General Enterprise Ventures, Inc. - Quarter Report: 2008 September (Form 10-Q)

gem_10q-093008.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from __________to__________

Commission File No. 33-55254-38

General Environmental Management, Inc.

(Exact name of Small Business Issuer as specified in its charter)

NEVADA		87-0485313
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

3191 Temple Ave., Suite 250, Pomona CA 91768

(Address of principal executive offices) (Zip Code)

(909) 444-9500

Issuer’s telephone number, including area code

Indicate by check mark whether the issuer (1) has 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. xYes oNo

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

Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). oYes xNo

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practical date. As of November 14, 2008, there were 12,678,885 shares of the issuer’s $.001 par value common stock issued and outstanding.

GENERAL ENVIRONMENTAL MANAGEMENT, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2008

TABLE OF CONTENTS

		Page
Part 1	Financial Information

Item 1	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of September 30, 2008 (Unaudited) and December 31, 2007	1

	Condensed Unaudited Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2008 and 2007	3

	Condensed Unaudited Consolidated Statement of Shareholders’ Equity (Deficiency) for the Nine Months Ended September 30, 2008	4

	Condensed Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2008 and 2007	5

	Notes to the Unaudited Condensed Consolidated Financial Statements	7

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operation	23

Item 3	Controls and Procedures	31

Part II	Other Information

Item 1	Legal Proceedings	31

Item 2	Changes in Securities	31

Item 3	Defaults Upon Senior Securities	31

Item 4	Submission of Matters to a Vote of Security Holders	31

Item 5	Other Information	31

Item 6	Exhibits and Reports on Form 8K	31

	Signatures	32
	CEO Certifications	Attached
	CFO Certifications	Attached

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements.

GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,		December 31,
	2008		2007
	(Unaudited)
ASSETS
CURRENT ASSETS:

Cash	$	604,526	$	954,581

Accounts receivable, net of allowance for doubtful
accounts of $178,779 and $236,781, respectively		6,209,475		6,495,736

Prepaid expenses and other current assets		654,557		156,340

Total Current Assets		7,468,558		7,606,657

Property and Equipment – net of accumulated depreciation $2,506,196 and $1,854,141, respectively		7,847,706		3,950,253

Restricted cash		1,198,450		1,184,835

Intangibles, net		905,586		1,028,044

Deferred financing fees		561,545		394,082

Deposits		503,804		282,070

Goodwill		946,119		946,119

TOTAL ASSETS	$	19,431,768	$	15,392,060

(Continued)

See accompanying notes to condensed consolidated financial statements.

GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

	September 30,			December 31,
	2008			2007
	(Unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)

CURRENT LIABILITIES:

Accounts payable	$	3,214,047		$	4,314,515

Accrued expenses		2,884,265			2,780,121

Payable to related party		513,115			31,871

Current portion of financing agreement		812,500			662,719

Current portion of long term obligations		43,763			1,274,464

Current portion of capital lease obligations		613,857			187,015

Current portion of convertible notes payable		495,848			-

Total Current Liabilities		8,577,395			9,250,705

LONG-TERM LIABILITIES :

Financing agreements, net of current portion		8,538,084			3,708,694

Long term obligations, net of current portion		1,296,633			79,842

Capital Lease obligations, net of current portion		1,904,590			1,046,920

Convertible notes payable, net of current portion		-			520,208

Total Long-Term Liabilities		11,739,307			5,355,664

STOCKHOLDERS’ EQUITY (DEFICIENCY)

Common stock, $.001 par value, 1,000,000,000 shares authorized,
12,673,885 and 12,473,885 shares issued and outstanding		12,674			12,474

Additional paid in capital		53,168,600			50,151,615

Accumulated deficit		(54,066,208	)		(49,378,398	)

Total Stockholders' Equity (Deficiency)		(884,934	)		785,691

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIENCY)	$	19,431,768		$	15,392,060

See accompanying notes to condensed consolidated financial statements.

GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Nine months ended						Three months ended
	September 30, 2008			September 30, 2007			September 30, 2008			September 30, 2007

REVENUES	$	24,989,210		$	21,415,043		$	8,630,972		$	8,555,831

COST OF REVENUES		20,327,989			17,023,247			6,860,275			6,878,235

GROSS PROFIT		4,661,221			4,391,796			1,770,697			1,677,596

OPERATING EXPENSES		5,651,106			10,782,081			1,845,179			3,034,039

OPERATING LOSS		(989,885	)		(6,390,285	)		(74,482	)		(1,356,443	)

OTHER INCOME (EXPENSE):

Interest income		15,894			30,056			6,082			10,641

Interest and financing costs		(3,748,992	)		(1,815,131	)		(2,087,673	)		(574,998	)

Costs to induce conversion of related party debt		-			(6,737,413	)		-			(3,189,726	)

Other non-operating income		35,173			93,568			18,480			25,329

Net Loss	$	(4,687,810	)	$	(14,819,205	)	$	(2,137,593	)	$	(5,085,197	)


Net loss per common share, basic and diluted	$	(.37	)	$	(1.53	)	$	(.17	)	$	(.43	)

Weighted average shares of common stock
outstanding, basic and diluted		12,673,885			9,661,979			12,673,885			11,737,377

See accompanying notes to the condensed consolidated financial statements

GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIENCY) (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008

					Additional
	Common Stock				Paid-in		Accumulated
	Shares		Amount		Capital		Deficit			Total

Balance, December 31, 2007		12,473,885	$	12,474	$	50,151,615	$	(49,378,398	)	$	785,691

Stock compensation cost for value of vested options						634,213					634,213

Issuance of stock to related party for extension of debt		200,000		200		219,800					220,000

Fair value of warrants issued to related party for extension of debt						402,482					402,482

Issuance of warrants related to financing						1,674,035					1,674,035

Issuance of warrants to related party						57,405					57,405

Issuance of warrants for services						29,050					29,050

Net loss for the nine months ended September 30, 2008								(4,687,810	)		(4,687,810	)

Balance, September 30, 2008		12,673,885	$	12,674	$	53,168,600	$	(54,066,208	)	$	(884,934	)

See accompanying notes to consolidated financial statements

GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended
	September 30,
	2008			2007

OPERATING ACTIVITIES
Net Loss	$	(4,687,810	)	$	(14,819,205	)
Adjustments to reconcile net loss to cash used in operating activities
Depreciation and amortization		827,861			559,525
Amortization of discount on notes		210,281			21,863
Fair value of vested options		634,213			752,291
Issuance of warrants and common shares for services		57,405			1,606,395
Common stock issued for services					530,225
Amortization of discount on convertible debts		2,141,610			612,405
Amortization of deferred financing fees		410,127			187,314
Costs to induce conversion of debt		-			6,737,413
Warrants issued to modify debt		-			279,202
Accrued interest on notes payable		-			67,755
Changes in assets and liabilities:
Accounts Receivable		1,365,335			(1,558,205	)
Inventory		16,831			-
Prepaid and other current assets		(264,700	)		(143,016	)
Deposits and restricted cash		(51,527	)		-
Accounts Payable		(1,477,501	)		580,955
Payable to related party		-			7,999
Accrued interest on convertible notes		28,141			-
Accrued expenses and other liabilities		(256,861	)		756,067
NET CASH USED IN OPERATING ACTIVITIES		(1,046,595	)		(3,815,017	)

INVESTING ACTIVITIES
Increase in deposits and restricted cash		-			(413,404	)
Acquisitions, net of cash received, and
notes payable issued to seller		(2,150,000	)		-
Additions to property and equipment		(290,946	)		(518,893	)
NET CASH USED IN INVESTING ACTIVITIES		(2,440,946	)		(932,297	)

