SB-2/A

          As filed with the Securities and Exchange Commission on April 10, 2006

Registration No. 333-130889

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 3
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 Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer 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. o

          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. o

          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. o

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

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered (1)			Proposed Maximum Offering Price Per Unit/ Share/Warrant				Proposed Maximum Aggregate Offering Price (2)		Amount of Registration Fee
Units, consisting of two shares of common stock, no par value, two Class A warrants and two Class B warrants, each to purchase one share of common stock		1,552,500	(1)		$	14.00	(2)	$	21,735,000.00		$	2,325.65
Common stock included in the units		3,105,000	(1)			—			—			—
Class A warrants to purchase common stock included in the units		3,105,000	(1)			—			—			—
Class B warrants to purchase common stock included in the units		3,105,000	(1)			—			—			—
Common stock underlying the Class A warrants included in the units(3)		3,105,000	(1)		$	10.50	(2)	$	32,602,500.00		$	3,488.47
Common stock underlying the Class B warrants included in the units(3)		3,105,000	(1)		$	14.00	(2)	$	43,470,000.00		$	4,651.29
Representative’s warrants		135,000				—			—				(4)
Units issuable upon exercise of the representative’s warrants		135,000			$	16.80	(2)	$	2,268,000.00		$	242.68
Common shares included in the units underlying the representative’s warrants(3)		270,000				—			—			—
Class A warrants to purchase common stock included in units issuable upon exercise of the representative’s warrants		270,000				—			—			—
Class B warrants to purchase common stock included in the units issuable upon exercise of the representative’s warrants		270,000				—			—			—
Common stock underlying the Class A warrants to purchase common stock included in units issuable upon exercise of the representative’s warrants(3)		270,000			$	10.50	(2)	$	2,835,000.00		$	303.35
Common stock underlying the Class B warrants to purchase common stock included in units issuable upon exercise of the representative’s warrants(3)		270,000			$	14.00	(2)	$	3,780,000.00		$	404.46
Total		18,697,500				—		$	106,690,500.00		$	11,415.90	(5)

(1)	Includes 202,500 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 and $3,742.95 is being paid in connection with the filing of Amendment No. 3.

          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 April 10, 2006

1,350,000 Units

each consisting of

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

          This is our initial public offering. We are offering 1,350,000 units, each unit consisting of two shares of common stock, two Class A warrants and two Class B warrants. 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 $13.00 - $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 under the symbols “AMGIU,” “AMGI,” “AMGIW” and “AMGIZ,” respectively and on the Boston Stock Exchange under the symbols “AML.U,” “AML,” “AML.WS.A” and “AML.WS.B,” 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 2.5% of the total public offering price for the 1,350,000 units offered by this prospectus and to issue to Paulson a warrant covering 135,000 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 202,500 units to cover over-allotments.

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

The date of this prospectus is            , 2006

          Notice to California investors This offering is limited to suitable investors only. Each purchaser of units in California must meet one of the following suitability standards: (i) a minimum net worth of at least $75,000 and minimum gross income of not less than $50,000 or (ii) a liquid net worth of $150,000, in both instances exclusive of home, home furnishings and automobile. In either instance, the investor’s purchase may not exceed 10% of his or her net worth. Alternatively, a “small investor” who, including this offering, has not purchased more than $2,500 worth of the Applicant’s securities in the past 12 months may purchase up to $2,500 of the securities.

          Notice to New Jersey investors: Offers and sales in this offering in New Jersey may only be made to accredited investors as defined in Rule 501(a) of Regulation D under the Securities Act of 1933. Under Rule 501(a), to be an accredited investor, an individual must have: (1) net worth or joint net worth with the individual’s spouse of more than $1,000,000; or (2) income of more than $200,000 in each of the two most recent years or joint income with the individual’s spouse of more than $300,000 in each of those years and a reasonable expectation of reaching the same income level in the current year. Other standards apply to investors who are not individuals. There will be no secondary sales of the securities to persons who are not accredited investors for 90 days after the date of this offering in New Jersey by the underwriters and selected dealers.

          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, 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 Preferred Stock into shares of common stock on the date of this prospectus and a one-for-.340124209 reverse stock split effective on April 7, 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 year ended December 31, 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. Our revenue in 2004 and 2005 was $1.55 million and $5.83 million, respectively. During these periods we incurred losses of $3.3 million and $5.9 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 aggressively 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	1,350,000 units, each unit consisting of two shares of common stock, two Class A redeemable common stock purchase warrants and two Class B redeemable common stock purchase warrants. 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 following 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 commences, the units will cease trading and will be delisted.
Shares of common stock to be outstanding after this offering	4,263,895
Warrants:
Number of Class A warrants to be outstanding after this offering	2,930,770
Number of Class B warrants to be outstanding after this offering	2,930,770
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 offering price. The Class A and Class B warrants are exercisable 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 holders. 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 symbols		Nasdaq Capital Market	Boston Stock Exchange
	Units	AMGIU	AML.U
	Common stock	AMGI	AML
	Class A Warrants	AMGIW	AML.WS.A
	Class B Warrants	AMGIZ	AML.WS.B

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 the following:
	•	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.
	•	The independent registered accounting firm that audited our financial statements has substantial doubt about our ability to continue as a going concern.
	•	We have breached various covenants under the loan agreement with our senior secured lender. If the lender demands immediate repayment, we would not be able to repay the debt and may have to declare bankruptcy.
	•	The holder of our 10% Convertible Notes has the right to convert those notes at any time into shares of Series C Preferred Stock representing approximately 13.0% of the voting power of all classes of stock entitled to vote.
	•	Unless we achieve profitability fairly quickly, we are likely to require additional capital in the not too distant future.
	•	The industry in which we operate – mold prevention services for residential real estate construction – is relatively new, and our services have yet to be accepted as standard practice in the real estate construction industry.
	•	We do not own any proprietary products or systems making us susceptible to increasing competition.

          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 230,770 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; and
•	66,176 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:

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• 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 202,500 units;

• warrants to purchase 135,000 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 Preferred Stock or the conversion of those shares into an equal number of shares of our common stock. Based on the accrued interest through March 31, 2006, we estimate that the Convertible Notes are convertible into approximately 639,803 shares of Series C Preferred Stock, which would be further convertible into an equal number of shares of common stock.

Summary Financial Information

	Years ended December 31,
	2004				2005
	(in thousands, except share and per share data)
Consolidated statement of operations data:
Revenue		$	1,553			$	5,829
Gross profit		$	333			$	1,073
Selling, general and administrative expenses		$	3,303			$	5,576
Loss from operations		$	(2,970	)		$	(4,503	)
Net loss		$	(3,290	)		$	(5,932	)
Dividends on cumulative preferred stock			114				245
Net loss applicable to common shareholders		$	(3,404	)		$	(6,177	)
Net loss per share—basic and diluted		$	(4.26	)		$	(6.54	)
Cumulative preferred stock dividends per share		$	(0.15	)		$	(0.27	)
Net loss per share attributable to common stock		$	(4.41	)		$	(6.81	)
Weighted average number of shares outstanding—basic and diluted			772,189				907,617

          The table below summarizes our consolidated balance sheet data at December 31, 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:

• an additional $650,000 of indebtedness that we have incurred since December 31, 2005, but before the date of this prospectus;

• 230,770 shares, 230,770 Class A warrants and 230,770 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 324,648 shares of common stock; and

• 66,176 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 $15.0 million of estimated net proceeds from this offering and the use of approximately $5.76 million of proceeds to repay our outstanding indebtedness, including the Convertible Notes.

Consolidated balance sheet data:

	December 31, 2005
	Actual			Pro forma			Pro forma as adjusted
	(in thousands)
				(unaudited)
Current assets	$	2,180		$	2,508		$	11,748
Working capital (deficit)	$	(4,918	)	$	(4,622	)	$	8,152
Total assets	$	2,492		$	2,820		$	12,060
Total liabilities	$	7,934		$	8,215		$	3,846
Shareholders’ equity (deficiency)	$	(5,442	)	$	(5,395	)	$	8,214

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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 December 31, 2005. At December 31, 2005, we had cumulative net losses of $10.4 million and a working capital deficit of $4.9 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 December 31, 2005, we raised approximately $5.2 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. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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 2004 and 2005 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, because we require additional funds to meet our obligations and fund the costs of our operation and because we have violated debt covenants, 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. See our Consolidated Financial Statements.

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. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

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 of 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

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be successful or result in increased revenue. Our success also depends on builders 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 prevention 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 38.4% 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 approximately 59.2% of the estimated net proceeds of this offering, or $8.88 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. See “Use of Proceeds.”

We have not been able to generate a sufficient amount of cash flow to fund operations and, as a result, have had to borrow a substantial amount of money. If that trend continues after the offering, our prospects for profitability would be severely diminished, and we could face bankruptcy.

          We are a highly-leveraged company. We have never been able to generate a sufficient amount of cash flow to fund operations. As a result, since inception through December 31, 2005, our total indebtedness, including accrued interest, was $5.1 million. Since January 1, 2006 through the date of this prospectus we have borrowed or anticipate borrowing an additional $650,000. While none of these debt obligations are in default for non-payment, in a number of instances we had to negotiate to extend the maturity date so as not to be in default. In the case of the Convertible Notes, as discussed above, we are in default for breach of covenants. If we are unable to fund our business with cash flows from operations after the offering and are required to incur substantial indebtedness in the future, the interest payments and charges on the debt would negatively impact our overall financial performance or force us into bankruptcy. This, in turn, could negatively impact the price of our stock causing you to lose all or a portion of your investment.

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

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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.

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. See “Business — Intellectual Property.”

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. See “Business—Competition.”

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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 2005, the Lennar entities accounted for approximately 32% 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 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

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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. See “Business.”

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. See “Management.”

          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, despite our history of losses, cash flow deficits and risks of continuing as a going concern. Based on our revenue for the quarter ended December 31, 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. See “Management — Executive Compensation.”

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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 Preferred Stock at a price per share of $3.35. The Series C Preferred Stock is convertible into common stock on a one-for-one basis. 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.

• 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 April 1, 2006, it would own approximately 639,803 shares of Series C Preferred Stock, representing approximately 13.0% of our voting securities after this offering. If the holder of the Convertible Notes exercised its conversion rights in full on September 30, 2006 immediately before we exercised our right of prepayment, it would own approximately 667,050 shares of Series C Preferred Stock, representing approximately 14.1% of our voting securities immediately after this offering. In either case, it would be 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 $3.35, which would result in each share of Series C Preferred Stock being convertible into more than one share of common stock.

• 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.

See the Notes to our Consolidated Financial Statements.

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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, beneficially own 13.2% of the issued and outstanding shares of our common stock, or 12.1% 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 disadvantageous 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. See “Principal Shareholders.”

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 and Nasdaq, 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 $850,000. These expenses include additional amounts for legal and accounting services, listing fees for Nasdaq and the Boston Stock 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.

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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. See “Dividend Policy.”

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 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 4,263,895 shares of common stock issued and outstanding and will have reserved approximately an additional 8.6 million shares of common stock for future issuance as follows:

• 5,861,540 shares underlying the Class A and Class B warrants (including the warrants held by the holders of the Unsecured Notes);

• 1,215,000 shares underlying the over-allotment option, including the shares underlying the Class A and Class B warrants included in the units underlying that option;

• 810,000 shares underlying the representative’s warrant, including the shares underlying the Class A and Class B warrants includable in the representative’s warrants;

• 255,093 shares underlying warrants outstanding on the date of this prospectus; and

• 425,155 shares reserved for issuance under our stock option plan.

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          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 (the “Securities Act”), 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, 230,770 Class B warrants and 461,540 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 594,122 unregistered shares will be saleable without restriction under Rule 144(k) promulgated under the Securities Act and another 969,773 unregistered shares will be saleable subject to the timing and volume limitations set forth in Rule 144(d) promulgated under the Securities Act. Included in this latter amount are 230,000 shares of common stock that we will issue to the holders of the Unsecured Notes on the date of this prospectus that we have agreed to register for resale one year after the date of this prospectus. See “Shares Eligible for Future Sale.”

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. See “Description of Securities — Options and Warrants.”

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. See “Use of Proceeds.”

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. See “Description of Securities — Preferred Stock.”

Purchasers in this offering will experience immediate and substantial dilution in net tangible book value.

          The initial public offering price is substantially higher than the pro forma net tangible book value per share of our outstanding common stock. As a result, investors purchasing our units in this offering will incur immediate dilution of $4.57 per share or 70.3%, based on an assumed initial public offering price of $6.50 per share. As a result of this dilution, investors purchasing units from us will have contributed 79.2% of the total amount invested in us but will own only 63.3% of our outstanding common stock. In addition, the exercise of outstanding options and warrants and future equity issuances may result in further dilution to investors and current shareholders. See “Dilution.”

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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,”5 “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 $1,316,250, the representative’s non-accountable expense allowance of $438,750 and other estimated offering expenses of $795,000, we estimate that the net proceeds to us from this offering will be approximately $15 million. (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 $17.43 million.

          We expect to use the net proceeds as follows:

Use of Proceeds	Approximate Amount		Approximate Percentage
Repayment of debt	$	5,760,000		38.4	%
Region expansion and new service centers		1,800,000		12.0
Sales and marketing		700,000		4.7
Capital expenditures		680,000		4.5
Deferred compensation and severance		360,000		2.4
Working capital		5,700,000		38.0
Total	$	15,000,000		100.0	%

          Repayment of debt. All of our outstanding indebtedness, other than a $250,000 unsecured note that we issued in March 2006, including unpaid principal and accrued interest through the date of closing, will be repaid out of the proceeds of this offering. At December 31, 2005, our total indebtedness, including accrued interest was approximately $5.1 million, consisting of the following:

• Convertible Notes having an aggregate principal amount of $1.95 million, bearing interest at 10%. As of December 31, 2005, the accrued interest on these notes was $192,000. These notes are due and payable in full on September 30, 2007. We have a right to prepay beginning September 30, 2006, at which time we expect the accrued interest will be $357,000. If these notes have not been converted into shares of our capital stock before we can prepay them, they will be repaid out of the proceeds. If the holder exercises its conversion right before we prepay, the proceeds of the offering that would have otherwise been used to prepay the Convertible Notes will be allocated to working capital.

• Unsecured Notes in the aggregate principal amount of $1.5 million, bearing interest at 10%. These notes mature on August 31, 2006 but must be repaid out of the proceeds of this offering. As of December 31, 2005, the accrued interest on these notes was approximately $43,000.

• $400,000 reflected in two unsecured notes, each in the original principal amount of $200,000, bearing interest at 10%. One note matures in July 2006 and the other matures in October 2006. They both must be repaid out of the proceeds of this offering. As of December 31, 2005 the accrued interest on these notes was approximately $17,000. These notes are held by the representative.

• $100,000 unsecured note bearing interest at 10%. The note is due and payable on August 31, 2006 but must be repaid out of the proceeds of this offering. Accrued interest through December 31, 2005 was $3,300.

• $200,000 unsecured note bearing interest at 10%. The note matures on January 1, 2007 but must be repaid out of the proceeds of this offering. Accrued interest through December 31, 2005 was $1,000.

• $75,000 unsecured note bearing interest at 7%. The note matures on December 31, 2006. Accrued interest through December 31, 2005 was $12,000.

•
$40,000 reflected in two unsecured notes, one in the original principal amount of $25,000 and the other in the original principal amount of $15,000. Neither note has a stated maturity date, although, by oral agreement with the holder of the notes we agreed to repay these notes out of the proceeds of this offering. Both notes bear interest at 7% per annum until they are repaid. Accrued interest on both notes as of December 31, 2005 was approximately $750.

• $175,000, reflected in two unsecured notes, one in the original principal amount of $100,000 and the other in the original principal amount of $75,000. The $100,000 note matured on October 6, 2004. The $75,000

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	note does not have a stated maturity date. By oral agreement with the holder of these notes, the holder agreed to extend the maturity date of the $100,000 to the effective date of this offering and we agreed to repay both notes out of the proceeds of this offering. Both notes bear interest at 8% per annum. Accrued interest on both notes as of December 31, 2005 was approximately $90,000.
•	$100,000 unsecured note that was due and payable October 13, 2004. However, the holder of the note agreed to extend the maturity date until the effective date of this offering and we agreed to repay the note out of the proceeds of this offering. Originally the interest rate on the note was 12% per annum. However, as part of the agreement to extend the maturity date we also agreed to increase the interest rate to 18%. $100,000 unsecured note bearing interest at 10% that is payable out of the proceeds of this offering. Accrued interest as of December 31, 2005 was approximately $9,500.
•	$170,000 note secured by our accounts receivable. The note bears interest at the rate of 3% per month and is payable as and when we collect receivables. To date, none of the principal amount has been repaid. Accrued interest as of December 31, 2005 was $5,200.
	In addition, the amount included in the table above also includes the following:
•	Three separate demand notes, one issued in January and two issued in February 2006, each in the principal amount of $50,000 and which bear interest at 8%.
•	A $250,000 note, bearing interest at 10% per annum and payable out of the proceeds of this offering or 30 days following demand for repayment. This note is held by the representative.
•	Approximately $112,000 of accrued interest for the first calendar quarter of 2006 on all of the notes that will be repaid out of the proceeds of this offering other than the Convertible Notes. Included in this amount is approximately $11,300 of accrued interest on the notes held by the representative.

          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.

          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 become cash 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, marketing director 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 $2.43 million will be added to working capital. Similarly, if the holder of the Convertible Notes exercises its rights to convert those notes into

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stock, the amount that would have been used to repay those notes, approximately $2.3 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 December 31, 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:

• an additional $650,000 of indebtedness that we have incurred since December 31, 2005 but before the date of this prospectus;

• conversion of all of the Series A and Series B Preferred Stock into 324,648 shares of common stock;

• 230,770 shares, 230,770 Class A warrants and 230,770 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); and

• 66,176 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 $15 million of estimated net proceeds from this offering and our use of approximately $5.76 million of those proceeds to repay all of our outstanding indebtedness.

	December 31, 2005
	Actual			Pro forma			Pro forma as adjusted
	(in thousands)
				(unaudited)
Debt	$	4,337	(1)	$	4,619		$	250	(2)
Shareholders’ equity:
Preferred stock, no par value, 10,000,000 shares authorized:
Series A 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 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 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; 942,301 shares issued and outstanding, actual; 1,563,895 shares issued and outstanding pro forma; and 4,263,895 shares issued and outstanding, pro forma as adjusted		1,475			4,313			15,413
Additional paid-in capital		2,005			2,470			6,370
Accumulated deficiency		(10,406	)		(12,178	)		(13,569	)
Total shareholders’ equity (deficiency)		(5,442	)		(5,395	)		8,214
Total capitalization	$	(1,105	)	$	(776	)	$	8,464

(1)	Reflects the sum of Short-term notes payable, Accrued interest payable and Long-term notes payable, net of discount as reflected on our balance sheet as of December 31, 2005.
(2)	Assumes repayment of the Convertible Notes, which should take place on or about October 1, 2006.

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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 December 31, 2005, we had a negative pro forma net tangible book value of approximately $5.4 million, or approximately negative $3.45 per share based on 1,563,895 shares issued and outstanding on a pro forma basis. After taking into account the estimated net proceeds from this offering of $15 million, our net tangible book value at December 31, 2005 would have been approximately $8.2 million, or $1.93 per share. This represents an immediate increase of $5.38 per share to existing shareholders and immediate dilution of $4.57 per share, or 70.3%, 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 December 31, 2005	$	(3.45	)
Increase in net tangible book value per share attributable to new investors		5.38
Net tangible book value per share after the offering					1.93
Dilution per share to new investors				$	4.57

          The following table summarizes as of December 31, 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 Share
	Number			Percent			Amount			Percent
Founders, executive officers and directors(1)		642,030			15.1	%	$	786,579	(2)		3.5	%	$	1.23
Other existing stockholders		921,865	(3)		21.6			3,821,421			17.2		$	4.15
New investors		2,700,000			63.3			17,550,000			79.2		$	6.50	(4)
Total		4,263,895	(5)		100.0	%	$	22,158,000			100.0	%

(1)	Includes shares owned by Tom Blakely, Brad Barnes, KPC, LLC, Peter Wilson, John Martin and Mark Davidson.
(2)	Includes the value of services rendered for stock.
(3)	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) 66,176 shares to be issued on the date of this prospectus; and (iii) 324,648 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.
(4)	Based on an initial public offering price of $13.00 per unit.
(5)	Does not include any shares underlying unexercised warrants and options.

          If the representative exercises the over-allotment option in full, the new investors will purchase 3,105,000 shares of common stock. In that event, the gross proceeds from this offering will be $20,182,500, representing approximately 81.4 of the total consideration for 66.5% of the total number of shares of common stock outstanding, and the dilution to new investors would be $4.22 per share, or 64.9%.

          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, 2005 and the consolidated balance sheet data at December 31, 2005 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. Historical results are not necessarily indicative of the results to be expected in the future.

Consolidated statement of operations data:

	Years ended December 31,
	2004			2005
	(in thousands, except share and per share data)
Revenue	$	1,553		$	5,829
Cost of revenue		1,220			4,756
Gross profit		333			1,073
Selling, general and administrative expenses		3,303			5,576
Loss from operations		(2,970	)		(4,503	)
Interest expense		(278	)		(1,491	)
Other income (loss)		(42	)		64
Loss before provision for taxes		(3,290	)		(5,930	)
Provision for taxes		1			2
Net loss	$	(3,290	)	$	(5,932	)
Dividends on cumulative preferred stock		114			245
Net loss applicable to common shareholders	$	(3,404	)	$	(6,177	)
Net loss per share—basic and diluted	$	(4.26	)	$	(6.54	)
Cumulative preferred stock dividends per share	$	(0.15	)	$	(0.27	)
Net loss per share attributable to common stock	$	(4.41	)	$	(6.81	)
Weighted average number of shares outstanding—basic and diluted		772,189			907,617

Consolidated balance sheet data:

	December 31, 2005
	(in thousands)
Current assets	$	2,180
Working capital deficit	$	(4,918	)
Total assets	$	2,492
Total liabilities	$	7,934
Shareholders’ deficiency	$	(5,442	)

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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

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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 3,401 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
Region	1Q04		2Q04		3Q04		4Q04		1Q05		2Q05		3Q05		4Q05
	(in thousands)
California	$	70.9	$	283.8	$	351.2	$	442.4	$	492.8	$	714.9	$	868.1	$	786.7
Florida		—		1.6		151.5		236.1		348.6		304.6		484.8		374.7
Louisiana		—		—		—		—		—		—		—		241.5
Texas		—		—		—		15.1		117.7		101.8		174.5		163.6
Other		—		—		—		—		27.8		142.9		356.1		127.8
Total	$	70.9	$	285.4	$	502.7	$	693.7	$	986.9	$	1,264.2	$	1,883.6	$	1,694.3

• The California region currently has six service centers serving the Bay Area, Sacramento, Fresno and Southern California. In this region, we had revenue of $1,148,300 for 2004 and $2,862,500 for 2005, a 149% increase.

• The Florida region, which opened in May 2004, currently has three service centers serving Tampa, Orlando and south Florida. We had $389,200 in revenue for 2004 and $1,512,700 in revenue for 2005, a 288% increase.

• The Texas region, which opened in October 2004, currently operates out of one service center in Houston. We had $15,100 in revenue for 2004 and $557,600 in revenue for 2005.

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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. 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 32% of our revenue for 2005. We had several multi-family projects completed or in process in California for D.R. Horton. D.R. Horton projects accounted for 2.5% of our revenue for 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 experience to determine if a reserve is required and/or if the coverage under the general liability policy is sufficient

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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 December 31, 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 123R 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 at the date of issuance 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 Years Ended December 31, 2004 and 2005

	Years ended December 31,
	2004						2005									Percent Increase/ (Decrease)
	Amount			Percentage of Revenue			Amount			Percentage of Revenue			Increase/ (Decrease)
							(all dollar amounts are in thousands)
Revenue	$	1,553			100.0	%	$	5,829			100.0	%	$	4,277			275.6	%
Cost of revenue		1,220			78.5			4,756			81.6			3,537			290.2	%
Gross profit/margin		333			21.5			1,073			18.4			740			222.2	%
Selling, general and administrative expenses		3,303			212.8			5,576			95.7			2,273			68.8	%
Loss from operations		(2,970	)		(191.4	)		(4,503	)		(77.3	)		(1,533	)		51.6	%
Interest expense		278			17.9			1,491			25.6			1,213			436.3	%
Other income (expense)		(42	)		(2.7	)		64			1.1			106			(352.4	)%
Loss before provision for taxes		(3,290	)		(212.0	)		(5,930	)		(101.7	)		(2,640	)		80.2	%
Provision for taxes		1			0.1			2			0.1			1			100.0	%
Net loss	$	(3,291	)		(212.0	)%	$	(5,932	)		(101.8	)%	$	(2,641	)		80.2	%

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     Revenue

          Revenue for the year ended December 31, 2005 increased 276% compared to revenue for the year ended December 31, 2004. The revenue growth was primarily a result of increased business volume. During 2005, we added seven new service center locations. Serviced volume during the periods increased from approximately 6.7 million square feet in 2004 to 23.2 million square feet in 2005. 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 2005, California revenue accounted for $2.9 million, or approximately 50% of revenue and Florida accounted for $1.5 million, or approximately 26% of revenue. California revenue increased by $1.7 million, of which approximately $0.7 million was attributable to existing service centers (representing a 58% revenue increase in those locations) and $1.2 million 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 $1.1 million, all as a result of increased demand in the areas served by our existing service centers. Texas revenue increased by $500,000 due to increased home builder demand. The Louisiana service center commenced operations in the fourth quarter of 2005 and generated $241,500 of revenue in that period. Of the remaining $655,000 increase in revenue, $261,000 was attributable to projects in regions where we do not have any service centers, $286,000 was attributable to Trust One and $108,000 constituted other service revenue. We expect to increase the number of our service centers as the demand for our services increases and as we determine that opening new centers is an economically feasible strategic option.

          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 increased across all three categories from 2004 to 2005. Revenue for the national builder group totaled $1.8 million for 2005, an increase of 292% over 2004. Revenue for the regional builder group totaled $2.1 million for 2005, an increase of 448% over 2004. Revenue for the multi-family group totaled $1.9 million for 2005, an increase of 181% over 2004.

     Cost of Revenue

          Cost of revenue includes the material, labor, depreciation expense relating to equipment used to provide our services and other costs directly related to providing our services. Our cost of revenue increased significantly in 2005 as a result of our increase in revenue and because we added seven service centers. 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. In addition, 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, until June 2005, we could not obtain 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. In the second quarter of 2005, we were approved for our own workman’s compensation policy through AIG, enabling us to hire our own workers directly, resulting in significant cost savings.

          Overall, cost of revenue for 2005 increased 290% over cost of revenue for 2004. Our gross margin for 2005 — 18.4% — was lower than our gross margin for 2004 — 21.5%. Direct labor costs were $585,000 and $2.2 million for 2004 and 2005, respectively, reflecting an increase of 276%. Direct labor cost as a percentage of revenue was consistent across both years at 38%. 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 cost of revenue decreased to 46% in 2005 from 48% in 2004, 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.

          Material costs in 2004 and 2005 were $182,000 and $1,164,000, respectively, a 540% increase. As a percentage of revenue, material costs increased from 12% in 2004 to 20% for 2005. This increase is attributable to higher freight and shipping costs in 2005 compared to 2004 as fuel prices and overall shipping costs have increased. Also, the lack of working capital has forced us to order materials in smaller lot sizes to conserve cash. The smaller lot sizes limit our ability to receive volume 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. After this offering, we expect that we will be able to order materials in more economic quantities, reducing our per unit cost as well as the related freight costs to ship them to our service centers.

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          Other direct 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. In 2005, we expanded our number of service crews and service centers and, as a result, we increased the number of vehicles that we used. 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. Other direct costs in 2004 and 2005 were $403,000 and $1,289,000, respectively, a 220% increase. Other direct costs decreased as a percentage of revenue from 26% in 2004 to 22% in 2005. Finally, depreciation expense for 2004 and 2005 was $50,000 and $107,000, respectively, reflecting 3.2% 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 equipment on a capital basis, which would increase depreciation expense and reduce rental costs. Workman’s compensation expense was $218,000 for 2005 compared to $43,000 for 2004. Other direct costs were $360,000 and $1,071,000 for 2004 and 2005, respectively, or 23% and 18% 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, which we expect to be able to do after this offering, 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 $5.6 million and $3.3 million for 2005 and 2004, respectively, or 96% and 213% of revenue. The increase in absolute terms is primarily attributable to increased headcount and other expenses related to our expansion in California. 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.

          Non-service employee payroll costs increased from $1.5 million in 2004 to $2.3 million in 2005, or 97% and 40% of revenue, respectively. The increases in payroll costs were directly related to the addition of, accounting and marketing personnel, regional management and sales personnel in California, Texas and Louisiana 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 from $163,000 in 2004 to $358,000 in 2005, or 11% and 6% of revenue, respectively. The decrease as a percentage of revenue is a result of spreading the costs of insurance, which increased 120% from 2004 to 2005, over a 276% 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 $117,000 and $217,000 for 2004 and 2005, respectively, or 7.5% and 3.7% of revenue. Telecommunications increased from $52,000 in 2004 to $116,000 in 2005, or 3.4% and 2.0% of revenue, respectively. The increase in dollars spent was due to the addition of service centers in locations outside of Southern California. Travel costs increased from $117,000 in 2004 to $234,000 in 2005, or 7.5% and 4.0% of revenue, respectively. The 100% 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 $135,000 of the cost increase in selling, general and administrative expenses, or 6.0%, is attributable to Trust One, which we acquired in February 2005. Marketing costs accounted for approximately $133,000, or 6.0% of the increase, accrued severance for a terminated officer of $444,500, or 20% of the increase and depreciation expense resulting from capital asset purchases resulting from the increase in staffing accounted for $18,000, or 1.0%, of the increase.

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          Legal costs in 2005 were $408,000 compared to $183,000 in 2004, an increase of 123%. The costs were incurred in relation to general corporate and commercial law matters. For the year ended December 31, 2004 and 2005, we accrued a $150,000 and $310,000, respectively, for executive bonuses 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 2005 amount includes non cash compensation charges of approximately $366,000 for third party service providers.

     Interest Expense

          Interest expense for 2005 totaled $1,491,000, a $1,213,000 increase over 2004 interest expense. The increase is directly attributable to the increase in debt financings in the fourth quarter of 2004 and in 2005. Of the amount incurred in 2005, $649,000 represented interest paid in cash or stock or accrued during the period, $368,000 represented amortization of debt discount on the Convertible Notes and $474,000 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.

     Other Income

          In 2004, we reported a loss of $42,000 as a result of a non-insured theft of capital assets. Other income of $64,000 reflects the profit from the sale of our 50% interest in Zero Plus, which was effective as of December 2005.

     Provision for Taxes

          This amount, $2,000, represents California franchise taxes. We have not recorded an income tax benefit in 2005 or 2004 because of our historical losses.

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 December 31, 2005, we raised approximately $5.2 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 $1.3 million of obligations — $285,000 of interest, $748,000 of salaries, $83,000 of director fees and $182,000 of professional services — to reduce the need to further issue debt and/or equity cash infusions. At December 31, 2005, we had a working capital deficit of approximately $4.9 million. These funding strategies have enabled us to offset accumulated losses of $10.4 million.

          From October 2004 through April 2005, we issued $1.95 million 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 $1.5 million, 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 170,062 shares of our common stock at an exercise price of $5.88 per share at any time up to April 15, 2008. We recorded $147,368 of debt discount in connection with the issuance of these warrants. Currently, we have breached various covenants relating to the Convertible Notes. We do not have the ability repay these notes if the holder were to declare a default and obtain a judgment. In that case, we would probably have to file for bankruptcy. Once this offering is complete, we will have the ability to repay those notes, which we plan to do as soon as we are permitted to under their terms. At September 30, 2006, the date on which the Convertible Notes are first prepayable, we calculate that the total amount due, principal plus accrued interest will be $2.3 million.

          During 2005 we raised a total of $2 million through the sale of debt securities. Included among these debt securities are the Unsecured Notes, which have an aggregate principal amount of $1.5 million, bear interest at 10% and that mature on August 31, 2006. In connection with the issuance of the Unsecured Notes, we agreed to issue to the purchasers of those notes $1.5 million worth of securities identical to the securities we issue in the next financing in which we realize gross proceeds of at least $5 million. If such a financing is not completed by December 31, 2006, then we will issue to the holders of the Unsecured Notes 408,149 shares of common stock. As a result, at the effective date of this offering we will issue $1.5 million worth of units to the holders of the Unsecured Notes. The exact number of units to be issued will depend on the initial public offering price of the units. Assuming an initial public offering price of $13.00 per unit, on the date of this prospectus we expect to issue to the holders of the Unsecured Notes 115,385 units, which include 230,770 shares of common stock, 230,770 Class A warrants and 230,770 Class B warrants. We have valued the right to receive these additional securities at $1.5 million, which has been reflected as deferred interest cost (debt discount) and which is being amortized over the life of the Unsecured Notes. For the year ended December 31, 2005, $439,130 of deferred interest cost was charged to interest expense and $1,060,870 remains as the unamortized balance. Any

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unamortized balance at the time the Unsecured Notes are repaid, which we expect will be immediately after we receive the proceeds of this offering, will be charged to income in the period in which such repayment occurs.

          The key components of our current assets are cash and accounts receivable and the key components of our current liabilities at December 31, 2005 are short-term debt, accounts payable and accrued payroll. The principal reasons for the working capital deficit at December 31, 2005 are as follows:

• Accounts receivable. During 2005, revenue increased by approximately $4.3 million over 2004 and receivables increased by approximately $878,000. Approximately 8% of the accounts receivable balance at December 31, 2005, or $99,000, was due to retentions held back from payment by home builders until such time as the entire project was completed. Substantially all of the remaining 92% of receivables was collected in the first quarter of 2006, and we do not expect any difficulties in collecting the balance.

• Accounts payable and accrued liabilities. Accounts payable and accrued liabilities increased by $1,378,000 during 2005. This increase 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 and other accrued payroll-related expenses. Accrued salary, wages and commissions and other accrued payroll-related expenses increased by $466,000 during 2005 as a result of increases in 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. Accrued bonuses increased by $157,000 during 2005. Accrued bonuses are payable to the executive staff and the payments have 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 severance. Accrued severance of $491,000 represents unpaid salary, severance and other amounts owed to our former president who resigned in November 2005 and one other former employee.

