10QSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2006

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from                      to                     

Commission File Number: 001-32862

AMERICAN MOLD GUARD, INC.

(Exact name of small business issuer as specified in its charter)

California	74-3077656
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

30200 Rancho Viejo Road, Suite G, San Juan Capistrano, California 92675

(Address of principal executive offices)

(949) 240-5144

(Issuer’s telephone number)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨    No  x

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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: as of November 3, 2006, 4,605,092 common stock, no par value, were outstanding.

Transitional Small Business Disclosure Format (check one): Yes  ¨    No  x

AMERICAN MOLD GUARD, INC.

FORM 10-QSB

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006

TABLE OF CONTENTS

		Page No.
PART I - FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Financial Statements:
	Condensed Consolidated Balance Sheets as of December 31, 2005 and September 30, 2006 (unaudited)	3
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2005 and 2006 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2005 and 2006 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis or Plan of Operation	15
Item 3.	Controls and Procedures	27
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Submission of Matters to a Vote of Security Holders	29
Item 5.	Other Information	29
Item 6.	Exhibits	30
Signatures		31

2

PART I

FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

American Mold Guard, Inc.

Condensed Consolidated Balance Sheets

	December 31, 2005			September 30, 2006 (unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	67,782		$	7,181,269
Accounts receivable, less allowance for doubtful accounts of $15,708 and $83,003, as of December 31, 2005 and September 30, 2006, respectively.		1,257,356			1,380,393
Inventories		38,039			106,167
Deferred offering costs (Note 2)		620,882			—
Deposits		115,935			527,887
Other current assets		80,122			39,603
Total Current Assets		2,180,116			9,235,319
Property and equipment, net (Note 4)		309,465			848,596
Intangible assets, net		2,536			2,029
Total Assets	$	2,492,117		$	10,085,944
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIENCY)
Current Liabilities:
Accounts payable and accrued liabilities	$	1,908,414		$	1,452,307
Lease line of credit, current portion		—			128,569
Accrued payroll related expenses		1,687,834			1,144,335
Short term notes payable (Note 5)		3,129,986			1,581
Accrued interest payable		372,326			—
Total Current Liabilities		7,098,560			2,726,792
Long-Term Liabilities:
Long-term notes payable, net of discount (Note 5)		835,089			—
Lease line of credit, net of current portion		—			391,750
Total Liabilities		7,933,649			3,118,542
Commitments and contingencies (Notes 5, 8)
Shareholders’ Equity (Deficiency) (Notes 3, 5, 6, 7 and 9)
Preferred stock no par value; 10,000,000 shares authorized:
Series A Convertible Preferred Stock, no par value, 170,062 shares authorized, 170,062 shares issued and outstanding having a liquidation preference of $772,740 on December 31, 2005, and 0 shares authorized, issued and outstanding on September 30, 2006		625,000			—
Series B Redeemable, Convertible Preferred Stock, no par value, 411,550 shares authorized, 154,586 shares issued and outstanding having a liquidation preference of $1,180,791 on December 31, 2005, and 256,964 shares authorized and 0 shares issued and outstanding on September 30, 2006		859,000			—
Series C Convertible Preferred Stock, no par value, 5,000,000 authorized, none issued and outstanding on December 31, 2005 and September 30, 2006
Common Stock, no par value, 50,000,000 shares authorized, 942,301 and 4,605,092 shares issued and outstanding on December 31, 2005 and September 30, 2006, respectively		1,475,262			16,554,648
Additional paid-in capital		2,005,289			6,872,685
Accumulated deficiency		(10,406,083	)		(16,459,931	)
Total Shareholders’ Equity (Deficiency)		(5,441,532	)		6,967,402
Total Liabilities and Shareholders’ Equity (Deficiency)	$	2,492,117		$	10,085,944

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

3

American Mold Guard, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three months ended September 30, 2005			Three months ended September 30, 2006			Nine months ended September 30, 2005			Nine months ended September 30, 2006
Revenue, net	$	1,883,572		$	2,240,985		$	4,143,446		$	7,594,607
Cost of revenue:
Direct costs		1,371,198			1,202,630			3,207,321			4,215,926
Depreciation expense		29,363			66,050			74,404			137,664
Total cost of revenue		1,400,561			1,268,680			3,281,725			4,353,590
Gross margin		483,011			972,305			861,721			3,241,017
Selling, general and administrative expenses		1,226,623			2,445,107			3,558,572			6,747,675
Loss from operations		(743,612	)		(1,472,802	)		(2,696,851	)		(3,506,658	)
Interest income\expense		(184,149	)		102,350			(578,863	)		(2,539,699	)
Loss before provision income for taxes		(927,761	)		(1,370,452	)		(3,275,714	)		(6,046,357	)
Provision for income taxes		386			2,658			1,336			7,490
Net loss		(928,147	)		(1,373,110	)		(3,277,050	)		(6,053,847	)
Dividends on cumulative preferred stock		35,159			—			70,318			—
Net loss applicable to common shareholders		(963,306	)		(1,373,110	)		(3,347,368	)		(6,053,847	)
Basic and diluted net loss per share	$	(1.08	)	$	(0.30	)	$	(3.64	)	$	(2.32	)
Dividends accumulated for the period on cumulative preferred stock	$	(0 .04	)	$	—		$	(0.08	)	$	—
Net loss per share attributable to common shareholders	$	(1.12	)	$	(0.30	)	$	(3.72	)	$	(2.32	)
Weighted average number of common shares outstanding
– basic and diluted		862,916			4,584,187			899,423			2,610,407

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

4

American Mold Guard, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine months ended September 30, 2005			Nine months ended September 30, 2006
Cash flows from operating activities:
Net loss	$	(3,227,051	)	$	(6,053,848	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization expense		92,511			166,001
Compensation expense from stock options		—			95,416
Common stock issued for payment of services		113,540			—
Common stock issued in payment of directors fees		37,500			—
Options issued for payment of consulting services		12,080			—
Common stock issued in settlement		—			27,807
Fair value of warrant issued for services		275,368			38,543
Fair value of common stock issued for Trust One		12,500			—
Amortization of beneficial conversion debt discount		(1,261,451	)		2,415,837
Increase (decrease) in cash from changes in assets and liabilities:
Accounts receivable		(777,993	)		(123,037	)
Inventories		40,587			(68,128	)
Deposits and other current assets		(130,189	)		(370,926	)
Accounts payable and accrued liabilities		630,932			(456,108	)
Accrued payroll related expenses		538,350			(543,498	)
Accrued interest payable		250,365			(372,236	)
Net cash used in operating activities		(3,442,950	)		(5,244,267	)
Cash flows from investing activities:
Purchase of property and equipment		(197,225	)		(170,963	)
Net cash used in investing activities		(197,225	)		(170,963	)
Cash flows from financing activities:
Proceeds on issuance of common stock, net of $1.4 million of offering costs and underwriter discounts of $1.5 million		—			16,631,685
Borrowings from notes payable		4,471,581			750,000
Payments on short term notes payable		(29,618	)		(5,460,000	)
Payments on lease line of credit		—			(13,850	)
Deferred offering costs, net of an increase of $787,583		441,424			620,882
Net cash flows provided by financing activities		4,000,538			12,528,717
(Decrease) Increase in cash and cash equivalents		360,333			7,113,487
Cash and cash equivalents, beginning of period		243,788			67,782
Cash and cash equivalents, end of period	$	604,121		$	7,181,269
Supplemental disclosures for cash flow information:
Non-cash financing activities
Conversion of Series A and B preferred stock	$	—		$	1,484,000
Securities issued in repayment of bridge financing		—			1,500,000
Property and equipment acquired under lease line of credit		—			294,539
Non-cash investing activities – 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	)		—
Cash paid for interest		40,910			550,275
Cash paid for income taxes		361			2,555

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

5

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 its efforts on single and multi-family residential new construction. Currently, the Company operates 16 service centers in five states – California, Florida, Texas, Mississippi and Louisiana. Through its wholly-owned subsidiary, Trust One Termite, Inc. (“Trust One”), the Company also provides termite control services.

Unaudited Interim Financial Statements

The Company has prepared these financial statements in accordance with United States generally accepted accounting principles for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such regulations. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2005 included in the Company’s Registration Statement on Form SB2 filed with the Securities and Exchange Commission on January 6, 2006 ( the “Registration Statement”) and effective on May 2, 2006. The interim unaudited condensed consolidated financial statements should be read in conjunction with the financial statements included in the Registration Statement. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary for a fair statement of the financial position of the Company as of September 30, 2006 and the results of its operations and its cash flows for the three and nine months ended September 30, 2006 and 2005. Such adjustments are of a normal recurring nature. The results of operations for the nine months ended September 30, 2006 are not necessarily indicative of results of operations to be expected for the full year.

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 of the issued and outstanding shares of common stock 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 shares were valued at $12,500, based on the estimated fair value of the Company’s common stock at the day of the acquisition of $3.68 per share. The results of Trust One’s operations have been included in the consolidated financial statements since the date of the acquisition.

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.

