE, WHICH,
                                    IN TURN, COULD NEGATIVELY IMPACT THE PRICE
                                    OF OUR SECURITIES. - PAGE 8

                           o        IF WE FAIL TO KEEP UP WITH CHANGES IN OUR
                                    INDUSTRY, WE WILL BECOME LESS COMPETITIVE,
                                    WHICH WILL ADVERSELY AFFECT OUR FINANCIAL
                                    PERFORMANCE. - PAGE 9

                           o        WE MAY NOT BE ABLE TO MANAGE OUR GROWTH
                                    EFFECTIVELY, WHICH COULD ADVERSELY AFFECT
                                    OUR OPERATIONS AND FINANCIAL PERFORMANCE. -
                                    PAGE 11

The risk factors on page 7, 8, 9 and 11 referred to in your comment have been
revised as per your request.

RISKS RELATED TO OUR BUSINESS - PAGE 7

OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM HAS SUBSTANTIAL DOUBT ABOUT
OUR ABILITY TO CONTINUE AS A GOING CONCERN - PAGE 7

         14.      PLEASE REVISE BOTH THE RISK FACTOR HEADING AND THE ATTENDANT
                  DISCLOSURE TO CLARIFY THE RISK TO INVESTORS RELATED TO YOUR
                  POSSIBLE INABILITY TO CONTINUE AS A GOING CONCERN, WHICH WOULD
                  APPEAR TO BE THE POSSIBLE LOSS OF ONE'S ENTIRE INVESTMENT.

The risk factor referred to in your comment has been revised as per your
request.



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

A SIGNIFICANT PORTION OF OUR SALES IS DERIVED FROM A LIMITED NUMBER OF
CUSTOMERS. IF ANY OF THESE CUSTOMERS DECIDE THEY NO LONGER WILL USE OUR
SERVICES, OUR FINANCIAL PERFORMANCE WILL BE SEVERELY AND ADVERSELY IMPACTED -
PAGE 9

         15.      PLEASE REVISE TO IDENTIFY THE CUSTOMER ACCOUNTING FOR MORE
                  THAN 30.9% OF YOUR REVENUES.

The risk factor referred to in your comment has been revised as per your
request.

RISKS RELATED TO THIS OFFERING - PAGE 11

OUR STOCK PRICE WILL FLUCTUATE AFTER THIS OFFERING, WHICH COULD RESULT IN
SUBSTANTIAL LOSSES FOR INVESTORS AND SIGNIFICANT COSTS RELATED TO LITIGATION -
PAGE 11

         16.      WE NOTE THE REFERENCE TO SECURITIES LITIGATION IN THE FINAL
                  PARAGRAPH OF THIS RISK FACTOR. TO THE EXTENT THAT YOU BELIEVE
                  THIS RISK IS A MATERIAL RISK TO THE COMPANY, PLEASE REVISE TO
                  ADDRESS IT AS A SEPARATE RISK FACTOR WITH ITS OWN HEADING.

The last three sentences of risk factor referred to in your comment have been
eliminated.

AS A PUBLIC COMPANY, OUR ADMINISTRATIVE COSTS WILL BE SIGNIFICANTLY HIGHER THAN
THEY ARE NOW, MAKING IT MORE DIFFICULT FOR US TO BE CASH FLOW POSITIVE AND
PROFITABLE - PAGE 12

         17.      PLEASE REVISE, IF POSSIBLE, TO PROVIDE AN ESTIMATE OF THE
                  COSTS YOU EXPECT TO INCUR RELATED TO BEING A REPORTING
                  COMPANY.

The risk factor referred to in your comment has been revised as per your
request.

USE OF PROCEEDS - PAGE 15

         18.      PLEASE DISCLOSE THE MEANING OF "NON-ACCOUNTABLE EXPENSE
                  ALLOWANCE."

As per your comment, an explanation of the term "non-accountable expense
allowance" has been inserted in the introductory paragraph of the Use of
Proceeds section.

         19.      PLEASE DISCLOSE THAT A PORTION OF THE DEBT TO BE REPAID IS
                  OWED TO THE MANAGING UNDERWRITER OF THIS OFFERING.

As per your comment, the disclosure regarding the repayment of debt has been
revised to specifically identify the amount owed to the representative.