• Accrued interest. Accrued interest of $372,000 has been deferred until the completion of this offering, after which all outstanding debt and accrued interest will be repaid.

• Deferred offering costs. Deferred offering costs of $299,000 associated with this offering, including legal fees, audit fees, filing fees, application fees and other costs and expense related to this offering will be paid when this offering is completed and will be offset against the gross proceeds. Deferred offering costs of $418,000 associated with the sale of the Unsecured Notes, including placement agent fees, legal and accounting fees and other costs and expenses, have been capitalized and are being amortized over the life of the notes. For the year ended December 31, 2005, $96,000 was expensed. The remaining $322,000 will be expensed in the period in which this offering is completed.

          Net cash used in operations during 2005 was approximately $2.8 million, which consisted of losses from operations of approximately $5.9 million offset by non-cash expenses, such as the use of stock to pay interest, salaries and other obligations, plus depreciation charges of $147,000 and net changes in working capital. In comparison, net cash used in operations during 2004 was approximately $1.8 million and consisted of losses from operations of $3.3 million offset by $1.5 million of non-cash expenses as noted above, depreciation charges of $52,000 and net changes in working capital.

          In 2005, we purchased capital assets, consisting primarily of vehicles and office furniture and fixtures, of $224,000. In 2004, capital expenditures totalled approximately $199,000. 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 loss and cash positions, equipment leasing facilities were not available.

          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.

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          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 or if our operating expenses increase significantly, 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. However, we believe that we will be able to locate adequate facilities in Orange County for our corporate headquarters. 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.

          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.

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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, mycotoxins 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 was estimated 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 was approximately $62.0 million annually. We treated approximately 3.4 million square feet in Southern California in 2005, or approximately 1.9% of the total market. Applying this analysis to all the markets that we serve, we treated approximately 16.9 million square feet 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 April 1, 2006, we had 119 employees of which 31 were full-time and 88 were part-time. We have 9 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 April 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	Secretary and director
Michael A. Katz	56	Director – Nominee (1)
Thomas C. Donnelly	52	Director – Nominee (1)
James Crofton	54	Director – Nominee (1)
Frank Brandenberg	59	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., now known as Avalon Digital Marketing 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 upon our incorporation in January 2003. 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 and was appointed Secretary in March 2006. 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 immediately after this offering is effective. 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.

          Thomas C. Donnelly. Mr. Donnelly will join our Board immediately after this offering is effective. Mr. Donnelly is the president and chief operating officer of ValleyCrest Landscape Development, a division of the ValleyCrest Companies, a privately-held landscaping and site development company. He has held that position since July 2001 and has been an employee of ValleyCrest since 1980.

          James Crofton. Mr. Crofton will join our Board immediately after this offering is effective. Since February 1999, Mr. Crofton has been a senior vice president and the chief financial officer of Sarnoff Corporation, a privately-held company focusing on product development and marketing services. Mr. Crofton also serves on the board of directors of Columbia Laboratories, Inc. (NasdaqNM: CBRX) and serves as a member of its Audit Committee and Scientific Committee.

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          Frank Brandenberg. Mr. Brandenberg will join our Board immediately after this offering is effective. Since October 2003, Mr. Brandenberg has been a member of the board of directors Kemet Corporation, a New York Stock Exchange (KEM) diversified electronics company, and in March 2005 was named chairman of the board. From April 2001 through December 2003, when he retired, Mr. Brandenberg was a vice president and sector president of Northrop Grumman Corporation. From December 1999 through April 2001, he was a group executive and a corporate senior vice president for Litton Industries.

          There are no family relationships among our officers and directors or director nominees.

          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. Messrs. Crofton, Katz, Brandenberg and Donnelly, all of whom have agreed to join our Board on the effective date of this offering, meet the required independence standards.

          Under our bylaws, the Board must consist of at least a minimum of six and a maximum of 11 directors. Following this offering, the Board will consist of seven members. 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, 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 has established three standing committees: an Audit Committee, a Compensation Committee and a Corporate Governance and Nominating Committee. Each committee is made up entirely of independent directors.

          Audit Committee. The Audit Committee oversees 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 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;

• reviewing 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.

          Following this offering, Mr. Crofton will be chairman of the Audit Committee and the other members of the Audit Committee will be Messrs. Donnelly and Brandenberg. The Board has determined that Mr. Crofton 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 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.

          Following this offering, the chairman of the Compensation Committee will be Mr. Brandenberg and the other members of the Compensation Committee will be Messrs. Crofton and Katz.

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

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• evaluating the composition, size and governance of our Board 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;

• 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.

          Following this offering, the chairman of the Corporate Governance and Nominating Committee will be Mr. Brandenberg and the other members of the committee will be Messrs. Donnelly and Crofton.

          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 $2,500, payable in equal quarterly installments and reimbursement for actual out-of-pocket expenses in connection with each board meeting attended in person. In addition, the chairman of the audit committee will receive an annual fee of $2,500, payable in equal quarterly installments and each other member of the audit committee will receive $750 for each meeting they attend in person. Each member of the compensation and nominating committees, including the chairmen, will receive $500 for each committee meeting they attend in person.

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		17,006
		2003		$	55,000(2	)						$	81,600		—
Brad Barnes		2005		$	131,664(3	)		$	—			$	—		—
President		2004		$	200,000(3	)		$	65,000(3	)		$	150,000		17,006
		2003		$	55,000(3	)						$	88,000		—
Mark Davidson		2005		$	150,000(4	)		$	164,202			$	—		25,334
Chief Financial Officer		2004		$	90,000(4	)		$	30,000(4	)		$	124,250		42,516
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 December 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 $42,800 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.

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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.

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		25,334		15.8	%		$	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		7,086		9,920		$	19,980		$	27,977
Brad Barnes		17,006		—		$	47,957		$	—
Mark Davidson		47,301		20,549		$	61,947		$	57,948

(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

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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 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, or $16,000.

• 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.

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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 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 425,155 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

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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 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, who, at the time, was our former president and a director. He resigned as president in November 2005 but continues to serve as 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 December 31, 2005, the balance due on this loan, including accrued interest, was approximately $87,000. In connection with this loan, we also agreed to issue to Mr. Barnes warrants to purchase 85,031 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 December 31, 2005, the total amount owed to KPC and Mr. Wilson, including accrued interest, was approximately $175,000 and $28,000, 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 December 31, 2005, the balance due on this loan, including accrued interest, was $110,000. The loan will be repaid out of the proceeds of this offering.

          In 2003, 2004 and 2005 we paid John Martin, one of our directors, $39,943, $66,775 and $0, respectively, for legal services performed by him on our behalf.

          In December 2005, we borrowed $100,000 on an unsecured basis from High Capital Funding, LLC, an institutional accredited investor. In order to induce the investor to make this loan, 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 Joseph Kowal 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 High Capital Funding, LLC. 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.

          In March 2006, we borrowed $250,000 from SGC Capital, an institutional private investor. As an inducement, Tom Blakeley agreed to transfer 25,000 shares of our common stock that he owns to SGC Capital on the date of this prospectus.

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PRINCIPAL SHAREHOLDERS

          The following table sets forth information regarding the beneficial ownership of our common shares as of April 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		226,916(4	)		14.4	%		5.3	%
Brad Barnes		183,496(5	)		11.6	%		4.3	%
Mark Davidson		85,099(6	)		5.3	%		2.0	%
John W. Martin		74,653(7	)		4.7	%		1.7	%
Michael A. Katz		—			—			—
Thomas C. Donnelly		—			—			—
James Crofton		—			—			—
Frank Brandenberg		—			—			—
Peter Wilson		143,625(8	)		9.2	%		3.4	%
c/o KPC, LLC
20243 Piedra Chica Road
Malibu, CA 90265
Rick Edwards		103,794(9	)		6.6	%		2.4	%
c/o Seagrove, LLC
1801 Century Park East
Suite 1080
Los Angeles, CA 90067
Kevin Coleman		77,132			5.0	%		1.8	%
c/o Net Development Company
3188 Airway Avenue
Suite F
Costa Mesa, CA 90626
John Long		809,865(10	)		34.1	%		16.0	%
c/o Crestridge Investments AMG
Moldguard, L.L.C.
400 Continental Boulevard
Suite 160
El Segundo, CA 90245
All directors, director-nominees and executive
officers as a group (8 persons)		575,164(11	)		34.6	%		13.2	%

*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.

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(3)	Based on 1,563,895 shares of common stock issued and outstanding immediately as of the date of this prospectus and 4,263,895 shares of common stock issued and outstanding immediately after this offering.
(4)	Includes 8,503 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 table. Mr. Blakeley’s beneficial ownership has been reduced by 73,077 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 17,006 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 50,843 shares of common stock issuable upon exercise of stock options that are currently exercisable or exercisable within 60 days of the date of this table.
(7)	Includes 20,407 shares of common stock issuable upon exercise of stock options that are currently exercisable.
(8)	Includes 7,575 shares owned directly and 136,050 shares owned indirectly through KPC, LLC. Mr. Wilson has full voting control and investment power over the shares owned by KPC and may be deemed the beneficial owner of those shares. He disclaims beneficial ownership of all of the shares except to the extent of his pecuniary interest in the entity.
(9)	All shares are owned directly by Seagrove, LLC. Rick Edwards has full voting control and investment power over these shares and may be deemed to be the beneficial owner of such shares. He disclaims beneficial ownership of all the shares except to the extent of his pecuniary interest in the entity.
(10)	Reflects 170,062 shares of common stock underlying warrants that are currently exercisable and 639,803 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 March 31, 2006 ($243,000) at a conversion price of $3.35. Mr. Long has full voting control and investment power over those shares and may be deemed to be the beneficial owner of such shares. He disclaims beneficial ownership of all the shares except to the extent of his pecuniary interest in the entity.
(11)	Includes 96,759 shares of common stock underlying options that are either currently exercisable or exercisable within 60 days of the date of this table.

          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. Crestridge has agreed to a 180-day lockup on its shares.

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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 4,263,895 shares of common stock issued and outstanding and 4,668,895 shares if the over-allotment option is exercised in full. At the time this offering is effective, we will have 1,563,895 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 Preferred Stock into 324,648 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; and (iii) 66,176 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 two Class B warrants. 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 2,930,770 Class A warrants issued and outstanding of which 2,700,000 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 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

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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 2,930,770 Class B warrants issued and outstanding including 2,700,000 Class B warrants included in the units sold in this offering and 230,770 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 $3.35.

• The Series C Preferred Stock accrues dividends at the rate of 8% per annum cumulatively from the date of issuance, if and when declared by the board of directors.

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• 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 April 1, 2006 in full, it would own approximately 639,803 shares of Series C Preferred Stock representing approximately 13.0% 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 April 1, 2006, we had outstanding warrants covering 255,083 shares of common stock, of which warrants covering 170,062 shares are held by the holder of the Convertible Notes. Those warrants expire April 15, 2008 and have an exercise price of $5.88. The remaining warrants, covering 85,031 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 April 1, 2006, we had outstanding options covering 267,499 shares of common stock. These options have a weighted exercise price of $4.53 per share and expire in 2009 and 2010. As of April 1, 2006, 126,971 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 4,263,895 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 4,668,895 shares of common stock outstanding if the representative’s over-allotment is exercised in full. Of these shares, the 2,700,000 shares of common stock issued as part of the units sold in this offering (3,105,000 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 2,700,000 shares of common stock underlying the Class A warrants and the 2,700,000 shares of common stock underlying the Class B warrants issued as part of the units sold in this offering (3,105,000 shares of common stock in the case of the Class A warrants and 3,105,000 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 1,563,895 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, 1,165,603 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:

• 102,115 shares on January 1, 2007; and

• 296,176 shares in April 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 April 1, 2006, we had outstanding options to purchase a total of 267,499 shares of common stock under our Equity Incentive Plan. Under that plan, we can grant options covering an additional 157,656 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.

52

          Warrants

          Immediately prior to the date of this prospectus, we had outstanding warrants covering 255,093 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 warrants to purchase 135,000 units. The representative’s warrants will be exercisable for units at any time beginning one year 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 one year 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 one-year lock-up restriction for the remainder of the lock-up period. After one year, the warrants may be transferred (i) without restriction to any officer, director or shareholder of an underwriter or (ii) to any other person, provided that the transferred warrants must be immediately exercised. 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) 230,770 Class B warrants that we are issuing to the holders of the Unsecured Notes on the date of this prospectus as well as the 461,540 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. Our obligation to register the shares terminates on the earlier of the third anniversary of the Qualified Public Offering and the date on which all of the shares are salable under Rule 144(k). The piggyback registration rights are exercisable immediately but are subject to full underwriter cutbacks on a Qualified Public Offering.

53

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.

Underwriter	Number of units
Paulson Investment Company, Inc.
Capital Growth Financial, LLC
Chicago Investment Group, LLC
Total		1,350,000

          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 202,500 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.

54

• 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.

• 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 Boston Stock 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 7.5% underwriting discount. The underwriting agreement also provides that the representative will be paid a nonaccountable expense allowance equal to 2.5% 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 135,000 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 one year 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 one year 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 one-year lock-up restriction for the remainder of the lock-up period. After one year, the warrants may be transferred (i) without restriction to any officer, director or shareholder of an underwriter or (ii) to any other person provided that the transferred warrants must be immediately exercised.

          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.

55

          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
	Per unit	Without over-allotment	With 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 these loans were used to pay expenses relating to this offering and for working capital. In March 2006, the representative agreed to extend to us a $250,000 line of credit upon which we are allowed to draw down at the rate of up to $50,000 per week. The line of credit bears interest at 10% per annum. As of April 6, 2006, we have borrowed $250,000 against this line of credit. These funds will be used for working capital and general corporate purposes. The principal and accrued interest on the loans and the credit facility 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, without the consent of the representative. The holder of the Convertible Notes has agreed 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.

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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, has audited our consolidated financial statements as of and for the years ended December 31, 2004 and 2005 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 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.

57

AMERICAN MOLD GUARD, INC.

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Haskell & White LLP, Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheet — December 31, 2005	F-3
Consolidated Statements of Operations — Years ended December 31, 2004 and 2005	F-4
Consolidated Statements of Shareholders’ Deficiency — Years ended December 31, 2004 and 2005	F-5
Consolidated Statements of Cash Flows — Years ended December 31, 2004 and 2005	F-6
Notes to Consolidated Financial Statements	F-7

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, 2005, and the related consolidated statements of operations, shareholders’ deficiency and cash flows for the years ended December 31, 2005 and 2004. 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, 2005, and the consolidated results of its operations and its cash flows for the years ended December 31, 2005 and 2004 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, has violated certain debt covenents, 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
March 10, 2006, except for Note 12, as to which the date is March 27, 2006,
and the last paragraph of Note 2, as to which the date is April 7, 2006

F-2

American Mold Guard, Inc.

Consolidated Balance Sheet

	December 31, 2005
ASSETS
Current Assets:
Cash and cash equivalents	$	67,782
Accounts receivable, less allowance for doubtful accounts of $15,708		1,257,356
Inventories		38,039
Deferred offering costs (Note 3)		620,882
Deposits		115,935
Other current assets		80,122
Total Current Assets		2,180,116
Property and equipment, net (Note 4)		309,465
Intangible assets, net (Note 1)		2,536
TOTAL ASSETS	$	2,492,117
LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
Current Liabilities:
Accounts payable and accrued liabilities	$	1,908,414
Accrued salary, wages and commissions		470,570
Accrued bonus		306,672
Accrued severance		490,967
Other accrued payroll-related expenses		419,623
Short term notes payable (Note 6)		3,129,986
Accrued interest payable		372,326
Total Current Liabilities		7,098,560
Long-term liabilities:
Long-term notes payable, net of discount (Note 6)		835,089
Total Liabilities		7,933,649
Commitments and contingencies (Notes 1, 2 and 6-12)
Shareholders’ Deficiency (Notes 7, 8 and 9)
Series A Preferred Stock, no par value, 499,999 shares authorized, 499,999 shares issued and outstanding having a liquidation preference of $772,740		625,000
Series B Preferred Stock, no par value, 1,210,000 shares authorized, 454,500 shares issued and outstanding having a liquidation preference of $1,180,791		859,000
Series C Preferred Stock, no par value 5,000,000 authorized, none issued and outstanding		—
Common Stock, no par value, 50,000,000 shares authorized, 942,301 shares issued and outstanding		1,475,262
Additional paid-in capital		2,005,289
Accumulated deficiency		(10,406,083	)
Total Shareholders’ Deficiency		(5,441,532	)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIENCY	$	2,492,117

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

F-3

American Mold Guard, Inc.

Consolidated Statements of Operations

	Years Ended December 31,
	2004			2005
Revenue, net	$	1,552,725		$	5,829,423
Cost of revenue:
Direct costs		1,169,051			4,649,684
Depreciation expense		50,292			106,577
Total cost of revenue		1,219,343			4,756,261
Gross profit		333,382			1,073,162
Selling, general and administrative expenses		3,303,148			5,576,248
Loss from operations		(2,969,766	)		(4,503,086	)
Interest expense		(277,833	)		(1,490,600	)
Other (loss) income		(42,050	)		64,000
Loss before provision for taxes		(3,289,649	)		(5,929,686	)
Provision for taxes		800			1,900
Net loss		(3,290,449	)		(5,931,586	)
Dividends on cumulative preferred stock		113,500			245,706
Net loss applicable to common shareholders	$	(3,403,949	)	$	(6,177,292	)
Basic and diluted net loss per share	$	(4.26	)	$	(6.54	)
Dividends accumulated for the year on cumulative preferred stock	$	(0.15	)	$	(0.27	)
Net loss attributable to common stock per share	$	(4.41	)	$	(6.81	)
Weighted average number of common shares outstanding – basic and diluted		772,189			907,617

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 Years Ended December 31, 2004 and 2005

	Series A Preferred Stock				Series B Preferred Stock				Common Stock						Additional Paid-in Capital		Accum- ulated Deficiency
	Shares		Amount		Shares		Amount		Shares			Amount								Total
Balance as of December 31, 2003		499,999	$	625,000		—		—		644,534		$	293,718		$	25,600	$	(1,184,047	)	$	(156,618	)
Stock issued for cash, net of reacquisition of 12,500 shares for $75,000						454,500		859,000		—			—			—		—			859,000
Stock issued in payment of services		—		—		—		—		22,615			83,111			—		—			83,111
Stock issued for employee compensation		—		—		—		—		145,768			490,264			—		—			490,264
Stock issued for Board of Directors compensation		—		—		—		—		23,809			83,000			—		—			83,000
Stock issued in payment of interest		—		—		—		—		59,182			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		895,908		$	1,167,593		$	785,086	$	(4,474,496	)	$	(1,037,817	)
Repurchase of stock issued		—		—		—		—		(42,516	)		(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
Shares retired		—		—		—		—		(5,043	)		(18,534	)		18,534		—			—
Fair value of stock option issued for legal services		—		—		—		—		—			—			47,554		—			47,554
Stock issued in payment of interest		—		—		—		—		8,936			67,479			—		—			67,479
Stock issued in acquisition of Trust One		—		—		—		—		3,401			12,500			—		—			12,500
Stock issued for services		—		—		—		—		22,524			99,077			—		—			99,077
Stock issued as legal fee		—		—		—		—		43,824			219,040			—		—			219,040
Stock issued in conversion of debt		—		—		—		—		15,267			56,107			—		—			56,107
Benefit of personal stock given in issue of debt		—		—		—		—		—			—			150,000		—			150,000
Net loss for the year		—		—		—		—		—			—			—		(5,931,586	)		(5,931,586	)
Balance as of December 31, 2005		499,999	$	625,000		454,500	$	859,000		942,301		$	1,475,262		$	2,005,289	$	(10,406,083	)	$	(5,441,532	)

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

F-5

American Mold Guard, Inc.

Consolidated Statements of Cash Flows

	Years Ended December 31,
	2004			2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,290,449	)	$	(5,931,586	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization expense		52,440			146,821
Common stock issued in payment of interest expense		217,500			67,479
Common stock issued in payment of salaries		490,264			—
Common stock issued in payment of services		83,111			318,117
Amortization of deferred interest costs		—			368,405
Common stock issued in payment of director fees		83,000			—
Interest expense associated with personal transfer of stock		—			150,000
Amortization of beneficial conversion debt discount		29,704			473,806
Fair value of stock option issued to consultant		5,100			12,080
Fair value of stock option issued for legal services		—			47,554
Increase (decrease) in cash from changes in assets and liabilities
Accounts receivable		(333,495	)		(877,678	)
Inventories		(67,125	)		36,005
Other current assets		(55,640	)		(136,162	)
Accounts payable and accrued expenses		366,357			1,377,523
Accrued salaries, wages and commissions		172,478			230,195
Accrued bonus		150,000			156,672
Other accrued payroll-related expenses		183,512			236,112
Accrued severance		—			490,967
Accrued interest payable		69,843			301,582
NET CASH USED IN OPERATING ACTIVITIES		(1,843,400	)		(2,532,108	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(198,827	)		(224,132	)
Cash acquired in acquisition of Trust One Termite		—			9,083
NET CASH USED IN INVESTING ACTIVITIES		(198,827	)		(215,049	)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from notes payable		1,549,245			3,151,581
Payments on short term notes payable		(50,000	)		(34,118	)
Deferred offering costs		(74,570	)		(546,312	)
Proceeds from issuance of Series B Preferred Stock		859,000			—
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES		2,283,675			2,571,151
INCREASE (DECREASE) IN CASH		241,448			(176,006	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		2,340			243,788
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	243,788		$	67,782
SUPPLEMENTAL DISCLOSURES FOR CASH FLOW INFORMATION—
Cash paid for interest	$	54,785		$	155,931
Cash paid for income taxes		—			—
Non-cash investing transactions - Trust One Termite
Vehicles and equipment		—			5,730
Other current assets		—			2,233
Intangible assets		—			4,397
Accounts payable		—			(7,362	)
Long term notes payable		—			(1,581	)
Common stock issued in conversion of debt		—			56,107

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

F-6

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

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 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 3,401 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 Accounting Standards (“SFAS”) No. 141, “Business Combinations.” The results of Trust One’s operations have been included in the consolidated financial statements since the date of the acquisition.

          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 $3.68 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 operating at a deficit and, aside from cash on hand, had nominal tangible assets. Management believed that the 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 intangible assets are being amortized over the remaining life of the pest control license, which expires on March 31, 2007. Amortization recorded in the year ended December 31, 2005 was $1,861.

          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

          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 1, 2005.

	2005
Net revenue	$	5,839,290
Net loss	$	(5,940,409	)
Loss per common share	$	(6.54	)
Weighted average common shares outstanding		908,574

F-7

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

Note 1. Organization and Nature of Operations (continued)

     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 was 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. In December 2005, the Company sold its 50% interest in Zero Plus to EAU for aggregate consideration of $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. In February 2006, EAU paid the Company $30,000 in cash and management expects EAU to pay the remaining note balance of $30,000 during 2006. Under the terms of the agreement, all of the assets of Zero Plus are assigned to EAU and all liabilites of Zero Plus are assumed by EAU. The Company has recorded a net profit from the sale of Zero Plus of $64,000, which includes a commission expense on the sale to EAU of $16,000.

          The Company accounted for its investment in Zero Plus using the equity method of accounting. In exchange for its 50% ownership interest, the Company provided back office support services to Zero Plus. Each month, the Company increased its investment in Zero Plus and recognized income for the estimated fair value of the back office support services provided to Zero Plus. Each month the Company also recognized its proportionate share of Zero Plus’ net loss to the extent that such amount did not exceed its investment in Zero Plus. As of the date of the sale of Zero Plus, the Company’s basis in its investment in Zero Plus was $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, its violation of certain debt covenants 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 $3.3 million, had a working capital deficiency of $1 million, an accumulated deficit of $4.5 million and negative shareholders’ equity of $1 million. Although the Company realized revenue gains for the year ended December 31, 2005, the Company incurred a net loss of $5.9 million for the year and as of that date, had a working capital deficiency of $4.9 million, an accumulated deficit of $10.4 million and negative shareholders’ equity of $5.4 million. 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 “Representative”) to make a firmly underwritten initial public offering (the “IPO”). On January 6, 2006, the Company filed a registration statement with the United States Securities and Exchange Commission on Form SB-2, which has been subsequently amended (the “Registration Statement”). The Registration Statement, as amended, covers the sale by the Company of 1,350,000 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 two Class B redeemable common stock purchase warrants (the “Class B Warrants” and together with the Class A Warrants, the “Warrants”).

F-8

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

Note 2. Going Concern and Management’s Plans (continued)

          As currently contemplated, the initial public offering price of the units is expected to be between $13.00 and $14.00 per unit or $17.55 million to $18.9 million in the aggregate. The net proceeds to the Company, after paying underwriting commissions, a non-accountable expense allowance and other offering costs, are expected to be approximately $15 million (assuming an initial public offering price of $13.00 per unit). The Company has granted the Representative an “over-allotment” option under which the Representative may purchase up to 202,500 units from the Company resulting in potential additional gross proceeds of up to approximately $2.8 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, exclusive of the shares to be issued as a part of the IPO.

          The accompanying consolidated financial statements give effect to a reverse stock split authorized by the Company and its shareholders on November 14, 2005 pursuant to which each share of Common Stock outstanding before the reverse stock split will be converted and exchanged for 0.340124209 new shares of Common Stock. The reverse stock split was effective as of April 7, 2006. The accompanying financial statements and notes thereto have been adjusted to give effect for the reverse stock split. 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.

     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 during the year ended December 31, 2005 incurred in connection with the Company’s sale of the Unsecured Notes (Note 6) and the contemplated IPO, principally legal expenses, are capitalized. The costs related to the Unsecured Notes are being amortized over the life of the Unsecured Notes and, for the year ended December 31, 2005, $95,549 has been recognized as interest expense. The unamortized balance is $322,247 as of December 31, 2005.The Company will be offsetting the costs associated with the IPO, $298,635, 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-9

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

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 years ended December 31, 2004 and 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, 2005, and during the years ended December 31, 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 and adjusted for an estimated allowance for uncollectible amounts, if appropriate. The Company does not require collateral on its accounts receivable.

     Service 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 and expectations of future trends. Management reviews these estimates on a regular basis and adjusts the warranty provisions as actual

F-10

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

Note 3. Summary of Critical Accounting Policies (continued)

experience differs from historical estimates 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 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 and board member 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 years ended December 31, 2004 and 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 $149,292 (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 year ended December 31, 2005, the Company would have recorded deferred compensation of $44,963 (using a Black-Sholes method of valuation with a volatility ranging from 48.2% to 59.9%, 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:

	Years Ended December 31,
	2004			2005
Net loss applicable to common shareholders, as reported	$	(3,403,949	)	$	(6,177,292	)
Add: Stock-based compensation expense recorded in accordance with APB No. 25		—			—
Deduct: Additional stock-based employee compensation expense determined under fair value based method for all awards, net of tax effects		(32,627	)		(69,048	)
Pro forma net loss applicable to common shareholders	$	(3,436,576	)	$	(6,246,340	)
Weighted average number of shares outstanding –
Basic and diluted		772,189			907,617
Net loss per share applicable to common shareholders:
Basic – as reported	$	(4.41	)	$	(6.81	)
Basic – pro forma	$	(4.45	)	$	(6.88	)

F-11

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

Note 3. Summary of Critical Accounting Policies (continued)

     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 and cash equivalents, 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 314,400 and 1,204,668 for the years ended December 31, 2004 and 2005, respectively.

          The accompanying consolidated financial statements give effect to a reverse stock split authorized by the Company and its shareholders (Note 2). As a result, each share of Common Stock outstanding before the reverse stock split will be converted and exchanged for 0.340124209 new shares of Common Stock.

     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”, 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 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. Management does not expect the adoption of SFAS No. 153 to 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 123R 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 123R 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

F-12

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

Note 3. Summary of Critical Accounting Policies (continued)

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.

          Management adopted this standard for the quarter ending March 31, 2006. Management is currently assessing the effect of SFAS 123R 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

          At December 31, 2005, property and equipment consisted of the following:

Vehicles	$	421,678
Office furniture and fixtures		96,589
Accumulated depreciation		(208,802	)
Property and equipment, net	$	309,465

Note 5. Income Taxes

          The Company has reported a net operating loss in every period since inception and, as a result, has not recorded a provision for federal income taxes in the accompanying consolidated statements of operations.

          Significant components of the provision for income taxes for the years ended December 31, 2004 and 2005 are:

	2004		2005
Current
Federal	$	-0-	$	-0-
State		800		1,900
Deferred
Federal	$	-0-	$	-0-
State		-0-		-0-
Provision for income taxes	$	800	$	1,900

          A reconciliation of the expected income tax (benefit) computed using the federal statutory tax rate to the Company’s effective income tax rate is as follows for the years ended December 31, 2004 and 2005:

	2004			2005
Income tax computed at the federal statutory rate		34.0	%		34.0	%
Changes in valuation allowance		(34.0	%)		(34.0	%)
Effective tax rate		0.0	%		0.0	%

          Significant components of the Company’s deferred tax assets (liabilities) at December 31, 2004 and 2005 consist of the following:

	2004			2005
Net operating loss carry forward	$	1,675,000		$	3,464,000
Accrued bonus		60,000			124,000
Accrued severance		29,000			178,000
Amortization of debt discount		12,000			53,000
Amortization of deferred interest costs		—			176,000
Other		3,000			53,000
Valuation allowance		(1,779,000	)		(4,048,000	)
Net deferred tax asset	$	-0-		$	-0-

          The accumulated net operating losses for federal income tax purposes was $8.3 million as of December 31, 2005. The Company has fully offset the net operating loss carryforwards by a valuation allowance of an equal

F-13

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

Note 5. Income Taxes (continued)

amount. The carryforwards of $1.0 milllion will expire in 2023, $2.8 milllion will expire in 2024 and $4.5 million will expire in 2025. The utilization of net operating loss carryforwards will likely 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, 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.

Note 6. Short and Long –Term Notes Payable

          At December 31, 2005, notes payable consist of the following:

Short-Term Notes Payable:
Unsecured loans	$	591,581
Secured loan		170,000
Unsecured notes		2,000,000
Additional securities		1,500,000
Less: Deferred interest costs		(1,131,595	)
Total short-term loans payable	$	3,129,986
Long-Term Notes Payable:
10% Convertible notes	$	1,950,000
Less: Debt discount		(1,114,911	)
Total long-term loans payable	$	835,089

Short-Term Notes Payable:

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 3,401 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 warrant covering 85,031 shares of Common Stock (the “January 2005 Warrants”) in exchange for 37,414 shares of Common Stock previously earned as interest by the lender. The Company has recorded the estimated fair value of the January 2005 Warrants at $128,000 during the year ended December 31, 2005, as interest expense and additional paid-in capital. As of December 31, 2005, the loan, plus accrued interest of $11,991, remains outstanding (Note 8).

          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 shareholder on the same terms as the November 10, 2003 loan. As of December 31, 2005, the entire $40,000 principal amount and $756 of accrued interest remains outstanding. The entire principal amount of the loan and accrued interest will be paid from the net proceeds of the IPO.

          During 2004, the Company borrowed an aggregate of $350,000 from five individual investors. The loans bear interest at rates ranging between 7% and 18% per annum which is payable monthly. The loans are past their contractual due dates. However, by oral agreement, the lenders have agreed to extend the maturity dates until the completion of the IPO. In December 2005, two of the investors converted their loans (including the accrued interest thereon) into 15,267 shares of Common Stock at a conversion price of $3.68 per share. As of December 31, 2005, the aggregate balance on the remaining loans was $275,000 and is payable to two investors. One investor is owed

F-14

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

Note 6. Short and Long-Term Notes Payable (continued)

two notes for $75,000 and $100,000, both at 8% interest, and the second investor is owed $100,000 at 18% interest. Accrued interest payable on the outstanding amount as of December 31, 2005 is $98,978.

          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.

          On November 28, 2005, the Company borrowed $200,000 from an individual investor. The loan bears interest at the rate of 10% per annum and is due on the earlier of January 1, 2007, or upon the completion of the IPO. Upon the completion of the IPO, the Company’s chief executive officer has agreed to transfer 20,000 shares of his common stock to the investor. As of December 31, 2005, the note and accrued interest of $1,063 remained outstanding.

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, 2005, the outstanding balance was $170,000. Accrued interest as of December 31, 2005 was $5,185. 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.

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 Representative. 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 December 31, 2005, both notes, and accrued interest of $17,066, remain outstanding.

          In August and September 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 was $1.5 million in cash (the “Purchase Price”), all of which has been received by the Company. The Unsecured Notes and the accrued but unpaid interest thereon, amounting to $42,706 as of December 31, 2005, 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. 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 the Additional Securities. 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. As a result, at the effective date of the IPO, the Company will issue $1.5 million worth of units to the holders of the unsecured Notes. The exact number of units to be issued will depend on the initial public offering price of the units. Assuming an initial public offering price of $13.00 for each unit, the holders of the Unsecured Notes will receive an aggregate of 115,385 units. The Additional Securities have been valued at $1.5 million and deferred interest costs (debt discount) has been valued at $1.5 million. The debt discount is amortized over the life of the notes. For the year ended December 31, 2005, $439,130 has been amortized and charged to interest expense in the accompanying consolidated statement of operations. If a Qualified Sale does not occur by December 31, 2006, then the holders of the Unsecured Notes will receive an aggregate of 408,149 shares of the Common Stock. Management estimates the fair value of these shares to be approximately $2,041,000 as of December 31, 2005.

          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 December 31, 2005, the note and accrued interest of $3,335 remained outstanding. In order to induce the investor to make the 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. The benefit of the personal transfer, $150,000, to the Company has been valued at $150,000 of which $100,000 has been charged to debt discount, $50,000 has been charged as interest expense and $150,000 has been credited to additional paid in capital. The debt discount is being amortized over the life of the note. For the year

F-15

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

Note 6. Short and Long-Term Notes Payable (continued)

ended December 31, 2005, $29,275 has been amortized and charged to interest expense in the accompanying consolidated statement of operations.

Long-Term Notes Payable

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 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 $3.35. As of December 31, 2005, the notes and accrued interest of $191,245 are outstanding.