	Nine Months Ended September 30, 2005
Net revenue	$	4,153,312
Net loss	$	(3,285,864	)
Loss per common share	$	(3.65	)
Weighted average common shares outstanding		899,423

Note 2. Summary of Critical Accounting Policies

Principles of Consolidation

These condensed 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 since the date of its acquisition, February 1, 2005. All significant inter-company accounts and transactions are eliminated upon consolidation.

6

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 were incurred in connection with the sale of the Company’s $1.5 million aggregate principal amount 10% unsecured promissory notes due August 31, 2006 (the “Unsecured Notes”). The costs related to the Unsecured Notes were fully amortized over the life of the Unsecured Notes, and, for the three and nine months ended September 30, 2006, $0 and $47,450 has been recognized as interest expense. Direct costs were also incurred in connection with the Company’s initial public offering (the “IPO”), which became effective on May 2, 2006 (Note 7), principally related to underwriting commissions and legal expenses which were capitalized. The Company offset the costs associated with the IPO in the amount of $1,408,465 against the IPO proceeds in the quarter ended June 30, 2006.

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 Statement of Financial Accounting Standards (“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 nine months ended September 30, 2005 and 2006.

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 September 30, 2006 or during the nine months ended September 30, 2005 and 2006.

7

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 10 and 15 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 $3.0 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 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 condensed consolidated financial statements do not include any accruals or provisions associated with future warranty expenditures.

Stock-based Compensation under FAS123R

On January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment,”, or SFAS 123(R), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options based on estimated fair values. SFAS 123(R) supersedes the Company’s previous accounting under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, or APB 25, for periods beginning in fiscal 2006. In March 2006, the SEC issued Staff Accounting Bulletin No. 107, or SAB 107, relating to SFAS 123(R). The Company has applied the provisions of SAB 107 in its adoption of SFAS 123(R).

The Company adopted SFAS 123(R) using the modified prospective application transition method, which requires the application of the accounting standard as of January 1, 2006, the first day of the Company’s 2006 fiscal year. The Company’s Consolidated Financial Statements as of and for the three and nine months ended September 30, 2006 reflect the impact of SFAS 123(R). In accordance with this transition method, the Company’s Consolidated Financial Statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123(R).

Upon adoption of SFAS No. 123(R) the Company has continued to use the Black-Scholes model which was previously used for the Company’s pro forma information required under SFAS No. 123. The determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Option-pricing models were developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable. Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock options.

8

The weighted-average estimated fair value of employee stock options granted during the nine month periods ended September 30, 2006 was $2.59 using the Black-Scholes model. There were no stock options granted during the 3 months ended September 30, 2006. The weighted-average estimated fair value of employee stock options granted during the three and nine month periods ended September 30, 2005 was $0.45 per share using the Black-Scholes model. The Black Scholes model was utilized with the following assumptions (annualized percentages):

	Three months ended September 30,			Nine months ended September 30,
	2005		2006	2005		2006
Expected volatility	33.0	%	—	33.0	%	55.0	%
Expected dividend yield	0		—	0		0
Expected term (in years)	5.0	%	—	5.0		3.4
Risk-free rate	4.2	%	—	4.0	%	4.9	%

Expected volatility is based on the Company’s historical volatility and the historical volatilities of the common stock of comparable publicly traded companies. The risk-free rate for the expected term of the option is based on the average U.S. Treasury yield curve at balance sheet date for the expected term. The expected term of options granted is derived from the average midpoint between vesting and the contractual term, as described in SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment.

Share-based compensation expense, included in selling, general and administrative expenses, recognized under SFAS 123(R) for the three and nine months ended September 30, 2006 was $34,902 and $95,416, respectively. SFAS 123(R) requires companies to estimate the fair value of share-based payment awards on the grant-date using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Consolidated Statements of Operations.

Share-based compensation expense recognized during the current period is based on the value of the portion of share-based payment awards that is ultimately expected to vest. SFAS 123(R) requires forfeitures to be estimated at the time of grant in order to estimate the amount of share-based awards that will ultimately vest. The forfeiture rate is based on historical rates. Share-based compensation expense recognized in the Company’s Consolidated Statement of Operations for the nine months ended September 30, 2006 includes (i) compensation expense for share-based payment awards granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair value estimated in accordance with the pro forma provisions of SFAS 123 and (ii) compensation expense for the share-based payment awards granted subsequent to December 31, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123(R). As share-based compensation expense recognized in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2006 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Pre-vesting forfeitures were estimated to be approximately 10.0% in the third quarter of 2006 based on historical experience. In the Company’s pro forma information required under SFAS 123 for the periods prior to fiscal 2006, the Company accounted for forfeitures as they occurred.

Pro Forma Information under FAS123 for Periods Prior to Fiscal 2006

Prior to the adoption of SFAS 123(R), the Company accounted for share-based awards to employees and directors using the intrinsic value method in accordance with APB 25, as allowed under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”, or SFAS 123. Under the intrinsic value method, no share-based compensation expense related to stock options had been recognized in the Company’s Consolidated Statements of Operations because the exercise price of the Company’s stock options granted to employees and directors equaled the fair market value of the underlying stock at the grant-date.

If the Company had adopted the fair value provisions of SFAS No. 123 for employee stock options, in connection with options issued during the three and nine months ended September 30, 2005, the Company would have recorded deferred compensation of $70,511. Most 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.

9

The pro forma loss assuming implementation of SFAS No. 123(R) for the three and nine months ended September 30, 2005 is as follows:

	Three months ended September 30, 2005			Nine months ended September 30, 2005
Net loss, as reported	$	(928,147	)	$	(3,277,051	)
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		(15,589	)		(46,858	)
Pro forma net loss	$	(943,736	)	$	(3,323,909	)
Weighted average number of shares outstanding:
Basic and diluted -		862,916			899,423
Net loss per share:
Basic – as reported	$	(1.08	)	$	(3.64	)
Basic – pro forma	$	(1.09	)	$	(3.70	)

Risk Management

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

Fair Value of Financial Instruments

The carrying values of cash, accounts receivable, other current assets, accounts payable and accrued liabilities, accrued salary and wages, accrued interest payable and short term debt approximate their fair values 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 the Company’s common stock, no par value (the “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 anti-dilutive, aggregate 2,449,369 and 6,418,801 as of September 30, 2005 and 2006, respectively.

Note 3. Capitalization

The accompanying financial statements give retroactive effect to a reverse stock split pursuant to which each share of common stock outstanding before the reverse stock split was converted and exchanged for 0.340124209 new shares of common stock. The reverse stock split was effective as of April 7, 2006.

10

Note 4. Property and Equipment

Property and equipment consisted of the following as of:

	December 31, 2005			September 30, 2006 (Unaudited)
Field equipment and vehicles	$	421,678		$	1,039,725
Office furniture and fixtures		96,589			183,675
Accumulated depreciation		(208,802	)		(374,804	)
Property and equipment, net	$	309,465		$	848,596

Note 5. Notes Payable and Lease Line of Credit

As of September 30, 2006, the Company had no outstanding borrowings under notes payable and its lease line of credit consists of:

In the second quarter of 2006, the Company opened a secured lease line of credit with Bank of America for the amount of $500,000. On June 26, 2006, the Company borrowed $294,539 against this line of credit to purchase equipment. The terms of this agreement is 48 months with an annual interest rate of 7.75% and with a $1.00 buy out at the end of the lease term.

During the third quarter of 2006, the Company increased the line of credit from $500,000 to $540,000. The Company borrowed an additional amount of $239,630 against the line of credit to purchase additional equipment. In the third quarter of 2006, the Company paid $13,849 towards the line of credit.

Debt transactions in the nine months ended September 30, 2006:

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. In order to induce the investor to make these loans, the Company’s chief executive officer and one of its directors agreed to transfer 1,701 and 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 $49,081 which was charged to debt discount and credited to additional paid in capital during 2006. The loan, including accrued interest, was paid in full in May 2006.

In February and March, 2006, the Company’s chief executive officer loaned the Company an aggregate of $100,000. The loan bears interest at the rate of 10% per annum and is payable from the proceeds of the IPO. The loan, including accrued interest, was paid in full in May 2006.

On March 1, 2006, the Company issued a 10% unsecured promissory note up to a principal amount of $200,000 to the representative of the underwriters of the IPO (the “Representative”). In April 2006, the Company borrowed an additional $50,000. The note, including accrued interest, was payable in full at the closing of the IPO and was paid in full in May 2006.

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 agreed to transfer 25,000 shares to the investor from his own personal holdings. The benefit of the personal transfer to the Company has been valued at $120,250, which was charged to debt discount and credited to additional paid in capital during 2006. During the nine months ended September 30, 2006, $120,250 was charged to interest expense since the note was paid in full in May 2006.

In the quarter ended June 30, 2006, the Company paid off an aggregate amount of short term and long term notes payable of $5,285,000 with the IPO proceeds.