CAPITALIZATION, PAGE 17

         20.      PLEASE ADVISE US WHY THE ISSUANCE OF ADDITIONAL SHARES OF
                  COMMON STOCK WITH NO PAR VALUE WOULD CAUSE INCREASES IN YOUR
                  ADDITIONAL PAID-IN CAPITAL ACCOUNT. WE NOTE THAT THE PRO FORMA
                  APIC ACCOUNT REFLECTS THE VALUE OF 140,522 SHARES ISSUED IN
                  SATISFACTION OF DEBT AND THE PRO FORMA AS ADJUSTED APIC
                  ACCOUNT REFLECTS THE ESTIMATED PROCEEDS OF THIS OFFERING. IN
                  ADDITION,



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

                  PLEASE ADVISE US AND EXPAND UPON YOUR DESCRIPTION OF THE
                  ADJUSTMENTS TO INCLUDE 1) WHAT SPECIFICALLY CAUSED THE $1,184
                  INCREASE IN THE PRO FORMA COMMON STOCK ACCOUNT AND 2) THE
                  AMOUNT OF THE PROCEEDS FROM THIS OFFERING THAT ARE BEING
                  ALLOCATED TO THE SHARES OF COMMON STOCK AND THE WARRANTS,
                  RESPECTIVELY.

The table on page 18 of the prospectus has been revised. First, the 141,727
shares that were or will be issued after September 30, 2005 are reflected under
common stock. Second, the pro forma as adjusted column has been revised to take
into account the additional securities to be issued at closing to the holders of
the Unsecured Notes (see your comments 49-51 below) and to allocate $12 million
of net proceeds from the offering and the $1.5 million worth of units to be
issued to the holders of the Unsecured Notes between the stock and the warrants
included in the units. The amounts allocated to common stock and APIC was
determined by the Black-Scholes valuation model using an estimated fair value of
our common stock of $6.50, expected term of one year, a volatility of 0.0%, no
dividends and a discount rate of 5.0%.

MANAGEMENT'S DISCUSSION AND ANALYSIS - PAGE 21

OVERVIEW - PAGE 20

         21.      PLEASE ADDRESS ANY KNOWN TRENDS THAT MAY IMPACT YOUR FUTURE
                  FINANCIAL CONDITION OR OPERATING PERFORMANCE, INCLUDING
                  HOUSING CONSTRUCTION MARKET TRENDS AND COMPETITIVE TRENDS.

A paragraph discussing industry trends that may affect the Company's future
operations has been added to page 21. Specifically, those trends are the growth
in new home construction and public awareness of the health risks associated
with mold contamination.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES - PAGE 22

         22.      PLEASE EXPAND THE DISCUSSION OF EACH OF YOUR POLICIES TO
                  INCLUDE DISCLOSURE ABOUT HOW THE ESTIMATES ARE MADE AND THE
                  TYPES OF ASSUMPTIONS RELIED UPON. FOR EXAMPLE, UNDER
                  STOCK-BASED COMPENSATION, DISCUSS HOW YOU CALCULATE THE FAIR
                  VALUE OF OPTIONS/WARRANTS AND YOUR BASIS FOR THE ASSUMPTIONS
                  USED IN SUCH CALCULATIONS.

The disclosure under Stock Based Compensation and Debt Discount has been
expanded as per your request.

RESULTS OF OPERATIONS - PAGE 24

         23.      PLEASE REVISE YOUR DISCUSSION OF CHANGES IN REVENUES TO
                  DISCUSS AND QUANTIFY THE EFFECTS OF CHANGES IN FEES, VOLUME OF
                  ENGAGEMENTS, AND ANY OTHER SIGNIFICANT FACTORS ON YOUR
                  REVENUES FOR THE PERIOD, IN ACCORDANCE WITH ITEM 303(B)(1) OF
                  REGULATION S-B. YOU SHOULD DISCUSS WHY THESE CHANGES OCCURRED
                  AND WHETHER THESE MATTERS ARE EXPECTED TO HAVE AN IMPACT ON
                  FUTURE OPERATIONS, INCLUDING ANY MATERIAL TRENDS THAT MAY
                  EXIST.



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

The disclosure has been revised as per your comment. The Company's revenue
growth is attributable to increasing demand for its services, most likely as a
result of the trends identified in response to comment 21.

         24.      WHEN MORE THAN ONE FACTOR IS CITED IN EXPLAINING A CHANGE IN A
                  FINANCIAL STATEMENT ITEM, THE AMOUNTS RELATED TO EACH
                  SIGNIFICANT INDIVIDUAL FACTOR SHOULD BE QUANTIFIED UNLESS NOT
                  PRACTICAL. ALSO, SIMILAR TO THE PREVIOUS COMMENT REGARDING
                  REVENUES, YOU SHOULD DISCUSS WHY THESE CHANGES OCCURRED AND
                  WHETHER THESE MATTERS ARE EXPECTED TO HAVE AN IMPACT ON FUTURE
                  OPERATIONS, INCLUDING ANY MATERIAL TRENDS THAT MAY EXIST.
                  PLEASE APPLY THIS GENERAL GUIDANCE THROUGHOUT MANAGEMENT'S
                  DISCUSSION AND ANALYSIS.