          Simultaneously with its issuance of the $600,000 Convertible Note on April 15, 2005, the Company also issued to the purchaser a warrant to purchase 170,062 shares of Common Stock exercisable at $5.88 per share (the “April 2005 Warrants”). The Company has recorded the relative estimated fair value of the April 2005 Warrants of $147,368 as debt discount and additional paid-in capital in the year ended December 31, 2005. (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 Convertible Notes. Interest expense charged for the years ended December 31, 2004 and 2005 was $29,704 and $473,806, respectively.

          Prepaid finaincing fees of $81,350 paid in connection with the Convertible Notes are being amortized over the life of the Convertible Notes. Amortization of $6,780 and $27,120 for the year ended December 31, 2004 and 2005, respectively, is included in interest expense in the accompanying consolidated statements of operations. The remaining unamortized balance of $74,570 and $47,450 is included in deferred offering costs in the accompanying consolidated balance sheet.

          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 (the “September 2005 Agreement”) that, among other things, provided as follows:

• The holders of Convertible Notes waived the right to convert the Convertible 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 226,750 Class A Warrants and 113,375 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 (Note 12).

          Subsequent to the initial filing of the Registration Statement (Note 2), the Company contacted the holder of the Convertible Notes with a proposal to extend the reference date in the September 2005 Agreement from February 17, 2006 to July 31, 2006. The holder of the Convertible Note rejected the Company’s proposal and no new agreement has been consummated. Accordingly, the holder of the Convertible Notes is free to exercise its

F-16

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

Note 6. Short and Long-Term Notes Payable (continued)

conversion rights at any time, the Convertible Notes cannot be prepaid before October 1, 2006 and the April 2005 Warrants will not be exchanged for any Class A or Class B Warrants.

          As of December 31, 2005, the Company was in violation of several debt covenants and, as a result, the Convertible Noteholder could demand payment.

Maturies on Short and Long-Term Notes Payable:

          Maturities of notes payable, exclusive of the Additional Securities, as of December 31, 2005 are as follows:

2006	$	2,761,581
2007		1,950,000
	$	4,711,581

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 170,062 shares of Common Stock. 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 and are payable as and when declared by the Board of Directors of the Company or upon the occurrence of an event constituting a liquidation. As of December 31, 2004 and 2005, dividends in arrears are $90,500 and $147,740, respectively. No dividends have been declared by the Board of Directors.

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 154,586 shares of Common Stock. The Series B Preferred Stock has a liquidation preference, after payment in full to the holders of Series A Preferred Stock, equal to $2.00 per outstanding share, or $909,000 (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 and are payable as and when declared by the Board of Directors of the Company or upon the occurrence of an event constituting a liquidation. As of December 31, 2004 and 2005, dividends in arrears are $83,325 and $271,791, respectively. No dividends have been declared by the Board of Directors.

          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 July 31, 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 (Note 6). As of December 31, 2005, no shares of Series C Preferred Stock have been issued.

F-17

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

Note 7. Capitalization (continued)

     Common Stock

2004

During the year ended December 31, 2004, the Company issued 251,373 shares of Common Stock as follows:
–	22,615 shares at an average price of $3.68 per share in payment of legal services for a total of $83,111.
–	145,768 shares at an average price of $3.35 per share in payment of salaries for a total of $490,264.
–	23,809 shares at an average price of $3.50 per share in payment of Board of Director fees for a total of $83,000.
–	59,182 shares at a price of $3.68 per share in payment of interest expenses for a total of $217,500.

2005

During the year ended December 31, 2005, the Company issued 93,952 shares of Common Stock as follows:
–	3,401 shares at a price of $3.68 per share for the acquisition of Trust One (Note 1).
–	8,936 shares at a price of $3.68 per share in payment of interest expenses for a total of $67,479.
–	22,524 shares at a price of $3.68 per share in payment of services for a total of $99,077.
–	15,267 shares at a price of $3.68 for the conversion of debt to common stock for a total of $56,107.
–	43,824 shares at a price of $3.68 in payment of finder’s fees for the $1.5 million of Unsecured Notes for a total of $219,040.

          Per an agreement, the Company retired 5,043 shares at a price of $3.68, of which 2,662 had been issued to its chief executive officer and 2,381 had been issued to its president in connection with the performance of services.

          The Company also repurchased 42,516 shares of Common Stock at an average price of $3.00, 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 January 2005 Warrants at $128,000 and recorded such amount as paid-in capital (Note 6).

          The accompanying consolidated financial statements give effect to a reverse stock split authorized by the Company and its shareholders on November 14, 2005. As a result, each share of Common Stock outstanding before the reverse stock split will be converted and exchanged for 0.340124209 new shares of Common Stock (Note 2).

Note 8. Common Stock Purchase Warrants

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

	Underlying Shares	Weighted Average Exercise Price			Weighted Average Contractual Life Remaining
Balance, December 31, 2004	—		$	—	—
Granted during the period -
January 2005 Warrants	85,031			3.68	1.0
April 2005 Warrants	170,062			5.88	1.375 years
Balance, December 31, 2005	255,093			5.15	1.25 years

F-18

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

Note 8. Common Stock Purchase Warrants (continued)

          The January 2005 Warrants entitle the holder thereof to purchase up to 85,031 shares of Common Stock at any time up to January 3, 2007 at a purchase price of $3.68 per share. In connection with the issuance of the January 2005 Warrants (Notes 6 and 7), the Company estimated the fair value of such warrants to be $128,000 using the Black-Sholes valuation model (exercise price of $3.68, expected term of 5 years, volatility of 37.5%, discount rate of 5% and no dividends, present value of warrant $1.50 per share).

          The April 2005 Warrants entitle the holder thereof to purchase up to 170,062 shares of Common Stock at any time until April 15, 2008 at a purchase price of $5.88 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 2005 and is being amortized over the life of that Convertible Note. For the year ended December 31, 2005, $34,735 has been amortized and charged to interest expense (Note 6).

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 340,124 shares of Common Stock or options covering shares of Common Stock. The plan was amended in December 2005 approving the issuance of up to a total of 425,155 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.

          A summary of the status of the plan and changes during the two years ended December 31, 2005, is as follows:

	Option Grants			Weighted Average Exercise Price
Balance, December 31, 2003		—				—
Granted during the year		136,050			$	3.68
Balance, December 31, 2004		136,050			$	3.68
Granted during the year		160,020			$	3.78
Cancelled during the year		(28,570	)		$	3.68
Balance, December 31, 2005		267,499			$	3.74

          A summary of stock options outstanding is as follows:

	Options Outstanding						Options Exercisable
Fixed Options Range	Number Outstanding	Weighted Average Remaining Contractual Life		Weighted Average Exercise Price			Number Exercisable	Weighted Average Exercise Price
As of December 31, 2004	136,050		4.70 years		$	3.68	3,401		$	3.68
As of December 31, 2005	267,499		4.23 years		$	4.53	113,961		$	5.01

          In connection with a stock option grant of 3,401 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 $1.50). In August 2005, the Company granted stock options covering 6,795 shares to a consultant. Compensation expense of $12,080 has been recorded using the Black-Scholes valuation model (expected term of five years, volatility of 47.7%, discount rate of 5% and no dividends and an option value of $1.77). In December 2005, the Company granted stock options covering 20,386 to a Board member and consultant to the Company. Compensation expense of $47,554 has been recorded using the Black-Scholes valuation model (expected term of five years, volatility of 57.45%, discount rate of 4.38% and no dividends and an option value of $3.50).

          In general, the options vest over a three year period with one-third vesting after one year and the remaining two thirds vesting ratably over the eight remaining quarters.

F-19

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

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 under a lease that expires in August 2006. 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 noncancelable operating leases as of December 31, 2005 are as follows:

2006	$	311,121
2007		188,618
2008		128,890
2009		43,915
2010		2,027
	$	674,571

          Rent expense was $116,976 and $468,127 during the years ended December 31, 2004 and 2005, respectively.

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. Under each employment agreement, if the Company terminates the employment of the officer 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 executive 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				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

F-20

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

Note 10. Commitments and Contingencies (Continued)

Resignation of the President

          Effective November 30, 2005, the president of the Company, Brad Barnes, 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 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, amounting to $16,000, 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 unreimbursed 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 the Company’s 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. As of December 31, 2005, the Company has accrued $441,763 as severance payments related to the resignation of Mr. Barnes and has included such in the accompanying consolidated balance sheet.

Success Fee

          Upon the successful completion of the IPO, the Company will issue to its counsel 66,176 shares of Common Stock.

Payroll Taxes

          At December 31, 2005, the Company was delinquent in paying approximately $197,500 of payroll-related taxes. Such amount is included in other accrued payroll-related expenses in the accompanying consolidated balance sheet at December 31, 2005.

Litigation

          The Company is, at times, subject to legal proceedings, claims, and litigation arising in the ordinary course of business. Management currently is not aware of any such claims that would have a material adverse affect on the Company’s consolidated financial position, results of operations or cash flows.

          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, 2005, the Company did not have any cash balances in excess of federally insured limits.

F-21

American Mold Guard, Inc.

Notes to Consolidated Financial Statements
Years Ended December 31, 2004 and 2005

Note 11. Concentrations

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 customers listed in the period, the period ending receivable from the customer(s) and the customers’ receivable balance as a percentagge of total receivables:

	Years Ended December 31,
	2004			2005
Revenue –
Percentage		30.0	%		32.0	%
Number of customers		1			1
Receivables of above customers	$	61,371		$	244,702
Percent of total receivables		5.3	%		20.9	%

Vendors

          The table below reflects the percent of raw materials consumed in cost of revenues that were 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:

	Years Ended December 31,
	2004			2005
Material portion of cost of sales
Percentage		90	%		100	%
Number of vendors		2			2
Percent of total accounts payable		25.6	%		18.7	%
Material as a percent of total cost of sales		14.9	%		24.8	%

Note 12. Subsequent Events

          In January and February 2006, the Company borrowed an aggregate of $150,000 on a demand basis from an institutional accredited investor. The notes bear interest at the rate of 8% per annum until a written demand is made after which interest will be 18% per annum. No demand has been made to date. In order to induce the investor to make these loans, the Company’s chief executive officer and one of its directors agreed to transfer 1,701and 8,503 shares of Common Stock, respectively, to the investor from their own personal holdings. The benefit of the personal transfer to the Company has been valued at $66,300 which will be charged to debt discount and credited to additional paid in capital during 2006.

          On March 1, 2006, the Company issued a 10% unsecured promissory notes up to a principal amount of $250,000 to the Representative. The Representative will loan up to $50,000 per week to the Company. The note shall be payable in full at the closing of the IPO. In the event that the IPO has not closed on or before June 30, 2006, the note shall be payable 30 days after demand for payment by the Representative. As of March 22, 2006, the Company had drawn down $150,000.

          On March 2, 2006, the Company entered into a Consulting Agreement for Financial Public Relations (the “Agreement”). The Agreement is for an initial period of six months which will be automatically renewed on a month-to-month basis unless terminated in a written notice. Compensation is $10,000 per month plus an option to purchase 5,000 Units at the IPO price for Units offered by the Registration Statement as discussed in Note 2.

          On March 15, 2006, the Company borrowed $250,000 from an accredited investor. The note bears interest at 10% per annum and is payable on May 31, 2007. In order to induce the investor to make the loan, the Company’s chief executive officer has agreed to transfer 25,000 shares to the investor from his own personal holdings.

          As discussed in Note 2, the accompanying consolidated financial statements give effect to a reverse stock split pursuant to which each share of Common Stock outstanding before the reverse stock split will be converted and exchanged for 0.340124209 new shares of Common Stock.

F-22

          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	16
Use of Proceeds	17
Dividend Policy	19
Capitalization	20
Dilution	21
Selected Consolidated Financial Data	22
Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Business	33
Management	39
Certain Relationships and Related Transactions	46
Principal Shareholders	47
Description of Securities	49
Shares Eligible for Future Sale	52
Underwriting	54
Legal Matters	57
Experts	57
Where You Can Find More Information	57
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.

1,350,000 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	$	11,416
NASD fee	$	11,169
Nasdaq Capital Market listing fee	$	45,000	*
Boston Stock Exchange listing fee	$	15,000
Printing expenses	$	125,000	*
Accounting fees and expenses	$	100,000	*
Legal fees and expenses	$	400,000	*
Blue sky filing fees and related attorney fees and expenses	$	70,000	*
Transfer agent and registrar fees and expenses	$	3,500	*
Miscellaneous	$	13,915	*
Total	$	795,000	*

* 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 March 2006, we issued a $250,000 principal amount unsecured promissory note, bearing interest at 10% per annum, to an institutional accredited investor. The original principal amount and all accrued but unpaid interest is due May 31, 2007. In order to induce the investor to purchase this note, our chief executive agreed to transfer 25,000 shares of common stock (post reverse split) that he personally owns to the investor. We paid $20,000 commission to a registered broker dealer in connection with this sale, resulting in net proceeds to us of $230,000.
•	In March 2006, we issued a $250,000 principal amount unsecured promissory note, bearing interest at 10%, to Paulson Investment Company, the representative of the several underwriters of this offering. Under the terms of this note, we are entitled to up to five weekly draws not to exceed $50,000 each. The aggregate amount drawn plus the accrued interest thereon is payable out of the net proceeds of this offering. No commission or placement agent fee was payable in connection with the issuance of this note.
•	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 representative of the several underwriters 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 representative of the several underwriters 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.

II-2

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. 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:

II-3

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

• In January 2004, we issued an option to Brian Lewis to purchase 10,000 shares of our common stock for $1.25 per share for consulting services.

• 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

• 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 Evaristo 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 as additional interest on outstanding loans.

• On June 30, 2005, we issued 6,000 shares of our common stock to Brian Cowley as additional interest on outstanding loans.

II-4

• In August 2005, we issued an option to Jeff Gold to purchase 20,000 shares of our common stock for $1.25 per share for consulting services.

• On September 30, 2005, we issued 6,000 shares of our common stock to Brian Cowley as additional interest on outstanding loans.

• In November 2005, we issued warrants covering 250,000 shares of our common stock, having an exercise price of $1.25 per share, in consideration of him releasing us from our obligation to issue him 125,000 shares

• On December 31, 2005, we issued 6,000 shares of our common stock to Brian Cowley as additional interest on outstanding loans.

• On December 31, 2005, we issued 128,847 shares of our common stock to Morse, Zelnick, Rose & Lander, LLP for legal services rendered prior to October 1, 2005.

• On December 31, 2005, we issued 36,222 shares of our common stock to Christopher Dunk in payment of commissions due to him.

• On December 31, 2005, we issued 24,886 shares of our common stock to Adrian Turcotte in satisfaction of an indebtedness and accrued interest in the aggregate amount of $31,107.

• On December 31, 2005, we issued 22,272 shares of our common stock to Peter Wilson in satisfaction of an indebtedness and accrued interest in the aggregate amount of $27,840.

          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.

Item 27. Exhibits

Exhibit No.				Description
	1		Form of Underwriting Agreement
	3.1		Articles of Incorporation, as amended
	3.2		Amended and Restated Bylaws
	4.1		Specimen stock certificate**
	4.2		Form of warrant agreement, including form of Class A and Class B warrants
	4.3		Specimen unit certificate**
	4.4		Revised form of representative’s warrant
	5.1		Form of opinion of Morse, Zelnick, Rose & Lander, LLP**
	10.1		American Mold Guard, Inc. Amended and Restated 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**
	10.7	(a)	Director Nominee Consent – Michael A. Katz**
		(b)	Director Nominee Consent – Thomas C. Donnelly**
		(c)	Director Nominee Consent – James Crofton**
		(d)	Director Nominee Consent – Frank Brandenberg**
	10.8		Form of Indemnification Agreement for Directors and Officers
	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)**

** Previously filed.

II-5

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 connection 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.

          C. To provide to the underwriter at the closing specified in the Underwriting Agreement certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

          D. The undersigned Registrant hereby undertakes that:

               (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

               (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-6

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 April 10, 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
		Board of Directors (Principal Executive Officer)	April 10, 2006
	Thomas Blakeley
	/s/ MARK DAVIDSON	Chief Financial Officer
		(Principal Financial and Accounting Officer)	April 10, 2006
	Mark Davidson
	/s/ BRAD BARNES*	Director	April 10, 2006
	Brad Barnes
	/s/ JOHN W. MARTIN*	Director	April 10, 2006
	John W. Martin
* By:	THOMAS BLAKELEY
	Thomas Blakeley,
	Attorney-in-fact

II-7

EX-1

                                                                            Ex 1

                                 1,350,000 Units

                            AMERICAN MOLD GUARD, INC.

                             UNDERWRITING AGREEMENT

                                                      ____________________, 2006

Paulson Investment Company, Inc.
As Representative of the
   several Underwriters
811 SW Naito Parkway, Suite 200
Portland, Oregon 97204

Gentlemen:

      American Mold Guard, Inc., a California corporation (the "Company"),
proposes to sell to the several underwriters (the "Underwriters") named in
Schedule I hereto for whom you are acting as Representative (the
"Representative") an aggregate of 1,350,000 Units (the "Firm Units") issued by
the Company. Each Unit will consist of two shares ("Shares") of the common
stock, no par value, of the Company ("Common Stock), two redeemable Class A
warrants (the "Class A Warrants") and two redeemable Class B warrants (the
"Class B Warrants," and together with the Class A Warrants, the "Warrants"). The
Warrants are to be issued under the terms of a Warrant Agreement (the "Warrant
Agreement") by and between the Company and U.S. Stock Transfer Corporation, as
warrant agent (the "Warrant Agent"), in each case substantially in the form most
recently filed as an exhibit to the Registration Statement (hereinafter
defined). Each Class A Warrant entitles the holder thereof to purchase one share
of Common Stock at a price equal to $___ [75% of the initial public offering
price of the Units], subject to adjustment under the terms of the Warrant
Agreement. Each Class B Warrant entitles the holder thereof to purchase one
share of Common Stock at a price equal to $___ [100% of the initial public
offering price of the Units], subject to adjustment under the terms of the
Warrant Agreement. Shares of Common Stock issued upon exercise of the Warrants
are referred to herein collectively as the "Warrant Shares." The Shares,
Warrants and Warrant Shares are sometimes referred to herein as the "Underlying
Securities."

      The respective number of the Firm Units to be so purchased by the several
Underwriters are set forth opposite their names in Schedule I hereto. The
Company also proposes to grant to the Representative an option to purchase up to
202,500 additional Units (the "Option Units"), identical to the Firm Units, as
set forth below. Unless specified to the contrary, all references herein to
"Units" shall be deemed to include the Firm Units and the Option Units (to the
extent the aforementioned option has been exercised) and all references herein
to Shares, Warrants and



Warrant Shares shall be deemed to include the Shares, Warrants and Warrant
Shares underlying the Option Units (to the extent the aforementioned option has
been exercised).

      As the Representative, you have advised the Company that: (a) that you are
authorized to enter into this Agreement for yourself as Representative and on
behalf of the several Underwriters; and (b) the several Underwriters are
willing, acting severally and not jointly, to purchase the numbers of Firm Units
set forth opposite their respective names in Schedule I.

      In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:

      1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each of the Underwriters as follows:

         (a) The Company has filed with the Securities and Exchange Commission
(the Commission") a registration statement on Form SB-2 (File No. 333-130889)
and a related preliminary prospectus for the registration of the Units,
underlying Common Stock, Warrants and Warrant Shares under the Securities Act of
1933, as amended (the "Securities Act") and the rules and regulations thereunder
(the "Securities Act Regulations"). The Company has prepared and filed such
amendments to the registration statement and such amendments or supplements to
the related preliminary prospectus as may have been required to the date hereof
and will file such additional amendments or supplements as may hereafter be
required. The registration statement has been declared effective under the
Securities Act by the Commission. The registration statement as amended at the
time it was declared effective by the Commission (and, if the Company files a
post-effective amendment to such registration statement that becomes effective
prior to the Closing Date (as defined below), such registration statement as so
amended) and including all information deemed to be a part of the registration
statement pursuant to Rule 430A of the Securities Act Regulations or otherwise,
is hereafter called the "Registration Statement." Any registration statement
filed pursuant to Rule 462(b) of the Securities Act Regulations is hereinafter
called the "Rule 462(b) Registration Statement," and after such filing, the term
"Registration Statement" shall include the 462(b) Registration Statement. Each
prospectus included in the Registration Statement, or amendments thereof or
supplements thereto, before it was declared effective by the Commission under
the Securities Act, and any preliminary form of prospectus filed with the
Commission by the Company with the consent of the Underwriters pursuant to Rule
424(a) of the Securities Act Regulations is hereinafter called the "Preliminary
Prospectus."

      The term "Prospectus" means the final prospectus, as first filed with the
Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Securities Act
Regulations, and any amendments thereof or supplements thereto. If applicable,
each Preliminary Prospectus and the Prospectus, if filed by electronic
transmission pursuant to the Commission's Electronic Data Gathering Analysis and
Retrieval System ("EDGAR"), was identical to the copies thereof delivered to the
Underwriters for use in connection with the offer and sale of the Units, other
than with respect to any artwork and graphics that were not filed or otherwise
as permitted by Regulation S-T. If Rule 434 of the Securities Act Regulations is
used, the Company will comply with the requirements of Rule 434, and the
Prospectus shall not be "materially different," as such

                                        2



term is used in Rule 434, from the Prospectus included in the Registration
Statement at the time it became effective.

         (b) The Registration Statement, at the time it became effective and as
of the date hereof complied in all material respects with the Securities Act.
The Registration Statement, as of the effective date and as of the date hereof,
did not, does not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The representations and warranties set forth in the
immediately preceding sentence do not apply to statements in or omissions from
the Registration Statement, or any amendments or supplements thereto, made in
reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by the Representative expressly for use
therein, it being understood and agreed that the only such information furnished
by the Representative consists of the information described as such in Section
14 hereof.

         (c) Each Preliminary Prospectus, and any amendments or supplements
thereto, when filed, complied in all material respects with the Securities Act
and did not and will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Prospectus, as amended or supplemented, as of its date and
at all subsequent times, did not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The representations and warranties set forth in the two
immediately preceding sentences do not apply to statements in or omissions from
the Preliminary Prospectus or the Prospectus, or any amendments or supplements
thereto, made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by the Representative
expressly for use therein, it being understood and agreed that the only such
information furnished by the Representative consists of the information
described as such in Section 14 hereof.

         (d) The term "Disclosure Package" shall mean (i) the Preliminary
Prospectus, as amended or supplemented, (ii) the issuer free writing
prospectuses as defined in Rule 433 of the Securities Act (each, an "Issuer Free
Writing Prospectus"), if any, identified in Schedule II hereto, and (iii) any
other free writing prospectus that the parties hereto shall hereafter expressly
agree in writing to treat as part of the Disclosure Package. As of _____ p.m.
(Eastern time) on the date of this Agreement (the "Initial Sale Time"), the
Disclosure Package did not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the immediately
preceding sentence do not apply to statements in or omissions from the
Disclosure Package, or any amendments or supplements thereto, made in reliance
upon and in conformity with information relating to any Underwriter furnished to
the Company in writing by the Representative expressly for use therein, it being
understood and agreed that the only such information furnished by the
Representative consists of the information described as such in Section 14
hereof. If at any time following issuance of an Issuer Free Writing Prospectus
there occurred or occurs an event or development as a result of which such
Issuer Free Writing Prospectus included or would include an untrue

                                        3



statement of a material fact or omitted or would omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances, not misleading, the Company has notified or will promptly notify
the Representative so that any use of such Issuer Free Writing Prospectus may
cease until it is amended or supplemented. Each Issuer Free Writing Prospectus,
as of its issue date and at all subsequent times through the completion of the
offering and the sale of the Units did not, does not and will not include any
information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement that has not been superseded or
modified.

         (e) The Company is eligible to use Free Writing Prospectuses in
connection with this offering pursuant to Rules 164 and 433 under the Securities
Act; any Free Writing Prospectus that the Company is required to file pursuant
to Rule 433(d) under the Securities Act Regulations has been, or will be, filed
with the Commission in accordance with the requirements of the Securities Act
and the Securities Act Regulations; and each Free Writing Prospectus that the
Company has filed, or is required to file, pursuant to Rule 433(d) under the
Securities Act Regulations or that was prepared by or on behalf of or used by
the Company complies or will comply in all material respects with the
requirements of the Securities Act and the Securities Act Regulations. Any
Issuer Free Writing Prospectus (to the extent any such Issuer Free Writing
Prospectus was required to be filed with the Commission) delivered to the
Underwriters for use in connection with this offering have been and will be
identical to the versions of such documents created to be transmitted to the
Commission for filing via EDGAR, except to the extent permitted by Regulation
S-T.

         (f) The Company has satisfied and will satisfy the conditions of Rule
433 to avoid a requirement to file with the Commission any electronic road show,
except to the extent such electronic road show has been identified as an Issuer
Free Writing Prospectus. If such electronic road show has been identified as an
Issuer Free Writing Prospectus, it is listed in Schedule II hereof and has been
filed with the Commission via EDGAR, if required to be filed pursuant to Rule
433(d).

         (g) Except for the Issuer Free Writing Prospectuses identified in
Schedule II hereto, if any, and any electronic road show relating to the
offering, the Company has not prepared, used or referred to, and will not,
without the Representative's prior consent, prepare, use or refer to, any Free
Writing Prospectus.

         (h) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of California, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement, the Prospectus and the
Disclosure Package. The Company has one consolidated subsidiary, Trust One
Termite, Inc., a California corporation ("Trust One"). The Company has also
formed American Mold Guard Franchise, Inc., a California corporation; however,
AMG Franchise, Inc. has engaged in no business or financial activity from
inception through the date hereof. As used in this Agreement, the term
"Subsidiary" refers only to Trust One. The Subsidiary has been duly organized
and is validly existing under the laws of its jurisdiction of organization and
has the necessary legal power and authority to own or lease its properties and
to

                                        4



conduct its business as described in the each of Registration Statement, the
Prospectus and the Disclosure Package. The Company and the Subsidiary are each
duly qualified to transact business in each jurisdiction in which they conduct
their respective businesses or in which they own or lease real property or
otherwise maintain an office and in which the failure, individually or in the
aggregate, to be so qualified or licensed could have a material adverse effect
on the assets, business, operations, earnings, prospects, properties or
condition (financial or otherwise), present or prospective, of the Company and
its Subsidiary, taken as a whole, (any such effect or change, where the context
so requires, is hereinafter called a "Material Adverse Effect" or "Material
Adverse Change"); except as disclosed in both the Prospectus and the Disclosure
Package, the Subsidiary is not prohibited or restricted, directly or indirectly,
from paying dividends to the Company, nor from making any other distribution
with respect to such Subsidiary's capital stock or from repaying to the Company
or any other Company subsidiary, if then-existing, any amounts that may from
time to time become due under any loans or advances to such Subsidiary from the
Company or such other then-existing subsidiary, or from transferring any such
Subsidiary's property or assets to the Company or to any such then-existing
Subsidiary; other than as disclosed in both the Prospectus and the Disclosure
Package, the Company does not own, directly or indirectly, any capital stock or
other equity securities of any other corporation or any ownership interest in
any partnership, joint venture or other association.

         (i) This Agreement has been duly authorized, executed and delivered by
the Company, and is a valid and binding agreement of the Company, enforceable in
accordance with its terms, except as rights to indemnification hereunder may be
limited by applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.

         (j) The outstanding shares of each class or series of capital stock or
other equity interests of the Company and its Subsidiary have been duly
authorized and validly issued and are fully paid and non-assessable and, except
as disclosed in the Registration Statement, the Prospectus and the Disclosure
Package, have been issued and sold by the Company or its Subsidiary in
compliance in all material respects with applicable securities laws. Except as
disclosed in both the Registration Statement, the Prospectus and the Disclosure
Package, there are no outstanding (i) securities or obligations of the Company
or its Subsidiary convertible into or exchangeable for any capital stock of the
Company or its Subsidiary, (ii) warrants, rights or options to subscribe for or
purchase from the Company or its Subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations, or (iii) obligations of
the Company or its Subsidiary to issue any shares of capital stock, any such
convertible or exchangeable securities or obligation, or any such warrants,
rights or options. Except as set forth in the Registration Statement, the
Prospectus and the Disclosure Package, all of the outstanding shares of capital
stock of the Subsidiary are directly or indirectly owned of record and
beneficially by the Company. Except as set forth in the Registration Statement,
the Prospectus and the Disclosure Package, neither the filing of the
Registration Statement nor the offering or sale of the Units as contemplated by
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any shares of Common Stock
or other securities of the Company.

                                        5



         (k) The issuance and sale of the Units have been duly authorized by all
necessary corporate action and, when issued and paid for as contemplated herein,
the Units will be validly issued, fully paid and non-assessable; and no
preemptive rights of shareholders exist with respect to any security of the
Company or the issue and sale thereof. The Company has duly and validly
reserved, out of its authorized and unissued Common Stock, for issuance upon
exercise of the Warrants and the Representative's Warrant (defined below), a
number of shares sufficient for such purposes.

         (l) A registration statement has been filed on Form 8-A pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which complies in all material respects with the Exchange Act. The
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Units, Common Stock and Warrants under the
Exchange Act, nor has the Company received any notification that the Commission
is contemplating terminating such registration.

         (m) The information set forth under the caption "Capitalization" in the
Registration Statement, the Prospectus and the Disclosure Package is true and
correct in all material respects. The Common Stock conforms and the Warrants and
the Representative's Warrants will conform to the respective descriptions
thereof contained in the Registration Statement, the Prospectus and the
Disclosure Package in all material respects. The forms of certificates for the
Common Stock, the Warrants and the Representative's Warrant conform in all
material respects to the requirements of the corporate law of California.

         (n) The consolidated financial statements of the Company, together with
related notes as set forth in each of the Registration Statement, the Prospectus
and the Disclosure Package present fairly the consolidated financial position
and the results of operations and cash flows of the Company and its consolidated
Subsidiary at the indicated dates and for the indicated periods. The impact of
each material accounting judgment made in the preparation of the financial
statements included in the Registration Statement has been fairly and adequately
disclosed in the notes thereto or elsewhere in the Registration Statement. Such
financial statements have been prepared in accordance with generally accepted
principles of accounting, consistently applied throughout the periods involved,
except as disclosed in the Registration Statement, the Prospectus and the
Disclosure Package, and all adjustments necessary for a fair presentation of
results for such periods have been made. The amounts in both the Prospectus and
the Disclosure Package under the captions "Prospectus Summary - Summary
Consolidated Financial Information" and "Selected Consolidated Financial Data"
fairly present the information shown therein and have been compiled on a basis
consistent with the financial statements included in each of the Registration
Statement, the Prospectus and the Disclosure Package; no other financial
statements or supporting schedules are required to be included in the
Registration Statement, the Prospectus or the Disclosure Package. The unaudited
pro forma financial information included in each of the Registration Statement,
the Prospectus and the Disclosure Package complies as to form in all material
respects with the applicable accounting requirements of the Securities Act and
the Securities Act Regulations, and management of the Company believes that the
assumptions underlying the pro forma adjustments are reasonable; such pro forma
adjustments have been properly applied to the historical amounts in the
compilation of the information and such information fairly presents

                                        6



with respect to the Company and its Subsidiary, the financial position, results
of operations and other information purported to be shown therein at the
respective dates and for the respective periods specified; and no other pro
forma financial information is required to be included in the Registration
Statement, the Prospectus or the Disclosure Package.

         (o) The statistical, industry-related and market-related data included
in the Registration Statement, the Prospectus and the Disclosure Package are
based on or derived from sources that the Company reasonably and in good faith
believes to be reliable and accurate, such data agree with the sources from
which they are derived, and the Company has received any consents required from
such sources in connection with the inclusion of their data in the Registration
Statement.

         (p) Haskell & White LLP, which has expressed its opinion with respect
to the consolidated financial statements of the Company and its Subsidiary filed
as part of the Registration Statement and included in the Registration
Statement, the Prospectus and the Disclosure Package, is, and during the periods
covered by its reports was, an independent registered public accounting firm, as
required by the Securities Act and the Securities Act Regulations and is
registered with the Public Company Accounting Oversight Board.

         (q) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company or its Subsidiary
before any court or administrative agency or otherwise, which, if determined
adversely to the Company or such Subsidiary, might reasonably be expected to
have a Material Adverse Effect or prevent the consummation of the transactions
contemplated hereby, except as set forth in the Registration Statement, the
Prospectus and the Disclosure Package.

         (r) The Company and its Subsidiary either has, or has disposed of in
the ordinary course of business since the date of the latest consolidated
balance sheet included in the Registration Statement, the Prospectus and the
Disclosure Statement, good and marketable title to all of its properties and
material assets, tangible and intangible, reflected in the consolidated balance
sheet of the Company and its Subsidiary as of that date, and has good and
marketable title to all other property described in the Registration Statement,
the Prospectus and the Disclosure Package as owned by the Company or a
Subsidiary, subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except those reflected in such consolidated financial statements (or as
described in the Registration Statement, the Prospectus and the Disclosure
Package) or that are not material. All of the leases and subleases under which
the Company or its Subsidiary holds properties are in full force and effect
(with only such exceptions as are commonly accepted by prudent companies engaged
in the business of the Company or such Subsidiary), and neither the Company nor
its Subsidiary has received notice of any claim that is materially adverse to
the rights of the Company or its Subsidiary under any of such leases or
subleases.

         (s) The Company, for itself and its consolidated Subsidiary, has filed
all federal, state, local and foreign income tax returns that have been required
to be filed prior to the date hereof (other than those income tax returns as to
which the Company has timely filed a request for an extension to file) and has
paid all taxes indicated by said returns and all

                                        7



assessments received by the Company to the extent that such taxes have become
due and are not being contested in good faith. No entities in which the Company
has an interest, other than Trust One, are required to be consolidated with the
Company for tax purposes.

         (t) Since the respective dates as of which information is given in each
of the Prospectus and the Disclosure Package (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement), there has not
been any change or development involving a prospective Material Adverse Change
whether or not occurring in the ordinary course of business, that has had or
might reasonably be expected to have a Material Adverse Effect, and there has
not been any material transaction entered into or any material transaction that
is probable of being entered into by the Company or its Subsidiary, other than
transactions in the ordinary course of business and changes and transactions
described in each of the Registration Statement, the Prospectus and the
Disclosure Package. Neither the Company nor its Subsidiary has directly or
indirectly incurred any obligation material to the Company and its Subsidiary
taken as a whole, contingent or otherwise, that is not disclosed in the
Company's consolidated financial statements included in each of the Registration
Statement, the Prospectus and the Disclosure Package, and no dividend or
distribution of any kind has been declared, paid or made by the Company on any
class of its capital stock.