On March 17, 2004, the Company received a $75,000 unsecured loan from an individual investor with an interest rate of 8% per annum and an unspecified maturity date. On July 8, 2004, the Company borrowed $100,000 at a stated interest rate of 8% per annum from the same investor pursuant to a Loan Agreement entered into on the date of the loan. Although the Loan Agreement required the Company to repay all outstanding loan balances to the investor on or prior to October 9, 2004, the Company did not pay any interest or repay any portion of the principal or interest until March 31, 2005. The Company and the parties settled the agreement in September 2006.

For the nine months ended September 30, 2006, the Company realized a total of $2,415,837 of deferred interest costs (debt discount) which was amortized and charged to interest expense since the notes were paid in full in May 2006.

11

Prepaid financing fees of $81,350 paid in connection with certain notes payable were amortized over the life of the respective notes. Amortization of $20,340 and $47,450 for the nine months ended September 30, 2005 and 2006, respectively, is included in interest expense in the accompanying condensed consolidated statements of operations. Since the Company paid off the notes related to these financing fees in May 2006, the remaining balance has been expensed to interest expense.

Note 6. Purchase Warrants

Common Stock Purchase Warrants

Listed below are the warrant balances of the Company as of September 30, 2006:

	Underlying Shares	Weighted Average Exercise Price		Weighted Average Contractual Life Remaining
January 2005 Warrants	85,031	$	3.68	0.26 years
April 2005 Warrants	170,062		5.88	1.54 years
June 2006 Warrants	15,000		5.00	2.71 years
August 2006 Warrants	13,000		5.00	1.84 years
Balance, September 30, 2006	283,093	$	5.13	1.23 years

The January 2005 Warrants are fully vested and 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, the Company estimated the fair value of such warrants to be $128,000 using the Black-Sholes valuation model.

The April 2005 Warrants are fully vested and 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 has been amortized over the life of Convertible Note which was paid May 2006.

The June 2006 Warrants were issued in conjunction with payment for services to be received by the Company over a twelve month period. The Warrants entitle the holder thereof to purchase up to 15,000 shares of common stock at any time until June 14, 2009 at a purchase price of $5.00 per share. In connection with the issuance of the June 2006 Warrants, the Company recorded a prepaid asset which will be amortized to expense as the related services are received. The Company estimated the fair value of such warrants to be $23,029 using the Black-Scholes valuation model. For the three and nine months ended September 30, 2006,, $5,772 and $6,733, respectively has been amortized and charged to expense.

In August 2006, the Company issued 13,000 warrants in conjunction with payment for services to be received by the Company over a six month period commencing March 2006. The Warrants entitle the holder thereof to purchase up to 13,000 shares of common stock at any time until August 2009 at a purchase price of $5.00 per share. In connection with this grant, the Company and the recipient of the warrant has agreed to cancel A, B and common warrants previously granted to the recipient in May 2006. The Company estimated the fair value of such warrants to be $15,514 using the Black-Scholes valuation model. For the three and nine months ended September 30, 2006, $5,151 and $15,514, respectively has been amortized and charged to expense.

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Class A and Class B Purchase Warrants

Listed below are the A and B warrant balances of the Company as of September 30, 2006:

	Underlying Shares	Weighted Average Exercise Price		Weighted Average Contractual Life Remaining
May 2006 IPO Class A Warrants	2,930,770	$	9.75	4.59 years
May 2006 IPO Class B Warrants	2,930,770		13.00	4.59 years
Balance, September 30, 2006	5,861,540	$	11.37	4.59 years

In May 2006 in conjunction with the IPO there were 2,930,770 Class A warrants issued and outstanding of which 2,700,000 were included in the units sold and 230,770 were included in the units that were issued to the holders of the Unsecured Notes on April 26, 2006. The Class A warrants issued are exercisable beginning May 26, 2006 and ending on April 26, 2011. Each Class A warrant entitles the holder to purchase one share of common stock at an exercise price of $9.75 per share. The exercise price will be adjusted if specific events occur, as defined in the underwriting agreement.

In May 2006 in conjunction with the IPO there were 2,930,770 Class B warrants issued and outstanding of which 2,700,000 were included in the units sold and 230,770 were included in the units that were issued to the holders of the Unsecured Notes on April 26, 2006. The Class B warrants are identical to the Class A warrants except that the Class B warrants have an exercise price of $13.00 per share and the Class B warrants may only be redeemable after gross revenues for any previous 12 month period, as confirmed by independent audit, equals or exceeds $20 million.

Note 7. Stockholders Equity (Deficiency)

Equity Incentive Plan

The shareholders of the Company approved the Equity Incentive Plan (the “Plan”) on April 28, 2003, which initially provided 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 to permit 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 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 option activity under the Plan as of September 30, 2006:

Options	Shares		Weighted- Average Exercise Price			Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding on December 31, 2005	267,499		$	4.52		4.23	$	1,210,000
Granted	40,000			5.93		4.80		—
Exercised	—			—		—		—
Forfeited or expired	(33,331	)		(6.48	)	—		—
Outstanding on September 30, 2006 (unaudited)	274,168		$	4.52		3.81		115,938
Exercisable on September 30, 2006 (unaudited)	105,519		$	4.37		3.43	$	49,893

As of September 30, 2006, there was $230,209 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 1.1 years.

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Initial Public Offering

On May 2, 2006, the Company completed an initial public offering of 1,350,000 units, at a price per unit of $13.00. Each unit consisted of two shares of common stock, two Class A Warrants and two Class B Warrants. On May 23, 2006, the representative of the several underwriters exercised an overallotment option granted to the several underwriters in connection with the initial public offering and purchased an additional 100,000 units. On June 7, 2006, the representative of the several underwriters exercised the overallotment option again and purchased 100,000 shares of common stock, 100,000 Class A Warrants and 100,000 Class B Warrants. The total gross proceeds from the Company’s IPO were approximately $19.5 million, and the Company realized aggregate net proceeds of approximately $16.6 million.

Convertible Preferred Stock

In connection with our initial public offering, each share of Series A and Series B convertible preferred stock outstanding as of May 2, 2006 was automatically converted into common stock at a ratio of one share of common stock for each share of preferred stock. As of May 2, 2006, 170,062 Series A preferred and 154,586 Series B preferred shares were converted to 324,648 common shares. As a result of the conversion of these preferred shares into common stock, the Company’s obligation to pay cumulative preferred dividends terminated.

Note 8. Commitments and Contingencies

Lease Commitments

The Company’s executive offices are located in San Juan Capistrano, California under a lease that expired in August 2006 but are currently operating under a month to month lease. 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 are as follow:

Years ending December 31,
2006	$	490,989
2007		564,657
2008		455,114
2009		191,592
2010		2,027
	$	1,704,379

Rent expense was $53,210 and $113,492 during the three months ended September 30, 2005 and 2006. Rent expense was $145,802 and $279,059 during the nine months ended September 30, 2005 and 2006, respectively.

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.

Note 9. Subsequent events

On October 10, 2006, the Company appointed Dr. Atif Malik as the Company’s Chief Science Officer.

On October 12, 2006, the Company formed AMG Scientific, LLC, a California limited liability company (“AMG Scientific”). AMG Scientific is a wholly-owned subsidiary of the Company. The Company formed AMG Scientific to focus on the development of a new market application for its antimicrobial surface treatment technology. AMG Scientific’s principal plan of operation is to assist large organizations, institutions and government facility managers in combating the growing problem of interior surface transmitted infectious diseases. In connection with the formation of AMG Scientific, the Company assigned Dr. Atif Malik to become Chief Science Officer of AMG Scientific.

On October 17, 2006, the Company appointed Dr. Asif Ali as President of AMG Scientific.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS AND SAFE HARBOR

The following is a discussion of the financial condition and results of operations for our quarter ended September 30, 2006. As used herein, the “Company,” “we,” “us,” or “our” means American Mold Guard, Inc. and its wholly-owned subsidiary.

This Form 10-QSB includes “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding, among other things, statements relating to goals, plans and projections regarding the Company’s financial position, results of operations, market position, product and service development and market strategy. These statements may be identified by the fact that they use words or phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “targets,” “will likely result,” “will continue,” “may,” “could” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes and results to differ materially from current expectations. These factors include, among other things, competitive product and service development, future broad market acceptance of mold and hospital acquired infection prevention services, difficulties in raising additional capital in the future, difficulties and delays in establishing the "Mold Guard" brand, the impact of the absence of significant proprietary technology underlying our services, a continued and long-term dependence on a limited number of customers, changes to the inventory levels of the Company’s raw materials suppliers, the impact of a continued absence of exclusive or long-term commitments from the Company’s customers, changes in the anticipated size or trends of the markets in which the Company competes, judicial decisions and governmental laws and regulations, and changes in general economic conditions in the markets in which the Company may compete. In addition, these statements constitute our cautionary statements under the Private Securities Litigation Reform Act of 1995. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider the following to be a complete discussion of all potential risks or uncertainties. Forward-looking statements speak only as of the date of the document in which they are made. We disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. The forward-looking statements in this Form 10-QSB should be evaluated together with the many uncertainties that affect our business, particularly those mentioned under the section entitled “Factors That May Affect Future Results” below and our periodic reporting on Form 8-K (if any), which we incorporate by reference.