The disclosure throughout Management's Discussion and Analysis section of the
prospectus has been revised as per your comment.

         25.      FOR THOSE LINE ITEMS THAT HAVE INCREASED IN DOLLAR AMOUNT, BUT
                  SIGNIFICANTLY DECREASED AS A PERCENTAGE OF REVENUE, DISCUSS
                  THE REASONS FOR THE DECREASE AS A PERCENTAGE AS WELL AS THE
                  REASONS FOR THE DOLLAR INCREASE.

The disclosure has been revised as per your comment.

COST OF REVENUE - PAGE 24

         26.      PLEASE REVISE TO INCLUDE THE PERCENTAGE BY WHICH COST OF
                  REVENUE INCREASED DURING THE COMPARISON PERIOD.

The disclosure has been revised as per your comment.

         27.      WE NOTE YOUR DISCLOSURE THAT YOU INITIATED YOUR OWN WORKMAN'S
                  COMPENSATION INSURANCE POLICY. PLEASE EXPAND YOUR DISCLOSURE
                  TO ADDRESS ANY RISKS RESULTING FROM THIS DEVELOPMENT AND THE
                  IMPACT, IF ANY, ON YOUR LIQUIDITY NEEDS AND CONTINGENT
                  LIABILITIES.

The disclosure has been expanded. See pages 25 and 31 of the prospectus. The
workman's compensation insurance policy was obtained through AIG. It is an
annual renewable policy. It is too early for the Company to have developed any
rating history to estimate future contingencies under the policy. The Company
does not believe that there are any risks associated with obtaining this policy.

LIQUIDITY AND CAPITAL RESOURCES - PAGE 26

         28.      WE NOTED THAT YOUR LIQUIDITY AND CAPITAL RESOURCES DISCUSSION
                  IN MANAGEMENT'S DISCUSSION & ANALYSIS IS, IN PART, A
                  RECITATION OF YOUR CASH FLOW IN NARRATIVE FORM. IN ACCORDANCE
                  WITH ITEM 303 OF REGULATION S-B AND FRR 72, PLEASE REVISE
                  FUTURE FILINGS TO DISCUSS THE FACTORS THAT DRIVE CASH FLOWS
                  RATHER THAN SIMPLY DISCUSS THE LINE ITEMS THAT APPEAR ON THE
                  CASH FLOW STATEMENT. IN ADDITION, DISCUSS THOSE ITEMS WHICH
                  MANAGEMENT SPECIFICALLY BELIEVES MAY BE INDICATORS OF THE
                  COMPANY'S LIQUIDITY CONDITION IN BOTH THE SHORT TERM AND LONG
                  TERM.



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

The disclosure has been revised as per your comment. At the present time, the
Company is not aware of any trends, other than those disclosed in the prospectus
that would have an impact on future operations.

BUSINESS - PAGE 29

INDUSTRY BACKGROUND - PAGE 29

         29.      PLEASE ADVISE US FOR THE BASIS FOR YOUR BELIEF, AS DISCUSSED
                  IN PARAGRAPH THREE, THAT YOU ARE THE LARGEST MOLD PREVENTION
                  SERVICE COMPANY IN THE UNITED STATES.

The disclosure has been revised as per your comment. The Company's belief is
based on its knowledge of the industry in which it competes and the markets that
it serves and its relationships with various national and regional home
builders. As disclosed in the prospectus, the mold prevention industry is
relatively new and the Company is not aware of any independent studies analyzing
the size of the market or ranking the companies that compete in this industry.

SALES AND MARKETING - PAGE 31

         30.      PLEASE REVISE THE FOURTH PARAGRAPH TO INCLUDE THE MATERIAL
                  TERMS OF THE JOINT MARKETING AGREEMENT ENTERED INTO WITH GULF
                  COAST MOLD GUARD, LLC.

The disclosure has been revised as per your comment.

MANAGEMENT - PAGE 35

         31.      PLEASE ADVISE US OF THE CIRCUMSTANCES SURROUNDING MR. BARNES'
                  RESIGNATION AS PRESIDENT EFFECTIVE NOVEMBER 30, 2005.

Mr. Barnes was devoting substantially all of his time to developing a marketing
strategy and program for Zero Plus, the joint venture in which the Company owned
a 50% interest (see note 1 to the financial statements). In the meantime, the
Company had hired Mr. Davidson who, despite having been hired as the Company's
chief financial officer, assumed the responsibilities of overseeing all aspects
of the Company's operations. In August 2005, the Board appointed Mr. Davidson as
the Company's chief operating officer as well. Shortly thereafter, the Company
decided to divest itself of its interest in Zero Plus. Mr. Barnes was given the
opportunity to return to the Company on a full-time basis as Vice President -
Marketing, a position that would have required him to report to Mr. Davidson.
That was not acceptable to Mr. Barnes. Because he had an employment agreement
with the Company at the time, the Company felt compelled to enter into the
Severance Agreement.