         (u) Except as disclosed in the Registration Statement, the Prospectus
and the Disclosure Package, neither the Company nor its Subsidiary is, nor, with
the giving of notice or lapse of time or both, will such entity be, in violation
of or in default under its Articles of Incorporation or Bylaws or other charter
documents or under any agreement, lease, contract, indenture or other instrument
or obligation to which it is a party or by which it, or any of its properties or
its business, is bound and which default might reasonably be expected to have a
Material Adverse Effect. The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and the fulfillment of the
terms hereof will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default in the performance of any material
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust or other agreement or instrument to which the Company is
a party or by which it or any of its properties may be bound, or any license,
permit, judgment, decree, order, statute, rule or regulation to which it or any
of its properties or its business, or the properties or business of its
Subsidiary, may be subject, which would result in a Material Adverse Effect.

         (v) Each approval, registration, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
governmental body necessary to the execution or delivery of this Agreement by
the Company and the consummation or completion of the transactions contemplated
herein (except for such additional steps that such regulatory, administrative or
governmental body may require to be performed after the date of this Agreement)
has been obtained or made.

         (w) The Company and its Subsidiary have obtained, are in compliance in
all material respects with and maintain in full force and effect all licenses,
certificates, permits, orders or other, similar authorizations granted or issued
by any governmental agency (collectively "Government Permits") required to
conduct their respective businesses as they are presently conducted. No
proceeding to revoke, limit or otherwise materially change any Government Permit
has been commenced or, to the Company's knowledge, is threatened

                                        8



against the Company or its Subsidiary, and the Company has no reason to
anticipate that any such proceeding will be commenced against the Company or its
Subsidiary. Except as disclosed or contemplated in the each of the Registration
Statement, the Prospectus and the Disclosure Package, the Company has no reason
to believe that any pending application for a Government Permit will be denied
or limited in a manner inconsistent with the Company's business plan as
described in each of the Registration Statement, Prospectus and the Disclosure
Package. Neither the Company nor its Subsidiary is in violation of, in default
under, or has received any notice regarding a possible violation, default or
revocation of Government Permit applicable to the Company or its Subsidiary the
effect of which could result in a Material Adverse Change; and no such
Government Permit contains a materially burdensome restriction that is not
adequately disclosed in each of the Registration Statement, the Prospectus and
the Disclosure Package.

         (x) Except as disclosed in the Registration Statement, the Prospectus
and the Disclosure Package, the Company and its Subsidiary hold all patents,
patent rights, trademarks, trade names, service marks, copyrights, trade
secrets, other intangible property rights know-how, and licenses of any of the
foregoing (collectively, "Intellectual Property Rights") that are necessary to
the conduct of its businesses; there is no claim pending or, to the knowledge of
the Company, threatened against the Company or its Subsidiary or any of their
respective officers, directors or employees alleging any infringement of
Intellectual Property Rights, or any violation of the terms of any license
relating to Intellectual Property Rights, nor does the Company know of any basis
for any such claim. The Company knows of no infringement by others of
Intellectual Property Rights owned by or licensed to the Company or its
Subsidiary.

         (y) The Company and its Subsidiary are in all material respects in
compliance with all applicable Environmental Laws. The Company has no knowledge
of any past, present or, as anticipated by the Company, future events,
conditions, activities, investigation, studies, plans or proposals that: (i)
would interfere with or prevent compliance with any Environmental Law by the
Company or its Subsidiary or (ii) could reasonably be expected to give rise to
any common law or other liability, or otherwise form the basis of a claim,
action, suit, proceeding, hearing or investigation, involving the Company or its
Subsidiary and related to Hazardous Substances or Environmental Laws. Except for
the prudent and safe use and management of Hazardous Substances in the ordinary
course of the Company's business: (i) no Hazardous Substance is or has been
used, treated, stored, generated, manufactured or otherwise handled on or at any
Facility and (ii) to the Company's knowledge, no Hazardous Substance has
otherwise come to be located in, on or under any Facility. No Hazardous
Substances are stored at any Facility except in quantities necessary to satisfy
the reasonably anticipated use or consumption by the Company. No litigation,
claim, proceeding or governmental investigation is pending regarding any
environmental matter for which the Company or its Subsidiary has been served or
otherwise notified or, to the knowledge of the Company, threatened or asserted
against the Company or its Subsidiary, or the officers or directors of the
Company or its Subsidiary in their capacities as such, or any Facility or the
Company's business. There are no orders, judgments or decrees of any court or of
any governmental agency or instrumentality under any Environmental Law which
specifically apply to the Company or its Subsidiary, any Facility or any of the
Company's or its Subsidiary's operations. Neither the Company nor its Subsidiary
has received from a governmental authority or other person: (i) any notice that
it is a potentially responsible person for any Contaminated site or (ii) any
request for information about a site alleged to be

                                        9



Contaminated or regarding the disposal of Hazardous Substances. There is no
litigation or proceeding against any other person by the Company or its
Subsidiary regarding any environmental matter. The Company has disclosed in the
Prospectus or made available to the Underwriters and their counsel true,
complete and correct copies of any reports, studies, investigations, audits,
analyses, tests or monitoring in the possession of or initiated by the Company
or its Subsidiary pertaining to any environmental matter relating to the
Company, its Subsidiary, their past or present operations or any Facility.

      For the purposes of the foregoing paragraph, "Environmental Laws" means
any applicable federal, state or local statute, regulation, code, rule,
ordinance, order, judgment, decree, injunction or common law pertaining in any
way to the protection of human health or the environment, including without
limitation, the Resource Conservation and Recovery Act of 1976, as amended, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Toxic Substances Control Act, as amended, the Clean Air Act, as
amended, the Hazardous Material Transportation Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Federal Water Pollution Control
Act, as amended, and any similar or comparable state or local law; "Hazardous
Substance" means any hazardous, toxic, radioactive or infectious substance,
material or waste as defined, listed or regulated under any Environmental Law;
"Contaminated" means the actual existence on or under any real property of
Hazardous Substances, if the existence of such Hazardous Substances triggers a
requirement to perform any investigatory, remedial, removal or other response
action under any Environmental Laws or if such response action legally could be
required by any governmental authority; "Facility" means any property currently
owned, leased or occupied by the Company.

         (z) The descriptions or summaries in each of the Registration
Statement, the Prospectus and the Disclosure Package of the legal or
governmental proceedings, contracts, leases and other legal documents therein
described or summarized present fairly the information required to be shown, and
there are no legal or governmental proceedings, contracts, leases, or other
documents of a character required to be described or summarized in the
Registration Statement, the Prospectus or the Disclosure Package, or required to
be filed as exhibits to the Registration Statement, which are not described,
summarized or filed as required; all agreements between the Company or its
Subsidiary and third parties expressly referenced in both the Prospectus and the
Disclosure Package are legal, valid and binding obligations of the Company or
its Subsidiary, enforceable in accordance with their respective terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and by general equitable principles.

         (aa) Neither the Company, nor to the Company's best knowledge, any of
its affiliates, has taken or intends to take, directly or indirectly, any action
which is designed to cause or result in, or which constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock or the Warrants to facilitate the sale or
resale of the Units.

         (bb) The Company is not an "investment company" within the meaning of
such term under the Investment Company Act of 1940, as amended, and the rules
and regulations of the Commission thereunder.

                                       10



         (cc) The Company maintains a system of internal control over financial
reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act that
complies with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder (the "Exchange Act") and has been designed by the
Company's principal executive officer and principal financial officer, or under
their supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of consolidated financial statements for
external purposes in accordance with generally accepted accounting principles.
The Company's internal control over financial reporting is effective, and the
Company is not aware of any material weaknesses in its internal control over
financial reporting. Since the date of the latest audited financial statements
included in the Registration Statement and the Prospectus, there has been no
change in the Company's internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting. The books, records and accounts of
the Company and its Subsidiary accurately and fairly reflect, in reasonable
detail, the transactions in, and dispositions of, the assets of, and the results
of operations of, the Company and its Subsidiary. The Company's system of
internal accounting controls is sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

         (dd) The minute books of the Company and its Subsidiary have been made
available to the Underwriters and counsel for the Underwriters, and such books
(i) contain a complete summary of all meetings and actions of the board of
directors or comparable body (including each committee thereof) and the
shareholders of the Company and its Subsidiary since the time of its respective
incorporation or formation through the date of the latest meeting and action and
(ii) accurately reflect all transactions referred to in such minutes.

         (ee) The Company and its Subsidiary are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are customary in the businesses in which they are engaged, all of
which insurance is in full force and effect. The Company and its Subsidiary are
in compliance with the terms of such policies and instruments in all material
respects; and neither the Company nor its Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that is not materially greater
than the current cost. Except as disclosed in the Registration Statement, the
Prospectus and the Disclosure Package, neither the Company nor its Subsidiary
has been denied any insurance coverage which it has sought or for which it has
applied.

         (ff) The Company and its Subsidiary are in compliance in all material
respects with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for
which the Company or its Subsidiary would have any liability; neither the

                                       11



Company nor its Subsidiary has incurred and the Company does not expect that it
or its Subsidiary will incur liability under (i) Title IV of ERISA with respect
to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412
or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company or its Subsidiary would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, which would cause the loss of such qualification.

         (gg) The Company and its Subsidiary are in material compliance with all
laws, rules, regulations, orders of any court or administrative agency,
operating licenses or other requirements imposed by any governmental body
applicable to it, including, without limitation, all applicable laws, rules,
regulations, licenses or other governmental standards applicable to its
business; and the conduct of the business of the Company and its Subsidiary, as
described in the Registration Statement, the Prospectus and the Disclosure
Package, will not cause the Company or such Subsidiary to be in violation of any
such requirements.

         (hh) Each of the Warrants and the Representative's Warrant (defined
below) has been authorized for issuance to the purchasers thereof or to the
Representative or its designees, as the case may be, and will, when issued, and
delivered pursuant to this Agreement and, in the case of the Warrants,
countersigned by the Warrant Agent as provided in the Warrant Agreement, will
have been duly executed, issued and delivered and will constitute valid and
legally binding obligations of the Company, and the holders thereof will possess
the rights, privileges, and characteristics as represented in the most recent
form of Warrant Agreement or Representative's Warrant, as the case may be, filed
as an exhibit to the Registration Statement; the securities to be issued upon
exercise of the Warrants and the Representative's Warrant, when issued and
delivered against payment therefor in accordance with the terms thereof, will be
duly and validly issued, fully paid, nonassessable and free of preemptive
rights, and all corporate action required to be taken for the authorization and
issuance of the Warrants and the Representative's Warrant, and the securities to
be issued upon their exercise, have been validly and sufficiently taken. The
execution by the Company of the Warrant Agreement and the Representative's
Warrant has been duly authorized by all required action of the Company and, when
so executed and delivered (and assuming due and valid execution by the Warrant
Agent, in the case of the Warrant Agreement) will constitute the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles.

         (ii) Except as disclosed in each of the Registration Statement, the
Prospectus and the Disclosure Package, neither the Company nor any of its
officers, directors or affiliates have caused any person, other than the
Underwriters, to be entitled to reimbursement of any kind, including, without
limitation, any compensation that would be includable as underwriter
compensation under the NASD's Corporate Financing Rule with respect to the
offering of the Units, as a result of the consummation of such offering based on
any activity of such person as a finder, agent, broker, investment adviser or
other financial service provider.

                                       12



         (jj) There are no affiliations with the NASD among the Company's
officers, directors or, to the best of the knowledge of the Company, any five
percent or greater shareholder of the Company, except as set forth in the
Registration Statement, the Prospectus and the Disclosure Package or otherwise
disclosed in writing to the Representative.

         (kk) The Units, the Common Stock and the Warrants have been approved
for listing on the Nasdaq Capital Market upon the effectiveness of the
Registration Statement, and the Company has satisfied all of the requirements of
the Nasdaq Capital Market for such listing and for the trading of its Units,
Common Stock and Warrants on the Nasdaq Capital Market. The Units, the Common
Stock and the Warrants have also been approved for dual listing on the Boston
Stock Exchange upon the effectiveness of the Registration Statement, and the
Company has satisfied all of the requirements of the Boston Stock Exchange for
such listing and for the trading of its Units, Common Stock and Warrants on the
Boston Stock Exchange. The Company has taken no action designed to, or likely to
have the effect of, terminating the quotation or listing, as the case may be, of
the Units, Common Stock and Warrants on the Nasdaq Capital Market or the Boston
Stock Exchange, nor has the Company received any notification that the Nasdaq
Capital Market or the Boston Stock Exchange is contemplating terminating such
quotation or listing.

         (ll) The Company has adopted organizational structures and policies
sufficient to comply with the requirements of the Nasdaq Corporate Governance
Rules in effect as of the date hereof (collectively, the "Nasdaq Corporate
Governance Rules"). Without limiting the generality of the foregoing, the
Company's Board of Directors has validly appointed an Audit Committee, a
Nominating Committee and a Compensation Committee whose composition satisfies
the requirements of the Nasdaq Corporate Governance Rules. The Board of
Directors, the Audit Committee, the Nominating Committee or the Compensation
Committee, as the case may be, has adopted a charter governing the respective
activities of the Committees that satisfies the requirements of the Nasdaq
Corporate Governance Rules. The Audit Committee, the Nominating Committee and
the Compensation Committee have each acted in accordance with the provisions of
their respective charters, as amended from time to time. The Company has adopted
additional organizational structures and policies sufficient to comply with the
requirements of the Boston Stock Exchange in effect as of the date hereof.

         (mm) Neither the Board of Directors nor the Audit Committee has been
informed, nor is any director of the Company aware, of: (i) any significant
deficiencies or material weaknesses existing in the design or operation of the
Company's internal controls over financial reporting of the Company which could
adversely affect the Company's ability to record, process, summarize and report
financial data or any material weakness in the Company's internal controls; or
(ii) any fraud, whether or not material, that involves management or other
employees of the Company who have a significant role in the Company's internal
controls.

         (nn) No relationship, direct or indirect, exists between or among the
Company, on the one hand, and the directors, officers, shareholders, customers
or suppliers of the Company, on the other hand, which is required to be
described in the Registration Statement, the Disclosure Package and the
Prospectus and which is not so described. There are no outstanding loans,
advances or guarantees of indebtedness by the Company to or for the benefit of
any of the officers or directors of the Company or any of their respective
family members, except as disclosed in the Registration Statement, the
Disclosure Package and the Prospectus.

                                       13



         (oo) The Company is in compliance with all currently effective
provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated thereunder that are applicable, or will be applicable to the Company
as of the date of payment for and delivery of the Firm Units pursuant hereto.

         (pp) The Company or any other person associated with or acting on
behalf of the Company including, without limitation, any director, officer,
agent or employee of the Company or its Subsidiary, has not, directly or
indirectly, while acting on behalf of the Company or its Subsidiary (i) used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; (iii) violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made
any other unlawful payment.

         (qq) The operations of the Company and its Subsidiary are and have been
conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the USA Patriot Act, the money laundering statutes of all
jurisdictions, the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the "Money Laundering Laws") and no action,
suit or proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving the Company or its Subsidiary with respect to
the Money Laundering Laws is pending, or to the best knowledge of the Company,
threatened.

         (rr) Neither the Company nor its Subsidiary nor, to the knowledge of
the Company, any director, officer, agent, employee or affiliate of the Company
or its Subsidiary is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and
the Company will not directly or indirectly use the proceeds of the offering, or
lend, contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of financing
the activities of any person currently subject to any U.S. sanctions
administered by OFAC.

         (ss) Neither the Company nor its Subsidiary nor, to the knowledge of
the Company, any employee or agent of the Company or its Subsidiary, has made
any payment of funds of the Company or its Subsidiary or received or retained
any funds in violation of any law, rule or regulation or of a character required
to be disclosed in the Prospectus or the Disclosure Package.

         (tt) Except as described in the Registration Statement, the Company has
not sold or issued any securities during the six-month period preceding the date
of the Prospectus, including any sales pursuant to Rules 144A or 701 under, or
Regulations D or S of, the Securities Act.

         (uu) In connection with this offering, the Company has not offered and
will not offer its Units or any other securities convertible into or
exchangeable or exercisable for Common Stock in a manner in violation of the
Securities Act; and the Company has not

                                       14



distributed and will not distribute any offering material in connection with the
offer and sale of the Units, except for the Preliminary Prospectus, the
Prospectus, any Issuer Free Writing Prospectus or the Registration Statement.

         (vv) No relationship, direct or indirect, exists between or among the
Company or its Subsidiary, on the one hand, and the directors, officers,
shareholders, customers or suppliers of the Company or its Subsidiary, on the
other hand, which is required by the Securities Act and the Securities Act
Regulations to be described in the Registration Statement, the Prospectus or the
Disclosure Package, and which is not so described;

         (ww) The Company and its Subsidiary has complied with all provisions of
Section 517.075 Florida Statutes, relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.

      2. PURCHASE, SALE AND DELIVERY OF THE UNITS.

         (a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
agrees to sell to the Underwriters and each Underwriter agrees, severally and
not jointly, to purchase, at a price of $____ per Unit (which price reflects an
underwriter's discount of 7.5%), the number of Firm Units set forth opposite the
name of each Underwriter in Schedule I hereof, subject to adjustments in
accordance with Section 9 hereof.

         (b) Payment for the Firm Units to be sold hereunder is to be made in
New York Clearing House funds and, at the option of the Representative, by bank
wire to an account specified by the Company, certified or bank cashier's checks
drawn to the order of the Company, against either uncertificated delivery of
Firm Units or of certificates therefor (which delivery, if certificated, shall
take place in such location in New York, New York as may be specified by the
Representative) to the Representative for the several accounts of the
Underwriters. Such payment is to be made at the offices of the Representative at
the address set forth on the first page of this agreement, at 7:00 a.m., Pacific
time, on the third business day after the date of this Agreement or at such
other time and date not later than five business days thereafter as you and the
Company shall agree upon, such time and date being herein referred to as the
"Closing Date." (As used herein, "Business Day" means a day on which the New
York Stock Exchange is open for trading and on which banks in New York are open
for business and not permitted by law or executive order to be closed.) Except
to the extent uncertificated Firm Units are delivered at closing, the
certificates for the Firm Units will be delivered in such denominations and in
such registrations as the Representative requests in writing not later than the
second full business day prior to the Closing Date, and will be made available
for inspection by the Representative at least one business day prior to the
Closing Date.

         (c) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the Representative to purchase the Option
Units at the price per Unit as set forth in Section 2(a). The option granted
hereby may be exercised in whole or in part by giving written

                                       15



notice: (i) at any time before the Closing Date and (ii) only once thereafter
within 45 days after the date of this Agreement, by the Representative to the
Company setting forth the number of Option Units as to which the Representative
is exercising the option, the names and denominations in which the Option Units
are to be registered and the time and date at which certificates representing
such Units are to be delivered. The time and date at which certificates for
Option Units are to be delivered shall be determined by the Representative but
shall not be earlier than three nor later than 10 full business days after the
exercise of such option, nor in any event prior to the Closing Date (such time
and date being herein referred to as the "Option Closing Date"). If the date of
exercise of the option is three or more days before the Closing Date, the notice
of exercise shall set the Closing Date as the Option Closing Date. The option
with respect to the Option Units granted hereunder may be exercised only to
cover over-allotments in the sale of the Firm Units by the Underwriters. The
Representative may cancel such option at any time prior to its expiration by
giving written notice of such cancellation to the Company. To the extent, if
any, that the option is exercised, payment for the Option Units shall be made on
the Option Closing Date in New York Clearing House funds and, at the option of
the Representative, by bank wire to an account specified by the Company, or
certified or bank cashier's check drawn to the order of the Company for the
Option Units to be sold by the Company in consideration either of uncertificated
delivery of Option Units or delivery of certificates therefor (which delivery,
if certificated, shall take place in such location in New York, New York as may
be specified by the Representative) to the Representative for the several
accounts of the Underwriters. Except to the extent uncertificated Option Units
are delivered at closing, the certificates for the Option Units will be
delivered in such denominations and in such registrations as the Representative
requests in writing not later than the second full business day prior to the
Option Closing Date, and will be made available for inspection by the
Representative at least one business day prior to the Option Closing Date.

         (d) In addition to the sums payable to the Representative as provided
elsewhere herein, the Representative shall be entitled to receive at the
Closing, for itself alone and not as Representative of the Underwriters, as
additional compensation for its services, a warrant for the purchase of up to
135,000 Units at a price of $____ per Unit (120% of the initial public offering
price), upon the terms and subject to adjustment and conversion as described in
the form of the Representative's Warrant filed as an exhibit to the Registration
Statement.

      3. OFFERING BY THE UNDERWRITERS.

         (a) It is understood that the several Underwriters are to make a public
offering of the Firm Units as soon as the Representative deems it advisable to
do so. The Firm Units are to be initially offered to the public at the initial
public offering price set forth in the Prospectus. The Representative may from
time to time thereafter change the public offering price and other selling
terms. To the extent, if at all, that any Option Units are purchased pursuant to
Section 2 hereof, the Representative will offer them to the public on the
foregoing terms.

      It is further understood that you will act as the Representative for the
Underwriters in the offering and sale of the Units in accordance with an
Agreement Among Underwriters entered into by you and the several other
Underwriters.

                                       16



      4. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
several Underwriters that:

         (a) The Company will (i) use its best efforts to cause the Registration
Statement to become effective or, if the procedure in Rule 430A of the
Securities Act Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Securities Act Regulations a Prospectus in a
form approved by the Representative containing information previously omitted at
the time of effectiveness of the Registration Statement in reliance on Rule 430A
of the Securities Act Regulations and (ii) not file any amendment to the
Registration Statement or supplement to the Prospectus of which the
Representative shall not previously have been advised and furnished with a copy
or to which the Representative shall have reasonably objected in writing or
which is not in compliance with the Securities Act Regulations.

         (b) The Company will file promptly with the Commission any amendment or
supplement to the Registration Statement, any Preliminary Prospectus, the
Prospectus or any Issuer Free Writing Prospectus that may, in the judgment of
the Company or the Representative, be required by the Securities Act or
requested by the Commission.

         (c) Prior to filing with the Commission any amendment or supplement to
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
Issuer Free Writing Prospectus, the Company will furnish a copy thereof to the
Representative and counsel for the Underwriters and obtain the consent of the
Representative to the filing.

         (d) The Company will cooperate with the Representative in endeavoring
to qualify the Units for sale under the securities laws of such jurisdictions as
the Representative may reasonably have designated in writing and will make such
applications, file such documents, and furnish such information as may be
reasonably required for that purpose; PROVIDED, HOWEVER, that the Company shall
not be required in connection therewith, as a condition thereof, to qualify as a
foreign corporation or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation as doing business in any
jurisdiction. The Company will, from time to time, prepare and file such
statements, reports, and other documents, as are or may be required to continue
such qualifications in effect for so long a period as the Representative may
reasonably request for distribution of the Units and exercise of the Warrants.

                                       17



         (e) The Company will deliver to, or upon the order of, the
Representative, from time to time, as many copies of any Preliminary Prospectus
as the Representative may reasonably request. The Company will deliver to, or
upon the order of, the Representative during the period when delivery of a
Prospectus is required under the Securities Act, as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representative may reasonably request. The Company shall furnish to the
Representative and counsel for the Underwriters, without charge, signed copies
of the Registration Statement (including all exhibits thereto and amendments
thereof) and to each other Underwriter a copy of the Registration Statement
(without exhibits thereto) and all amendments thereof and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by the Securities
Act or the Securities Act Regulations, as many copies of any preliminary
prospectus and the Prospectus and any amendments thereof and supplements thereto
as the Representative may reasonably request. If applicable, the copies of the
Registration Statement and Prospectus and each amendment and supplement thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.

         (f) The Company will advise the Representative immediately, confirming
such advice in writing, of (i) the receipt of any comments from, or any request
by, the Commission for amendments or supplements to the Registration Statement,
the Preliminary Prospectus, the Prospectus or any Issuer Free Writing
Prospectus, or for additional information with respect thereto, or (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of the
Preliminary Prospectus, the Prospectus or any Issuer Free Writing Prospectus, or
of the suspension of the qualification of the Units for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes and, if the Commission or any other government agency or authority
should issue any such order, to make every reasonable effort to obtain the
lifting or removal of such order as soon as possible; to advise the
Representative promptly of any proposal to amend or supplement the Registration
Statement, the Preliminary Prospectus, the Prospectus or any Issuer Free Writing
Prospectus and to file no such amendment or supplement to which the
Representative shall reasonably object in writing.

         (g) The Company will advise the Underwriters promptly of the happening
of any event or development known to the Company within the time during which a
Prospectus relating to the Units (or, in lieu thereof, the notice referred to in
Rule 172(a) of the Securities Act Regulations) is required to be delivered under
the Securities Act Regulations which, in the judgment of the Company or in the
reasonable opinion of the Representative or counsel for the Underwriters, would
require the making of any change in the Prospectus or the Disclosure Package so
that the Prospectus or the Disclosure Package would not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
at any time to amend or supplement the Prospectus or the Disclosure Package to
comply with any law and, during such time, to promptly prepare and furnish to
the Underwriters copies of the proposed amendment or supplement before filing
any such amendment or supplement with the Commission and thereafter promptly
furnish at the Company's own expense to the Underwriters and to dealers, copies
in such quantities and at such

                                       18



locations as the Representative may from time to time reasonably request of an
appropriate amendment or supplement to the Prospectus or the Disclosure Package
so that the Prospectus or the Disclosure Package as so amended or supplemented
will not, in the light of the circumstances when it (or, in lieu thereof, the
notice referred to in Rule 172(a) under the Securities Act Regulations) is so
delivered, be misleading, or so that the Prospectus or the Disclosure Package
will comply with the law.

         (h) The Company will make generally available to its security holders,
as soon as it is practicable to do so, but in any event not later than 15 months
after the effective date of the Registration Statement, an earnings statement
(which need not be audited) in reasonable detail, covering a period of at least
12 consecutive months beginning after the effective date of the Registration
Statement, which earning statement shall satisfy the requirements of Section
11(a) of the Securities Act and Rule 158 of the Securities Act Regulations and
will advise you in writing when such statement has been so made available.

         (i) The Company will, for a period of five years from the Closing Date,
deliver to the Representative copies of annual reports and copies of all other
documents, reports and information furnished by the Company to its stockholders
or filed with any securities exchange pursuant to the requirements of such
exchange or with the Commission pursuant to the Securities Act or the Exchange
Act. The Company will deliver to the Representative similar reports with respect
to significant subsidiaries, as that term is defined in the Securities Act
Regulations, which are not consolidated in the Company's financial statements.

         (j) The Company will use its best efforts to list, subject to notice of
issuance of the Units, the Common Stock and the Warrants on the Nasdaq Capital
Market and to cause such listing to remain in effect with respect to each such
security unless and until: (i) such security expires; (ii) such security is
listed on another exchange of at least comparable reputation; or (iii) the
Company is no longer required to file reports under Section 12 of the Exchange
Act.

         (k) The Company will furnish a copy of each proposed Free Writing
Prospectus to the Representative and counsel for the Underwriters and obtain the
consent of the Representative prior to referring to, using or filing with the
Commission any Free Writing Prospectus pursuant to Rule 433(d) under the
Securities Act, other than the Issuer Free Writing Prospectuses, if any,
identified in Schedule II.

                                       19



         (l) The Company will comply with the requirements of Rules 164 and 433
of the Securities Act Regulations applicable to any Issuer Free Writing
Prospectus, including timely filing with the Commission, legending and record
keeping, as applicable.

         (m) The Company has caused all of its officers and directors and each
holder of its Common Stock outstanding immediately prior to the date hereof
(including holders of securities convertible into or exercisable for Common
Stock) to furnish to you, on or prior to the date of this Agreement, a letter or
letters, in form and substance satisfactory to the Underwriters ("Lock-Up
Agreements"), pursuant to which each such person has agreed not to offer, sell,
sell short or otherwise dispose of any shares of Common Stock or other capital
stock of the Company, or any other securities convertible, exchangeable or
exercisable for Common Stock or derivatives of Common Stock owned by such person
or request the registration for the offer or sale of any of the foregoing (or as
to which such person has the right to direct the disposition) for a period of
one year after the date of this Agreement, directly or indirectly, except with
the prior written consent of the Representative.

         (n) Except with the prior written consent of the Representative, for a
period of one year from the date of this Agreement, the Company will refrain
from, directly or indirectly, (i) offering, pledging, selling, contracting to
sell, selling any option or contract to purchase, purchasing any option or
contract to sell, granting any option for the sale of, or otherwise disposing of
or transferring (or entering into any transaction or device which is designed
to, or could be expected to, result in the disposition by any person at any time
in the future of), any share of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock, or filing any registration
statement under the Securities Act with respect to any of the foregoing, or (ii)
entering into any swap or any other agreement or any transaction that transfers,
in whole or in part, directly or indirectly, the economic consequence of
ownership of the Common Stock, whether any such swap or transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing shall not apply to (A)
issuance of the Units to be sold hereunder and issuance of the Underlying
Securities applicable thereto; (B) issuance of any shares of Common Stock upon
the exercise of warrants or options or upon conversion of convertible securities
that are described in the Prospectus; (C) grants of options to purchase shares
of Common Stock pursuant to the Company's Equity Incentive Plan as described in
the Prospectus or issuances of Common Stock upon exercise of such options; or
(D) filing of a registration statement to register for resale the securities
issuable on the date of this Agreement to holders of Unsecured Notes, as
described in the Prospectus.

         (o) The Company shall apply the net proceeds of its sale of the Units
as set forth in the Prospectus and the Disclosure Package, and shall file such
reports with the Commission with respect to the sale of the Units and the
application of the proceeds therefrom as may be required in accordance with Rule
463 under the Securities Act.

         (p) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Units in such a manner as would
require the Company to register as an investment company under the Investment
Company Act of 1940, as amended (the "1940 Act").

                                       20



         (q) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar for the Common
Stock, and shall comply with the provisions of the Warrant Agreement with
respect to the appointment and maintenance of a Warrant Agent for the Warrants.

         (r) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
securities of the Company.

      5. COSTS AND EXPENSES.

         (a) The Representative shall be entitled to reimbursement from the
Company, for itself alone and not as Representative of the Underwriters, to a
non-accountable expense allowance equal to 2.5% of the gross offering proceeds
from the sale of the Firm Units to the public but not any Units sold pursuant to
the exercise of the over-allotment option, or $_______ assuming _________ Firm
Units to be sold at $____ per Unit. The Representative shall be entitled to
withhold this allowance on the Closing Date related to the purchase of the Firm
Units. The Company shall receive as a credit against this non-accountable
expense allowance, any amounts previously paid to the Representative.

         (b) In addition to the payment described in Paragraph (a) of this
Section 5, the Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company under this Agreement, including,
without limiting the generality of the foregoing, the following: accounting and
auditing fees of the Company; the fees and disbursements of counsel and other
advisors for the Company; the cost of printing and delivering to the
Underwriters copies of the Registration Statement, Preliminary Prospectuses, the
Prospectus, any Issuer Free Writing Prospectus, this Agreement, the Blue Sky
Survey and any supplements or amendments thereto; the filing fees of the
Commission; the filing fees incident to securing the required review and
approval by the NASD Corporate Finance Department of the underwriting terms and
arrangements; the Nasdaq Capital Market application and listing fees; the Boston
Stock Exchange application and listing fees; the expenses associated with the
placement of tombstone advertisements; the expenses related to "road show"
meetings, including travel, lodging, food and similar expenses; and the
expenses, including the fees and disbursements of counsel for the Underwriters,
incurred in connection with the qualification of the Units under state
securities or Blue Sky laws, to the extent such registration/qualification is
required or recommended by counsel for the Underwriters. Any transfer taxes
imposed on the sale of the Units to the several Underwriters will be paid by the
Company. The Company agrees to pay all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters, incident
to the offer and sale of directed Units by the Underwriters to employees and
persons having business relationships with the Company. Except as set forth
above, the Company shall not, however, be required to pay for any of the
Underwriters' expenses (other than those related to NASD review and approval and
state securities or Blue Sky laws) except that, if this Agreement shall not be
consummated, then the Company shall reimburse the several Underwriters for their
actual accountable out-of-pocket expenses, including fees and disbursements of
counsel, reasonably incurred in connection with investigating, marketing and
proposing to market the

                                       21



Units or in contemplation of performing their obligations hereunder, and any
portion of monies advanced to the Underwriters or the Representative other than
actual out-of-pocket accountable expenses shall be returned to the Company. The
Company shall not in any event be liable to any of the several Underwriters for
damages on account of loss of anticipated profits from the sale by them of the
Units.

      6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS. The several obligations
of the Underwriters to purchase the Firm Units on the Closing Date and the
Option Units, if any, on the Option Closing Date are subject to the accuracy, as
of the Closing Date or the Option Closing Date, as the case may be, of the
representations and warranties of the Company contained herein, and to the
performance by the Company of their covenants and obligations hereunder and to
the following additional conditions:

         (a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Securities Act Regulations shall have been made, and any
request of the Commission for additional information (to be included in the
Registration Statement or otherwise) shall have been disclosed to the
Representative and complied with to their reasonable satisfaction. No stop order
suspending the effectiveness of the Registration Statement, as amended from time
to time, shall have been issued and no proceedings for that purpose shall have
been taken or, to the knowledge of the Company, shall be contemplated by the
Commission and no injunction, restraining order, or order of any nature by a
Federal or state court of competent jurisdiction shall have been issued as of
the Closing Date which would prevent the issuance of the Units.

         (b) The Representative shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Morse Zelnick Rose &
Lander LLP, counsel for the Company, dated the Closing Date or the Option
Closing Date, as the case may be, addressed to the Underwriters (and stating
that it may be relied upon by counsel to the Underwriters) to the effect that:

            (i) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of California, with
corporate power and authority to own or lease its properties and conduct its
business as described in each of the Registration Statement, the Prospectus and
the Disclosure Package.