GENERAL OVERVIEW

We provide mold prevention services to builders of single and multi-family homes. To date, we have provided our service to over 500 national and regional single- and multi-family home builders through 16 service centers located in California, Florida, Texas, Mississippi 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 The Hanover Company, 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. 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 regions and service centers.

Our strategy is to continue to grow sales and reach operating profitability by being the leader in anti-microbial surface treatments. To accomplish this goal we plan to continue to enter new regions and establish new service centers throughout the country. We, also, plan to assist large organizations, institutions and government facility managers in combating the growing problem of interior surface transmitted infectious diseases. Through the formation of a new wholly owned subsidiary, AMG Scientific, LLC, we intend to broaden our available market for interior surface treatment. The challenge we face is timely adoption of our interior surface application by large institutions and balance our goals of achieving profitability. We intend to utilize our existing service center capabilities to deploy our interior surface treatment. 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 demand for interior surface treatment and 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

15

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.

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 demand for services relating to mold prevention and interior surface treatment. In addition, we believe public awareness of health risk 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 and public awareness of the dangers of hospital acquired infections will 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.

Lack of sufficient capital prior to the IPO has prevented us from aggressively marketing our mold prevention 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. The lack of capital has had negative margin impact on our service operations in the areas of raw material cost, labor cost and labor productivity. The additional capital, provided through the IPO, has allowed us to implement operation improvement programs that we expect will lead to higher gross margins.

On May 2, 2006, we completed an initial public offering of 1,350,000 units, at a per unit price of $13.00. Each unit consisted of two shares of Common Stock, two Class A Warrants and two Class B Warrants. On May 23, 2006, the representative of the several underwriters exercised an overallotment option granted to the several underwriters in connection with the initial public offering and purchased an additional 100,000 units. On June 7, 2006, the representative of the several underwriters exercised the overallotment option again and purchased 100,000 shares of Common Stock, 100,000 Class A Warrants and 100,000 Class B Warrants. The total gross proceeds from the IPO were approximately $19.5 million, and we realized aggregate net proceeds of approximately $16.6 million. We believe that capital raised in our initial public offering will allow us to increase sales and marketing resources in our existing regions, as well as expand into new regions.

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 new sales order activity, service schedule, material usage and crew productivity.

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

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 also is 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 the experience of the crew and the amount of mold contamination to be removed from the project.

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CRITICAL ACCOUNTING POLICIES

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.

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.

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.

Stock-based Compensation

On January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment”, or SFAS 123(R), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options based on estimated fair values. SFAS 123(R) supersedes the Company’s previous accounting under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, or APB 25, for periods beginning in fiscal 2006. In March 2006, the SEC issued Staff Accounting Bulletin No. 107, or SAB 107, relating to SFAS 123(R). The Company has applied the provisions of SAB 107 in its adoption of SFAS 123(R).

The Company adopted SFAS 123(R) using the modified prospective application transition method, which requires the application of the accounting standard as of January 1, 2006, the first day of the Company’s 2006 fiscal year. In accordance with this transition method, the Company’s Consolidated Financial Statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123(R). Share-based compensation expense recognized under SFAS 123(R) for the nine months ended September 30, 2006 was $60,514.

SFAS 123(R) requires companies to estimate the fair value of share-based payment awards on the grant-date using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Consolidated Statements of Operations. Prior to the adoption of SFAS 123(R), the Company accounted for share-based awards to employees and directors using the intrinsic value method in accordance with APB 25, as allowed under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”, or SFAS 123. Under the intrinsic value method, no share-based compensation expense related to stock options had been recognized in the Company’s Consolidated Statements of Operations because the exercise price of the Company’s stock options granted to employees and directors equaled the fair market value of the underlying stock at the grant-date.

Share-based compensation expense recognized during the current period is based on the value of the portion of share-based payment awards that is ultimately expected to vest. SFAS 123(R) requires forfeitures to be estimated at the time of grant in order to estimate the amount of share-based awards that will ultimately vest. The forfeiture rate is based on historical rates. Share-based compensation expense recognized in the Company’s Consolidated Statement of Operations includes (i) compensation expense for share-based payment awards granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair value estimated in accordance with the pro forma provisions of SFAS 123 and (ii) compensation expense for the share-based payment awards granted subsequent to December 31, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123(R). As share-based compensation expense recognized in the Condensed Consolidated Statement of Operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. In the Company’s pro forma information required under SFAS 123 for the periods prior to fiscal 2006, the Company accounted for forfeitures as they occurred.

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RESULTS OF OPERATIONS (Unaudited)

The following table set forth the percentage relationship to total revenues of items included in the Company’s Condensed Consolidated Statements of Operations for the periods indicated:

	Three Months Ended September 30,						Increase (Decrease)			% Change
	2005			2006
Revenue	$	1,883,572		$	2,240,985		$	357,413		19.0	%
Cost of Revenue		1,400,561			1,268,680			(131,881	)	9.4	%
Gross Margin		483,012			972,305			489,293		101.3	%
Selling, general and administrative expenses		1,226,623			2,445,107			1,218,484		99.3	%
Loss from Operations		(743,612	)		(1,472,802	)		729,190		98.1	%
Interest Income\Expense		(184,149	)		102,350			286,499		155.6	%
Loss before provision for income taxes		(927,761	)		(1,370,452	)		442,691		47.7	%
Provision for income taxes		386			2,658			2,272		588.6	%
Net Loss		(928,147	)		(1,373,110	)		444,963		47.9	%
	Nine months Ended September 30,						Increase (Decrease)			% Change
	2005			2006
Revenue	$	4,143,446		$	7,594,607		$	3,451,161		83.3	%
Cost of Revenue		3,281,725			4,353,590			1,071,865		32.7	%
Gross Margin		861,721			3,241,017			2,379,296		276.1	%
Selling, general and administrative expenses		3,558,572			6,747,675			3,189,103		89.6	%
Loss from Operations		(2,696,851	)		(3,506,658	)		809,807		30.0	%
Interest Expense		(578,863	)		(2,539,699	)		1,960,836		338.7	%
Loss before provision for income taxes		(3,275,715	)		(6,046,357	)		2,770,642		84.6	%
Provision for income taxes		1,336			7,490			6,154		460.6	%
Net Loss		(3,277,051	)		(6,053,848	)		2,776,797		84.7	%

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Revenues

Revenues for the three months ended September 30, 2006 increased to $2,240,985 compared to $1,883,572 during the same period last year. Year to date revenue increased $3,451,161 or 83.3% compared to the same period last year. The increase in revenue is attributable to increased market penetration through the expansion of regions and service centers as well as a price increases enacted in the beginning of 2006.

Revenue growth in the three and nine months ended September 30, 2006 versus the three and nine months ended September 30, 2005 by region is summarized below:

	Three Months Ended September 30, 2005		Percentage of Revenue		Three Months Ended September 30, 2006		Percentage of Revenue		Increase (Decrease)			Percentage Increase (Decrease)
Region
California	$	959,525	50.9	%	$	1,057,870	47.2	%	$	98,345		10.2	%
Florida		484,808	25.7	%		410,532	18.3	%		(74,276	)	(15.3	%)
Gulf		—	0.0	%		696,333	31.1	%		696,333		100.0	%
Midwest		174,520	9.3	%		42,934	1.9	%		(131,586	)	(75.4	%)
Other		264,719	14.1	%		33,316	1.5	%		(231,403	)	(87.4	%)
Total		1,883,572	100.0	%		2,240,985	100.0	%		357,413		19.0	%
	Nine months Ended September 30, 2005		Percentage of Revenue		Nine months Ended September 30, 2006		Percentage of Revenue		Increase (Decrease)			Percentage Increase (decrease)
Region
California		2,346,708	56.6	%		3,873,347	51.0	%	$	1,526,639		65.1	%
Florida		1,137,950	27.5	%		1,168,962	15.4	%		31,012		2.7	%
Gulf		—	0.00	%		2,284,874	30.1	%		2,284,874		100.00	%
Midwest		394,069	9.5	%		50,759	00.6	%		(343,310	)	(87.1	%)
Other		264,719	6.4	%		216,665	02.9	%		(48,054	)	(18.2	%)
Total		4,143,446	100.0	%		7,594,607	100.0	%		3,451,161		83.3	%

Revenue in California increased $98,345 or 10.2% in the third quarter of 2006 versus the same period for 2005. Year to date revenue increased $1,526,639 or 65.1% compared to the same period last year. The year to date increase is the result of the expansion of service centers as well as increases in pricing enacted in the beginning of the year along with an increase in multi-family and single family projects.

Revenue in the Florida region decreased $74,276 or 15.3%, in the third quarter of 2006 versus the same period of 2005. Year to date revenue increased $31,012 or 2.7%. The decrease is attributable to the overall real estate slow down but we continued to expand our customer base in Florida during the third quarter of 2006.

Commencing in the quarter ended September 30, 2006, we separated our Texas and Louisiana regions. The Gulf region now includes New Orleans, St. Bernard’s and Biloxi. Revenue in that region increased $696,333 or 100.0%, in the third quarter of 2006 versus the same period in 2005. Year to date revenue increased $2,284,874 or 100.0% compared to the same period last year .The increase was primarily attributable to the Company’s expansion into New Orleans in October 2005 following Hurricane Katrina.