         32.      PLEASE REVISE, IF KNOWN, TO IDENTIFY THE DIRECTOR NOMINEES
                  INCLUDED IN THE LISTING OF YOUR EXECUTIVE OFFICERS AND
                  DIRECTORS.

At this time, only one director-nominee has confirmed that he will join the
Board after the offering. His name is Michael Katz and he has been added to the
Management table and his biography has been included.



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

SUMMARY COMPENSATION TABLE - PAGE 37

         33.      PLEASE PROVIDE FOOTNOTE DISCLOSURE REGARDING THE ITEMS
                  INCLUDED AS "OTHER COMPENSATION."

The disclosure has been revised as per your comment.

PRINCIPAL SHAREHOLDERS - PAGE 43

         34.      PLEASE REVISE TO INDICATE THE NAME OF THE NATURAL PERSON OR
                  PERSONS HOLDING VOTING CONTROL AND DISPOSITIVE POWER OVER THE
                  SHARE HELD BY SEAGROVE, LLC.

The disclosure has been revised as per your comment.

REGISTRATION RIGHTS - PAGE 49

         35.      WE NOTE THAT YOU INTEND TO ISSUE 227,660 CLASS A WARRANTS AND
                  113,830 CLASS B WARRANTS AND 341,490 SHARES OF COMMON STOCK
                  UNDERLYING THE WARRANTS TO CRESTRIDGE INVESTMENTS AMG
                  MOLDGUARD LLC IN EXCHANGE FOR THE 170,745 WARRANTS IT ALREADY
                  OWNS. PLEASE ADVISE US AS TO THE TIMING OF THIS ISSUANCE, AND
                  OF THE EXEMPTION FROM REGISTRATION YOU INTEND TO RELY UPON FOR
                  THE ISSUANCE OF THE WARRANTS AND SHARES, AS WELL AS PROVIDING
                  THE LEGAL ANALYSIS WHEREBY YOU DETERMINED THAT THE EXEMPTION
                  MAY APPROPRIATELY BE RELIED UPON. UPON REVIEW, WE MAY HAVE
                  FURTHER COMMENTS.

In September 2005, the Company and Crestridge Investments AMG Moldguard LLC
entered into an agreement pursuant to which, among other things, Crestridge
agreed that it would not exercise its right to convert the Convertible Notes
into shares of Series C Preferred Stock and to cancel the warrants that the
Company issued in April 2005, and the Company agreed that it would issue to
Crestridge a fixed number of warrants (1,000,000 pre-reverse split) of the same
class or series that are issued in the offering and to register those warrants
and the underlying shares of common stock in the Registration Statement. By its
terms, that agreement terminates on February 17, 2006. When it became apparent
that the offering would not be completed by February 17, 2006, the Company asked
Crestridge to extend that date to June 30, 2006. Crestridge made certain demands
on the Company that the Company felt were onerous and decided to allow the
September 2005 agreement to expire on February 17, 2006. Consequently, beginning
February 18, 2006 Crestridge's conversion right will be reinstated, the April
2005 warrants will not be cancelled and the Company will not issue any Class A
or Class B warrants to Crestridge. As a result, the selling security holder
prospectus has been eliminated from the Registration Statement, all references
to the Selling Securityholder have been eliminated from the primary prospectus
and additional disclosure has been added describing Crestridge's conversion
right and the consequences of it exercising that right. Specifically, in
response to your comment, the Class A Warrants and the Class B Warrants would
have been issued at the time of the offering to two affiliates of Crestridge
Investments AMG Moldguard LLC. This issuance would have been exempt from the
registration requirements of the Act pursuant to Section 4(2) and, possibly,
Section 3(a)(9) thereof. Crestridge Investments is an institutional accredited
investor that purchased the Company's convertible notes and is also the holder
of a warrant issued by the Company. That warrant is the only one of its class.



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

UNDERWRITERS - PAGE 50

         36.      PLEASE CONFIRM, IF TRUE, THAT PAULSON INVESTMENT COMPANY, INC.
                  IS THE SOLE UNDERWRITER.

There will be at least two additional underwriters in the offering-Capital
Growth Financial LLC and Chicago Investment Group, LLC. More may be added before
the effective date. Paulson will continue to act as the "representative of the
several underwriters."