FINANCING ACTIVITIES
Net advances from ComVest		10,925,200			-
Net advances from (repayment of) Laurus notes		(6,413,604	)		844,822
Advances from related parties		32,601			3,355,243
Payment for deferred financing fees		(147,607	)		-
Issuance of notes payable to related party		472,500			-
Payment of notes payable		(1,279,536	)		142
Repayment of convertible notes		(52,500	)		-
Payment on capital leases		(399,568	)		-
Proceeds from exercise of warants		-			119
Proceeds from issuance of common stock		-			1,888
NET CASH PROVIDED BY FINANCING ACTIVITIES		3,137,486			4,202,214

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(350,055	)		(545,100	)

Cash at beginning of period		954,581			618,654

CASH AT END OF PERIOD	$	604,526		$	73,554
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest Expense	$	852,648		$	669,811

See accompanying notes to the condensed consolidated financial statements

GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(UNAUDITED)

	Nine Months Ended
	September 30,
	2008		2007

SUPPLEMENTAL DISCLOSURE OF NON – CASH INVESTING AND FINANCING ACTIVITIES:

Conversion of related party debt to common stock	$	-	$	3,902,700
Conversion of investor interest to common stock		-		196,772
Issuance of capital lease obligations				981,327
Issuance of common stock to related party for extension of debt		220,000		-
Fair value of warrants issued to related party for extension of debt		222,500		-
Valuation of warrants allocated to deferred fees		179,982		451,602
Acquisition of leased equipment and capital lease obligations		1,658,066
Value of warrants issued in connection with lease				187,128
Conversion of fees due in related party to common stock				220,000
Issuance of note payable on acquisition		1,250,000		-
Closing fees due to related party included as deferred financing fees		250,000		-

See accompanying notes to the condensed consolidated financial statements

GENERAL ENVIRONMENTAL MANAGEMENT, INC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

ORGANIZATION AND DESCRIPTION OF BUSINESS

Ultronics Corporation ( “the Company”) was incorporated in the state of Nevada on March 14, 1990 to serve as a vehicle to effect a merger, exchange of capital stock, asset acquisition or other business combination with a domestic or foreign private business. The Company’s fiscal year end is December 31.

On February 14, 2005 the Company acquired all of the outstanding shares of General Environmental Management, Inc (“GEM”), a Delaware Corporation in exchange for 18,914,408 shares of its class A common stock and as a result GEM became a wholly owned subsidiary of Ultronics Corporation.

On January 29, 2007 a special meeting of the shareholders of the Company was held. The shareholders approved the amendment and restatement of the Company’s Articles of Incorporation. The restated articles included the increase of the authorized number of shares of common stock to one billion, the increase of the authorized number of shares of preferred stock to 100,000,000; and of a one for thirty reverse stock split. Share and per share amounts have been restated to show the effects of the reverse stock split as if it occurred at the beginning of the earliest period presented.

BASIS OF PRESENTATION

The condensed consolidated interim financial statements included herein have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission with regard to Regulation S-B and, in the opinion of management, include all adjustments which, except, as described elsewhere herein, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, and cash flows for the period presented. The financial statements presented herein should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2007 filed with the Securities and Exchange Commission.

The results for the interim periods are not necessarily indicative of results for the entire year.

GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company incurred a net loss of $4,687,810 and utilized cash in operating activities of $1,046,595 during the nine months ended September 30, 2008, and as of September 30, 2008 the Company had current liabilities exceeding current assets by $1,108,837. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

Management is continuing to raise capital through the issuance of debt and equity. In addition, management believes that the Company will begin to operate profitably due to increased size, improved operational results and cost cutting practices. However, there can be no assurances that the Company will be successful in this regard or will be able to eliminate its working capital deficit or operating losses. The accompanying condensed consolidated financial statements do not contain any adjustments which may be required as a result of this uncertainty.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements. These estimates and assumptions will also affect the reported amounts of certain revenues and expenses during the reporting period. Actual results could differ materially based on any changes in the estimates and assumptions that the Company uses in the preparation of its financial statements that are reviewed no less than annually. Actual results could also differ materially from these estimates and assumptions due to changes in environmental-related regulations or future operational plans, and the inherent imprecision associated with estimating such future matters.

(b) Revenue Recognition.

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collection is reasonably assured.