We created the Midwest region in the third quarter of 2006 which will service Houston, Dallas and Austin. Revenue in the Midwest region decreased $131,586 or 75.4%, in the third quarter of 2006 verses the same period of 2005. Year to date revenue decreased $343,310 or 87.1% compared to the same period last year. This overall decrease was attributable to the Company focusing its selling efforts in The Gulf. In the third quarter of 2006, we began the process of refocusing our efforts in the Houston and Dallas and the Austin area.

Other region revenue comprises projects serviced outside of existing primary regions, where we have service centers. Other revenue decreased $231,403 or 87.4%, in the third quarter of 2006. Year to date revenue decreased $48,054 or 18.2% compared to the same period last year. The 2006 other region revenue was derived from the completion of three multi-family projects in New Jersey and Maryland in the first quarter of 2006. In the third of quarter of 2006, we completed a job in Massachusetts.

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We also analyze revenue based on type of construction treated. National builder projects decreased from $646,309 to $575,871 during the third quarter of 2006, a decrease of 11% compared to the same period in 2005. National builder year to date revenue increased from $1,469,220 to $2,253,310, an increase of 54% from a year ago. Single family construction increased from $952,419 to $1,409,514 during the third quarter of 2006, an increase of 48% from the same quarter in 2005. Year to date single family revenue increased from $1,770,156 to $4,465,553 an increase of 152%. Service to multi-family construction decreased from $284,844 to $255,600, a decrease of 10% compared to the same period in 2005. Year to date multi-family revenue decreased from $904,069 to $875,744 or a decreased of 3% compared to same period last year.

Cost of Revenue

Three Months Ended September 30, 2005		Percent of revenues		Three Months Ended September 30, 2006		Percent of Revenues		Increase (Decrease)
$	1,400,561	74.4	%	$	1,268,680	56.6	%	$	(131,881	)
Nine months Ended September 30, 2005		Percent of revenues		Nine months Ended September 30, 2006		Percent of revenues		Increase (Decrease)
$	3,281,725	79.2	%	$	4,353,590	57.3	%	$	1,071,865

Cost of revenue includes the material, labor and other costs directly related to providing our services, including the depreciation expense relating to equipment used to provide our services. Cost of revenue for the quarter ended September 30, 2006 totaled $1,268,680 a decrease of 9.4 % compared to the cost of revenue for the period ended September 30, 2005. Year to date Cost of Revenue is $4,353,590 an increase of 31.7% compared to the same period last year. The increase was a result of increased labor associated with the increase in new sales and the additional costs associated with service center expansion.

Raw material costs have decreased as a percentage of revenue from 15.9% in the third quarter of 2005 to 10.8% for the same time period in 2006. Year to date raw material costs decreased from 17.5% in 2005 to 11.6% in 2006. This decrease is attributable to increased pricing on new construction services an increase in Gulf Coast business, which has a lower material cost as a percentage of revenue and an overall material cost price reduction was negotiated in the third quarter of 2006.

Direct labor cost as a percentage of revenue decreased from 32.7% in third quarter of 2005 to 29.0% in the same period in 2006. Year to date direct labor costs decreased from 40.7% in 2005 to 29.8% in 2006. The decrease is primarily a result of improved labor utilization on higher sales volume and from acquiring our own national workman’s compensation insurance policy.

Other costs of revenue include costs associated with fuel, service vehicle rental, equipment rental, equipment depreciation, direct supplies and other costs directly associated with the services we provide. Other direct costs have decreased as a percentage of revenue from 22.1% in the third quarter of 2005 to 16.9% for the same time period in 2006. Year to date other costs decreased from 21.0% in 2005 verses 15.7% in 2006. The decrease is primarily a result of our decision in the third quarter of 2006 to purchase equipment that had previously been rented.

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Selling, General and Administrative Costs

Three Months Ended September 30, 2005		Percent of Revenues		Three Months Ended September 30, 2006		Percent of Revenues		Increase (Decrease)
$	1,226,623	65.1	%	$	2,445,107	109.1	%	$	1,218,484
Nine months Ended September 30, 2005		Percent of Revenues		Nine months Ended September 30, 2006		Percent of Revenues		Increase (Decrease)
$	3,558,572	85.9	%	$	6,747,675	88.8	%	$	3,189,103

Selling, general and administrative costs include corporate and regional overhead such as compensation and benefits for sales, administrative and executive personnel, rent, insurance, professional fees, travel and office related expenses. The increase from the third quarter of 2005 to the third quarter of 2006 was $1,218,484. The year to date increase of $3,189,103 in 2006 verses the nine months ended September 2005 is primarily attributed to investments in service center expansion which increased 45%, regional and brand marketing which increased 48%, corporate infrastructure additions which increased 14% and the added cost of being a public company which increased 170%. As a percentage of revenue, selling, general and administrative costs increased from 65.1% in the third quarter of 2005 to 109.1% for the same period in 2006. Year to date selling, general administrative costs increased from 85.6% in 2005 to 88.6% for the same period in 2006.

Net Interest Income\Expense

Three Months Ended September 30, 2005		Percent of Revenues		Three Months Ended September 30, 2006			Percent of Revenues		Increase (Decrease)
($184,149	)	09.8	%	$	102,350		4.6	%		$286,499
Nine months Ended September 30, 2005		Percent of Revenues		Nine months Ended September 30, 2006			Percent of Revenues		Increase (Decrease)
($578,863	)	14.0	%		($2,539,699	)	33.4	%		$1,960,836

Net interest expense, for the three months ended September 30, 2006 totaled $(102,350), an increase of $286,499 over the same period in 2005. The 2006 year to date interest expense totals $2,539,699, an increase of $47.2%. The increase is directly attributable to the increase in debt financing in the last three quarters of 2005 and the first six months of 2006. The Company, earned interest income of $107,573 from cash investments in the third quarter of 2006 and a total of $124,811 for the nine months ending 2006.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, we have funded our operations from internally generated funds, the proceeds from the sale of debt and equity securities and payment of obligations with our Common Stock. As of September 30, 2006, our working capital was $6.5 million. The primary reason for this decrease relative to the prior quarter is due to the operating loss, payment of the remaining short term debt and payment of aged accounts payables and accrued payroll related expenses.

Our net loss was $928,147 and $1,373,110 during the three months ended September 30, 2005 and 2006. Our net loss was $3,277,051 and $6,053,848 during the nine months ended September 30, 2005 and 2006, respectively. The increased net loss from operations was due primarily to the increased cost of being a public company, investments in new regions and service centers and marketing of our brand and product. Gross margin improved from $972,305 or 43.4% of net sales for the three months ended September 30, 2006 as compared to $483,012 or 25.6% of net sales for the three months ended September 30, 2005. The year to date gross margin in 2006 is $3,241,017 or 42.7% compared to $861,721 or 20.8% for the same period of the prior year. The gross margin increase was the result of material costs reductions, equipment lease verses rent and labor productivity activities that were implemented throughout the third quarter of 2006.

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On May 2, 2006, we completed an initial public offering of 1,350,000 units, at a price per unit of $13.00. On May 23, 2006, the representative of the several underwriters exercised an overallotment option granted to the several underwriters in connection with the initial public offering and purchased an additional 100,000 units. On June 7, 2006, the representative of the several underwriters exercised the overallotment option again and purchased 100,000 shares of Common Stock, 100,000 Class A Warrants and 100,000 Class B Warrants. The total gross proceeds from our IPO were approximately $19.5 million, and we realized aggregate net proceeds of approximately $16.6 million. As noted in our offering prospectus, significant amounts of the net proceeds of the offering were used to repay outstanding debt and for working capital purposes. As of close of market on September 30, 2006 there were 4,605,092 shares of Common Stock outstanding.

Changes in Working Capital between December 31, 2005 and September 30, 2006

During the nine months ended September 30, 2006, our working capital increased from a deficit of $4,918,444 as of December 31, 2005 to $6,508,527, or an increase of $11,426,971. The principal reasons for the increase in working capital were as follows:

• Cash increased by $7,113,487 primarily as a result of proceeds received from the IPO.

• Long and short term notes payable decreased by $3,963,494 as result of paying off debt with the IPO proceeds.

• Deferred offering costs decreased by $620,882 as the result of netting these costs against the IPO proceeds.

• Accrued payroll related expenses decreased $543,497 as IPO funds were used to pay payroll related expenses.

• Property and Equipment increased $539,131 as a result of purchasing compressors, soda pots, fork lifts and electro static sprayers for our service center expansion.

• Deposits increased by $411,953 as the result of down payments on workers compensation and auto insurance.

• Accrued interest decreased by $372,326 as IPO funds were used to pay off debt and the associated accrued interest.

• Accounts payable decreased by $456,107, as IPO proceeds received in May 2006 were used to pay aged payables.

• Accounts receivable increased by $123,037 due to the increase in revenue.