PROSPECTUS COVER PAGE [ALTERNATE PAGE FOR SELLING SECURITY HOLDER PROSPECTUS]

         37.      BECAUSE THERE IS ONE SELLING SHAREHOLDER ONLY, PLEASE REVISE
                  TO NAME CRESTRIDGE INVESTMENTS AMG MOLDGUARD, LLC.

The selling securityholder prospectus has been eliminated from the Registration
Statement as have all references to the selling Securityholder in the primary
prospectus. See response to comment 35.

         38.      PLEASE REVISE TO INCLUDE THE PAGE UPON WHICH RISK FACTOR
                  DISCLOSURE BEGINS. PLEASE SIMILARLY REVISE THE RISK FACTOR
                  REFERENCE UNDER "THE OFFERING" ON THE ALTERNATE PAGE FOR
                  SELLING SECURITY HOLDER PROSPECTUS PAGE 2.

The selling securityholder prospectus has been eliminated from the Registration
Statement as have all references to the Selling Securityholder in the primary
prospectus.

PLAN OF DISTRIBUTION [ALTERNATE PAGE FOR SELLING SECURITY HOLDER PROSPECTUS]

         39.      PLEASE REVISE THE FIRST SENTENCE TO CLARIFY THAT SALES MAY
                  ONLY OCCUR AT "SUCH PRICES AS THE [SELLING STOCKHOLDER]
                  DETERMINES" IF THE SECURITIES ARE LISTED. IF THERE IS NO
                  MARKET FOR THE SECURITIES THE OFFERING MUST BE AT A FIXED
                  PRICE.

The selling securityholder prospectus has been eliminated from the Registration
Statement as have all references to the Selling Securityholder in the primary
prospectus.

SELLING SECURITY HOLDER [ALTERNATE PAGE 4 FOR SELLING SECURITY HOLDER
PROSPECTUS]

         40.      PLEASE REVISE TO INDICATE THE NAME OF THE NATURAL PERSON OR
                  PERSONS HOLDING VOTING CONTROL AND DISPOSITIVE POWER OVER THE
                  SHARES HELD BY CRESTRIDGE INVESTMENTS AMG MOLDGUARD, L.L.C.

The selling securityholder prospectus has been eliminated from the Registration
Statement as have all references to the Selling Securityholder in the primary
prospectus.

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF OPERATIONS - PAGE F-4

         41.      PLEASE REVISE YOUR CONSOLIDATED STATEMENTS OF OPERATIONS TO
                  RECONCILE THE NET LOSS FROM CONTINUING OPERATIONS TO NET LOSS
                  ATTRIBUTABLE TO COMMON STOCK.



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

                  REFER TO PARAGRAPH 40 OF SFAS 128. PLEASE MAKE SIMILAR
                  REVISIONS TO YOUR DISCLOSURES ON PAGES 5 AND 19.

The Consolidated Statements of Operations have been revised as per your comment.
These revisions have also been incorporated in the financial data appearing on
pages 5 and 20 of the prospectus.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY - PAGE F-5

         42.      PLEASE PRESENT AS A LINE ITEM SEPARATE FROM STOCK ISSUED FOR
                  CASH, THE 12,500 SHARES OF SERIES B PREFERRED STOCK REACQUIRED
                  IN SEPTEMBER 2004. ALSO TELL US HOW YOU HAVE ACCOUNTED FOR THE
                  REACQUIRED SHARES (I.E. SPECIFY WHETHER THEY HAVE BEEN RETIRED
                  OR WHETHER THEY ARE CONSIDERED TREASURY STOCK).

The transaction has been subject to further review, and the Company has
concluded that the $75,000 should be accounted for as refund of a subscription
amount. Accordingly, all references to the repurchase stock have been
eliminated. Please see our response to comment 52.

CONSOLIDATED STATEMENTS OF CASH FLOWS - PAGE F-7

         43.      WE NOTE NUMEROUS INSTANCES WHERE EQUITY INSTRUMENTS HAVE BEEN
                  ISSUED, BUT THE AMOUNTS ON THE CONSOLIDATED STATEMENTS OF CASH
                  FLOWS DO NOT AGREE TO THE AMOUNTS IN YOUR CONSOLIDATED
                  STATEMENTS OF SHAREHOLDERS' DEFICIENCY. FOR EXAMPLE, IN 2003 A
                  $293,718 ADJUSTMENT TO NET LOSS FOR COMMON STOCK ISSUED IN
                  PAYMENT OF INTEREST EXPENSE APPEARS TO CORRELATE TO STOCK
                  ISSUED FOR EMPLOYEE COMPENSATION AND STOCK ISSUED IN PAYMENT
                  OF SERVICES ON THE CONSOLIDATED STATEMENTS OF SHAREHOLDERS'
                  DEFICIENCY. STOCK ISSUED IN PAYMENT OF INTEREST ($16,000) AND
                  FOR SERVICES RENDERED BY THE FOUNDERS ($9,500) DO NOT APPEAR
                  TO BE REPRESENTED AT ALL. PLEASE PROVIDE US WITH A DETAILED
                  RECONCILIATION OF AMOUNTS PRESENTED IN YOUR CONSOLIDATED
                  STATEMENTS OF CASH FLOWS TO THE AMOUNTS IN YOUR CONSOLIDATED
                  STATEMENTS OF SHAREHOLDERS' DEFICIENCY.