The Company is a fully integrated environmental service firm structured to provide field services, technical services, transportation, off-site treatment, on-site treatment services, and environmental health and safety (“EHS”) compliance services. We assist clients in meeting regulatory requirements from the designing stage to the waste disposition stage. The technicians who provide these services are billed at negotiated rates, or the service is bundled into a service package. These services are billed and revenue recognized when the service is performed and completed. When the service is billed, client costs are accumulated and accrued.

Our field services consist primarily of handling, packaging, and transporting a wide variety of liquid and solid wastes of varying amounts. We provide the fully trained labor and materials to properly package hazardous and non-hazardous waste according to requirements of the Environmental Protection Agency and the Department of Transportation. Small quantities of laboratory chemicals are segregated according to hazard class and packaged into appropriate containers or drums. Packaged waste is profiled for acceptance at a client’s selected treatment, storage and disposal facility (TSDF) and tracked electronically through our systems. Once approved by the TSDF, we provide for the transportation of the waste utilizing tractor-trailers or bobtail trucks. The time between picking up the waste and transfer to an approved TSDF is usually less than 10 days. The Company recognizes revenue for waste picked up and received waste at the time pick up or receipt occurs and recognizes the estimated cost of disposal in the same period. For the Company’s TSDF located in Rancho Cordova, CA, costs to dispose of waste materials located at the Company’s facilities are included in accrued disposal costs. Due to the limited size of the facility, waste is held for only a short time before transfer to a final treatment, disposal or recycling facility.

The Company’s financial instruments that are exposed to concentrations of credit risk consist principally of cash and trade receivables. The Company places its cash in what it believes to be credit-worthy financial institutions. However, cash balances have exceeded FDIC insured levels at various times. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk in cash.

The Company’s trade receivables result primarily from removal or transportation of waste, and the concentration of credit risk is limited to a broad customer base located throughout the Western United States.

During the nine months ended September 30, 2008 and 2007, one customer accounted for 13% and 15.5% of revenues, respectively. During the three months ended September 30, 2008 and 2007, one customer accounted for 9% and 25.6% of revenue. As of September 30, 2008 and December 31, 2007 there was one customer that accounted for 6% and 25% of accounts receivable, respectively.

(d) Income Taxes

The Company accounts for income taxes using the liability method whereby deferred income tax assets and liabilities are recognized for the tax consequences of temporary differences by applying statutory tax rates applicable to future years to the difference between the financial statement carrying amounts and the tax bases of certain assets and liabilities. Changes in deferred tax assets and liabilities include the impact of any tax rate changes enacted during the year.

(e) Net Loss per Share

Statement of Financial Accounting Standards No. 128, "Earnings per Share", requires presentation of basic earnings per share ("Basic EPS") and diluted earnings per share ("Diluted EPS"). Basic income (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period.

These potentially dilutive securities were not included in the calculation of loss per share for the three and nine months ended September 30, 2008 and 2007 because the Company incurred a loss during such periods and thus their effect would have been anti-dilutive. Accordingly, basic and diluted loss per share is the same for the three and nine months ended September 30, 2008 and 2007.

At September 30, 2008 and 2007, potentially dilutive securities consisted of convertible securities, outstanding common stock purchase warrants and stock options to acquire an aggregate of 16,233,735 shares and 9,312,594 shares, respectively.

(f) Stock Compensation Costs

The Company periodically issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing costs. The Company adopted SFAS No. 123R effective January 1, 2006, and is using the modified prospective method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS No. 123R for all share-based payments granted after the effective date and (b) based on the requirements of SFAS No. 123R for all awards granted to employees prior to the effective date of SFAS No. 123R that remain unvested on the effective date. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with EITF No. 96-18: "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services” and EITF No. 00-18 “Accounting Recognition for Certain Transactions involving Equity Instruments Granted to Other Than Employees” whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete.

(g) Reclassifications

Certain reclassifications from accrued disposal costs to accrued expenses have been made to 2007 financial statement amounts to conform to the 2008 presentation.