Off-Balance Sheet Arrangements

None

FACTORS THAT MAY AFFECT FUTURE RESULTS

Our prospects are subject to certain uncertainties and risks. Our future results may differ materially from our current results, and our actual results could differ materially from those projected. Such differences may be the result of certain risks, including but not limited to those risk factors set forth below, other one-time events and other important factors previously disclosed or to be disclosed from time to time in our other filings with the Securities and Exchange Commission. The following risk factors should be considered carefully in evaluating the Company and its business because these risks currently have a significant impact or may have a significant impact in the future on our business, operating results and financial condition.

Risks Related To Our Business.

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

Since our inception, we have incurred net losses in every quarter through September 30, 2006. At September 30, 2006, we had cumulative net losses of $16.5 million and working capital of $6.5 million. We also had negative cash flow from operating activities. Historically, we have funded our operations from internally generated funds, the proceeds from the sale of debt and equity securities and payment of obligations with Common Stock. Our growth strategy is to increase our market share by opening more regions and service centers. This is likely to result in additional losses and negative cash flow for the foreseeable future. We cannot give assurances that we will ever become profitable.

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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 about the importance of mold prevention. We believe that one of the major obstacles we face is the lack of knowledge of the importance of maintaining indoor environments mold-free. We spend a considerable amount of time educating property owners, builders, contractors and the general public on the health risks associated with mold exposure and the value of our services. We can provide no assurances that these efforts will be successful or result in increased revenue. Our success also depends on 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 give assurances 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 operation 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 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.

Our cash 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.

We have approximately $7.2 million in cash and cash equivalents for use in expansion, sales and marketing, capital expenditures and working capital. This amount may 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 and penetration into large institutions, organizations and government facilities for interior surface treatment, we anticipate that we will need to raise additional capital in the future. We could also face unforeseen costs, such 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 projection if AMG Scientific is unable to successfully sell its interior surface treatment or builders could discontinue ordering 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.

We have not been able to generate a sufficient amount of cash flow to fund operations and, as a result, 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.

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 acceptable. If capital is not available on satisfactory terms or is not available at all, we may be unable to continue to fully develop our business or take advantage of new business opportunities. In addition, our results of operations may decline from previous levels or may fail to meet expectations because of the higher cost of capital. As a result, the price of our publicly traded securities may decline, causing holders of our securities to lose all or part of their investment. Finally, equity financing, if obtained, could result in additional dilution to our existing shareholders.

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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 or 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 an investment in our securities.

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 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 – $3 million – may not be sufficient. We intend to seek additional liability insurance coverage in the future. However, we cannot give assurances 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 aware could render us financially insolvent.

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 our chief executive officer, our chief operating officer and our chief financial officer. We do not carry, nor do we anticipate obtaining, “key man” insurance on any of them. If, for any reason, either one of them decides to discontinue his active participation in our business, our financial condition or results of operations could be adversely affected. Our current management team is not sufficient for our projected needs. As our business grows, we will need to hire 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.

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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.

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 Our Industry

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 also may 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.

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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-effective 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 give assurances 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 change for our services. This could 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 an investment in our securities.

We do not have “exclusive” or long-term 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 three 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.

Risk Related to Our Stock

Our stock price is volatile and there is a limited market for our shares.

The stock markets generally have experienced, and will probably continue to experience, extreme price and volume fluctuations that have affected the market price of the shares of many small capital companies. These fluctuations have often been unrelated to the operating results of such companies. Factors that may affect the volatility of our stock price include the following:

• our success, or lack of success, in developing and marketing our products and services;

• the announcement of new products, services, or technological innovations by us or our competitors;

• quarterly fluctuations of our operating results;

• changes in revenue or earning estimates by the investment community; and

• competition.

In addition, broad market fluctuations, as well as general economic and political conditions, may decrease the market price of our Common Stock or warrants in any market that develops. Based on the factors described above, recent trends should not be considered reliable indicators of our future stock prices or financial results. Additionally, there is a limited market for our Common Stock and warrants and we cannot give assurances that such a market will continue to develop or be maintained.

Investors should not expect the payment of dividends by us.

We do not expect to pay dividends on our Common Stock or warrants in the foreseeable future. Investors who require cash dividends from their investments should not purchase our Common Stock or warrants.

Holders of our securities may experience significant dilution.

We anticipate that we will need to raise additional capital to fund our business. In addition, we anticipate that we may issue a significant number of shares or the rights to acquire shares as a part of our strategy. In either event, current shareholders may experience significant dilution and our earnings per share may decrease.

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Fluctuations in our quarterly operating results may cause our stock price to decline and limit our shareholders’ ability to sell our Common Stock or warrants in the public markets.

Our operating results and the operating results of businesses that we may acquire in the future may fluctuate significantly due to a variety of factors, many of which are outside of our control. Our operating results may in some future quarter fall below the expectations of securities analysts and investors. In this event, the trading price of our Common Stock or warrants could decline significantly. In addition to the risks disclosed elsewhere in this report, factors outside of our control, which may cause our quarterly operating results to fluctuate may include:

• fluctuations in the general economic condition;

• demand for our products;

• fluctuation in the capital budgets of our customers; and

• development of superior products and services by our competitors.

In addition, factors within our control, such as our ability to deliver equipment in a timely fashion, may cause our operating results to fluctuate in the future.

The factors listed above may affect both our quarter-to-quarter operating results as well as our long-term success. Given the potential fluctuation in our operating results, you should not rely on quarter-to-quarter comparisons of our results of operations as an indication of our future performance or to determine any trend in our performance. Fluctuations in our quarterly operating results could cause the market price and demand for our Common Stock or warrants to fluctuate substantially, which may limit the ability of our shareholders to sell our securities in the public markets.

If persons engage in short sales of our Common Stock, including sales of shares to be issued upon exercise of warrants, the price of our Common Stock may decline.

Selling short is a technique used by a shareholder to take advantage of an anticipated decline in the price of a security. A significant number of short sales or a large volume of other sales within a relatively short period of time can create downward pressure on the market price of a security. Further sales of Common Stock issued upon exercise of our warrants could cause even greater declines in the price of our Common Stock due to the number of additional shares available in the market, which could encourage short sales that could further undermine the value of our Common Stock. Holders of our securities could, therefore, experience a decline in the value of their investment as a result of short sales of our Common Stock.

ITEM 3 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our “disclosure controls and procedures” (as defined in Rules 13(a)-15(e) under the Securities Exchange Act of 1934, as amended) are effective to ensure that all information required to be disclosed by us in the reports filed or submitted by us under the Securities Exchange Act is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and Forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, and allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

In connection with the above-referenced evaluation, no change in our internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

Item 1 – Legal Proceedings

None

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

During the nine-month period ended September 30, 2006, the Company sold the following unregistered securities:

• In March 2006, the Company 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 was due May 31, 2007. In order to induce the investor to purchase this note, the Company’s Chief Executive Officer agreed to transfer 25,000 shares of Common Stock that he personally owned to the investor. The Company paid $20,000 in commissions to a registered broker-dealer in connection with this sale, resulting in net proceeds to the Company of $230,000.

• In March 2006, the Company issued a $250,000 principal amount unsecured promissory note, bearing interest at 10%, to Paulson Investment Company, the representative of the several underwriters of the Company’s initial public offering concluded on May 2, 2006. Under the terms of this note, the Company was entitled to up to five weekly draws not to exceed $50,000 each. The aggregate amount drawn plus the accrued interest thereon in payable out of the net proceeds of the initial public offering. No commission or placement agent fee was payable in connection with the issuance of this note.

• In June 2006, the Company issued a warrant to purchase 15,000 shares of its Common Stock to Brookstreet Securities Corporation in exchange for certain consulting services rendered by Brookstreet Securities Corporation to the Company. The warrant issued to Brookstreet Securities Corporation has an exercise price of $5.00 per share of Common Stock and expires two years after the date of issuance.

• In July 2006, the Company issued 40,000 shares of its Common Stock to Morse, Zelnick, Rose & Lander in exchange for certain legal services rendered to the Company in connection with the Company’s initial public offering.

• In August 2006, the Company issued a warrant to purchase 13,000 shares of its Common Stock to Investor Awareness, Inc. in exchange for certain consulting services rendered by Investor Awareness, Inc. to the Company. The warrant issued to Investor Awareness, Inc. has an exercise price of $5.00 per share of Common Stock and expires two years after the date of issuance.

• In August 2006, the Company issued an aggregate of 30,000 shares of its Common Stock to six of its directors pursuant to the terms of a Director Restricted Stock Award Agreement. The Director Restricted Stock Award Agreements provide that the shares of Common Stock issued to each director are required to be forfeited back to the Company should a recipient director discontinue his service as a director prior to August 2007.

• In September 2006, the Company issued 11,396 shares of its common stock to Brian Cowley as part of a mutual release and cancellation of all debts and claims settlement agreement.

• In September 2006, the Company issued an aggregate of 5,000 shares of its Common Stock to a new director pursuant to the terms of a Director Restricted Stock Award Agreement. The Director Restricted Stock Award Agreement provides that the shares of Common Stock issued to the new director are required to be forfeited back to the Company should the new director discontinue his service as a director prior to September 2007.