The Consolidated Statements of Cash Flows has been revised as per your comment.

NOTE 1.  ORGANIZATION AND NATURE OF OPERATIONS

ACQUISITION OF TRUST ONE TERMITE, INC. - PAGE F-8

         44.      WE NOTE THAT YOU VALUED THE ACQUISITION OF TRUST ONE TERMITE,
                  INC. BASED UPON THE ESTIMATED VALUE OF YOUR COMMON STOCK.
                  PLEASE ADVISE US HOW YOU DETERMINED THAT THE VALUE OF YOUR
                  COMMON STOCK WAS MORE RELIABLY MEASURABLE THAN THE FAIR VALUE
                  OF THE ASSETS AND LIABILITIES ACQUIRED AS PART OF THE BUSINESS
                  COMBINATION. REFER TO PARAGRAPH 6 OF SFAS 141.

The fair value of the Company's common stock issued in the transaction was
deemed to be a more reliable measure of the value of the transaction because it
was consistent with recent valuations of the Company's stock in connection with
various financing transactions and because there was no objective reliable
valuation of Trust One. Trust One was losing money and, aside



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

from cash on hand, had nominal tangible assets. The real value of Trust One was
the intangible assets - its customers and its pest control license issued by the
State of California, in which Trust One had only a small investment.

         45.      REMOVE THE 2003 PRO FORMA FINANCIAL RESULTS RELATED TO THE
                  TRUST ONE ACQUISITION, AS A PRO FORMA INCOME STATEMENT SHOULD
                  NOT BE PRESENTED FOR MORE THAN ONE COMPLETE FISCAL YEAR. YOU
                  MAY SHOW PRO FORMA RESULTS FOR THE LATEST INTERIM PERIOD.

The 2003 pro forma results related to the Trust One acquisition have been
removed as per your comment.

NOTE 3.  SUMMARY OF CRITICAL ACCOUNTING POLICIES

STOCK-BASED COMPENSATION - PAGE F-12

         46.      PLEASE CORRECT THE DATE OF INCEPTION IN THE FIRST COLUMN OF
                  THE TABLE AT THE BOTTOM OF THIS PAGE.

The table has been corrected as per your comment.

         47.      WE NOTE THAT THE AMOUNTS PRESENTED AS "BASIC-AS REPORTED" IN
                  THIS TABLE DO NOT AGREE TO YOUR CONSOLIDATED STATEMENTS OF
                  OPERATIONS. PLEASE REVISE TO PRESENT HISTORICAL AND PRO FORMA
                  NET LOSS PER SHARE CALCULATED IN ACCORDANCE WITH SFAS 128.

The table has been revised as per your comment.

NOTE 6.  NOTES PAYABLE

SHORT TERM LOANS:

2004 - PAGE F-15

         48.      PLEASE CLARIFY WHETHER THE INTEREST RATE OF 3% PER MONTH IS
                  TRULY 3% PER MONTH OR 3% PER ANNUM PAYABLE MONTHLY.

The disclosure is correct. The interest charge is 3% per month.

2005 - PAGE F-16

         49.      PLEASE CLARIFY TO US THE TERMS OF THE UNSECURED PROMISSORY
                  NOTES ISSUED ON SEPTEMBER 20, 2005. SPECIFICALLY TELL US
                  WHETHER YOU ARE REQUIRED TO PAY BACK THE $1.5 MILLION
                  PRINCIPLE, IN CASH; INTEREST; AND $1.5 MILLION WORTH OF YOUR
                  SECURITIES (I.E. WHETHER YOU PAY BACK THE NOTES WITH A
                  COMBINATION OF CASH AND SECURITIES WORTH A TOTAL IN EXCESS OF
                  $3 MILLION).