            (ii) The Subsidiary has been duly organized and is validly existing
as a business entity in good standing under the laws of its jurisdiction of
formation with all requisite power and authority under the laws governing such
entities to own or lease its properties and conduct its business as described in
each of the Registration Statement, the Prospectus and the Disclosure Package.

            (iii) The Company and its Subsidiary are duly qualified or licensed
by each jurisdiction in which they conduct their respective businesses and in
which the failure, individually or in the aggregate, to be so licensed could
have a Material Adverse Effect, and the Company and its Subsidiary are duly
qualified, and are in good standing, in each jurisdiction in which they own or
lease real property or maintain an office and in which such qualification is

                                       22



necessary except where the failure to be so qualified and in good standing could
not have a Material Adverse Effect; except as disclosed in both the Prospectus
and the Disclosure Package, the Subsidiary is not prohibited or restricted,
directly or indirectly, from paying dividends to the Company or any other
Company subsidiary, nor from making any other distribution with respect to such
Subsidiary's capital stock nor from repaying to the Company or any other Company
subsidiary any amounts which may from time to time become due under any loans or
advances to such Subsidiary from the Company or such other subsidiary, nor from
transferring its Subsidiary's property or assets to the Company or to such other
subsidiary; other than as disclosed in both the Prospectus and the Disclosure
Package, the Company does not own, directly or indirectly, any capital stock or
other equity securities of any other corporation or any ownership interest in
any partnership, joint venture or other association;

            (iv) The Company has authorized and outstanding capital stock as set
forth under the caption "Capitalization" in the Prospectus and the Disclosure
Package; the outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable; the Units to be sold by
the Company have been duly authorized; the Shares to be sold by the Company as a
component of the Units have been duly authorized and, when issued and delivered
in accordance with the terms of this Agreement, will be validly issued, fully
paid and non-assessable; all of the securities of the Company conform to the
description thereof contained in the Prospectus and the Disclosure Package; the
certificates for the Common Stock and the Warrants are in due and proper form
under California law and comply in all material respects with requirements of
the Nasdaq Capital Market and the Boston Stock Exchange; no preemptive rights of
shareholders exist with respect to any of the Common Stock or the issuance or
sale thereof pursuant to any applicable statute or the provisions of the
Company's Articles of Incorporation or Bylaws or, to such counsel's best
knowledge, pursuant to any contractual obligation. To counsel's knowledge, all
of the outstanding shares of capital stock of the Subsidiary are directly or
indirectly owned of record and beneficially by the Company.

            (v) Except as described in or contemplated by the Prospectus and the
Disclosure Package, to the knowledge of such counsel (a) there are no
outstanding securities of the Company convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares of capital stock of
the Company and (b) there are no outstanding or authorized options, warrants or
rights of any character obligating the Company to issue any shares of its
capital stock or any securities convertible or exchangeable into or evidencing
the right to purchase or subscribe for any shares of such stock; and except as
described in the Prospectus and the Disclosure Package, to the knowledge of such
counsel, no holder of any securities of the Company or any other person has the
right, contractual or otherwise, which has not been satisfied or effectively
waived, to cause the Company to sell or otherwise issue to them, or to permit
them to underwrite the sale of, any of the Units or the right to have any Common
Stock or other securities of the Company included in the Registration Statement
or the right, as a result of the filing of the Registration Statement, to
require registration under the Securities Act of any shares of Common Stock or
other securities of the Company.

            (vi) To the best of such counsel's knowledge, each of the Company
and its Subsidiary has all necessary material licenses, authorizations, consents
and approvals and has made all necessary filings required under any federal,
state or local law, regulation or rule, and

                                       23



has obtained all necessary authorizations, consents and approvals from other
persons, required to conduct their respective businesses, as described in both
the Prospectus and the Disclosure Package; to the best of such counsel's
knowledge, neither the Company nor its Subsidiary is in violation of, in default
under, or has received any notice regarding a possible violation, default or
revocation of any such material license, authorization, consent or approval or
any federal, state, local or foreign law, regulation or decree, order or
judgment applicable to the Company or its Subsidiary;

            (vii) This Agreement has been duly authorized, executed and
delivered by the Company as contemplated in the Registration Statement, the
Prospectus and the Disclosure Package. This Agreement constitutes a legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.

            (viii) The Warrant Agreement has been duly authorized, executed and
delivered by the Company and the Warrants have been duly authorized,
authenticated, issued and delivered by the Company as contemplated in the
Registration Statement, the Prospectus, the Disclosure Package and the Warrant
Agreement. The Warrant Agreement and the Warrants constitute legally binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms and, in the case of the Warrants, entitled to the
benefits of the Warrant Agreement subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.

            (ix) The Warrants are exercisable to purchase the Warrant Shares in
accordance with the terms of the Warrant Agreement; the Warrant Shares initially
issuable upon exercise of the Warrants (including the Warrants underlying the
Units issuable on exercise of the Representative's Warrant) have been duly
authorized and reserved for issuance upon such exercise, and, when issued upon
such exercise in accordance with the terms of the Warrant Agreement, will be
validly issued, fully paid and nonassessable.

            (x) The Representative's Warrant has been duly authorized by the
Company. When duly executed, issued and delivered by the Company as contemplated
in this Agreement and the Registration Statement, the Prospectus and the
Disclosure Package, the Representative's Warrant will constitute the legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.

            (xi) The Registration Statement has become effective under the
Securities Act and, to the best of the knowledge of such counsel, no stop order
proceedings with respect thereto have been instituted or are pending or
threatened under the Securities Act.

            (xii) The Registration Statement, the Prospectus, and the Disclosure
Package comply as to form in all material respects with the requirements of the
Securities Act and the

                                       24



applicable rules and regulations thereunder (except that such counsel need
express no opinion as to the financial statements therein).

            (xiii) The statements under the caption "Description of Securities"
in the Registration Statement, the Prospectus and the Disclosure Package, and in
Items 24 and 26 of the Registration Statement, insofar as such statements
constitute a summary of documents referred to therein or matters of law, fairly
summarize in all material respects the information called for with respect to
such documents and matters.

            (ivx) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or described or
summarized in the Registration Statement, the Prospectus and the Disclosure
Package, which have not been so filed, summarized or described as required, and
all such summaries and descriptions, in all material respects, fairly and
accurately set forth the material provisions of such contracts and documents.

            (xv) Except as described in or contemplated by the Registration
Statement, the Prospectus and the Disclosure Package, there are no material
actions, suits or proceedings, inquiries, or investigations pending or, to the
best of such counsel's knowledge, threatened against the Company or its
Subsidiary or any of their respective officers and directors or to which the
properties, assets or rights of any such entity are subject, at law or in
equity, before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority, arbitral panel or agency which
are required to be described in the Registration Statement, the Prospectus or
the Disclosure Package but are not so described.

            (xvi) To the best of such counsel's knowledge, the Company and its
Subsidiary each owns or possesses adequate licenses or other rights to use all
patents, trademarks, service marks, trade names, copyrights, software and design
licenses, trade secrets, manufacturing processes, other intangible property
rights and know-how (collectively "Intangibles") necessary to entitle the
Company and its Subsidiary to conduct its business as described in both the
Prospectus and the Disclosure Package, and neither the Company, nor its
Subsidiary, has received notice of infringement of or conflict with (and knows
of no such infringement of or conflict with) asserted rights of others with
respect to any Intangibles which could materially and adversely affect the
business, prospects, properties, assets, results of operations or condition
(financial or otherwise) of the Company or its Subsidiary.

            (xvii) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the Articles of Incorporation or Bylaws of the
Company, as amended, or any agreement or instrument known to such counsel to
which the Company is a party or by which the Company may be bound.

            (xviii) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by

                                       25



state securities and Blue Sky laws, as to which such counsel need express no
opinion) except such as have been obtained or made.

            (ixx) The Company is not, and will not become, as a result of the
consummation of the transactions contemplated by this Agreement, and application
of the net proceeds therefrom as described in the Prospectus, required to
register as an investment company under the 1940 Act.

      The opinions set forth in Paragraphs (b) of this Section shall be based on
the federal laws of the United States of America and the laws of the State of
California. Insofar as the laws of any other jurisdiction apply, such counsel
may rely on local counsel in such jurisdictions, provided that in each case such
counsel shall state that they believe that they and the Underwriters are
justified in relying on such other counsel. With respect to factual matters,
counsel for the Company may rely on (i) certificates issued by governmental
agencies, (ii) certificates executed and delivered by an executive officer of
the Company and (iii) the representations and warranties of the Company as set
forth herein, provided that such counsel shall not have actual knowledge that
any information or statements set forth in such certificates or any
representations and warranties contained herein are untrue, inaccurate, wrong or
misleading and such counsel shall specifically state that they believe that the
Underwriters and their counsel may rely on the same.

      In addition to the matters set forth above, the opinion of Morse Zelnick
Rose & Lander LLP shall also state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the Representative and representatives of the independent
certified public accountants of the Company, at which conferences the contents
of the Registration Statement, the Prospectus and the Disclosure Package and
related matters were discussed and, although such counsel is not passing upon
and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus, on the basis of the foregoing, no facts have come to the attention
of such counsel which lead such counsel to believe that (i) the Registration
Statement at the time it became effective contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, (ii) that the
Prospectus as amended or supplemented (except with respect to the financial
statements and notes thereto and other financial data, as to which such counsel
need make no statement) on the date thereof, the Closing Date or any Option
Closing Date, as the case may be; or (iii) the Disclosure Package as of the
Initial Sale Time contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no belief as to the financial
statements and notes thereto and other financial data derived therefrom included
in the Registration Statement, the Prospectus or the Disclosure Package.

         (c) The Representative shall have received from Wickersham & Murphy, a
Professional Corporation ("Wickersham & Murphy, P.C."), counsel for the
Underwriters, an opinion dated the Closing Date or the Option Closing Date, as
the case may be, substantially to the effect specified in subparagraphs (x) and
(xi) of Paragraph (b) of this Section 6. In rendering such opinion Wickersham &
Murphy, P.C. may rely as to all matters governed other than by the laws of the
State of California or federal laws on the opinion of counsel referred to in
Paragraph

                                       26



(b) of this Section 6. In addition to the matters set forth above, such opinion
shall also include a statement to the effect that nothing has come to the
attention of such counsel that has caused them to believe that; (i) the
Registration Statement at the time it became effective contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
that the Prospectus as amended or supplemented (except with respect to the
financial statements and notes thereto and other financial data, as to which
such counsel need make no statement) on the date thereof, the Closing Date or
any Option Closing Date, as the case may be; or (iii) the Disclosure Package as
of the Initial Sale Time contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no belief as to
the financial statements and notes thereto and other financial data derived
therefrom included in the Registration Statement, the Prospectus or the
Disclosure Package). With respect to such statement, Wickersham & Murphy, P.C.
may state that their belief is based upon the procedures set forth therein.

         (d) If the Units are to be listed only on an exchange or system other
than the New York Stock Exchange, American Stock Exchange or Nasdaq National
Market, the Representative shall have received at or prior to the Closing Date
from Wickersham & Murphy, P.C. a memorandum or summary, in form and substance
satisfactory to the Representative, with respect to the qualification for
offering and sale by the Underwriters of the Units under the state securities or
Blue Sky laws of such jurisdictions as the Representative may reasonably have
designated to the Company.

         (e) The Representative, on behalf of the several Underwriters, shall
have received, on each of the dates hereof, the Closing Date and the Option
Closing Date, as the case may be, a letter dated the date hereof, the Closing
Date or the Option Closing Date, as the case may be, in form and substance
satisfactory to the Representative, of Haskell & White LLP, confirming that it
is an independent registered public accounting firm within the meaning of the
Securities Act and the applicable published Securities Act Regulations
thereunder and stating that in its opinion the financial statements examined by
them and included in the Registration Statement comply in form in all material
respects with the applicable accounting requirements of the Securities Act and
the related published Securities Act Regulations and containing such other
statements and information as is ordinarily included in accountants' "comfort
letters" to Underwriters with respect to the financial statements and certain
financial and statistical information contained in the Registration Statement
and Prospectus.

         (f) Prior to the Closing Date and each Option Closing Date (i) no stop
order suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of the Prospectus or any document in the
Disclosure Package shall have been issued, and no proceedings for such purpose
shall have been initiated or threatened, by the Commission, and no suspension of
the qualification of the Units for offering or sale in any jurisdiction, or the
initiation or threatening of any proceedings for any of such purposes, has
occurred; (ii) all requests for additional information on the part of the
Commission shall have been complied with to the reasonable satisfaction of the
Representative; (iii) the Registration Statement shall not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated

                                       27



therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; and (iv) the Prospectus
and the Disclosure Package shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.

         (g) No amendment or supplement to the Registration Statement, the
Prospectus or any document in the Disclosure Package shall have been filed to
which the Underwriters shall have objected in writing.

         (h) The Representative shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates of the
Chief Executive Officer and the Chief Financial Officer of the Company to the
effect that, as of the Closing Date or the Option Closing Date, as the case may
be, each of them severally represents as follows:

            (i) The Registration Statement has become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such purpose have
been taken or are, to his or her knowledge, contemplated by the Commission;

            (ii) The representations and warranties of the Company contained in
Section 1 hereof are true and correct as of the Closing Date or the Option
Closing Date, as the case may be;

            (iii) All filings required to have been made pursuant to Rules 424
or 430A under the Securities Act have been made;

            (iv) The signers of such certificate have carefully examined the
Registration Statement, the Prospectus, the Disclosure Package and this
Agreement, and that when the Registration Statement became effective and at all
times subsequent thereto up to the Closing Date or the Option Closing Date, as
the case may be, the Registration Statement and the Prospectus, and any
amendments or supplements thereto, contained all material information required
to be included therein by the Securities Act and the Securities Act Regulations,
as the case may be, and in all material respects conformed to the requirements
of the Securities Act and the Securities Act Regulations, as the case may be;
the Registration Statement, the Prospectus and the Disclosure Package, and any
amendments or supplements thereto, did not and do not include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made (in the case of the Prospectus and the
Disclosure Package only), not misleading; and, since the effective date of the
Registration Statement, there has occurred no event required to be set forth in
an amendment or supplement to the Prospectus or the Disclosure Package which has
not been so set forth; and

            (v) Since the respective dates as of which information is given in
the Registration Statement, Prospectus and the Disclosure Package, there has not
been any change or development involving a prospective change, whether or not
arising in the ordinary course of business, which has had or might reasonably be
expected to have a Material Adverse Effect.

                                       28



         (i) The Company shall have furnished to the Representative such further
certificates and documents confirming the representations and warranties,
covenants and conditions contained herein and related matters as the
Representative may reasonably have requested.

         (j) The Units, Common Stock and the Warrants have been approved for
quotation upon notice of issuance of the Units on the Nasdaq Capital Market and
for dual listing on the Boston Stock Exchange.

         (k) The Lock-up Agreements described in Section 4(m) are in full force
and effect.

      The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects reasonably satisfactory to the Representative and to Wickersham &
Murphy, P.C., counsel for the Underwriters.

      If any of the conditions hereinabove provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representative by notifying the Company of such termination in writing or by
telegram at or prior to the Closing Date or the Option Closing Date, as the case
may be.

      In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 9
hereof).

      7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company to sell and deliver the portion of the Units required to be delivered as
and when specified in this Agreement are subject to the conditions that at the
Closing Date or the Option Closing Date, as the case may be, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and in effect or proceedings therefor initiated or threatened.

      8. ABSENCE OF FIDUCIARY RELATIONSHIP. The Company acknowledges and agrees
that:

         (a) In connection with the sale of the Units, the Underwriters have
been retained solely to act as underwriters and no fiduciary, advisory or agency
relationship between the Company and the Underwriters has been created in
respect of any of the transactions contemplated by this Agreement, even if the
Underwriters have advised the Company on other matters previously.

         (b) The price of the Units set forth in this Agreement was established
following discussions and arms-length negotiations between the Company and the
Representative, and the Company is capable of evaluating and understanding and
understands and accepts the terms, risks and conditions of the transactions
contemplated by this Agreement.

                                       29



         (c) It has been advised that the Underwriters and their respective
affiliates are engaged in a broad range of transactions which may involve
interests that differ from those of the Company and that the Underwriters have
no obligation to disclose such interests and transactions to the Company by
virtue of any fiduciary, advisory or agency relationship.

         (d) It waives, to the fullest extent permitted by law, any claims it
may have against the Underwriters for breach of fiduciary duty or alleged breach
of fiduciary duty and agrees that the Underwriters shall have no liability
(whether direct or indirect) to the Company in respect of such a fiduciary duty
claim or to any person asserting a fiduciary duty claim on behalf of or in right
of the Company, including stockholders, employees or creditors of the Company.

      9. INDEMNIFICATION AND CONTRIBUTION

         (a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 the Securities Act or Section 20 of the Exchange Act and the
respective directors, officers, employees and agents of each Underwriter and
control person, against any losses, expenses, damages, liabilities or claims
(including the reasonable cost of investigation) to which such Underwriter or
any such controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, expenses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon: (i)
any breach of any representation, warranty or covenant of the Company contained
herein, (ii) any failure on the part of the Company to comply with any
applicable law, rule or regulation relating to the offering of securities being
made pursuant to the Prospectus, (iii) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or in any
amendment thereof), any Issuer Free Writing Prospectus, the Prospectus (the term
Prospectus for the purpose of this Section 9 being deemed to include any
Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented by the Company), (iv) any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
(domestic or foreign) in order to qualify the Units and underlying Securities
under the securities or blue sky laws thereof or filed with the Commission or
any securities association or securities exchange (each an "Application"), (v)
any omission or alleged omission to state a material fact required to be stated
in any such Registration Statement or necessary to make the statement made
therein not misleading; (vi) any omission or alleged omission to statement a
material fact required to be stated in any Issuer Free Writing Prospectus,
Prospectus or any Application or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading,
(vii) any untrue statement or alleged untrue statement of any material fact
contained in any audio or visual materials used in connection with the marketing
of the Units, including, without limitation, slides, videos, films and tape
recordings; except in the case of (iii), (v) and (vi) above only insofar as any
such loss, expense, liability, damage or claim arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
of a material fact contained in and in conformity with information furnished in
writing by the Underwriters through the Representative to the Company expressly
for use in such Registration

                                       30



Statement, Prospectus or Application. The indemnity agreement set forth in this
Section 9(a) shall be in addition to any liability which the Company may
otherwise have.

         (b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Section 15 of the Securities Act or Section 20
of the Exchange Act, to the same extent as the foregoing indemnity from the
Company to such Underwriter, but only insofar as such loss, expense, liability,
damage or claim arises out of or is based upon (i) an untrue statement or
alleged untrue statement of a material fact contacted in the Registration
Statement, any amendment thereof, any Issuer Free Writing Prospectus, the
Prospectus, or any Application, (ii) any omission or alleged omission to state a
material fact in connection with such information required to be stated in the
Registration Statement or necessary to make such information not misleading or
(iii) any omission or alleged omission to state a material fact in connection
with such information required to be stated either in any Issuer Free Writing
Prospectus, the Prospectus or any Application or necessary to make such
information, in light of the circumstances under which made, not misleading, in
each case to the extent and only to the extent that such untrue statement or
alleged untrue statement or omission was made in reliance upon and in conformity
with information furnished in writing by such Underwriter through the
Representative to the Company expressly for use therein.

         (c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of whom indemnity may be
sought pursuant to this Section 9, such person (the "Indemnified Party") shall
promptly notify the person against whom such indemnity may be sought (the
"Indemnifying Party") in writing. No indemnification provided for in Section
9(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Section 9(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 9(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of presentation) the
fees and expenses of the counsel retained by the indemnified party in the event:
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel; (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them; or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action. It is understood that the
indemnifying

                                       31



party shall not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the reasonable fees and expenses of more than
one separate firm for all such indemnified parties. Such firm shall be
designated in writing by you in the case of parties indemnified pursuant to
Section 9(a) and by the Company in the case of parties indemnified pursuant to
Section 9(b). The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. In addition, the
indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding in respect of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.

         (d) If the indemnification provided for in this Section 9 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 9(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Units. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bears to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

      The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 9(d) were determined by PRO
RATA allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 9(d). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 9(d) shall be deemed to include any legal or other expenses
reasonably incurred by such

                                       32



indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d): (i) no
Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Units purchased by such
Underwriter; and (ii) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 9(d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.

         (e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 9 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.

         (f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 9 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 9 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of: (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company; (ii) acceptance of any Units and payment therefor
hereunder; and (iii) any termination of this Agreement. A successor to any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 9.

      10. DEFAULT BY UNDERWRITERS. If on the Closing Date or the Option Closing
Date, as the case may be, any Underwriter shall fail to purchase and pay for the
portion of the Units which such Underwriter has agreed to purchase and pay for
on such date (otherwise than by reason of any default on the part of the
Company), you, as Representative of the Underwriters, shall use reasonable
efforts to procure within 36 hours thereafter one or more of the other
Underwriters, or any others, to purchase from the Company such amounts as may be
agreed upon and upon the terms set forth herein, the Firm Units or Option Units,
as the case may be, which the defaulting Underwriter or Underwriters failed to
purchase. If during such 36 hours you, as such Representative, shall not have
procured such other Underwriters, or any others, to purchase the Firm Units or
Option Units, as the case may be, agreed to be purchased by the defaulting
Underwriter or Underwriters, then (a) if the aggregate number of Units with
respect to which such default shall occur does not exceed 10% of the Firm Units
or Option Units, as the case may be, covered hereby, the other Underwriters
shall be obligated, severally, in proportion to the respective numbers of Firm
Units or Option Units, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Units or Option Units, as the case may be, which
such defaulting Underwriter or Underwriters failed to purchase or (b) if the
aggregate

                                       33



number of Firm Units or Option Units, as the case may be, with respect to which
such default shall occur exceeds 10% of the Firm Units or Option Units, as the
case may be, covered hereby, the Company or you as the Representative of the
Underwriters will have the right, by written notice given within the next
36-hour period to the parties to this Agreement, to terminate this Agreement
without liability on the part of the non-defaulting Underwriters or of the
Company except to the extent provided in Section 9 hereof. In the event of a
default by any Underwriter or Underwriters, as set forth in this Section 10, the
Closing Date or Option Closing Date, as the case may be, may be postponed for
such period, not exceeding seven days, as you, as Representative, may determine
in order that the required changes in the Registration Statement or in the
Prospectus or in any other documents or arrangements may be effected. The term
"Underwriter" includes any person substituted for a defaulting Underwriter. Any
action taken under this Section 10 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.

      11. NOTICES.

      All communications hereunder shall be in writing and, except as otherwise
provided herein, will be mailed, delivered, telecopied or telegraphed and
confirmed as follows:

         if to the Underwriters, to

                   Paulson Investment Company, Inc.
                   811 SW Naito Parkway, Suite 200
                   Portland, Oregon 97204
                   Attention: Chester L.F. Paulson

                   with a copy, which shall not constitute notice, to

                   Wickersham & Murphy, P.C.
                   430 Cambridge Avenue, Suite 100
                   Palo Alto, California 94306
                   Attention: Debra K. Weiner

         if to the Company, to

                   American Mold Guard, Inc.
                   30200 Rancho Viejo Road, Suite G
                   San Juan Capistrano, California 92675
                   Attention: Tom Blakeley

                   with copy, which shall not constitute notice, to

                   Morse, Zelnick, Rose & Lander LLP
                   405 Park Avenue, Suite 1401
                   New York, New York 10022
                   Attention: Joel J. Goldschmidt, Esq.

                                       34



      12. TERMINATION. This Agreement may be terminated by you by notice to the
Company as follows:

         (a) at any time prior to the earlier of (i) the time the Units are
released by you for sale by notice to the Underwriters, or (ii) 11:30 a.m. on
the first business day following the date of this Agreement;

         (b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, in your judgment, there has occurred
any change or development involving a prospective change whether or not arising
in the ordinary course of business that has had or might reasonably be expected
to have a Material Adverse Effect; (ii) any outbreak or escalation of national
or international hostilities or any crisis or calamity, or any change in the
United States or international financial markets, or any substantial change or
development involving a prospective substantial change in United States' or
international political, financial or economic conditions, that, in the judgment
of the Representative is material and adverse and makes it impracticable to
market the Units in the manner and on the terms described in the Prospectus or
to enforce contracts for the sale of the Units; (iii) the Dow Jones Industrial
Average shall have fallen by 15 percent or more from its closing price on the
day immediately preceding the date that the Registration Statement is declared
effective by the Commission; (iv) suspension of trading in securities generally
on the New York Stock Exchange or the Nasdaq Capital Market or limitation on
prices (other than limitations on hours or numbers of days of trading) for
securities on either such Exchange; (v) the enactment, publication, decree or
other promulgation of any statute, regulation, rule or order of any court or
other governmental authority which in your opinion materially and adversely
affects or may materially and adversely affect the business or operations of the
Company; (vi) declaration of a banking moratorium by United States or New York
State authorities; (vii) the suspension of trading of the Common Stock or the
Warrants by the Commission or the Nasdaq Capital Market; or (viii) the taking of
any action by any governmental body or agency in respect of its monetary or
fiscal affairs which in your reasonable opinion has a material adverse effect on
the securities markets in the United States; or

         (c) as provided in Sections 6 and 10 of this Agreement.

      The foregoing notwithstanding, nothing in this Section 12(b) shall be
interpreted to mean that the Underwriters may abrogate their obligations to
purchase the Firm Units from the Company based upon an inability to market the
securities.

      13. SUCCESSORS. This Agreement has been and is made solely for the benefit
of the Underwriters, the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Units from any Underwriter
shall be deemed a successor or assign merely because of such purchase.

      14. INFORMATION PROVIDED BY UNDERWRITERS. The Company and the Underwriters
acknowledge and agree that the only information furnished or to be furnished by
any Underwriter to the Company for inclusion in the Prospectus or the
Registration Statement consists of the information set forth in the last
paragraph on the front cover page (insofar as such information relates to the
Underwriters), legends required by Item 502(b) of Regulation S-B under the
Securities Act and the information under the caption "Underwriting" in the
Prospectus (insofar as such information relates to the Underwriters).

                                       35



      15. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or its directors or officers and (c) delivery of and payment for the
Units under this Agreement.

      This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

      This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Oregon. All disputes relating to this Underwriting
Agreement shall be adjudicated before a court located in Multnomah County,
Oregon to the exclusion of all other courts that might have jurisdiction.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS)

                                       36



      If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.

                                        Very truly yours,

                                        AMERICAN MOLD GUARD, INC.

                                        By: ___________________________________
                                            Name: Tom Blakely
                                            Title: Chief Executive Officer

      The foregoing Underwriting Agreement is hereby confirmed and accepted as
of the date first above written.

                                        PAULSON INVESTMENT COMPANY, INC.
                                        As Representative of the several
                                        Underwriters listed on Schedule I

                                        By: ___________________________________
                                            Name:
                                            Title:

                                       37



                                   SCHEDULE I

                            SCHEDULE OF UNDERWRITERS

                                                           Number of Firm Units
                    Underwriter                              to Be Purchased
- ------------------------------------------------------   -----------------------
Paulson Investment Company, Inc. .....................
Capital Growth Financial, LLC ........................
Chicago Investment Group, LLC ........................

                                                                ---------
   Total .............................................          1,350,000
                                                                =========



                                   SCHEDULE II

                  SCHEDULE OF ISSUER FREE WRITING PROSPECTUSES

EX-3.1

                                                                     Exhibit 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





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

         The undersigned, Thomas 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,
         November 20, 2003 and November 1, 2004 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 2,770,462. The total number of outstanding shares of Series A
Preferred Stock is 499,999. 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 outstanding shares of common
stock and Series A 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 60%.
The percentage vote required of the common stock and Series A 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 20th day of March 2006.


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



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

         Executed at Irvine, California on the 20th day of March 2006.


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




                                       2


                                   EXHIBIT "A"

                             DESIGNATION AND AMOUNT


         An aggregate of four hundred ninety nine thousand nine hundred and
ninety nine (499,999) 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, 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


                                       2



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 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.



                                       3



         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.

                  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, reclassi-
fication, 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


                                       4



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.

                           (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"


                                       5


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
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


                                       6


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. 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


         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

                           (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.


                                       8


                           "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.

                  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.

         8. SPECIAL PROVISIONS.

                  A. PREEMPTION. During the Special Provision Period, the
provisions of Article 8 shall preempt and take precedence over any contrary or
conflicting provision of this Certificate of Determination and shall govern and
be controlling during such Special Provision Period. In the event that a
Qualified Initial Public Offering is not closed during the Special Provision
Period, the provisions of Article 8 shall immediately terminate and shall have
no further effect whatsoever.


                                       9


                  B. ADDITIONAL DEFINITIONS.

                           "CRESTRIDGE WARRANTS" means any warrant, option or
right to purchase up to 1,000,000 shares of Common Stock of the Corporation ( as
adjusted for any stock dividends, combinations or splits with respect to such
shares) granted and/or issued to Crestridge Investments AMG Mold Guard, LLC
("CIAMG"), during the Special Provision Period in exchange for, among other
things, CIAMG giving up the right to receive the warrants to which it is
entitled as of July 1, 2005 and agreeing to be repaid in full out of the
proceeds of the Qualified Initial Public Offering and not to convert its
convertible debt during the Special Provision Period; provided that such
warrants must provide for an exercise price per share of at least $1.66 ( as
adjusted for any stock dividends, combinations or splits with respect to such
shares) .

                           "LOAN SECURITIES" means those equity securities of
the Corporation and/or or warrants, options or rights to purchase equity
securities of the Corporation issued in connection with the sale by the
Corporation, at any time during the Special Provision Period, of $1,500,000
principal amount of promissory notes, wherein the purchasers of such promissory
notes (the "Note Purchasers") shall, if the Corporation shall have sold any
equity securities during the Special Provision Period (whether common stock,
preferred stock, warrants options or any combination thereof) in a transaction
wherein the gross proceeds received by the Corporation equal or exceed
$5,000,000 (a "Qualified Sale"), then upon the closing of the first such
Qualified Sale, the Corporation shall issue to the Note Purchasers such number
of shares of common stock, preferred stock, warrants, options, ETC., as the case
may be, as shall have a value equal $1,500,000 (such value to be based upon the
gross purchase price received by the Corporation in such Qualified Sale).

                           "QUALIFIED INITIAL PUBLIC OFFERING" means a firm
commitment underwritten public offering of shares of Common Stock of the
Corporation under the Securities Act, other than a registration relating solely
to a transaction under Rule 145 under the Securities Act of 1933, as amended
(the "Securities Act") (or any successor thereto) or to an employee benefit plan
of the Corporation, (i) at a public offering price (prior to underwriters'
discounts and expenses) equal to or exceeding $1.66 per share of Common Stock,
as adjusted for any stock dividends, combinations or splits with respect to such
shares, (provided that if the "public offering price" shall be for a unit which
includes shares of Common Stock and warrants or other securities to purchase
shares of any equity securities of the Corporation then the public offering
price per share of Common Stock for purposes of this Section shall be deemed to
be equal to (x) the offering price per unit plus the exercise or conversion
prices of the warrants or other securities included in such unit divided by (y)
the number of shares of Common Stock included in such unit plus the number of
shares of equity securities (on an as-exercised or as-converted basis)
underlying the warrants or other securities included in such unit) , (ii) the
gross proceeds to the Corporation and/or any selling shareholders of which
exceed $4,000,000 and (iii) wherein upon the completion thereof the Common Stock
is listed on either the New York Stock Exchange, the American Stock Exchange,
the Nasdaq National Market or the Nasdaq Small Cap Market


                                       10


                           "SPECIAL PROVISION PERIOD" means the period
commencing as of September 8, 2005 and ending on July 31, 2006.

                  C. AUTOMATIC CONVERSION. If there is a Qualified Initial
Public Offering during the Special Provision Period, then, notwithstanding the
provisions of Section 4.B. hereof, or any other provision of this Certificate of
Determination, each share of Series A Preferred Stock 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
such Qualified Initial Public Offering as may be adjusted by the application of
the provisions of Section 4.C. which provisions as modified by Section 8.D.
shall continue to apply to such conversion.

                  D. WAIVER OF ANTIDILUTION RIGHTS. Notwithstanding the
provisions of Section 4.C. hereof if a Qualified Initial Public Offering shall
have been closed during the Special Provision Period, there shall not be any
adjustment to the conversion ratio in connection with or as a result of (i) the
sale and issuance of any Loan Securities; or (ii) the granting and issuance of
the Crestridge Warrants. If a Qualified Initial Public Offering has not closed
prior to the expiration of the Special Provision Period, then the adjustments to
the conversion ratio, as required by Section 4.C.(iv) and (v) shall immediately
be made retroactive to the date of the original issuance of the Loan Securities
or Crestridge Warrants as the case may be.



                                       11


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

         The undersigned, Thomas 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 March 3, 2004,
         September 1, 2004 and November 1, 2004 fixed the rights, preferences
         and restrictions relating to a series of Preferred Stock designated as
         "Series B Preferred Stock"; and

                  WHEREAS, the Board of Directors 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 2,770,462. The total number of outstanding shares of Series B
Preferred Stock is 454,500. 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 B Preferred Stock voting in favor of the amendment equaled or
exceeded the vote required. The total number of outstanding shares of common
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 B Preferred Stock was 60%.
The percentage vote required of the common 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 20th day of March 2006.


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



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

         Executed at Irvine, California on the 20th day of March 2006.


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



                                       2

                                  EXHIBIT "A"

                             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.

                           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

                  (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.

         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.

                           (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, reclassi-
fication, 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 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.

                           (v) 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.

                           (vi) 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 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.

                           "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.


                  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. SPECIAL PROVISIONS.

                  A. PREEMPTION. The provisions of Article 9 shall preempt and
take precedence over any contrary or conflicting provision of this Certificate
of Determination and shall govern and be controlling during the Special
Provision Period.

                  B. ADDITIONAL DEFINITIONS.

                           "QUALIFIED INITIAL PUBLIC OFFERING" means a firm
commitment underwritten public offering of shares of Common Stock of the
Corporation under the Securities Act, other than a registration relating solely
to a transaction under Rule 145 under the Securities Act of 1933, as amended
(the "Securities 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 $1.66 per share of Common Stock, as adjusted
for any stock dividends, combinations or splits with respect to such shares,
(provided that if the "public offering price" shall be for a unit which includes
shares of Common Stock and warrants to purchase shares of any equity securities
of the Corporation then the public offering price per share of Common Stock for
purposes of this Section shall be deemed to be equal to the offering price per
unit



divided by the number of shares of Common Stock included in such unit) and the
gross proceeds to the Corporation and/or any selling shareholders of which
exceed $4,000,000.