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Item 3 – Defaults upon Senior Securities

On March 17, 2004, the Company received a $75,000 unsecured loan from an individual investor with an interest rate of 8% per annum and an unspecified maturity date. On July 8, 2004, the Company borrowed $100,000 at a stated interest rate of 8% per annum from the same investor pursuant to a Loan Agreement entered into on the date of the loan. Although the Loan Agreement required the Company to repay all outstanding loan balances to the investor on or prior to October 9, 2004, the Company did not pay any interest or repay any portion of the principal or interest until March 31, 2005. The Company and the parties settled the agreement in September 2006.

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, from October 2004 through April 2005, the Company issued four Convertible Notes having an aggregate principal amount of $1,950,000. The Company was in default under the Note Purchase Agreement as a result of breaching certain covenants set forth therein. The notes and accrued interest were paid in full in May 2006.

Item 4 – Submission of Matters to a Vote of Security Holders

None

Item 5 – Other Information

None

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Item 6 – Exhibits

Exhibit No.	Description
3.1	Articles of Incorporation, as amended, previously filed as Exhibit 3.1 to the Registration Statement of American Mold Guard, Inc. on Form SB-2/A (Amendment No. 1), filed with the Commission on February 13, 2006 (File No. 333-130899), which is incorporated herein by reference.
3.2	Amended and Restated Bylaws, previously filed as Exhibit 3.1 to the Registration Statement of American Mold Guard, Inc. on Form SB-2/A (Amendment No. 1), filed with the Commission on February 13, 2006 (File No. 333-130899), which is incorporated herein by reference.
4.1	Form of Stock Certificate for Common Stock, previously filed as Exhibit 4.1 to the Registration Statement of American Mold Guard, Inc. on Form SB-2/A (Amendment No. 2), filed with the Commission on March 28, 2006 (File No. 333-130899), which is incorporated herein by reference.
4.2	Form of Warrant Agreement between American Mold Guard, Inc. and U.S. Stock Transfer Corporation, including form of Class A and Class B warrants, previously filed as Exhibit 4.2 to the Registration Statement of American Mold Guard, Inc. on Form SB-2/A (Amendment No. 3), filed with the Commission on April 10, 2006 (File No. 333-130899), which is incorporated herein by reference.
4.3	Form of Unit Certificate for Units, previously filed as Exhibit 4.3 to the Registration Statement of American Mold Guard, Inc. on Form SB-2/A (Amendment No. 2), filed with the Commission on March 28, 2006 (File No. 333-130899), which is incorporated herein by reference.
4.4	Revised Form of Purchase Warrant Issued to Paulson Investment Company, Inc., previously filed as Exhibit 4.2 to the Registration Statement of American Mold Guard, Inc. on Form SB-2/A (Amendment No. 4), filed with the Commission on April 10, 2006 (File No. 333-130899), which is incorporated herein by reference.
10.1	American Mold Guard, Inc. Amended and Restated Equity Incentive Plan, previously filed as Exhibit 10.1 to the Registration Statement of American Mold Guard, Inc. on Form SB-2/A (Amendment No. 2), filed with the Commission on March 28, 2006 (File No. 333-130899), which is incorporated herein by reference.
10.2	American Mold Guard, Inc. Annual Reward Plan, previously filed as Exhibit 10.2 to the Registration Statement of American Mold Guard, Inc. on Form SB-2/A (Amendment No. 1), filed with the Commission on February 13, 2006 (File No. 333-130899), which is incorporated herein by reference.
10.3	Form of American Mold Guard, Inc. Indemnification Agreement for Directors and Officers. Previously filed as exhibit 10.8 to the registration statements of American Mold Guard, Inc. on Form SB-2/A (Amendment No. 3), filed with the Commissions on April 7, 2006 (File No. 333-130899), which is incorporated herein by reference.
10.4	Form of American Mold Guard, Inc. Director Restricted Stock Award Agreement.
31.1	Certification of Chief Executive Officer of American Mold Guard, Inc., pursuant to Rule 13a-14 of the Securities Exchange Act.
31.2	Certification of Chief Financial Officer of American Mold Guard, Inc., pursuant to Rule 13a-14 of the Securities Exchange Act.
32.1	Certification of Chief Executive Officer of American Mold Guard, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer of American Mold Guard, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURE

In accordance with the requirements of the Exchange Act, American Mold Guard, Inc. caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 13, 2006

AMERICAN MOLD GUARD, INC.

/s/ THOMAS BLAKELEY

Thomas Blakeley

Chief Executive Officer

/s/ PAUL BOWMAN

Paul Bowman

Chief Financial Officer

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EX-10.4

EXHIBIT 10.4

AMERICAN MOLD GUARD, INC.

DIRECTOR RESTRICTED STOCK AWARD AGREEMENT

THIS DIRECTOR RESTRICTED STOCK AWARD AGREEMENT (the “Agreement”), is made, effective as of the          day of             , 200   (hereinafter the “Date of Grant”), between American Mold Guard, Inc., a California corporation (the “Company”), and              (the “Director”).

R E C I T A L S:

WHEREAS, the Company has adopted the American Mold Guard, Inc. Equity Incentive Plan (the “Plan”), pursuant to which awards of restricted shares of the Company’s Common Stock may be granted to persons including members of the Board of Directors of the Company (the “Board “); and

WHEREAS, the Board has determined that it is in the best interests of the Company and its stockholders to grant the restricted stock award provided for herein (the “Restricted Stock Award “) to the Director in connection with the Director’s services to the Company, such grant to be subject to the terms set forth herein.

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

1. Incorporation by Reference, Etc. The provisions of the Plan are hereby incorporated herein by reference. Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan and any capitalized terms not otherwise defined in this Agreement shall have the definitions set forth in the Plan. The Board shall have final authority to interpret and construe the Plan and this Agreement and to make any and all determinations under them, and its decision shall be binding and conclusive upon the Director and his legal representative in respect of any questions arising under the Plan or this Agreement.

2. Grant of Restricted Stock Award. The Company hereby grants on the Date of Grant to the Director a Restricted Stock Award consisting of shares of Common Stock (hereinafter called the “Restricted Shares”), on the terms and conditions set forth in this Agreement and as otherwise provided in the Plan. The Restricted Shares shall vest in accordance with Section 3(a) hereof.

3. Terms and Conditions.

(a) Vesting. Except as otherwise provided in the Plan and this Agreement, and contingent upon the Director’s continued membership on the Board, one hundred percent (100%) of the Restricted Shares shall vest and become non-forfeitable on the first anniversary of the Award Date (such anniversary, the “Vesting Date”).

(b) Taxes. The Director shall pay to the Company promptly upon request, and in any event at the time the Director recognizes taxable income in respect of the Restricted Stock Award, an amount equal to the taxes, if any, the Company determines it is required to withhold under applicable tax laws with respect to the Restricted Shares. Such payment shall be made in the form of cash.

(c) Certificates. Certificates evidencing the Restricted Shares shall be issued by the Company and shall be registered in the Director’s name on the stock transfer books of the Company promptly after the date hereof, but shall remain in the physical custody of the Company or its designee at all times prior to, in the case of any particular Restricted Shares, the applicable Vesting Date. As a condition to the receipt of this Restricted Stock Award, the Director shall deliver to the Company a stock power, duly endorsed in blank, relating to the Restricted Shares.

(d) Effect of Termination of Services.

(i) Except as provided in subsection (ii) of this Section 3(d), unvested Restricted Shares shall be forfeited without consideration by the Director at any time prior to the Vesting Date upon the Director’s cessation of Board membership.

(ii) Upon the Director’s cessation of Board membership due to death or disability, any remaining unvested Restricted Shares shall vest on the date of such termination.

(e) Rights as a Stockholder; Dividends. The Director shall be the record owner of the Restricted Shares unless and until such shares are forfeited pursuant to Section 3(d) hereof or sold or otherwise disposed of, and as record owner shall be entitled to all rights of a common stockholder of the Company, including, without limitation, voting rights, if any, with respect to the Restricted Shares; provided that any cash or in-kind dividends paid with respect to unvested Restricted Shares shall be withheld by the Company and shall be

2

paid to the Director, without interest, only when, and if, such Restricted Shares shall become vested. As soon as practicable following the vesting of any Restricted Shares, certificates for such vested Restricted Shares and any cash dividends or in-kind dividends credited to the Director’s account with respect to such Restricted Shares shall be delivered to the Director or the Director’s beneficiary along with the stock power relating thereto.

(f) Restrictive Legend. The stock certificates for the Restricted Shares shall be endorsed with one or more of the following restrictive legends and any legend required to be placed thereon by the applicable blue sky laws of any state:

“The shares represented by this certificate have not been registered under the Securities Act of 1933. The shares may not be sold or offered for sale in the absence of (a) an effective registration statement for the shares under such Act, (b) a “no action” letter of the Securities and Exchange Commission with respect to such sale or offer or (c) satisfactory assurances to the Company that registration under such Act is not required with respect to such sale or offer.”