The 10% unsecured promissory notes accrue interest at the rate of 10% per annum
and are due on the earlier of (a) three business days after the date on which
the Company completes an equity



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

financing resulting in gross proceeds of $3 million or more and (b) August 31,
2006. At maturity, the Company is required to repay in cash the original
principal amount -- $1.5 million - plus all accrued but unpaid interest. In
addition, the Company agreed to issue to the holders of the unsecured notes
additional securities of the Company as follows: If the Company completes a
Qualified Sale on or before December 31, 2006, the Company is also required to
issue to the holders of these notes (whether or not such notes have been repaid)
$1.5 million worth of the securities sold in the Qualified Sale based on the
offering price in the Qualified Sale. If the Company does not complete a
Qualified Sale on or before December 31, 2006, then the Company will issue to
the holders of the unsecured promissory notes (whether or not the notes have
been repaid) 1,200,000 shares of its common stock. Thus, the holders of the
notes get back their entire investment with interest and either securities with
a value of $1.5 million (if a Qualified Sale has occurred on or before December
31, 2006) or 1.2 million shares of the Company's common stock (if a Qualified
Sale has not occurred on or before December 31, 2006).

         50.      ALSO, EXPLAIN WHETHER THE 1.2 MILLION SHARES OF COMMON STOCK
                  THAT MUST BE ISSUED IF A QUALIFIED SALE HAS NOT OCCURRED BY
                  DECEMBER 31, 2006 IS IN ADDITION TO $1.5 MILLION OF YOUR
                  SECURITIES OR IN LIEU OF $1.5 MILLION OF YOUR SECURITIES.

As discussed above in response to Comment No. 49, if a Qualified Sale has not
occurred by December 31, 2006, the holders of the 10% unsecured notes will
receive 1.2 million shares in lieu of $1.5 million worth of securities.

         51.      PLEASE ADVISE US OF THE VALUE, IF ANY, ASSIGNED TO THE RIGHT
                  TO RECEIVE ADDITIONAL EQUITY SECURITIES ISSUED IN CONNECTION
                  WITH THE 10% UNSECURED PROMISSORY NOTES. IT APPEARS THAT ALL
                  OF THE PROCEEDS WERE ALLOCATED TO DEBT, WHEN A BIFURCATION
                  BETWEEN DEBT AND THE ATTACHED RIGHTS MAY HAVE BEEN MORE
                  APPROPRIATE. PLEASE ADVISE US WHAT CONSIDERATION YOU GAVE TO
                  APB 14 AND EITF 00-19 WHEN DETERMINING THE ACCOUNTING
                  TREATMENT FOR THESE NOTES.

The value assigned to the right to receive $1.5 million of Additional Securities
was the notional amount, or $1.5 million. In determining the appropriate
accounting for this right, and the related notes payable, the Company did
consider APB 14 and EITF 00-19. However, it also considered SFAS 150 and the
Company believes that SFAS 150 is more appropriate based on the fact pattern of
this transaction. SFAS 150 states the following in paragraph 12:

         "A financial instrument that embodies an unconditional
         obligation, or a financial instrument other than an
         outstanding share that embodies a conditional
         obligation, that the issuer must or may settle by
         issuing a variable number of its equity shares shall be
         classified as a liability (or an asset in some
         circumstances) if, at inception, the monetary value of
         the obligation is based solely or predominantly on any
         one of the following:

               (a) A fixed monetary amount known at inception
               (for example, a payable settleable with a variable
               number of the issuer's equity shares)."

Because the value of the Additional Securities was a fixed monetary amount that
was known at inception ($1.5 million), the Company recorded such amount as a
liability with an offsetting amount recorded as a debt discount against the
related notes payable. The Company is amortizing the value of the Additional
Securities (debt discount) into interest expense over the expected term of the
related notes payable.



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

NOTE 7.  CAPITALIZATION

SERIES B PREFERRED STOCK - PAGE F-17

         52.      PLEASE CLARIFY HOW THE REPURCHASE PRICE OF $6 PER SHARE WAS
                  DETERMINED.

After reviewing the transaction and after consulting with counsel, the Company
has determined that the transaction in question was not a repurchase of
securities. Originally, the Company had agreed to sell 60,000 shares of is
Series B Preferred Stock to the investor for $150,000. The purchase price was
delivered to the Company but no certificate was ever issued. Subsequently, the
Company and the investor entered into a second agreement, which superseded the
first agreement, pursuant to which the Company agreed to accept $75,000 from the
investor and issue to him 62,500 shares of Series B Preferred Stock. Since the
Company did not have the cash on hand to return the $75,000 over-payment to the
investor, the $75,000 was reflected in a note that bears interest at 10% per
annum.

         53.      PLEASE EXPLAIN WHETHER THE $75,000 NOTE PAYABLE BEARS INTEREST
                  AND, IF SO, DISCLOSE THE RATE AND ANY OTHER SIGNIFICANT TERMS.

As described above in our response to comment 52, the note bears interest at 10%
per annum. It also provides for late payment penalties equal to 2% and $4,000
per month.