                           "SPECIAL PROVISION PERIOD" means the period
commencing as of July 1, 2005 and ending on July 31, 2006.

                  C. AUTOMATIC CONVERSION. If there is a Qualified Initial
Public Offering during the Special Provision Period, then, notwithstanding the
provisions of Section 5.B. hereof, or any other provision of this Certificate of
Determination, each share of Series A Preferred Stock 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
such Qualified Initial Public Offering as may be adjusted by the application of
the provisions of Section 5.C. which provisions shall continue to apply to such
conversion.




                            CERTIFICATE OF AMENDMENT
                                       OF
                            ARTICLES OF INCORPORATION
                                       OF
                            AMERICAN MOLD GUARD, INC.

The undersigned, Thomas Blakeley and John W. Martin, hereby certifY that:

1.       They are the President and  Secretary,  respectively,  of AMERICAN MOLD
         GUARD, INC., a California corporation.

2.       Article IV of the  Articles of  Incorporation  of this  corporation  is
         amended to add the following provision to Article IV:

         Effective  April 7,  2006,  each one (1) share of  Common  Stock of the
         Corporation   issued  and   outstanding  on  April  7,  2006  shall  be
         reclassified  as and changed  into  .340124209  share of Common  Stock,
         without any action by the holders  thereof (the "Reverse Stock Split").
         No fractional  share of Common Stock shall be issued as a result of the
         Reverse Stock Split. In lieu of any fractional  shares if any, to which
         a holder  would  otherwise  be  entitled,  after  aggregating  all such
         fractions  of a share,  upon  surrender of a  certificate  representing
         Common  Stock to the  Corporation  or its transfer  agent,  such holder
         shall be  entitled  to receive  cash in an amount  equal to the product
         obtained by  multiplying  such fraction by the fair market value of one
         share of Common Stock,  as such fair market value is determined in good
         faith by the Board of Directors.

3.       The  foregoing  amendment  of Articles of  Incorporation  has been duly
         approved by the board of directors.

4.       The  foregoing  amendment  of Articles of  Incorporation  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
         2,770,462. The total number of outstanding shares of Series A Preferred
         Stock of the  corporation  is 499,999.  The total number of outstanding
         shares of Series B Preferred Stock of the  corporation is 454,500.  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
         more than 50%. The percentage vote required of Series B Preferred Stock
         was more than 50%. 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%.

We declare  under  penalty of perjury under the laws of the State of Cali fomi a
that the matters set forth in this  certificate  are true and correct of our own
knowledge.

Date: April 6, 2006                       /s/ Thomas Blakeley
                                          ------------------------------------
                                          Thomas Blakeley, President



                                          /s/ John W. Martin
                                          ------------------------------------
                                          John W. Martin, Secretary






                                       2

EX-4.2

                                                                          Ex 4.2

                                WARRANT AGREEMENT

                                     BETWEEN

                            AMERICAN MOLD GUARD, INC.

                                       AND

                         U.S. STOCK TRANSFER CORPORATION

                              DATED AS OF    , 2006



      This Agreement, dated as of _____________, 2006, is between American Mold
Guard, Inc., a California corporation (the "Company"), and U.S. Stock Transfer
Corporation, a _____________ corporation (the "Warrant Agent").

      The Company, at or about the time that it is entering into this Agreement,
proposes to issue and sell to public investors up to 1,350,000 Units (together
with the additional units issuable as provided herein, the "Units"). Each Unit
consists of two shares of the common stock, no par value, of the Company
("Common Stock), two redeemable Class A warrants (the "Class A Warrants") and
two redeemable Class B warrants (the "Class B Warrants," and together with the
Class A Warrants, the "Warrants"). Each Class A Warrant entitles the holder
thereof to purchase one share of Common Stock at a price equal to $___ [75% of
the initial public offering price of the Units], subject to adjustment under the
terms of the Warrant Agreement. Each Class B Warrant entitles the holder thereof
to purchase one share of Common Stock at a price equal to $___ [100% of the
initial public offering price of the Units], subject to adjustment under the
terms of the Warrant Agreement. Shares of Common Stock issued upon exercise of
the Warrants are referred to herein collectively as the "Warrant Shares." The
Company also proposes to grant to the Representative of the Underwriters of the
public offering an option to purchase 202,500 additional Units to cover
over-allotments, if any.

      The Company also proposes to issue to the Representative of the
Underwriters warrants to purchase up to 135,000 additional Units.

      The Company wishes to retain the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange and replacement of the certificates evidencing the
Warrants to be issued under this Agreement (the "Warrant Certificates") and the
exercise of the Warrants;

      The Company and the Warrant Agent wish to enter into this Agreement to set
forth the terms and conditions of the Warrants and the rights of the holders
thereof ("Warrantholders") and to set forth the respective rights and
obligations of the Company and the Warrant Agent. Each Warrantholder is an
intended beneficiary of this Agreement with respect to the rights of
Warrantholders herein.

      NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:

SECTION 1. Appointment of Warrant Agent

      The Company appoints the Warrant Agent to act as agent for the Company in
accordance with the instructions in this Agreement and the Warrant Agent accepts
such appointment.

SECTION 2. Date, Denomination and Execution of Warrant Certificates

      The "Warrant Certificates" (and the Form of Election to Purchase and the
Form of Assignment to be printed on the reverse thereof) shall be in registered
form only and shall be substantially of the tenor and purport recited in EXHIBIT
A (with respect to Class A Warrants)



and EXHIBIT B (with respect to Class B Warrants), and may have such letters,
numbers or other marks of identification or designation and such legends,
summaries or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any law, or with any rule
or regulation made pursuant thereto, or with any rule or regulation of any stock
exchange on which the Common Stock or the Warrants may be listed or any
automated quotation system, or to conform to usage. In lieu of physical delivery
of warrant certificated, if the Company so directs, the Class A Warrants and the
Class B Warrants may be issued in electronic form through The Depository Trust
Company. Each Warrant Certificate shall entitle the registered holder thereof,
subject to the provisions of this Agreement and of the Class A Warrant
Certificate, to purchase, on or after the date on which the Class A Warrants are
first quoted on the Nasdaq Capital Market ("Nasdaq"), and on or before the close
of business on the fifth anniversary of the effective date of the public
offering (the "Expiration Date"), one fully paid and non-assessable share of
Common Stock for each Class A Warrant evidenced by such Class A Warrant
Certificate for $____ [75% of the IPO price for the Unit]. The exercise price of
the Warrants (the "Class A Exercise Price") is subject to adjustment as provided
in Section 6 hereof. Each Class B Warrant Certificate shall entitle the
registered holder thereof, subject to the provisions of this Agreement and of
the Class B Warrant Certificate, to purchase, on or after the date on which the
Class B Warrants are first quoted on Nasdaq, and on or before the close of
business on the Expiration Date, one fully paid and non-assessable share of
Common Stock for each Class B Warrant evidenced by such Class B Warrant
Certificate for $___ [100% of the IPO price for the Unit]. The exercise price of
the Class B Warrants (the "Class B Exercise Price") is subject to adjustment as
provided in Section 6 hereof. Each Warrant Certificate issued as a part of a
Unit offered to the public as described in the recitals, above, shall be dated
___________, 2006; each other Warrant Certificate shall be dated the date on
which the Warrant Agent receives valid issuance instructions from the Company or
a transferring holder of a Warrant Certificate or, if such instructions specify
another date, such other date.

      For purposes of this Agreement, the term "close of business" on any given
date shall mean 5:00 p.m., Eastern time, on such date; provided, however, that
if such date is not a business day, it shall mean 5:00 p.m., Eastern time, on
the next succeeding business day. For purposes of this Agreement, the term
"business day" shall mean any day other than a Saturday, Sunday, or a day on
which banking institutions in New York, New York (or in the state in which the
Warrant Agent maintains the principal office in which it conducts business
related to the Warrants) are authorized or obligated by law to be closed.

      Each Warrant Certificate shall be executed on behalf of the Company by its
Chairperson of the Board of Directors or Vice Chairperson of the Board of
Directors, or its President or a Vice President, and by its Treasurer or an
Assistant Treasurer, or its Secretary or an Assistant Secretary, either manually
or by facsimile signature printed thereon, and have affixed thereto the
Company's seal or a facsimile thereof. Each Warrant Certificate shall be
manually or by facsimile signature printed thereon countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. In case
any officer of the Company who shall have signed any Warrant Certificate shall
cease to be such officer of the Company before countersignature by the Warrant
Agent and issue and delivery thereof by the Company, such Warrant Certificate,
nevertheless, may be countersigned by the Warrant Agent, issued and delivered
with the same force and effect as though the person who signed such Warrant
Certificate had not ceased to be such officer of the Company.

                                        2



SECTION 3. Subsequent Issue of Warrant Certificates

      Subsequent to their original issuance, no Warrant Certificates shall be
reissued except: (i) Warrant Certificates issued upon transfer thereof in
accordance with Section 4 hereof; (ii) Warrant Certificates issued upon any
combination, split-up or exchange of Warrant Certificates pursuant to Section 4
hereof; (iii) Warrant Certificates issued in replacement of mutilated,
destroyed, lost or stolen Warrant Certificates pursuant to Section 5 hereof;
(iv) Warrant Certificates issued upon the partial exercise of Warrant
Certificates pursuant to Section 7 hereof; and (v) Warrant Certificates issued
to reflect any adjustment or change in the Exercise Price or the number or kind
of shares purchasable thereunder pursuant to Section 22 hereof. The Warrant
Agent is hereby irrevocably authorized to countersign and deliver, in accordance
with the provisions of said Sections 4, 5, 7 and 22, the new Warrant
Certificates required for purposes thereof, and the Company, whenever required
by the Warrant Agent, will supply the Warrant Agent with Warrant Certificates
duly executed on behalf of the Company for such purposes.

SECTION 4. Transfers and Exchanges of Warrant Certificates

      The Warrant Agent will keep or cause to be kept books for registration of
ownership and transfer of the Warrant Certificates issued hereunder. Such
registers shall show the names and addresses of the respective holders of the
Warrant Certificates and the kind and number of Warrants evidenced by each such
Warrant Certificate.

      The Warrant Agent shall, from time to time, register the transfer of any
outstanding Warrants upon the books to be maintained by the Warrant Agent for
that purpose, upon surrender of the Warrant Certificate evidencing such
Warrants, with the Form of Assignment duly filled in and executed with such
signature guaranteed by a financial institution that is a member of a Securities
Transfer Association approved medallion program, such as STAMP, SEMP or MSP, to
the Warrant Agent at its offices located at 1745 Gardena Avenue, 2nd Floor,
Glendale, California 91204, at any time on or before the Expiration Date of such
Warrant, and upon payment to the Warrant Agent for the account of the Company of
an amount equal to any applicable transfer tax. Payment of the amount of such
tax may be made in cash, or by certified or official bank check, payable in
lawful money of the United States of America to the order of the Company.

      Upon receipt of a Warrant Certificate, with the Form of Assignment duly
filled in and executed, accompanied by payment of an amount equal to any
applicable transfer tax, the Warrant Agent shall promptly cancel the surrendered
Warrant Certificate and countersign and deliver to the transferee a new Warrant
Certificate for the number of full Class A Warrants or Class B Warrants, as the
case may be, transferred to such transferee; provided, however, that in case the
registered holder of any Warrant Certificate shall elect to transfer fewer than
all of the Warrants evidenced by such Warrant Certificate, the Warrant Agent in
addition shall promptly countersign and deliver to such registered holder a new
Warrant Certificate or Certificates for the number of full Class A Warrants or
Class B Warrants, as the case may be, not so transferred.

                                        3



      Any Warrant Certificate or Certificates may be exchanged at the option of
the holder thereof for another Warrant Certificate or Certificates of different
denominations, of like tenor and representing in the aggregate the same kind and
number of Warrants, upon surrender of such Warrant Certificate or Certificates,
with the Form of Assignment duly filled in and executed, to the Warrant Agent,
at any time or from time to time after the close of business on the date hereof
and prior to the close of business on the Expiration Date. The Warrant Agent
shall promptly cancel the surrendered Warrant Certificate and deliver the new
Warrant Certificate pursuant to the provisions of this Section.

SECTION 5. Mutilated, Destroyed, Lost or Stolen Warrant Certificates

      Upon receipt by the Company and the Warrant Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of any
Warrant Certificate, and in the case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to them of all
reasonable expenses incidental thereto, and, in the case of mutilation, upon
surrender and cancellation of the Warrant Certificate, the Warrant Agent shall
countersign and deliver a new Warrant Certificate of like tenor for the same
kind and number of Warrants.

SECTION 6. Adjustments of Number and Kind of Shares Purchasable and Exercise
Price

      The number and kind of securities or other property purchasable upon
exercise of a Warrant shall be subject to adjustment from time to time upon the
occurrence, after the date hereof, of any of the following events:

            A. In case the Company shall (1) pay a dividend in, or make a
distribution of, shares of capital stock on its outstanding Common Stock, (2)
subdivide its outstanding shares of Common Stock into a greater number of such
shares or (3) combine its outstanding shares of Common Stock into a smaller
number of such shares, the total number of shares of Common Stock purchasable
upon the exercise of each Warrant outstanding immediately prior thereto shall be
adjusted so that the holder of any Warrant Certificate thereafter surrendered
for exercise shall be entitled to receive at the same aggregate Exercise Price
the number of shares of capital stock (of one or more classes) which such holder
would have owned or have been entitled to receive immediately following the
happening of any of the events described above had such Warrant been exercised
in full immediately prior to the record date with respect to such event. Any
adjustment made pursuant to this Subsection shall, in the case of a stock
dividend or distribution, become effective as of the record date therefor and,
in the case of a subdivision or combination, be made as of the effective date
thereof. If, as a result of an adjustment made pursuant to this Subsection, the
holder of any Warrant Certificate thereafter surrendered for exercise shall
become entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company (whose determination shall be
conclusive and shall be evidenced by a Board resolution filed with the Warrant
Agent) shall determine the allocation of the adjusted Exercise Price between or
among shares of such classes of capital stock.

            B. In the event of a capital reorganization or a reclassification of
the Common Stock (except as provided in Subsection A. above or Subsection E.
below), any Warrantholder,

                                        4



upon exercise of Warrants, shall be entitled to receive, in substitution for the
Common Stock to which he would have become entitled upon exercise immediately
prior to such reorganization or reclassification, the shares (of any class or
classes) or other securities or property of the Company (or cash) that he would
have been entitled to receive at the same aggregate Exercise Price upon such
reorganization or reclassification if such Warrants had been exercised
immediately prior to the record date with respect to such event; and in any such
case, appropriate provision (as determined by the Board of Directors of the
Company, whose determination shall be conclusive and shall be evidenced by a
certified Board resolution filed with the Warrant Agent) shall be made for the
application of this Section 6 with respect to the rights and interests
thereafter of the Warrantholders (including but not limited to the allocation of
the Exercise Price between or among shares of classes of capital stock), to the
end that this Section 6 (including the adjustments of the number of shares of
Common Stock or other securities purchasable and the Exercise Price thereof)
shall thereafter be reflected, as nearly as reasonably practicable, in all
subsequent exercises of the Warrants for any shares or securities or other
property (or cash) thereafter deliverable upon the exercise of the Warrants.

            C. Whenever the number of shares of Common Stock or other securities
purchasable upon exercise of a Warrant is adjusted as provided in this Section
6, the Company will promptly file with the Warrant Agent a certificate signed by
of its Chief Executive Officer or its President or a Vice President of the
Company and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Company setting forth the number and kind of
securities or other property purchasable upon exercise of a Warrant, as so
adjusted, stating that such adjustments in the number or kind of shares or other
securities or property conform to the requirements of this Section 6, and
setting forth a brief statement of the facts accounting for such adjustments.
Promptly after receipt of such certificate, the Company, or the Warrant Agent at
the Company's request, will deliver, by first-class, postage prepaid mail, a
brief summary thereof (to be supplied by the Company) to the registered holders
of the outstanding Warrant Certificates; provided, however, that failure to file
or to give any notice required under this Subsection, or any defect therein,
shall not affect the legality or validity of any such adjustments under this
Section 6; and provided, further, that, where appropriate, such notice may be
given in advance and included as part of the notice required to be given
pursuant to Section 12 hereof.

            D. In case of any consolidation of the Company with, or merger of
the Company into, another corporation (other than a consolidation or merger
which does not result in any reclassification or change of the outstanding
Common Stock), or in case of any sale or conveyance to another corporation of
the property of the Company as an entirety or substantially as an entirety, the
corporation formed by such consolidation or merger or the corporation which
shall have acquired such assets, as the case may be, shall execute and deliver
to the Warrant Agent a supplemental warrant agreement providing that the holder
of each Warrant then outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon exercise of such Warrant, solely
the kind and amount of shares of stock and other securities and property (or
cash) receivable upon such consolidation, merger, sale or transfer by a holder
of the number of shares of Common Stock of the Company for which such Warrant
might have been exercised immediately prior to such consolidation, merger, sale
or transfer. Such supplemental warrant agreement shall provide for adjustments
which shall be as nearly equivalent as may be

                                        5



practicable to the adjustments provided in this Section. The above provision of
this Subsection shall similarly apply to successive consolidations, mergers,
sales or transfers.

      The Warrant Agent shall not be under any responsibility to determine the
correctness of any provision contained in any such supplemental warrant
agreement relating to either the kind or amount of shares of stock or securities
or property (or cash) purchasable by holders of Warrant Certificates upon the
exercise of their Warrants after any such consolidation, merger, sale or
transfer or of any adjustment to be made with respect thereto, but subject to
the provisions of Section 20 hereof, may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, a
certificate of a firm of independent certified public accountants (who may be
the accountants regularly employed by the Company) with respect thereto.

            E. Irrespective of any adjustments in the number or kind of shares
issuable upon exercise of Warrants, Warrant Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the similar Warrant Certificates initially issuable
pursuant to this Warrant Agreement.

            F. The Company may retain a firm of independent public accountants
of recognized standing, which may be the firm regularly retained by the Company,
selected by the Audit Committee of the Board of Directors of the Company, and
not disapproved by the Warrant Agent, to make any computation required under
this Section, and a certificate signed by such firm shall, in the absence of
fraud or gross negligence, be conclusive evidence of the correctness of any
computation made under this Section.

            G. For the purpose of this Section, the term "Common Stock" shall
mean: (i) the Common Stock; or (ii) any other class of stock resulting from
successive changes or reclassifications of such Common Stock consisting solely
of changes in par value, or from par value to no par value, or from no par value
to par value. In the event that at any time as a result of an adjustment made
pursuant to this Section, the holder of any Warrant thereafter surrendered for
exercise shall become entitled to receive any shares of capital stock of the
Company other than shares of Common Stock, thereafter the number of such other
shares so receivable upon exercise of any Warrant shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Common Stock contained in this Section,
and all other provisions of this Agreement, with respect to the Common Stock,
shall apply on like terms to any such other shares.

            H. The Company may, from time to time and to the extent permitted by
law, reduce the Exercise Price of the Class A Warrants or Class B Warrants by
any amount for a period of not less than 60 days. If the Company so reduces the
Exercise Price of such Warrants, it will give not less than 60 days' notice of
such decrease, which notice may be in the form of a press release, and shall
take such other steps as may be required under applicable law in connection with
any offers or sales of securities at the reduced price.

                                        6



SECTION 7. Exercise and Redemption of Warrants

      Unless the Warrants have been redeemed as provided in this Section 7, the
registered holder of any Warrant Certificate may exercise the Warrants evidenced
thereby, in whole at any time or in part from time to time at or prior to the
close of business, on the Expiration Date relating to such Warrant, subject to
the provisions of Section 9, at which time the Warrant Certificates shall be and
become wholly void and of no value. Warrants may be exercised by their holders
or redeemed by the Company as follows:

            A. Exercise of Warrants shall be accomplished upon surrender of the
Warrant Certificate evidencing such Warrants, with the Form of Election to
Purchase on the reverse side thereof duly filled in and executed, to the Warrant
Agent at its stock transfer office located at 1745 Gardena Avenue, 2nd Floor,
Glendale, California 91204, together with payment to the Company of the Exercise
Price (as of the date of such surrender) of the Warrants then being exercised
and an amount equal to any applicable transfer tax and, if requested by the
Company, any other taxes or governmental charges which the Company may be
required by law to collect in respect of such exercise. Payment of the Exercise
Price and other amounts may be made by wire transfer of good funds, or by
certified or bank cashier's check, payable in lawful money of the United States
of America to the order of the Company. No adjustment shall be made for any cash
dividends, whether paid or declared, on any securities issuable upon exercise of
a Warrant. The Warrant Agent shall deposit or invest any and all funds received
in connection with the exercise of the Warrants in federally insured, interest
bearing accounts with a financial institution or institutions designated by the
Warrant Agent. The Warrant Agent shall have no liability with respect to the
performance of any such investments other than, in the case of funds deposited
in accounts maintained by the Warrant Agent, the liability of the Warrant Agent
to its depositors in such accounts generally. The Company shall be entitled to
the interest, if any, on funds deposited with the Warrant Agent. At the request
of the Company, the Warrant Agent shall remit any funds held by it as a result
of the exercise of the Warrants to the Company.

            B. Upon receipt of a Warrant Certificate, with the Form of Election
to Purchase duly filled in and executed, accompanied by payment of the Exercise
Price of the Warrants being exercised (and of an amount equal to any applicable
taxes or government charges as aforesaid), the Warrant Agent shall promptly
request from the Transfer Agent with respect to the securities to be issued and
deliver to or upon the order of the registered holder of such Warrant
Certificate, in such name or names as such registered holder may designate, a
certificate or certificates for the number of full shares of the securities to
be purchased, together with cash made available by the Company pursuant to
Section 8 hereof in respect of any fraction of a share of such securities
otherwise issuable upon such exercise. If the Warrant is then exercisable to
purchase property other than securities, the Warrant Agent shall take
appropriate steps to cause such property to be delivered to or upon the order of
the registered holder of such Warrant Certificate. In addition, if it is
required by law and upon instruction by the Company, the Warrant Agent will
deliver to each Warrantholder a prospectus which complies with the provisions of
Section 9 of the Securities Act of 1933, as amended, and the Company agrees to
supply Warrant Agent with sufficient number of prospectuses to effectuate that
purpose.

                                        7



            C. In case the registered holder of any Warrant Certificate shall
exercise fewer than all of the Warrants evidenced by such Warrant Certificate,
the Warrant Agent shall promptly countersign and deliver to the registered
holder of such Warrant Certificate, or to his duly authorized assigns, a new
Warrant Certificate or Certificates evidencing the number of Warrants that were
not so exercised.

            D. Each person in whose name any certificate for securities is
issued upon the exercise of Warrants shall for all purposes be deemed to have
become the holder of record of the securities represented thereby as of, and
such certificate shall be dated, the date upon which the Warrant Certificate was
duly surrendered in proper form and payment of the Exercise Price (and of any
applicable taxes or other governmental charges) was made; provided, however,
that if the date of such surrender and payment is a date on which the stock
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares as of, and the certificate for such
shares shall be dated, the next succeeding business day on which the stock
transfer books of the Company are open (whether before, on or after the
Expiration Date relating to such Warrant) and the Warrant Agent shall be under
no duty to deliver the certificate for such shares until such date. The Company
covenants and agrees that it shall not cause its stock transfer books to be
closed for a period of more than 20 consecutive business days except upon
consolidation, merger, sale of all or substantially all of its assets,
dissolution or liquidation or as otherwise provided by law.

            E. The Class A Warrants outstanding at the time of redemption may be
redeemed at the option of the Company, beginning on ___________, 2006 [six
months from the date of this Agreement], in whole or in part on a pro-rata
basis, by giving not less than 30 days' prior notice as provided in Section 7(F)
below, which notice may not be give before, but may be given at any time after,
the closing price of the Common Stock on the principal market, exchange or
quotation system, on which it is then traded or quoted has equaled or exceeded
$____ [100% of the initial unit offering price] per share on each of five
consecutive trading days that occur subsequent to the date of this Warrant
Agreement. The price at which Class A Warrants may be redeemed (the "Redemption
Price") is $0.25 per Class A Warrant (subject to adjustment in the event of a
stock split, dividend or the like). On and after the redemption date the holders
of record of redeemed Class A Warrants shall be entitled to payment of the
Redemption Price upon surrender of such redeemed Class A Warrants to the Company
at the office of the Warrant Agent designated for that purpose.

            F. The Class B Warrants outstanding at the time of redemption may be
redeemed at the option of the Company, beginning on ___________, 2006 [six
months from the date of this Agreement], in whole or in part on a pro-rata
basis, by giving not less than 30 days' prior notice as provided in Section 7(F)
below, which notice may not be give before, but may be given at any time after,
the Company's gross revenue for any 12-month period preceding the date of the
notice, as confirmed by an independent audit, equals or exceeds $20 million. The
price at which Class B Warrants may be redeemed (the "Redemption Price") is
$0.25 per Class B Warrant (subject to adjustment in the event of a stock split,
dividend or the like). On and after the redemption date the holders of record of
redeemed Class B Warrants shall be entitled to payment of the Redemption Price
upon surrender of such redeemed Class B Warrants to the Company at the office of
the Warrant Agent designated for that purpose.

                                        8



            G. Notice of redemption of the Class A Warrants or Class B Warrants,
as the case may be, shall be given at least 30 days prior to the redemption date
by first class mail, postage prepaid, a copy of such notice to the Warrant Agent
and to all of the holders of record of Class A Warrants or the Class B Warrants,
as the case may be, at their respective addresses appearing on the books or
transfer records of the Company or such other address designated in writing by
the holder of record to the Warrant Agent not less than 40 days prior to the
redemption date.

            H. From and after the redemption date, all rights of the Class A
Warrantholders or the Class B Warrantholders, as the case may be (except the
right to receive the Redemption Price) shall terminate, but only if: (a) no
later than one day prior to the redemption date the Company shall have
irrevocably deposited with the Warrant Agent as paying agent a sufficient amount
to pay on the redemption date the Redemption Price for all Class A Warrants or
the Class B Warrants, as the case may be, called for redemption; and (b) the
notice of redemption shall have stated the name and address of the Warrant Agent
and the intention of the Company to deposit such amount with the Warrant Agent
no later than one day prior to the redemption date.

            I. On the redemption date, the Warrant Agent shall pay to the
holders of record of redeemed Class A Warrants or the Class B Warrants, as the
case may be, all monies received by the Warrant Agent for the redemption of
Class A Warrants or the Class B Warrants, as the case may be, to which the
holders of record of such redeemed Class A Warrants or the Class B Warrants, as
the case may be, who shall have surrendered their Class A Warrants or their
Class B Warrants, as the case may be, are entitled. The Warrant Agent shall have
no obligation to pay for the redemption of the Class A Warrants or the Class B
Warrants, as the case may be, except to the extent that funds for such payment
have been provided to it by the Company.

            J. Any amounts deposited with the Warrant Agent that are not
required for redemption of Class A Warrants or the Class B Warrants, as the case
may be, may be withdrawn by the Company. Any amounts deposited with the Warrant
Agent that shall be unclaimed after six months after the redemption date shall
be redelivered back to the Company, and thereafter the holders of the Class A
Warrants or the Class B Warrants, as the case may be, called for redemption for
which such funds were deposited shall look solely to the Company for payment.
The Company shall be entitled to the interest, if any, on funds deposited with
the Warrant Agent and the holders of redeemed Class A Warrants or the Class B
Warrants, as the case may be, shall have no right to any such interest. The
Warrant Agent shall deposit or invest any and all funds deposited with it by the
Company in connection with any redemption in federally insured, interest bearing
accounts with a financial institution or institutions designated by the Warrant
Agent but shall have no liability with respect to the performance of any such
investments other than, in the case of funds deposited in accounts maintained by
the Warrant Agent, the liability of the Warrant Agent to its depositors in such
accounts, generally.

            K. If the Company fails to make a sufficient deposit with the
Warrant Agent as provided above, the holder of any Class A Warrants or the Class
B Warrants, as the case may be, called for redemption may at the option of the
holder (a) by notice to the Company declare the notice of redemption a nullity
as to such holder, or (b) maintain an action against the Company for the
Redemption Price. If the holder brings such an action, the Company will pay
reasonable

                                        9



attorneys' fees of the holder. If the holder fails to bring an action against
the Company for the Redemption Price within 60 days after the redemption date,
the holder shall be deemed to have elected to declare the notice of redemption
to be a nullity as to such holder and such notice shall be without any force or
effect as to such holder. Except as otherwise specifically provided in this
Paragraph K, a notice of redemption, once mailed by the Company as provided in
Paragraph G, shall be irrevocable.

SECTION 8. Fractional Interests

      The Company shall not issue any Warrant Certificate evidencing a fraction
of a Warrant, nor shall the Company issue any fractional share of securities
upon exercise of a Warrant. By accepting a Warrant Certificate, the holder
thereof expressly waives any right to receive a Warrant Certificate evidencing
any fraction of a Warrant or to receive any fractional share of securities upon
exercise of a Warrant. In lieu of fractional interest in a Warrant or a share of
Common Stock created upon separation of the Units or exercise of a Warrant,
respectively, a holder shall receive an amount of cash equal to the fraction
times the closing price of the Warrants on the date of separation of the Units
(if the fractional interest is in a Warrant) or the closing price of the Common
Stock (if the fractional interest is in Common Stock) on Nasdaq or such other
exchange, market or quotation service on which the Common Stock or warrant, as
the case may be, principally trades or is quoted.

SECTION 9. Reservation of Equity Securities

      The Company covenants that it will at all times reserve and keep
available, free from any pre-emptive rights, out of its authorized and unissued
equity securities, solely for the purpose of issue upon exercise of the
Warrants, such number of shares of equity securities of the Company as shall
then be issuable upon the exercise of all outstanding Warrants ("Equity
Securities"). The Company covenants that all Equity Securities which shall be so
issuable shall, upon such issue, be duly authorized, validly issued, fully paid
and non-assessable.

      The Company covenants that if any equity securities, required to be
reserved for the purpose of issue upon exercise of the Warrants hereunder,
require registration with or approval of any governmental authority under any
federal or state law before such shares may be issued upon exercise of Warrants,
the Company will use all commercially reasonable efforts to cause such
securities to be duly registered, or approved, as the case may be, and, to the
extent practicable, take all such action in anticipation of and prior to the
exercise of the Warrants, including, without limitation, filing any and all
post-effective amendments to the Company's Registration Statement on Form SB-2
(Registration No. 333-_______) necessary to permit a public offering of the
securities underlying the Warrants at any and all times during the term of this
Agreement, provided, however, that in no event shall such securities be issued,
and the Company is authorized to refuse to honor the exercise of any Warrant, if
such exercise would result in the opinion of the Company's Board of Directors,
upon advice of counsel, in the violation of any law; and provided further that,
in the case of a Warrant exercisable solely for securities listed on a
securities exchange or for which there are at least two independent market
makers, in lieu of obtaining such registration or approval, the Company may
elect to redeem Warrants submitted to the Warrant Agent for exercise for a price
equal to the difference between

                                       10



the aggregate low asked price, or closing price, as the case may be, of the
securities for which such Warrant is exercisable on the date of such submission
and the Exercise Price of such Warrants; in the event of such redemption, the
Company will pay to the holder of such Warrants the above-described redemption
price in cash within 10 business days after receipt of notice from the Warrant
Agent that such Warrants have been submitted for exercise.

SECTION 10. Reduction of Exercise Price Below Par Value

      Before taking any action that would cause an adjustment pursuant to
Section 6 hereof reducing the portion of the Class A Exercise Price or the Class
B Exercise Price required to purchase one share of capital stock below the then
par value (if any) of a share of such capital stock, the Company will use its
best efforts to take any corporate action which, in the opinion of its counsel,
may be necessary in order that the Company may validly and legally issue fully
paid and non-assessable shares of such capital stock.

SECTION 11. Payment of Taxes

      The Company covenants and agrees that it will pay when due and payable any
and all federal and state documentary, stamp and other original issue taxes
which may be payable in respect of the original issuance of the Warrant
Certificates, or any shares of Common Stock or other securities upon the
exercise of Warrants. The Company shall not, however, be required (i) to pay any
tax which may be payable in respect of any transfer involved in the transfer and
delivery of Warrant Certificates or the issuance or delivery of certificates for
Common Stock or other securities in a name other than that of the registered
holder of the Warrant Certificate surrendered for purchase or (ii) to issue or
deliver any certificate for shares of Common Stock or other securities upon the
exercise of any Warrant Certificate until any such tax shall have been paid, all
such tax being payable by the holder of such Warrant Certificate at the time of
surrender.

SECTION 12. Notice of Certain Corporate Action

      In case the Company after the date hereof shall propose (i) to offer to
the holders of Common Stock, generally, rights to subscribe to or purchase any
additional shares of any class of its capital stock, any evidences of its
indebtedness or assets, or any other rights or options or (ii) to effect any
reclassification of Common Stock (other than a reclassification involving merely
the subdivision or combination of outstanding shares of Common Stock) or any
capital reorganization, or any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is required, or
any sale, transfer or other disposition of its property and assets substantially
as an entirety, or the liquidation, voluntary or involuntary dissolution or
winding-up of the Company, then, in each such case, the Company shall file with
the Warrant Agent and the Company, or the Warrant Agent on the Company's behalf
and at the Company's request, shall mail (by first-class, postage prepaid mail)
to all registered holders of the Warrant Certificates notice of such proposed
action, which notice shall specify the date on which the books of the Company
shall close or a record be taken for such offer of rights or options, or the
date on which such reclassification, reorganization, consolidation, merger,
sale, transfer, other disposition, liquidation, voluntary or involuntary

                                       11



dissolution or winding-up shall take place or commence, as the case may be, and
which shall also specify any record date for determination of holders of Common
Stock entitled to vote thereon or participate therein and shall set forth such
facts with respect thereto as shall be reasonably necessary to indicate any
adjustments in the Class A Exercise Price or the Class B Exercise Price and the
number or kind of shares or other securities purchasable upon exercise of
Warrants which will be required as a result of such action. Such notice shall be
filed and mailed in the case of any action covered by clause (i) above, at least
ten days prior to the record date for determining holders of the Common Stock
for purposes of such action or, if a record is not to be taken, the date as of
which the holders of shares of Common Stock of record are to be entitled to such
offering; and, in the case of any action covered by clause (ii) above, at least
20 days prior to the earlier of the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, other disposition,
liquidation, voluntary or involuntary dissolution or winding-up is expected to
become effective and the date on which it is expected that holders of shares of
Common Stock of record on such date shall be entitled to exchange their shares
for securities or other property deliverable upon such reclassification,
reorganization, consolidation, merger, sale, transfer, other disposition,
liquidation, voluntary or involuntary dissolution or winding-up.