(h) Fair Value Measurements

Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements. This Statement defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This guidance applies to other accounting pronouncements that require or permit fair value measurements. On February 12, 2008, the FASB finalized FASB Staff Position (FSP) No.157-2, Effective Date of FASB Statement No. 157. This Staff Position delays the effective date of SFAS No. 157 for nonfinancial assets and liabilities to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years, except for those items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The adoption of SFAS No. 157 had no effect on the Company’s consolidated financial position or results of operations.

(i) Recent Accounting Pronouncements

In December 2007, the FASB issued FASB Statement No. 141 (R), “Business Combinations” (FAS 141(R)), which establishes accounting principles and disclosure requirements for all transactions in which a company obtains control over another business. Statement 141 (R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Earlier adoption is prohibited.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS No. 160 establishes accounting and reporting standards that require that the ownership interests in subsidiaries held by parties other than the parent be clearly identified, labeled, and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity; the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income; and changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently. SFAS No. 160 also requires that any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value when a subsidiary is deconsolidated. SFAS No. 160 also sets forth the disclosure requirements to identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, but will affect only those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. SFAS No. 160 must be applied prospectively as of the beginning of the fiscal year in which it is initially applied, except for the presentation and disclosure requirements. The presentation and disclosure requirements are applied retrospectively for all periods presented.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No. 133” (SFAS 161). This Statement requires enhanced disclosures about an entity’s derivative and hedging activities, including (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133), and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.

The Company does not believe that the adoption of the above recent pronouncements will have a material effect on the Company’s consolidated results of operations, financial position, or cash flows.

3. ACQUISITIONS

On August 31, 2008, the Company entered into a stock purchase agreement with Island Environmental Services, Inc. of Pomona, California ("Island"), a privately held company, pursuant to which the Company acquired all of the issued and outstanding common stock of Island, a California-based provider of hazardous and non-hazardous waste removal and remediation services to a variety of private and public sector establishments. In consideration of the acquisition of the issued and outstanding common stock of Island, the Company paid $2.25 million in cash to the stockholders of Island and issued $1.25 million in three year promissory notes (“Notes”). Other consideration is payable based on the performance of the acquired entity. The Notes bear interest at 8%, payable quarterly, and the entire principal is due 36 months after closing. As a result of the agreement, Island becomes a wholly-owned subsidiary of the Company.

The purchase price was allocated based upon the fair market values at the date of purchase as follows:

Current assets and liabilities		846,197
Property and Equipment		2,653,803
Total	$	3,500,000

The Company allocated the excess of net assets acquired to property and equipment based upon a preliminary valuation performed by a third party valuation company. The Company has not yet finalized the purchase price allocation which may change upon the completion of the independent third party evaluation of the assets purchased.

The following sets out the pro forma operating results for the nine months ended September 30, 2008 and 2007 for the Company had the acquisition occurred as of January 1, 2007:

Unaudited

Three and Nine months ended September 30, 2008

Proforma (Unaudited)

	Nine months ended						Three months ended
	September 30, 2008			September 30, 2007			September 30, 2008			September 30, 2007

Net sales	$	32,286,729		$	27,402,420		$	13,128,576		$	10,827,358

Cost of sales		24,861,224			20,615,739			9,633,772			8,069,368

Gross profit		7,425,505			6,786,681			3,494,804			2,757,990

Operating expenses		9,711,211			12,582,240			4,544,580			3,728,887

Operating loss		(2,285,706	)		(5,795,559	)		(1,049,776	)		(970,897	)

Other income (expense):
Interest income		52,922			61,634			28,424			30,542
Interest expense and amortization of deferred financing costs		(3,755,800	)		(1,815,131	)		(2,091,082	)		(574,998	)
Cash to induce conversion of related party debt		-			(6,737,413	)		-			(3,189,726	)
Other non-operating income		113,188			65,275			77,929			27,701

Net Loss	$	(5,875,396	)	$	(14,221,194	)	$	(3,034,505	)	$	(4,677,378	)

Loss per weighted average share, basic and diluted	$	(.47	)	$	(1.48	)	$	(.24	)	$	(.40	)

4. GOODWILL AND INTANGIBLE ASSETS

The Company accounts for goodwill and intangible assets pursuant to SFAS No. 142, Goodwill and Other Intangible Assets. Under SFAS 142, intangibles with definite lives continue to be amortized on a straight-line basis over the lesser of their estimated useful lives or contractual terms. Goodwill and intangibles with indefinite lives are evaluated at least annually for impairment by comparing the asset’s estimated fair values with its carrying value, based on cash flow methodology.