NOTE 10.  COMMITMENTS AND CONTINGENCIES

EMPLOYMENT AGREEMENTS - PAGE F-21

         54.      PLEASE CORRECT THE DISCREPANCY BETWEEN THE CHIEF EXECUTIVE
                  OFFICER'S BASE SALARY AS STATED IN THE SECOND PARAGRAPH AND AS
                  STATED IN THE TABLE BELOW.

The discrepancy has been corrected.

INCOME TAX RETURNS - PAGE F-21

         55.      WE NOTE THAT YOU HAVE NOT FILED FEDERAL OR STATE INCOME TAX
                  RETURNS FOR 2003 OR 2004. DESPITE THE FACT THAT YOU HAVE
                  EXPERIENCED LOSSES SINCE INCEPTION, IT APPEARS THAT YOU MAY
                  STILL HAVE AN OBLIGATION TO FILE INCOME TAX RETURNS. PLEASE
                  TELL US WHETHER YOU HAVE FILED FOR EXTENSIONS OR WHETHER YOU
                  HAVE HAD ANY OTHER COMMUNICATIONS WITH THE IRS. ALSO, TELL US
                  HOW YOU HAVE CONSIDERED THE IMPACT OF ANY POTENTIAL PENALTIES
                  OR FINES THAT MAY BE ASSESSED DUE TO YOUR DELINQUENT FILINGS
                  IN ACCORDANCE WITH SFAS 5.

The Company did not file for any extensions and it has not been contacted by the
IRS. The Company does not believe that any penalties for late filing would be
significant as it does not owe any taxes for the relevant periods. The Company
filed all of its returns for 2003 and 2004 on February 3, 2006. Accordingly, the
statement that the Company has not filed its tax returns for 2003 and 2004 has
been deleted.



Michael McTiernan
U.S. Securities and Exchange Commission
February 13, 2006

ITEM 26.  RECENT SALES OF UNREGISTERED SECURITIES

         56.      WE NOTE THAT IN SEPTEMBER 2005 YOU SOLD $1.5 MILLION AGGREGATE
                  PRINCIPAL AMOUNT OF 10% UNSECURED PROMISSORY NOTES DUE AUGUST
                  31, 2006, AND THE RIGHT TO RECEIVE $1.5 [MILLION] WORTH OF
                  UNITS SOLD IN THE INSTANT OFFERING BASED ON THE INITIAL PUBLIC
                  OFFERING PRICE PER UNIT, IN RELIANCE UPON THE EXEMPTION FROM
                  REGISTRATION UNDER SECTION 4(2) OF THE SECURITIES ACT OF 1933.
                  PLEASE CLARIFY WHETHER THE RIGHT TO RECEIVE UNITS IS PURSUANT
                  TO A CONVERSION FEATURE OF THE NOTES OR IF IT IS A SEPARATE
                  RIGHT. IN ADDITION, PLEASE PROVIDE US WITH YOUR ANALYSIS
                  ADDRESSING WHY THIS PLACEMENT SHOULD NOT BE INTEGRATED WITH
                  THIS OFFERING.

The right to receive $1.5 million worth of units is a separate right. The 10%
unsecured promissory notes are not convertible instruments. The right to receive
$1.5 million worth of units was fixed at the time of the financing - September
2005 - more than three months before the filing of the registration statement.
The exact number of units that will be issued will be determined at the time of
the offering based on the initial public offering price of the units but the
total dollar value of the units that the holders of these notes will receive as
well as their right to receive those units was fixed before the registration
statement was filed.

ITEM 28.  UNDERTAKINGS

         57.      WE NOTE THAT YOU HAVE INCLUDED THE UNDERTAKING APPLICABLE TO
                  REGISTRATION STATEMENTS THAT RELY ON RULE 430B. PLEASE CONFIRM
                  YOUR UNDERSTANDING THAT THIS REGISTRATION STATEMENT WILL RELY
                  ON RULE 430B AND NOT RULE 430C. IF NOT, PLEASE REVISE TO
                  INCLUDE THE APPROPRIATE UNDERTAKING.

Item 28 has been revised to include the appropriate undertaking.

EXHIBIT 5.1

         58.      THE REFERENCES TO THE SECURITIES REGISTERED IN (N), (O), (P)
                  AND (Q) OF THE FIRST PARAGRAPH DO NOT CONFORM TO THE
                  REGISTRATION STATEMENT. PLEASE REVISE OR ADVISE.

Exhibit 5.1 has been revised to delete the paragraphs referred to in your
comment. Those paragraphs were intended to reflect the securities covered by the
selling securityholder prospectus, which has been deleted form the Registration
Statement. Please see our response to comment 35.



                                            Sincerely,

                                            /s/ Joel J. Goldschmidt
                                            -----------------------
                                            Joel J. Goldschmidt