TRANSFER OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY IS RESTRICTED PURSUANT TO THE TERMS OF THE AMERICAN MOLD GUARD EQUITY INCENTIVE PLAN AND A RESTRICTED STOCK AWARD AGREEMENT, DATED AS OF 200 , BETWEEN AMERICAN MOLD GUARD, INC. AND [NAME OF DIRECTOR]. A COPY OF SUCH PLAN AND AGREEMENT IS ON FILE AT THE OFFICES OF AMERICAN MOLD GUARD, INC.

(g) Transferability. The Restricted Shares may not at any time prior to the Vesting Date (as to any particular Restricted Share) be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Director and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company; provided, that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.

4. Securities Law Compliance.

(a) Restricted Securities. The Restricted Shares have not been registered under the 1933 Act and are being issued to the Director in reliance upon the exemption from such registration provided by Section 4(2) of the 1933 Act. The Director hereby confirms that he has been informed that the Restricted Shares are restricted securities under the 1933 Act and may not be resold or transferred unless the Restricted Shares are first registered under the Federal securities laws or unless an exemption from such a registration is available. Accordingly, the Director hereby acknowledges that he is prepared to

3

hold the Restricted Shares for an indefinite period and that he is aware that SEC Rule 144 promulgated under the 1933 Act which exempts certain resales of unrestricted securities is not presently available to exempt the resale of the Restricted Shares from the registration requirements of the 1933 Act.

(b) Representations and Warranties of the Director. The Director hereby represents and warrants that:

(i) The Restricted shares are being acquired for investment purposes only for the Director’s own account, and not as a nominee or agent, and not with a view to the resale or distribution of all or any part of the Restricted Shares. The Director is prepared to hold the Restricted Shares for an indefinite period and has no present intention of selling, granting any participating interest in, or otherwise distributing any of the Restricted Shares. The Director does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant a participating interest in, any of the Restricted Shares.

(ii) The Director has a preexisting personal or business relationship with either the Company or certain Board members or officers of the company which is of a nature and duration sufficient to make the Director aware of the character, business acumen and general business and financial circumstances of the company and/or such Board members or officers. In addition, the Director has been furnished with, and has had access to, such information concerning the Company’s business, management and financial condition as he considers necessary or appropriate for deciding whether to invest in the Restricted Shares, and the Director has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the issuance of the Restricted Shares.

(iii) The Director is able to fend for himself in the transactions contemplated by this Agreement, can bear the economic risk of investment in the Restricted Shares and has such knowledge and experience in financial or business matters to be capable of evaluating the merits and risks of the investment in the Restricted Shares. The Director is fully aware of (i) the speculative nature of the investment in the Restricted Shares; (ii) the financial risk involved; (iii) the lack of liquidity for the Restricted Shares and (iv) the transfer restrictions and forfeiture requirements applicable to the Restricted Shares.

5. Disposition of Restricted Shares. The Director shall make no disposition of the Restricted Shares unless and until there is compliance with all of the following requirements:

(i) The Director shall have provided the Company with a written summary of the terms and conditions of the proposed disposition.

4

(ii) The Director shall have provided the Company with written assurances, in form and substance satisfactory to the company, that (a) the proposed disposition does not require registration of the Restricted Shares under the 1933 Act or (b) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or any exemption from registration available under the 1933 Act (including Rule 144) has been taken. The Company shall not be required (i) to transfer on its books any Restricted Shares which have been sold or transferred in violation of the provisions of this Agreement OR (ii) to treat as the owner of the Restricted Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee to whom the Restricted Shares have been transferred in contravention of this agreement.

6. Special Tax Election.

(a) Section 83(b) Election. Under Internal Revenue Code (the “Code”) Section 83, the excess of the fair market value of the Restricted Shares on the date any forfeiture restrictions applicable to such shares lapse over the purchase price paid for such shares will be reportable as ordinary income on the lapse date. The Director may elect under Code Section 83(b) to be taxed at the time the Restricted Shares are acquired, rather than when and as such Restricted Shares cease to be subject to such forfeiture restrictions. Such election must be filed with the Internal Revenue Service within thirty (30) days after the date of this Agreement. Even if the fair market value of the Restricted Shares on the date of this Agreement equals the purchase price paid (and thus no tax is payable), the election must be made to avoid adverse tax consequences in the future. THE DIRECTOR UNDERSTANDS THAT FAILURE TO MAKE THE CODE SECTION 83(b) ELECTION FILING WITHIN THE APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE RESTRICTIONS LAPSE.

(b) FILING RESPONSIBILITY. THE DIRECTOR ACKNOWLEDGES THAT IT IS HIS SOLE RESPONSIBILITY, AND NOT THE COMPANY’S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF THE DIRECTOR REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS BEHALF.

7. Miscellaneous.

(a) Notices. Any notice, consent, request or other communication made or given in accordance with this Agreement shall be in writing and shall be deemed to have been duly given when actually received or, if mailed, three days after mailing by registered or certified mail, return receipt requested, or one business day after mailing by a nationally recognized express mail delivery service with instructions for next-day delivery, to those persons listed below at

5

their following respective addresses or at such other address or person’s attention as each may specify by notice to the others:

To the Company:

American Mold Guard, Inc.

30200 Rancho Viejo Road, Suite G

San Juan Capistrano, California 92675 10019

Attention: John W. Martin, General Counsel

To the Director:

The most recent address for the Director in the records of the Company. The Director hereby agrees to promptly provide the Company with written notice of any change in the Director’s address for so long as this Agreement remains in effect.

(b) Bound by Plan. By signing this Agreement, the Director acknowledges that he has received a copy of the Plan and has had an opportunity to review the Plan and agrees to be bound by all the terms and provisions of the Plan.

(c) Beneficiary. The Director may file with the Board a written designation of a beneficiary on such form as may be prescribed by the Board and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Director, the executor or administrator of the Director’s estate shall be deemed to be the Director’s beneficiary.

(d) Successors. The terms of this Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and of the Director and the beneficiaries, executors, administrators, heirs and successors of the Director.

(e) Entire Agreement. This Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and supersedes all prior communications, representations and negotiations in respect thereto. No change, modification or waiver of any provision of this Agreement shall be valid unless the same be in writing and signed by the parties hereto.

(f) GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE WHOLLY PERFORMED WITHIN THAT STATE. ANY ACTION TO ENFORCE THIS AGREEMENT MUST BE BROUGHT IN A COURT SITUATED IN, AND THE PARTIES HEREBY

6

CONSENT TO THE JURISDICTION OF, COURTS SITUATED IN ORANGE COUNTY, CALIFORNIA. EACH PARTY HEREBY WAIVES THE RIGHTS TO CLAIM THAT ANY SUCH COURT IS AN INCONVENIENT FORUM FOR THE RESOLUTION OF ANY SUCH ACTION.

(g) JURY TRIAL WAIVER. THE PARTIES EXPRESSLY AND KNOWINGLY WAIVE ANY RIGHT TO A JURY TRIAL IN THE EVENT ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT IS LITIGATED OR HEARD IN ANY COURT.

(h) Headings. The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part, of this Agreement.

(i) Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. The parties hereto confirm that any facsimile copy of another party’s executed counterpart of this Agreement (or its signature page thereof) will be deemed to be an executed original thereof.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

AMERICAN MOLD GUARD, INC.
By:
	Thomas Blakeley
Title:	President

7

STOCK POWER

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                                     ,              shares of Common Stock of American Mold Guard, Inc., a California corporation, issued pursuant to a Director Restricted Stock Award Agreement between American Mold Guard, Inc. and the undersigned, dated                     , 200  , and standing in the name of the undersigned on the books of said corporation, represented by Certificate No.             , and does hereby irrevocably constitute and appoint American Mold Guard, Inc. as the undersigned’s true and lawful attorney, for it and in its name and stead, to sell, assign and transfer the said stock on the books of said corporation with full power of substitution in the premises.

Dated:

8

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO 17 CFR 240.13a-14(a)

PROMULGATED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas Blakeley, certify that:

(1) I have reviewed this Quarterly Report on Form 10-QSB of American Mold Guard, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

(4) The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(c) Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

(5) The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

/s/ THOMAS BLAKELEY

Thomas Blakeley

Chief Executive Officer

(Principal Executive Officer)

Date: November 13, 2006

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO 17 CFR 240.13a-14(a)

PROMULGATED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paul Bowman, certify that:

(1) I have reviewed this Quarterly Report on Form 10-QSB of American Mold Guard, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

(4) The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(c) Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

(5) The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

/s/ PAUL BOWMAN

Paul Bowman

Chief Financial Officer

(Principal Financial Officer)

Date: November 13, 2006

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Mold Guard, Inc. (the “Company”) on Form 10-QSB for the period ended September 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Thomas Blakeley, Chief Executive Officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ THOMAS BLAKELEY

Thomas Blakeley

Chief Executive Officer

(Principal Executive Officer)

Date: November 13, 2006

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Mold Guard, Inc. (the “Company”) on Form 10-QSB for the period ended September 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Paul Bowman, Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ PAUL BOWMAN

Paul Bowman

Chief Financial Officer

(Principal Financial Officer)

Date: November 13, 2006