      Failure to give any such notice or any defect therein shall not affect the
legality or validity of any transaction listed in this Section 12.

SECTION 13. Disposition of Proceeds on Exercise of Warrant Certificates, etc.

      The Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay to the Company all monies received by
the Warrant Agent for the purchase of securities or other property through the
exercise of such Warrants.

      The Warrant Agent shall keep copies of this Agreement available for
inspection by Warrantholders during normal business hours at its stock transfer
office. Copies of this Agreement may be obtained upon written request addressed
to the Warrant Agent at its stock transfer office located at 1745 Gardena
Avenue, 2nd Floor, Glendale, California 91204.

SECTION 14. Warrantholder Not Deemed a Stockholder

      No Warrantholder, as such, shall be entitled to vote, receive dividends or
be deemed the holder of Common Stock or any other securities of the Company
which may at any time be issuable on the exercise of the Warrants represented
thereby for any purpose whatever, nor shall anything contained herein or in any
Warrant Certificate be construed to confer upon any Warrantholder, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value or change of stock to no par value, consolidation, merger,
conveyance or otherwise), or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 12 hereof), or to receive
dividend or subscription rights, or otherwise, until such Warrant Certificate
shall have been exercised in accordance with the provisions hereof and the
receipt of the Exercise Price and any other amounts payable upon such exercise
by the Warrant Agent.

                                       12



SECTION 15. Right of Action

      All rights of action in respect to this Agreement are vested in the
respective registered holders of the Warrant Certificates; and any registered
holder of any Warrant Certificate, without the consent of the Warrant Agent or
of any other holder of a Warrant Certificate, may, in his own behalf for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company suitable to enforce, or otherwise in respect of, his right
to exercise the Warrants evidenced by such Warrant Certificate, for the purchase
of shares of the Common Stock in the manner provided in the Warrant Certificate
and in this Agreement.

SECTION 16. Agreement of Holders of Warrant Certificates

      Every holder of a Warrant Certificate by accepting the same consents and
agrees with the Company, the Warrant Agent and with every other holder of a
Warrant Certificate that:

            A. the Warrant Certificates are transferable on the registry books
of the Warrant Agent only upon the terms and conditions set forth in this
Agreement; and

            B. the Company and the Warrant Agent may deem and treat the person
in whose name the Warrant Certificate is registered as the absolute owner of the
Warrant (notwithstanding any notation of ownership or other writing thereon made
by anyone other than the Company or the Warrant Agent) for all purposes whatever
and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary.

SECTION 17. Cancellation of Warrant Certificates

      In the event that the Company shall purchase or otherwise acquire any
Warrant Certificate or Certificates after the issuance thereof, such Warrant
Certificate or Certificates shall thereupon be delivered to the Warrant Agent
and be canceled by it and retired. The Warrant Agent shall also cancel any
Warrant Certificate delivered to it for exercise, in whole or in part, or
delivered to it for transfer, split-up, combination or exchange. Warrant
Certificates so canceled shall be retained by the Warrant Agent or disposed of
in accordance with its customary business practices relating to such matters;
provided that the Warrant Agent shall give the Company notice prior to its
disposition or destruction of the Warrant Certificates.

SECTION 18. Concerning the Warrant Agent

      The Company agrees to pay to the Warrant Agent from time to time, upon
receipt of a written demand of the Warrant Agent, reasonable compensation for
all services rendered by it hereunder and also its reasonable expenses,
including counsel fees, and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Warrant Agent agrees to use its best efforts to submit in advance
a written estimate of any costs in excess of $2,500 that it expects to incur in
the exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Warrant Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without gross

                                       13



negligence, bad faith or willful misconduct on the part of the Warrant Agent,
arising out of or in connection with the acceptance and administration of this
Agreement.

SECTION 19. Merger or Consolidation or Change of Name of Warrant Agent

      Any corporation into which the Warrant Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Warrant Agent, shall be the
successor to the Warrant Agent hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor warrant agent
under the provisions of Section 21 hereof. In case at the time such successor to
the Warrant Agent shall succeed to the agency created by this Agreement, any of
the Warrant Certificates shall have been countersigned but not delivered, any
such successor to the Warrant Agent may adopt the countersignature of the
original Warrant Agent and deliver such Warrant Certificates so countersigned;
and in case at that time any of the Warrant Certificates shall not have been
countersigned, any successor to the Warrant Agent may countersign such Warrant
Certificates either in the name of the predecessor Warrant Agent or in the name
of the successor Warrant Agent; and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates and in this
Agreement.

      In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior name
and deliver Warrant Certificates so countersigned; and in case at that time any
of the Warrant Certificates shall not have been countersigned, the Warrant Agent
may countersign such Warrant Certificates either in its prior name or in its
changed name; and in all such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Agreement.

SECTION 20. Duties of Warrant Agent

      The Warrant Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Warrant Certificates, by their acceptance thereof, shall be
bound:

            A. The Warrant Agent may consult with counsel satisfactory to it
(who may be counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Warrant Agent as to any
action taken, suffered or omitted by it in good faith and in accordance with
such opinion; provided, however, that the Warrant Agent shall have exercised
reasonable care in the selection of such counsel. Fees and expenses of such
counsel, to the extent reasonable, shall be paid by the Company, and subject to
the provisions of Section 18 hereof.

            B. Whenever in the performance of its duties under this Agreement,
the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other

                                       14



evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate signed by a Chairperson
or co-Chairperson of the Board or the President or a Vice President or the
Secretary of the Company and delivered to the Warrant Agent; and such
certificate shall be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.

            C. The Warrant Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.

            D. The Warrant Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Warrant
Certificates (except its countersignature on the Warrant Certificates and such
statements or recitals as describe the Warrant Agent or action taken or to be
taken by it) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.

            E. The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Warrant Agent) or in respect of the
validity or execution of any Warrant Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Warrant Certificate;
nor shall it be responsible for the making of any change in the number of shares
of Common Stock for which a Warrant is exercisable required under the provisions
of Section 6 or responsible for the manner, method or amount of any such change
or the ascertaining of the existence of facts that would require any such
adjustment or change (except with respect to the exercise of Warrant
Certificates after actual notice of any adjustment of the Exercise Price); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of Common Stock to be
issued pursuant to this Agreement or any Warrant Certificate or as to whether
any shares of Common Stock will, when issued, be validly issued, fully paid and
non-assessable.

            F. The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or take any other action likely to involve
expense unless the Company or one or more registered holders of Warrant
Certificates shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses which may be incurred. All rights of action
under this Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrants or the production thereof at
any trial or other proceeding relative thereto, and any such action, suit or
proceeding instituted by the Warrant Agent shall be brought in its name as
Warrant Agent, and any recovery of judgment shall be for the ratable benefit of
the registered holders of the Warrant Certificates, as their respective rights
or interests may appear.

            G. The Warrant Agent and any shareholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to or otherwise act as fully and freely as though it were not Warrant

                                       15



Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other legal entity.

            H. The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from a
Chairman or co-Chairman of the Board or President or a Vice President or the
Secretary or the Controller of the Company, and to apply to such officers for
advice or instructions in connection with the Warrant Agent's duties, and it
shall not be liable for any action taken or suffered or omitted by it in good
faith in accordance with instructions of any such officer.

            I. The Warrant Agent will not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.

            J. The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees and the Warrant Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys, agents or employees or for any loss to the Company resulting
from such neglect or misconduct; provided, however, that reasonable care shall
have been exercised in the selection and continued employment of such attorneys,
agents and employees.

            K. The Warrant Agent will not incur any liability or responsibility
to the Company or to any holder of any Warrant Certificate for any action taken,
or any failure to take action, in reliance on any notice, resolution, waiver,
consent, order, certificate, or other paper, document or instrument reasonably
believed by the Warrant Agent to be genuine and to have been signed, sent or
presented by the proper party or parties.

            L. The Warrant Agent will act hereunder solely as agent of the
Company in a ministerial capacity, and its duties will be determined solely by
the provisions hereof. The Warrant Agent will not be liable for anything which
it may do or refrain from doing in connection with this Agreement except for its
own gross negligence, bad faith or willful conduct.

SECTION 21. Change of Warrant Agent

      The Warrant Agent may resign and be discharged from its duties under this
Agreement upon 30 days' prior notice in writing mailed, by registered or
certified mail, to the Company. The Company may remove the Warrant Agent or any
successor warrant agent upon 30 days' prior notice in writing, mailed to the
Warrant Agent or successor warrant agent, as the case may be, by registered or
certified mail. If the Warrant Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Warrant Agent and shall, within 15 days following such appointment, give
notice thereof in writing to each registered holder of the Warrant Certificates.
If the Company shall fail to make such appointment within a period of 15 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Warrant Agent,
then the Company agrees to perform the duties of the Warrant Agent hereunder
until a

                                       16



successor Warrant Agent is appointed. After appointment and execution of a copy
of this Agreement in effect at that time, the successor Warrant Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Warrant Agent without further act or deed; but the
former Warrant Agent shall deliver and transfer to the successor Warrant Agent,
within a reasonable time, any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Failure to give any notice provided for in this Section, however,
or any defect therein shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
warrant agent, as the case may be.

SECTION 22. Issuance of New Warrant Certificates

      Notwithstanding any of the provisions of this Agreement or the several
Warrant Certificates to the contrary, the Company may, at its option, issue new
Warrant Certificates in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the Class A Exercise Price or the Class B
Exercise Price or the number or kind of shares purchasable under the several
Warrant Certificates made in accordance with the provisions of this Agreement.

SECTION 23. Notices

      Notice or demand pursuant to this Agreement to be given or made on the
Company by the Warrant Agent or by the registered holder of any Warrant
Certificate shall be sufficiently given or made if sent by first class mail,
postage prepaid, addressed (until another address is filed in writing by the
Company with the Warrant Agent) as follows:

      American Mold Guard, Inc.
      30200 Rancho Viejo Road, Suite G
      San Juan Capistrano, CA 92675
      Attention: Chief Financial Officer

      Subject to the provisions of Section 21, any notice pursuant to this
Agreement to be given or made by the Company or by the holder of any Warrant
Certificate to or on the Warrant Agent shall be sufficiently given or made if
sent by first-class or registered mail, postage prepaid, addressed (until
another address is filed in writing by the Warrant Agent with the Company) as
follows:

      U.S. Stock Transfer Corporation
      1745 Gardena Avenue, 2nd Floor
      Glendale, CA 91204
      Attn: _____________

      Any notice or demand authorized to be given or made to the registered
holder of any Warrant Certificate under this Agreement shall be sufficiently
given or made if sent by first-class or registered mail, postage prepaid, to the
last address of such holder as it shall appear on the registers maintained by
the Warrant Agent.

                                       17



SECTION 24. Modification of Agreement

      The Warrant Agent may, without the consent or concurrence of the
Warrantholders, by supplemental agreement or otherwise, concur with the Company
in making any changes or corrections in this Agreement that the Warrant Agent
shall have been advised by counsel (who may be counsel for the Company) are
necessary or desirable to cure any ambiguity or to correct any defective or
inconsistent provision or clerical omission or mistake or manifest error herein
contained, or to make any other provisions in regard to matters or questions
arising hereunder and which shall not be inconsistent with the provisions of the
Warrant Certificates and which shall not adversely affect the interests of the
Warrantholders. As of the date hereof, this Agreement contains the entire and
only agreement, understanding, representation, condition, warranty or covenant
between the parties hereto with respect to the matters herein, supersedes any
and all other agreements between the parties hereto relating to such matters,
and may be modified or amended only by a written agreement signed by both
parties hereto pursuant to the authority granted by the first sentence of this
Section.

SECTION 25. Successors

      All the covenants and provisions of this Agreement by or for the benefit
of the Company or the Warrant Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.

SECTION 26. California Contract

      This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of California and for
all purposes shall be construed in accordance with the laws of said State.

SECTION 27. Termination

      This Agreement shall terminate as of the close of business on the
Expiration Date, or such earlier date upon which all Warrants shall have been
exercised or redeemed, except that the Warrant Agent shall account to the
Company as to all Warrants outstanding and all cash held by it as of the close
of business on the Expiration Date.

SECTION 28. Benefits of this Agreement

      Nothing in this Agreement or in the Warrant Certificates shall be
construed to give to any person or corporation other than the Company, the
Warrant Agent, and their respective successors and assigns hereunder and the
registered holders of the Warrant Certificates any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Warrant Agent, their respective
successors and assigns hereunder and the registered holders of the Warrant
Certificates.

                                       18



SECTION 29. Descriptive Headings

      The descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.

SECTION 30. Counterparts

      This Agreement may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute one
and the same instrument.

      (Remainder of page intentionally left blank; signature page follows)

                                       19



      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.

                                        AMERICAN MOLD GUARD, INC.

                                        By: ______________________________
                                            Name:
                                            Title:

                                        U.S. STOCK TRANSFER CORPORATION

                                        By: ______________________________
                                            Name:
                                            Title:

                                       20



                                    EXHIBIT A

             VOID AFTER 5 P.M. EASTERN TIME ON _______________, 2011

                        WARRANTS TO PURCHASE COMMON STOCK

No. AMGWA-___________                               ___________ Class A Warrants

                                                                   CUSIP _______

                            AMERICAN MOLD GUARD, INC.

THIS CERTIFIES THAT

or registered assigns, is the registered holder of the number of Class A
Warrants ("Class A Warrants") set forth above. Each Class A Warrant, unless and
until redeemed by the Company as provided in the Warrant Agreement, hereinafter
more fully described (the "Warrant Agreement"), entitles the holder thereof to
purchase from American Mold Guard, Inc., a corporation incorporated under the
laws of the State of California (the "Company"), subject to the terms and
conditions set forth hereinafter and in the Warrant Agreement, at any time on or
after the date on which the Class A Warrants are first quoted on the Nasdaq
Capital Market ("Nasdaq") or begin to trade on the Pacific Exchange and before
the close of business on _______________, 2011 ("Expiration Date"), one fully
paid and non-assessable share of Common Stock, no par value per share, of the
Company ("Common Stock") upon presentation and surrender of this Warrant
Certificate, with the instructions for the registration and delivery of Common
Stock filled in, at the stock transfer office located at 1745 Gardena Avenue,
Second Floor, Glendale, California 91204 of U.S. Stock Transfer Corporation,
Warrant Agent of the Company ("Warrant Agent") or of its successor warrant agent
or, if there be no successor warrant agent, at the corporate offices of the
Company, and upon payment of the Exercise Price (as defined in the Warrant
Agreement) and any applicable taxes paid either in cash, or by certified or
official bank check, payable in lawful money of the United States of America to
the order of the Company. Each Class A Warrant initially entitles the holder to
purchase one share of Common Stock for $___. The number and kind of securities
or other property for which the Class A Warrants are exercisable are subject to
adjustment in certain events, such as mergers, splits, stock dividends, reverse
splits and the like, to prevent dilution. Beginning on __________, 2006, the
Company may redeem any or all outstanding and unexercised warrants by giving not
less than 30 days' prior written notice at any time after the closing price of
the Common Stock on the principal market, exchange or quotation service on which
it is traded or quoted has equaled or exceeded $___ per share on each of five
consecutive trading days. The Redemption

                                    Exhibit A



Price is $0.25 per Warrant (subject to adjustment in the event of a stock split,
dividend or the like). All Warrants not theretofore exercised will expire on the
Expiration Date.

      This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, dated as of ___________, 2006, between the
Company and the Warrant Agent, to all of which terms, provisions and conditions
the registered holder of this Warrant Certificate consents by acceptance hereof.
The Warrant Agreement is incorporated herein by reference and made a part hereof
and reference is made to the Warrant Agreement for a full description of the
rights, limitations of rights, obligations, duties and immunities of the Warrant
Agent, the Company and the holders of the Warrant Certificates. Copies of the
Warrant Agreement are available for inspection at the stock transfer office of
the Warrant Agent or may be obtained upon written request addressed to the
Company at American Mold Guard, Inc., 30200 Rancho Viejo Road, Suite G, San
Juan Capistrano, CA 92675, Attention: Chief Financial Officer.

      The Company shall not be required upon the exercise of the Class A
Warrants evidenced by this Warrant Certificate to issue fractions of Class A
Warrants, Common Stock or other securities, but shall make adjustment therefor
in cash on the basis of the current market value of any fractional interest as
provided in the Warrant Agreement.

      In certain cases, the sale of securities by the Company upon exercise of
Class A Warrants may violate the securities laws of the United States, certain
states thereof or other jurisdictions. The Company has agreed to use all
commercially reasonable efforts to cause a registration statement to continue to
be effective during the term of the Class A Warrants with respect to such sales
under the Securities Act of 1933, and to take such action under the laws of
various states as may be required to cause the sale of securities upon exercise
to be lawful. However, the Company will not be required to honor the exercise of
Class A Warrants if, in the opinion of the Board of Directors, upon advice of
counsel, the sale of securities upon such exercise would be unlawful. In certain
cases, the Company may, but is not required to, purchase Class A Warrants
submitted for exercise for a cash price equal to the difference between the
market price of the securities obtainable upon such exercise and the exercise
price of such Class A Warrants.

      This Warrant Certificate, with or without other Certificates, upon
surrender to the Warrant Agent, any successor warrant agent or, in the absence
of any successor warrant agent, at the corporate offices of the Company, may be
exchanged for another Warrant Certificate or Certificates evidencing in the
aggregate the same number of Class A Warrants as the Warrant Certificate or
Certificates so surrendered. If the Class A Warrants evidenced by this Warrant
Certificate shall be exercised in part, the holder hereof shall be entitled to
receive upon surrender hereof another Warrant Certificate or Certificates
evidencing the number of Class A Warrants not so exercised.

      No holder of this Warrant Certificate, as such, shall be entitled to vote,
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose whatsoever, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder of this Warrant
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting

                                    Exhibit A



thereof or give or withhold consent to any corporate action (whether upon any
matter submitted to stockholders at any meeting thereof, or give or withhold
consent to any merger, recapitalization, issuance of stock, reclassification of
stock, change of par value or change of stock to no par value, consolidation,
conveyance or otherwise) or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Warrant Agreement) or to
receive dividends or subscription rights or otherwise until the Class A Warrants
evidenced by this Warrant Certificate shall have been exercised and the Common
Stock purchasable upon the exercise thereof shall have become deliverable as
provided in the Warrant Agreement.

      If this Warrant Certificate shall be surrendered for exercise within any
period during which the transfer books for the Company's Common Stock or other
class of stock purchasable upon the exercise of the Class A Warrants evidenced
by this Warrant Certificate are closed for any purpose, the Company shall not be
required to make delivery of certificates for shares purchasable upon such
transfer until the date of the reopening of said transfer books.

      Every holder of this Warrant Certificate by accepting the same consents
and agrees with the Company, the Warrant Agent, and with every other holder of a
Warrant Certificate that:

      (a) this Warrant Certificate is transferable on the registry books of the
Warrant Agent only upon the terms and conditions set forth in the Warrant
Agreement, and

      (b) the Company and the Warrant Agent may deem and treat the person in
whose name this Warrant Certificate is registered as the absolute owner hereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes whatsoever
and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary. The Company shall not be required to issue or deliver any
certificate for shares of Common Stock or other securities upon the exercise of
Class A Warrants evidenced by this Warrant Certificate until any tax which may
be payable in respect thereof by the holder of this Warrant Certificate pursuant
to the Warrant Agreement shall have been paid, such tax being payable by the
holder of this Warrant Certificate at the time of surrender.

      This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Warrant Agent.

                                    Exhibit A



      WITNESS the facsimile signatures of the proper officers of the Company and
its corporate seal.

Dated:

                            AMERICAN MOLD GUARD, INC.

                                    CORPORATE

       -----------------                                   -----------------
       SIGNATURE TO COME               SEAL                SIGNATURE TO COME
       -----------------               2003                -----------------

                                    CALIFORNIA

          SECRETARY                                           CHIEF EXECUTIVE
                                                              OFFICER

Countersigned:

U.S. STOCK TRANSFER CORPORATION
         WARRANT AGENT

By: ______________________________________
    Authorized Officer

                                    Exhibit A



      The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.

      TEN COM    -- as tenants in common
      TEN ENT    -- as tenants by the entireties
      JT TEN     -- as joint tenants with rights of survivorship and not as
                    tenants in common
      COM PROP   -- as community property

UNIF GIFT MIN ACT       -- ______________________ Custodian ____________________
                                   (Cust)                         (minor)

                           under Uniform Gifts to Minors Act

                           _________________________________
                                        (State)

UNIF TRF MIN ACT        -- ______________________ Custodian ____________________
                                   (Cust)                         (minor)

                           under Uniform Transfers to Minors Act

                           _____________________________________
                                          (State)

                                    Exhibit A



                                FORM OF EXERCISE
                    (To be executed upon exercise of Warrant)

To: American Mold Guard, Inc.

      The undersigned, pursuant to the provisions set forth in the within
Warrant Certificate, hereby irrevocably elects to exercise the right of purchase
represented thereby, and hereby agrees to subscribe for and to purchase shares
of the Common Stock of American Mold Guard, Inc. ("Common Shares"), as provided
for therein, and tenders herewith payment of the purchase price in full in cash
or by wire transfer, check, draft, money order or certified or bank cashier's
check in the amount of $___________.

      Please issue a certificate or certificates for such Common Shares in the
name of the undersigned. If the number of Common Shares purchased hereby shall
not be all the Common Shares purchasable under the within Warrant Certificate, a
new Warrant Certificate is to be issued in the name of the undersigned for the
balance remaining of the Common Shares purchasable thereunder.

Name:       _____________________________________________
            (Please Print Name and Address)

Address:    _____________________________________________

            _____________________________________________

Signature:  _____________________________________________
            Note: This above signature must correspond
            with the name of the face of this Warrant
            Certificate or with the name of the assignee
            appearing in the assignment form below.

Date:       _____________________________________________
            The signatures should be guaranteed by an
            eligible institution (banks, stockbrokers,
            savings and loan association and credit
            unions with membership in an approved
            signature medallion program), pursuant to
            S.E.C. Rule 17Ad-15.

                                    Exhibit A



                               FORM OF ASSIGNMENT
                       (TO BE SIGNED ONLY UPON ASSIGNMENT)

FOR VALUE RECEIVED, the undersigned Registered Holder (________________________)

_________________________________________________
(Please insert social security or other identification number of Registered
Holder)

hereby sells, assigns and transfers unto

_________________________________________________

_________________________________________________

_________________________________________________
(Please Print Name and Address including Zip Code)

Class A Warrants evidenced by the within Warrant Certificate, and irrevocably
constitutes and appoints ___________________________________ attorney to
transfer this Warrant Certificate on the books of American Mold Guard, Inc. with
the full power of substitution in the premises.

Dated: __________________________________________

Signature:

_________________________________________________
(Signature must conform in all respects to the
name of Registered Holder as specified on the
face of this Warrant Certificate in every
particular, without alteration or any change
whatsoever, and the signature must be guaranteed
in the usual manner.)

Signatures Guaranteed:

_________________________________________________
The signatures should be guaranteed by an
eligible institution (banks, stockbrokers,
savings and loan association and credit unions
with membership in an approved signature
medallion program), pursuant to S.E.C. Rule
17Ad-15.

                                    Exhibit A



                                    EXHIBIT B

             VOID AFTER 5 P.M. EASTERN TIME ON _______________, 2011

                        WARRANTS TO PURCHASE COMMON STOCK

No. AMGWB-___________                               ___________ Class B Warrants

                                                                  CUSIP ________

                            AMERICAN MOLD GUARD, INC.

THIS CERTIFIES THAT

or registered assigns, is the registered holder of the number of Class B
Warrants ("Class B Warrants") set forth above. Each Class B Warrant, unless and
until redeemed by the Company as provided in the Warrant Agreement, hereinafter
more fully described (the "Warrant Agreement"), entitles the holder thereof to
purchase from American Mold Guard, Inc., a corporation incorporated under the
laws of the State of California (the "Company"), subject to the terms and
conditions set forth hereinafter and in the Warrant Agreement, at any time on or
after the date on which the Class B Warrants are first quoted on the Nasdaq
Capital Market ("Nasdaq") or begin to trade on the Pacific Exchange and before
the close of business on _______________, 2011 ("Expiration Date"), one fully
paid and non-assessable share of Common Stock, no par value per share, of the
Company ("Common Stock") upon presentation and surrender of this Warrant
Certificate, with the instructions for the registration and delivery of Common
Stock filled in, at the stock transfer office located at 1745 Gardena Avenue,
Second Floor, Glendale, California 91204 of U.S. Stock Transfer Corporation,
Warrant Agent of the Company ("Warrant Agent") or of its successor warrant agent
or, if there be no successor warrant agent, at the corporate offices of the
Company, and upon payment of the Exercise Price (as defined in the Warrant
Agreement) and any applicable taxes paid either in cash, or by certified or
official bank check, payable in lawful money of the United States of America to
the order of the Company. Each Class B Warrant initially entitles the holder to
purchase one share of Common Stock for $___. The number and kind of securities
or other property for which the Class B Warrants are exercisable are subject to
adjustment in certain events, such as mergers, splits, stock dividends, reverse
splits and the like, to prevent dilution. Beginning on __________, 2006, the
Company may redeem any or all outstanding and unexercised warrants by giving not
less than 30 days' prior written notice at any time after the Company's gross
revenue for any 12-month period, as confirmed by an independent audit, equals or
exceeds $20.0 million. The Redemption Price is $0.25 per Warrant (subject to
adjustment in the event of a stock split, dividend or the like). All Warrants
not theretofore exercised will expire on the Expiration Date.

                                    Exhibit B



      This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, dated as of ___________, 2006, between the
Company and the Warrant Agent, to all of which terms, provisions and conditions
the registered holder of this Warrant Certificate consents by acceptance hereof.
The Warrant Agreement is incorporated herein by reference and made a part hereof
and reference is made to the Warrant Agreement for a full description of the
rights, limitations of rights, obligations, duties and immunities of the Warrant
Agent, the Company and the holders of the Warrant Certificates. Copies of the
Warrant Agreement are available for inspection at the stock transfer office of
the Warrant Agent or may be obtained upon written request addressed to the
Company at American Mold Guard, Inc., 30200 Rancho Viejo Road, Suite G, San
Juan Capistrano, CA 92675, Attention: Chief Financial Officer.

      The Company shall not be required upon the exercise of the Class B
Warrants evidenced by this Warrant Certificate to issue fractions of Class B
Warrants, Common Stock or other securities, but shall make adjustment therefor
in cash on the basis of the current market value of any fractional interest as
provided in the Warrant Agreement.

      In certain cases, the sale of securities by the Company upon exercise of
Class B Warrants may violate the securities laws of the United States, certain
states thereof or other jurisdictions. The Company has agreed to use all
commercially reasonable efforts to cause a registration statement to continue to
be effective during the term of the Class B Warrants with respect to such sales
under the Securities Act of 1933, and to take such action under the laws of
various states as may be required to cause the sale of securities upon exercise
to be lawful. However, the Company will not be required to honor the exercise of
Class B Warrants if, in the opinion of the Board of Directors, upon advice of
counsel, the sale of securities upon such exercise would be unlawful. In certain
cases, the Company may, but is not required to, purchase Class B Warrants
submitted for exercise for a cash price equal to the difference between the
market price of the securities obtainable upon such exercise and the exercise
price of such Class B Warrants.

      This Warrant Certificate, with or without other Certificates, upon
surrender to the Warrant Agent, any successor warrant agent or, in the absence
of any successor warrant agent, at the corporate offices of the Company, may be
exchanged for another Warrant Certificate or Certificates evidencing in the
aggregate the same number of Class B Warrants as the Warrant Certificate or
Certificates so surrendered. If the Class B Warrants evidenced by this Warrant
Certificate shall be exercised in part, the holder hereof shall be entitled to
receive upon surrender hereof another Warrant Certificate or Certificates
evidencing the number of Class B Warrants not so exercised.

      No holder of this Warrant Certificate, as such, shall be entitled to vote,
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose whatsoever, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder of this Warrant
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof or give or withhold consent to any corporate
action (whether upon any matter submitted to stockholders at any meeting
thereof, or give or withhold consent to any merger,

                                    Exhibit B



recapitalization, issuance of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, conveyance or
otherwise) or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Warrant Agreement) or to receive
dividends or subscription rights or otherwise until the Class B Warrants
evidenced by this Warrant Certificate shall have been exercised and the Common
Stock purchasable upon the exercise thereof shall have become deliverable as
provided in the Warrant Agreement.

      If this Warrant Certificate shall be surrendered for exercise within any
period during which the transfer books for the Company's Common Stock or other
class of stock purchasable upon the exercise of the Class B Warrants evidenced
by this Warrant Certificate are closed for any purpose, the Company shall not be
required to make delivery of certificates for shares purchasable upon such
transfer until the date of the reopening of said transfer books.

      Every holder of this Warrant Certificate by accepting the same consents
and agrees with the Company, the Warrant Agent, and with every other holder of a
Warrant Certificate that:

      (a) this Warrant Certificate is transferable on the registry books of the
Warrant Agent only upon the terms and conditions set forth in the Warrant
Agreement, and

      (b) the Company and the Warrant Agent may deem and treat the person in
whose name this Warrant Certificate is registered as the absolute owner hereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes whatsoever
and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary. The Company shall not be required to issue or deliver any
certificate for shares of Common Stock or other securities upon the exercise of
Class B Warrants evidenced by this Warrant Certificate until any tax which may
be payable in respect thereof by the holder of this Warrant Certificate pursuant
to the Warrant Agreement shall have been paid, such tax being payable by the
holder of this Warrant Certificate at the time of surrender.

      This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Warrant Agent.

                                    Exhibit B



      WITNESS the facsimile signatures of the proper officers of the Company and
its corporate seal.

Dated:

                            AMERICAN MOLD GUARD, INC.

                                    CORPORATE

      -----------------                                     -----------------
      SIGNATURE TO COME                SEAL                 SIGNATURE TO COME
      -----------------                2003                 -----------------

                                    CALIFORNIA

         SECRETARY                                            CHIEF EXECUTIVE
                                                              OFFICER

Countersigned:

U.S. STOCK TRANSFER CORPORATION
           WARRANT AGENT

By:_______________________________
   Authorized Officer

                                    Exhibit B



      The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.

      TEN COM  -- as tenants in common
      TEN ENT  -- as tenants by the entireties
      JT TEN   -- as joint tenants with rights of survivorship and not as
                  tenants in common
      COM PROP -- as community property

UNIF GIFT MIN ACT -- _________________________________ Custodian _______________
                                   (Cust)                            (minor)

                     under Uniform Gifts to Minors Act

                     _________________________________
                                  (State)

UNIF TRF MIN ACT --  _________________________________ Custodian _______________
                                   (Cust)                            (minor)

                   under Uniform Transfers to Minors Act

                   _____________________________________
                                  (State)

                                  Exhibit B



                                FORM OF EXERCISE
                    (To be executed upon exercise of Warrant)

To: American Mold Guard, Inc.

      The undersigned, pursuant to the provisions set forth in the within
Warrant Certificate, hereby irrevocably elects to exercise the right of purchase
represented thereby, and hereby agrees to subscribe for and to purchase shares
of the Common Stock of American Mold Guard, Inc. ("Common Shares"), as provided
for therein, and tenders herewith payment of the purchase price in full in cash
or by wire transfer, check, draft, money order or certified or bank cashier's
check in the amount of $___________.

      Please issue a certificate or certificates for such Common Shares in the
name of the undersigned. If the number of Common Shares purchased hereby shall
not be all the Common Shares purchasable under the within Warrant Certificate, a
new Warrant Certificate is to be issued in the name of the undersigned for the
balance remaining of the Common Shares purchasable thereunder.

Name:      ____________________________________
           (Please Print Name and Address)

Address:   ____________________________________

           ____________________________________

Signature: ____________________________________
           Note: This above signature must
           correspond with the name of the face
           of this Warrant Certificate or with
           the name of the assignee appearing
           in the assignment form below.

Date:      ____________________________________
           The signatures should be guaranteed
           by an eligible institution (banks,
           stockbrokers, savings and loan
           association and credit unions with
           membership in an approved signature
           medallion program), pursuant to
           S.E.C. Rule 17Ad-15.

                                    Exhibit B



                               FORM OF ASSIGNMENT
                       (TO BE SIGNED ONLY UPON ASSIGNMENT)

FOR VALUE RECEIVED, the undersigned Registered Holder (________________________)

__________________________________________________
(Please insert social security or other identification number of Registered
Holder)

hereby sells, assigns and transfers unto

__________________________________________________

__________________________________________________

__________________________________________________
(Please Print Name and Address including Zip Code)

Class B Warrants evidenced by the within Warrant Certificate, and irrevocably
constitutes and appoints ___________________________________ attorney to
transfer this Warrant Certificate on the books of American Mold Guard, Inc. with
the full power of substitution in the premises.

Dated:____________________________________________

Signature:

__________________________________________________
(Signature must conform in all respects to the
name of Registered Holder as specified on the face
of this Warrant Certificate in every particular,
without alteration or any change whatsoever, and
the signature must be guaranteed in the usual
manner.)

Signatures Guaranteed:

__________________________________________________
The signatures should be guaranteed by an eligible
institution (banks, stockbrokers, savings and loan
association and credit unions with membership in
an approved signature medallion program), pursuant
to S.E.C. Rule 17Ad-15.

                                    Exhibit B



                               FORM OF ASSIGNMENT
                       (TO BE SIGNED ONLY UPON ASSIGNMENT)

FOR VALUE RECEIVED, the undersigned Registered Holder (________________________)

__________________________________________________
(Please insert social security or other identification number of Registered
Holder)

hereby sells, assigns and transfers unto

__________________________________________________

__________________________________________________

__________________________________________________
(Please Print Name and Address including Zip Code)

Class B Warrants evidenced by the within Warrant Certificate, and irrevocably
constitutes and appoints ___________________________________ attorney to
transfer this Warrant Certificate on the books of American Mold Guard, Inc.
with the full power of substitution in the premises.

Dated: ___________________________________________

Signature:

__________________________________________________
(Signature must conform in all respects to the
name of Registered Holder as specified on the face
of this Warrant Certificate in every particular,
without alteration or any change whatsoever, and
the signature must be guaranteed in the usual
manner.)

Signatures Guaranteed:

__________________________________________________
The signatures should be guaranteed by an eligible
institution (banks, stockbrokers, savings and loan
association and credit unions with membership in
an approved signature medallion program), pursuant
to S.E.C. Rule 17Ad-15.

EX-4.4

                                                                     Exhibit 4.4

                      THIS WARRANT HAS NOT BEEN REGISTERED
                        UNDER THE SECURITIES ACT OF 1933
                             AND IS NOT TRANSFERABLE
                            EXCEPT AS PROVIDED HEREIN

                            AMERICAN MOLD GUARD, INC.

                                PURCHASE WARRANT

                                   Issued to:

                        PAULSON INVESTMENT COMPANY, INC.

                             Exercisable to Purchase

                                  135,000 UNITS


                                       of


                            AMERICAN MOLD GUARD, INC.










                        Void after _______________, 2011







     This is to certify  that,  for value  received and subject to the terms and
conditions set forth below, the Warrantholder  (hereinafter defined) is entitled
to  purchase,  and the  Company  promises  and  agrees  to sell and issue to the
Warrantholder,  at any  time on or  after  ________,  2007  [one  year  from the
effective  date]  and on or  before  ____________,  2011  [five  years  from the
effective date], up to 135,000 Units (hereinafter defined) at the Exercise Price
(hereinafter defined).

     This  Warrant  Certificate  is issued  subject to the  following  terms and
conditions:

     1.   DEFINITIONS  OF  CERTAIN  TERMS.  Except as may be  otherwise  clearly
required by the context, the following terms have the following meanings:

          (a)  "Act" means the Securities Act of 1933, as amended.

          (b)  "Cashless  Exercise"  means an exercise of Warrants in which,  in
lieu of payment of the  Exercise  Price,  the Holder  elects to receive a lesser
number of  Securities  such that the value of the  Securities  that such  Holder
would otherwise have been entitled to receive but has agreed not to receive,  as
determined by the closing  price of such  Securities on the date of exercise or,
if such date is not a trading  day, on the next prior  trading  day, is equal to
the  Exercise  Price with  respect to such  exercise.  A Holder may only elect a
Cashless  Exercise if  Securities  issuable by the Company on such  exercise are
publicly traded securities.

          (c)  "Closing Date" means the date on which the Offering is closed.

          (d)  "Commission" means the Securities and Exchange Commission.

          (e)  "Common  Stock"  means the common  stock,  no par  value,  of the
Company.

          (f)  "Company"   means   American  Mold  Guard,   Inc.,  a  California
corporation.

          (g)  "Company's  Expenses"  means any and all expenses  payable by the
Company or the Warrantholder in connection with an offering described in Section
6 hereof, except Warrantholder's Expenses.

          (h)  "Effective  Date"  means  the  date  on  which  the  Registration
Statement is declared effective by the Commission.

          (i)  "Exercise Price" means the price at which the  Warrantholder  may
purchase  one Unit upon  exercise of Warrants  as  determined  from time to time
pursuant to the provisions hereof. The initial Exercise Price is $___ per Unit.

          (j)  "Offering"  means the public  offering of Units made  pursuant to
the Registration Statement.

          (k)  "Participating  Underwriter" means any underwriter  participating
in the sale of the Securities pursuant to a registration under Section 6 of this
Warrant Certificate.



          (l)  "Registration   Statement"   means  the  Company's   registration
statement (File No. 333-130889) as amended on the Closing Date.

          (m)  "Rules and  Regulations"  means the rules and  regulations of the
Commission adopted under the Act.

          (n)  "Securities"  means the  securities  obtained or obtainable  upon
exercise of the Warrant or  securities  obtained or  obtainable  upon  exercise,
exchange, or conversion of such securities.

          (o)  "Unit" means two shares of Common Stock,  two redeemable  Class A
Warrants and two redeemable Class B Warrants.

          (p)  "Unit  Warrants"  means the Class A Warrants and Class B Warrants
that are components of the Unit, and such Unit Warrants are exercisable at $____
as to the Class A Warrants and $____ as to the Class B Warrants.

          (q)  "Warrant  Agreement" means that certain Warrant Agreement,  dated
as of  ___________,  2006,  by and between the Company and U.S.  Stock  Transfer
Corporation relating to the issuance of Unit Warrants.

          (r)  "Warrant Certificate" means a certificate evidencing the Warrant.

          (s)  "Warrantholder"   means  a  record   holder  of  the  Warrant  or
Securities. The initial Warrantholder is Paulson Investment Company, Inc.

          (t)  "Warrantholder's  Expenses"  means  the sum of (i) the  aggregate
amount of cash payments made to an underwriter, underwriting syndicate, or agent
in  connection  with an offering  described in Section 6 hereof  multiplied by a
fraction the numerator of which is the aggregate  sales price of the  Securities
sold by such underwriter,  underwriting syndicate, or agent in such offering and
the  denominator of which is the aggregate  sales price of all of the securities
sold by such underwriter,  underwriting syndicate, or agent in such offering and
(ii) all out-of-pocket  expenses of the  Warrantholder,  except for the fees and
disbursements of one firm retained as legal counsel for the  Warrantholder  that
will be paid by the Company.

          (u)  "Warrant" means the warrant  evidenced by this  certificate,  any
similar  certificate issued in connection with the Offering,  or any certificate
obtained upon transfer or partial exercise of the Warrant  evidenced by any such
certificate.

     2.   EXERCISE OF WARRANT.  All or any part of the  Warrant  represented  by
this  Warrant  Certificate  may be  exercised  commencing  one  year  after  the
Effective Date and ending at 5:00 p.m. Pacific Time on the fifth  anniversary of
the  Effective  Date by  surrendering  this Warrant  Certificate,  together with
appropriate  instructions,  duly  executed by the  Warrantholder  or by its duly
authorized attorney,  at the office of the Company at American MoldGuard,  Inc.,
30200  Rancho  Viejo  Road,  Suite  G, San Juan  Capistrano,  California  92675,
Attention:  Chief  Executive  Officer;  or at such other office or agency as the
Company may designate.  The date on which such  instructions are received by the
Company  shall be the date of  exercise.  If the Holder  has  elected a Cashless
Exercise,  such instructions shall so state. Upon receipt of notice of exercise,
the  Company  shall   immediately   instruct  its  transfer   agent  to  prepare
certificates for the




Securities to be received by the  Warrantholder  upon  completion of the Warrant
exercise.  When such  certificates  are  prepared,  the Company shall notify the
Warrantholder  and deliver such  certificates to the Warrantholder or as per the
Warrantholder's   instructions   immediately   upon   payment  in  full  by  the
Warrantholder,  in lawful  money of the United  States,  of the  Exercise  Price
payable  with  respect  to  the  Securities  being  purchased,  if  any.  If the
Warrantholder  shall represent and warrant that all applicable  registration and
prospectus  delivery  requirements  for their sale have been  complied with upon
sale of the Securities received upon exercise of the Warrant,  such certificates
shall not bear a legend with respect to the Securities Act of 1933, as amended.

     If  fewer  than  all the  Securities  purchasable  under  the  Warrant  are
purchased, the Company will, upon such partial exercise,  execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof), in form and
tenor  similar  to this  Warrant  Certificate,  evidencing  that  portion of the
Warrant not exercised.  The Securities to be obtained on exercise of the Warrant
will be deemed to have been issued,  and any person exercising the Warrants will
be deemed to have become a holder of record of those Securities,  as of the date
of the payment of the Exercise Price.

     3.   ADJUSTMENTS  IN  CERTAIN  EVENTS.  The  number,  class,  and  price of
Securities  for which this Warrant  Certificate  may be exercised are subject to
adjustment from time to time upon the happening of certain events as follows:

          (a)  If the  outstanding  shares  of the  Company's  Common  Stock are
divided  into a greater  number of shares or a dividend  in stock is paid on the
Common Stock, the number of shares of Common Stock for which the Warrant is then
exercisable  will be  proportionately  increased and the Exercise  Price will be
proportionately  reduced;  and, conversely,  if the outstanding shares of Common
Stock are combined into a smaller  number of shares of Common Stock,  the number
of shares of Common  Stock for which the  Warrant  is then  exercisable  will be
proportionately   reduced  and  the  Exercise  Price  will  be   proportionately
increased.  The increases and reductions  provided for in this Section 3(a) will
be made with the intent and, as nearly as  practicable,  the effect that neither
the percentage of the total equity of the Company  obtainable on exercise of the
Warrants nor the price  payable for such  percentage  upon such exercise will be
affected by any event described in this Section 3(a).

          (b)  In  case  of any  change  in the  Common  Stock  through  merger,
consolidation,    reclassification,    reorganization,   partial   or   complete
liquidation,  purchase of substantially all the assets of the Company,  or other
change in the capital structure of the Company, other than changes in par value,
then, as a condition of such change,  lawful and adequate provision will be made
so that the holder of this Warrant Certificate will have the right thereafter to
receive  upon the exercise of the Warrant the kind and amount of shares of stock
or other  securities  or  property  to which he would  have  been  entitled  if,
immediately  prior to such  event,  he had held the  number  of shares of Common
Stock obtainable upon the exercise of the Warrant. In any such case, appropriate
adjustment  will be made in the  application  of the provisions set forth herein
with respect to the rights and interest thereafter of the Warrantholder,  to the
end that the  provisions  set forth herein will  thereafter  be  applicable,  as
nearly  as  reasonably  may be,  in  relation  to any  shares  of stock or other
property  thereafter  deliverable upon the exercise of the Warrant.  The Company
will not permit any change in its capital  structure  to occur unless the issuer
of the shares of stock or other  securities to be received by the



holder of this Warrant  Certificate,  if not the Company,  agrees to be bound by
and comply with the provisions of this Warrant Certificate.

          (c)  When any  adjustment  is  required  to be made in the  number  of
shares of Common  Stock,  other  securities,  or the property  purchasable  upon
exercise of the Warrant,  the Company will promptly  determine the new number of
such shares or other  securities  or property  purchasable  upon exercise of the
Warrant and (i) prepare and retain on file a statement  describing in reasonable
detail the method  used in  arriving  at the new number of such  shares or other
securities or property purchasable upon exercise of the Warrant and (ii) cause a
copy of such  statement to be mailed to the  Warrantholder  within 30 days after
the date of the event giving rise to the adjustment.

          (d)  No fractional  shares of Common Stock or other securities will be
issued in connection with the exercise of the Warrant, but the Company will pay,
in lieu of fractional  shares,  a cash payment therefor on the basis of the mean
between  the bid and asked  prices of the Common  Stock in the  over-the-counter
market or the last sale price of the Common Stock on the  principal  exchange or
other  trading  facility  on  which  the  Common  Stock  is  traded  on the  day
immediately prior to exercise.

          (e)  If securities  of the Company or securities of any  subsidiary of
the Company are distributed pro rata to holders of Common Stock,  such number of
securities  will  be  distributed  to the  Warrantholder  or its  assignee  upon
exercise of its rights  hereunder as such  Warrantholder  or assignee would have
been entitled to if this Warrant  Certificate  had been  exercised  prior to the
record date for such distribution.  The provisions with respect to adjustment of
the Common Stock provided in this Section 3 will also apply to the securities to
which the Warrantholder or its assignee is entitled under this Section 3(e).

          (f)  Notwithstanding anything herein to the contrary, there will be no
adjustment  made  hereunder  on account of the sale by the Company of the Common
Stock or other Securities purchasable upon exercise of the Warrant.

          (g)  If, immediately prior to any exercise of Warrants, there shall be
outstanding  no securities of a class or series that,  but for the provisions of
this Section 3, would be issuable  upon such exercise  (the  "Formerly  Issuable
Securities"),  then,  upon such exercise,  and in lieu of the Formerly  Issuable
Securities,  the Company shall issue that number and kind of other securities or
property  for  which  the  Formerly  Issuable   Securities  were  most  recently
exercisable or into which the Formerly  Issuable  Securities  were most recently
convertible, as the case may be.

     4.   RESERVATION  OF  SECURITIES.  The  Company  agrees  that the number of
shares  of  Common  Stock or other  Securities  sufficient  to  provide  for the
exercise of the Warrant  upon the basis set forth above will at all times during
the term of the Warrant be reserved for exercise.

     5.   VALIDITY OF SECURITIES.  All Securities delivered upon the exercise of
the Warrant will be duly and validly issued in accordance with their terms,  and
the Company will pay all  documentary  and transfer taxes, if any, in respect of
the original issuance thereof upon exercise of the Warrant.



     6.   REGISTRATION   OF   SECURITIES   ISSUABLE   ON   EXERCISE  OF  WARRANT
CERTIFICATE.

          (a)  The  Company  will  register  the  Securities  on Form S-3 or any
successor form (or such other registration  statement form for which the Company
qualifies)  with  the  Commission  pursuant  to  the  Act  so  as to  allow  the
unrestricted  sale of the Securities to the public from time to time  commencing
180 days after the  Effective  Date and ending at 5:00 p.m.  Pacific Time on the
fifth anniversary of the Effective Date (the "Registration Period"). The Company
will also file such  applications  and other  documents  necessary to permit the
sale of the  Securities  to the public during the  Registration  Period in those
states in which the  Warrantholders  reside or such other states as to which the
Company and the  Warrantholder  agree. In order to comply with the provisions of
this  Section  6(a),  the  Company  is  not  required  to  file  more  than  one
registration  statement.  No  registration  right of any  kind,  "piggyback"  or
otherwise, will last longer than five years from the Effective Date.

          (b)  The  Company  will  pay all of the  Company's  Expenses  and each
Warrantholder  will  pay its pro  rata  share  of the  Warrantholder's  Expenses
relating to the registration, offer, and sale of the Securities.

          (c)  Except as specifically provided herein, the manner and conduct of
the registration,  including the contents of the registration statement, will be
entirely in the control and at the  discretion of the Company.  The Company will
file such  post-effective  amendments  and  supplements  as may be  necessary to
maintain the  currency of the  registration  statement  during the period of its
use. In addition,  if the  Warrantholder  participating  in the  registration is
advised  by  counsel  that the  registration  statement,  in their  opinion,  is
deficient  in any  material  respect,  the Company  will use its best efforts to
cause the registration statement to be amended to eliminate the concerns raised.

          (d) The Company will furnish to the Warrantholder the number of copies
of a prospectus,  including a  preliminary  prospectus,  in conformity  with the
requirements of the Act, and such other  documents as it may reasonably  request
in order to facilitate the disposition of Securities owned by it.

          (e)  The Company  will,  at the request of  Warrantholders  holding at
least 50 percent of the then outstanding Warrants: (i) furnish an opinion of the
counsel  representing the Company for the purposes of the registration  pursuant
to this  Section  6,  addressed  to the  Warrantholders  and  any  Participating
Underwriter;  (ii) furnish an  appropriate  letter from the  independent  public
accountants   of  the  Company,   addressed  to  the   Warrantholders   and  any
Participating Underwriter; and (iii) make such representations and warranties to
the Warrantholders and any Participating Underwriter as are customarily given to
underwriters  of public  offerings of equity  securities in connection with such
offerings.  A  request  pursuant  to this  subsection  (e) may be made on  three
occasions.  The documents  required to be delivered  pursuant to this subsection
(e)  will be  dated  within  ten days of the  request  and will be,  in form and
substance,  equivalent to similar  documents  furnished to the  underwriters  in
connection  with the Offering,  with such changes as may be appropriate in light
of changed circumstances.



     7.   INDEMNIFICATION IN CONNECTION WITH REGISTRATION.

          (a)  If  any  of the  Securities  are  registered,  the  Company  will
indemnify and hold harmless each selling Warrantholder,  any person who controls
any selling  Warrantholder  within the meaning of the Act, and any Participating
Underwriter  against any  losses,  claims,  damages,  or  liabilities,  joint or
several,  to which  any  Warrantholder,  controlling  person,  or  Participating
Underwriter  may be subject  under the Act or otherwise;  and it will  reimburse
each Warrantholder,  each controlling person, and each Participating Underwriter
for any  legal or  other  expenses  reasonably  incurred  by the  Warrantholder,
controlling   person,   or   Participating   Underwriter   in  connection   with
investigating or defending any such loss, claim, damage,  liability,  or action,
insofar as such losses,  claims,  damages, or liabilities,  joint or several (or
actions in respect thereof), arise out of or are based upon any untrue statement
or alleged  untrue  statement of any material fact  contained,  on the effective
date thereof, in any such registration  statement or any preliminary  prospectus
or final prospectus,  or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated  therein or necessary to make the  statements  therein not
misleading;  provided,  however, that the Company will not be liable in any case
to the extent that any loss,  claim,  damage,  or liability  arises out of or is
based upon any untrue  statement  or alleged  untrue  statement  or  omission or
alleged omission made in any  registration  statement,  preliminary  prospectus,
final prospectus,  or any amendment or supplement  thereto, in reliance upon and
in conformity with written  information  furnished by a Warrantholder for use in
the preparation  thereof. The indemnity agreement contained in this subparagraph
(a) will not apply to amounts paid to any claimant in  settlement of any suit or
claim unless such payment is first approved by the Company, such approval not to
be unreasonably withheld.

          (b)  Each  selling  Warrantholder,  as a  condition  of the  Company's
registration  obligation,  will indemnify and hold harmless the Company, each of
its directors,  each of its officers who have signed any registration  statement
or other  filing or any  amendment  or  supplement  thereto,  and any person who
controls the Company within the meaning of the Act, against any losses,  claims,
damages,  or liabilities to which the Company or any such director,  officer, or
controlling  person  may become  subject  under the Act or  otherwise,  and will
reimburse any legal or other expenses  reasonably incurred by the Company or any
such director,  officer,  or controlling person in connection with investigating
or defending any such loss, claim, damage, liability, or action, insofar as such
losses,  claims,  damages,  or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue or alleged untrue  statement of any material
fact  contained  in  said  registration  statement,  any  preliminary  or  final
prospectus,  or other filing, or any amendment or supplement  thereto,  or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated  therein or necessary to make the statements
therein not  misleading,  but only to the extent that such untrue  statement  or
alleged  untrue  statement  or  omission  or alleged  omission  was made in said
registration  statement,  preliminary or final  prospectus,  or other filing, or
amendment  or  supplement,  in  reliance  upon and in  conformity  with  written
information  furnished by such Warrantholder for use in the preparation thereof;
provided,  however,  that the indemnity agreement contained in this subparagraph
(b) will not apply to amounts paid to any claimant in  settlement of any suit or
claim unless such payment is first approved by the Warrantholder,  such approval
not to be unreasonably withheld.



          (c)  Promptly   after   receipt   by  an   indemnified   party   under
subparagraphs (a) or (b) above of notice of the commencement of any action, such
indemnified  party will, if a claim in respect  thereof is to be made against an
indemnifying party,  notify the indemnifying party of the commencement  thereof;
but the omission to notify the  indemnifying  party will not relieve it from any
liability  that it may  have  to any  indemnified  party  otherwise  than  under
subparagraphs  (a) and (b),  except  to the  extent  it was  prejudiced  by such
failure to notify.

          (d)  If any such action is brought against any  indemnified  party and
it notifies an indemnifying party of the commencement  thereof, the indemnifying
party will be entitled to  participate  in, and, to the extent that it may wish,
jointly with any other  indemnifying  party  similarly  notified,  to assume the
defense thereof,  with counsel satisfactory to such indemnified party; and after
notice from the indemnifying  party to such indemnified party of its election to
assume the defense thereof,  the  indemnifying  party will not be liable to such
indemnified party for any legal or other expenses  subsequently incurred by such
indemnified  party in connection  with the defense thereof other than reasonable
costs of investigation.

     8.   RESTRICTIONS ON TRANSFER. This Warrant Certificate and the Warrant may
not 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 Warrant or the underlying
securities by any person for a period of one year  following the Effective  Date
or commencement of sales of the public offering,  except pursuant to the laws of
descent and  distribution,  or to an individual  who is an officer or partner of
the underwriters of the Offering, provided, in such case, that all securities so
transferred remain subject to the transfer  restriction for the remainder of the
one-year period  following the Effective Date. After one year from the Effective
Date, the Warrant may be transferred  to (i) partners,  officers,  directors and
shareholders of underwriters, without restriction; and to (ii) other persons not
hereinbefore named, PROVIDED, HOWEVER, that in the case of transfers pursuant to
clause (ii),  the Warrant must be  immediately  exercised  upon transfer by such
transferee or it shall terminate.  The Warrant may be divided or combined,  upon
request to the Company by the Warrantholder,  into a certificate or certificates
evidencing the same aggregate number of Warrants.

     9.   NO RIGHTS AS A STOCKHOLDER.  Except as otherwise  provided herein, the
Warrantholder  will not, by virtue of ownership  of the Warrant,  be entitled to
any rights of a shareholder of the Company but will, upon written request to the
Company,  be entitled to receive such quarterly or annual reports as the Company
distributes to its stockholders.

     10.  NOTICE.  Any notices  required or permitted to be given hereunder will
be in writing  and may be served  personally  or by mail;  and if served will be
addressed as follows:

If to the Company:

      American Mold Guard, Inc.
      30200 Rancho Viejo Road, Suite G
      San Juan Capistrano, CA 92675
      Attention:  Chief Executive Officer






If to the Warrantholder:

     AT THE ADDRESS FURNISHED
     BY THE  WARRANTHOLDER TO THE COMPANY
     FOR THE PURPOSE OF NOTICE.

     Any notice so given by mail will be deemed effectively given 48 hours after
mailing when deposited in the United States mail,  registered or certified mail,
return receipt requested,  postage prepaid and addressed as specified above. Any
party may by written notice to the other specify a different  address for notice
purposes.

     11.  APPLICABLE  LAW.  This  Warrant  Certificate  will be  governed by and
construed in accordance with the laws of the State of Oregon,  without reference
to conflict of laws principles thereunder. All disputes relating to this Warrant
Certificate  shall be tried  before  the courts of Oregon  located in  Multnomah
County,   Oregon  to  the   exclusion  of  all  other  courts  that  might  have
jurisdiction.


     Dated as of ________________, 2006

                                                AMERICAN MOLD GUARD, INC.



                                                By: ____________________________
                                                    Name:
                                                    Title:


     Agreed and Accepted as of ______________, 2006

                                                PAULSON INVESTMENT COMPANY, INC.



                                                By: ____________________________
                                                    Name:
                                                    Title:

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. 3 to the Registration Statement of
American Mold Guard, Inc. (the "Company") on Form SB-2 (File No. 333-130889) of
our report dated March 10, 2006, except for Note 12, as to which the date is
March 27, 2006, and the last paragraph of Note 2, as to which the date is April
7, 2006, appearing in the Prospectus, which is part of this Amendment No. 3 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 March 10, 2006, except for Note 12, as to which the date is
March 27, 2006, and the last paragraph of Note 2, as to which the date is April
7, 2006, contains an explanatory paragraph that states the Company has incurred
losses from operations since inception, has a working capital deficit and a
shareholder deficiency, has violated certain debt covenants, 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
April 7, 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

                                 April 10, 2006

                                                            WRITER'S DIRECT LINE
                                                                  (212) 838-8269

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 April
5, 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.

USE OF PROCEEDS - PAGE 17

1.       WE NOTE YOUR RESPONSE TO COMMENT 3. PLEASE  INCLUDE  MATURITY DATES FOR
         THE LAST THREE  UNSECURED  NOTES ON PAGE 17, ALL OF WHICH BEAR INTEREST
         AT 10%.

The additional information has been added pursuant to your comment.

CAPITALIZATION, PAGE 20

2.       YOUR REVISED DISCLOSURE INDICATES THAT THE PRO FORMA COLUMN INCLUDES AN
         ADDITIONAL $650 OF DEBT INCURRED SINCE DECEMBER 31, 2005. THIS DOES NOT
         AGREE WITH THE CHANGE FROM $3,965 TO $4,247. PLEASE EXPLAIN THE REASONS
         FOR THE DIFFERENCE.

In  Amendment  No.2,  the debt  amount  under the actual  column  netted out the
Additional  Securities (to be issued to the holders of the Unsecured Notes), the
deferred  interest  cost  attributable  to the  Additional  Securities  and  the
beneficial discount  attributable to the Convertible Notes. The pro forma amount
reflects the additional  borrowing of $650,000 net of the difference between the
amount  allocated to the Additional  Securities  ($1.5 million) and the deferred
interest cost at December 31, 2005 ($1,132,000), or $368,000. In Amendment No.3,
the Company has



Michael McTiernan
American Mold Guard, Inc.
April 10, 2006


reflected  the debt amount  under the actual  column as $4,337 and the pro forma
amount  $4,619,  based on the amount of the short and long term debt and accrued
interest reflected on the December 31, 2005 balance sheet.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3.  SUMMARY OF CRITICAL ACCOUNTING POLICIES

STOCK-BASED COMPENSATION PAGE F-11

3.       PLEASE REVISE TO PRESENT NET LOSS PER SHARE DATA CALCULATED  BASED UPON
         NET LOSS APPLICABLE TO COMMON SHAREHOLDERS.

Note 3 to the  consolidated  financial  statements  has been revised as per your
comment.

NOTE 6.  NOTES PAYABLE

2005 UNSECURED NOTES, PAGE F-15

4.       WE HAVE REVIEWED THE REVISIONS TO YOUR  DISCLOSURE  MADE IN RESPONSE TO
         PRIOR COMMENT 12. WE NOTE THAT 230,770 SHARES OF COMMON STOCK,  230,770
         CLASS A WARRANTS  AND  115,385  CLASS B WARRANTS  WILL BE ISSUED TO THE
         HOLDERS OF UNSECURED  NOTES. IN YOUR INITIAL  DISCLOSURE AND ON PAGE 29
         OF THE MD&A,  YOU  INDICATE  THAT THE  NOTEHOLDERS  WILL  RECEIVE  $1.5
         MILLION WORTH OF SECURITIES, WHICH WOULD RESULT IN A VARIABLE NUMBER OF
         SECURITIES  TO BE ISSUED.  PLEASE  CLARIFY YOUR  DISCLOSURE IN BOTH THE
         NOTES TO CONSOLIDATED  FINANCIAL  STATEMENTS AND THE MD&A. WE ALSO NOTE
         THAT  408,149  SHARES  (A  SIGNIFICANT  DECREASE  FROM  THE  PREVIOUSLY
         DISCLOSED 1.2 MILLION SHARES) WILL BE ISSUED TO THESE  NOTEHOLDERS IF A
         QUALIFIED  SALE DOES NOT OCCUR BY  DECEMBER  31,  2006.  PLEASE TELL US
         WHETHER THE TERMS OF THE AGREEMENT HAVE BEEN RENEGOTIATED OR EXPLAIN TO
         US THE REASONS FOR THE CHANGES TO YOUR DISCLOSURE.

Note 6 to the  consolidated  financial  statements  and the MD&A  section of the
prospectus  have  been  revised  pursuant  to your  request.  The  terms  of the
agreement  with  the  holders  of the  Unsecured  Notes  have not  changed.  The
unaudited financial statements included in the original  registration  statement
did not give effect to the reverse stock split. The audited financial statements
included with  Amendment No. 2 give effect to the reverse stock split.  Applying
the reverse split factor of .34012429 to 1,200,000  pre-split  shares results in
408,149 post-split shares.

ITEM 28.  UNDERTAKINGS

5.       WE NOTE YOUR  RESPONSE  TO COMMENT 15. IF YOU PLAN TO RELY ON RULE 430A
         TO OMIT FINAL PRICING  INFORMATION FROM THE PROSPECTUS  INCLUDED IN THE
         REGISTRATION STATEMENT AT THE TIME OF EFFECTIVENESS, PLEASE INCLUDE THE
         RULE 430A  UNDERTAKINGS.  OTHERWISE,  PLEASE CONFIRM THAT FINAL PRICING
         INFORMATION  WILL  BE  INCLUDED  IN  THE  PROSPECTUS  AT  THE  TIME  OF
         EFFECTIVENESS.

We have  included  the  rule  430A  undertakings  as set  forth  in Item  512(i)
Regulation S-K. See paragraph D of Item 28.


                                       2


Michael McTiernan
American Mold Guard, Inc.
April 10, 2006


EXHIBIT 1.1

6.       WE NOTE YOUR  DISCLOSURE  THAT THE OFFERING WILL BE  UNDERWRITTEN  ON A
         FIRM COMMITMENT  BASIS.  HOWEVER,  UPON OUR REVIEW OF THE  UNDERWRITING
         AGREEMENT IT APPEARS THAT THE UNDERWRITER'S DISCRETION TO TERMINATE THE
         AGREEMENT  PRIOR TO  CLOSING  IS  INCONSISTENT  WITH A FIRM  COMMITMENT
         AGREEMENT.  IN PARTICULAR,  WE NOTE SECTION 12(B)(II) WHICH PERMITS THE
         UNDERWRITER  TO  TERMINATE  IN THE EVENT OF A "CHANGE  IN  ECONOMIC  OR
         POLITICAL  CONDITIONS  IF  THE  EFFECT  OF  SUCH  . . .  CHANGE  ON THE
         FINANCIAL  MARKETS  OF THE UNITED  STATES  WOULD,  IN [ITS]  REASONABLE
         JUDGMENT, MAKE IT IMPRACTICABLE TO MARKET THE UNITS." PLEASE REVISE THE
         AGREEMENT OR PROVIDE AN ANALYSIS. REFER TO THE NO-ACTION RELIEF GRANTED
         TO THE FIRST BOSTON CORPORATION (1985).

In response to your comment, Section 12(b)(ii) of the Underwriting Agreement has
been  modified to read as follows:  "(ii) any outbreak or escalation of national
or  international  hostilities  or any crisis or calamity,  or any change in the
United States or international  financial markets,  or any substantial change or
development  involving a  prospective  substantial  change in United  States' or
international political, financial or economic conditions, that, in the judgment
of the  Representative  is material  and adverse and makes it  impracticable  to
market the Units in the manner and on the terms  described in the  Prospectus or
to enforce contracts for the sale of the Units. . ."

In  addition,  a sentence has been added to the end of Section 12 to ensure that
the market out  provisions  do not  vitiate  the firm  commitment  intent of the
Underwriting  Agreement.  The new  sentence  reads as  follows:  "The  foregoing
notwithstanding,  nothing in Section 12(b) shall be interpreted to mean that the
Underwriters may abrogate their  obligations to purchase the Firm Units from the
Company based upon an inability to market the securities."

These  changes  should be  consistent  with the facts set forth in the no action
relief granted to The First Boston Corporation.

                                      * * *

         In addition to the foregoing responses to your comments,  we also would
like to bring to your attention two other significant  developments reflected in
Amendment  No. 3. Most  significantly,  the terms of the offering  have changed.
First,  the number of units to be offered has been increased from 1,100,000,  to
1,350,000.  As a consequence,  the over-allotment option has been increased from
165,000  units to  202,500  units and the  representative's  warrant  will cover
125,000 units rather than 110,000  units.  Second,  a second Class B warrant has
been added to the unit.  Accordingly,  each unit now includes 2 shares of common
stock, 2 Class A warrants and 2 Class B warrants.  Third, the units are expected
to price in a range of $13.00 to $14.00.  Previously,  the  low-end of the range
was $12.00.  Finally,  underwriters'  cash  compensation has been reduced to 10%
(7.5%  commission  and  2.5%  nonaccountable  expense  allowance)  from  11% (8%
commission and 3% non accountable expense allowance).  The information contained
in the prospectus  continues to assume an initial  public  offering price of the
$13.00 per unit.  However,  as a result of the additional  units included in the
offering and the reduction in expenses, estimated net proceeds have increased to
$15 million from $12 million.

                                       3


Michael McTiernan
American Mold Guard, Inc.
April 10, 2006


         The other  development  involves the  allocation of the initial  public
offering  price of the units to the  stock and  warrants  included  therein.  In
recalculating the allocation because of the addition of a Class B warrant to the
unit, the Company realized that some of the assumptions it used to determine the
relative  values of the stock and warrants  included in the units were incorrect
or  unreasonable.  (The  assumptions  used by the Company were  reflected in our
response  to comment  five of your letter  dated March 1, 2006,  which was filed
along with Amendment No. 2 on March 28, 2006.)

         Previously,  the Company assumed a stock price of $5.00 and an exercise
price of $3.75  for the Class A warrant  and $5.00 for the Class B  warrant.  In
addition,  the Company  assumed that the  expected  life of the Class A warrants
will be one month and the expected  life of the Class B warrants will only be 12
months. In reality,  assuming a unit price of $13.00,  the Class A warrants will
have an exercise  price of $9.75 per share and the Class B warrants will have an
exercise  price of $13.00 per share.  Similarly,  the  assumption  regarding the
lives of the  warrants  was  also  revised  in  light  of the fact  that (i) the
warrants all have a five-year  term,  (ii) the warrants are not callable for six
months,  (iii) the Class A warrants are only  callable at such time as the stock
trades  at  $13.00  per  share  for five  consecutive  days and (iv) the Class B
warrants  are  only  callable  at such  time as the  Company's  revenue  for any
12-month period is $20 million.  Accordingly,  the Company has  recalculated the
value of the warrants  based on their actual  respective  exercise  prices and a
life of five  years  for the  Class A  warrants  and 2.5  years  for the Class B
warrants  (expected  time for the Company to earn revenues of $20 million over a
12-month  period).  The other  variables - volatility  and  dividends - were not
changed. Using these revised assumptions, the Company has assigned $4.81 to each
share of stock included in a unit,  $1.38 to each Class A warrant  included in a
unit and $0.31 to each Class B warrant  included in a unit.  This  allocation is
now  reflected  in the pro forma  and pro  forma,  as  adjusted  columns  in the
Capitalization section appearing on page 20 of the prospectus.

                                               Very truly yours,

                                               /s/ Joel J. Goldschmidt
                                               -----------------------
                                               Joel J. Goldschmidt

cc:  Paul Fisher, Esq.

                                       4