Intangible assets consist of the following at:

	September 30, 2008			December 31, 2007
	(Unaudited)
Rancho Cordova acquisition – permit	$	475,614		$	475,659
Prime acquisition – customers		400,422			400,422
GMTS acquisition – customers		438,904			438,904
GMTS acquisition – permits		27,090			27,090
Accumulated amortization		(436,444	)		(314,031	)
	$	905,586		$	1,028,044

Permit costs have been capitalized and are being amortized over the life of the permit, including expected renewal periods. Customer Lists acquired are being amortized over their useful life.

5. RELATED PARTY TRANSACTIONS

The Company has entered into several transactions with General Pacific Partners (“GPP”), a company operated by a prior member of the Board of Directors of the Company’s wholly owned subsidiary, General Environmental Management, Inc. of Delaware. GPP owns 7% of the Company’s common stock at September 30, 2008. The following summarizes the transactions with GPP during the nine months ended September 30, 2008 and 2007.

Advisory Fees

During the three months ended March 31, 2007, the Company entered into a twelve month advisory agreement with GPP. Advisory fees paid or accrued to GPP during the three and nine months ended September 30, 2007 amounted to $55,500. There were no amounts paid or accrued under this agreement during 2008.

Advances from Related Party

	September 30, 2008			December 31, 2007
	(Unaudited)
Notes from GPP	$	472,500		$	-
Advances to Lapis		(15,255	)		-
Financing Fees		250,000			-
Accrued Interest		81,782			31,871
Valuation Discount		(275,912	)		-
	$	513,115		$	31,871

From time to time, GPP has made advances to the Company for working capital purposes. During the nine months ended September 30, 2008, General Pacific Partners or its affiliated entities made unsecured advances to the Company totaling $472,500. The proceeds were used for general working capital purposes. The rate of interest on the advance is 10% per annum. The funds were originally due six months from the date of clearance of the funds or August 14, 2008 and September 19, 2008. On June 30, 2008 GPP and the Company agreed to extend the maturity date of these advances to February 14, 2009 and March 19, 2009 respectively. In consideration of the extension the Company agreed to issue to GPP 200,000 shares of its common stock valued at $220,000 and a warrant to purchase up to 225,000 shares of the Company’s common stock at $0.60 for a period of seven years valued at $222,500 using the Black—Scholes pricing model. The aggregate value of the shares and warrants of $442,500 was reflected as a valuation discount that will be amortized over the remaining life of the note. For the Black - Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 4.78 %, expected volatility of 75.88% and an expected term for the warrants of 7 years.

During the nine months ended September 30, 2008, GPP provided services related to the financing completed with CVC California, LLC. Pursuant to these services the Company agreed to pay GPP $250,000 and issue a warrant to purchase up to 250,000 shares of the Company’s common stock at an exercise price of $.60 for a period of six years valued at $179,982 using the Black-Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 4.78%, expected volatility of 78.57% and an expected term for the warrants of 6 years. The value of the warrant and the cash paid has been reflected as part of deferred financing fees on the accompanying balance sheet at September 30, 2008.

Related Party Lease Agreement

During the third quarter ended September 30, 2007, the Company entered into a lease for $180,846 of equipment with current investors of the Company. The lease transaction was organized by General Pacific Partners, a related party, with these investors. The five year lease with payments of $4,000 per month began August 1, 2007.

Letter of Credit Fees

During the third quarter ended September 30, 2008 the Company entered into an agreement with GPP wherein GPP would provide funds to the Company’s bank and instruct the bank to issue letters of credit to support various projects contracted to GEM. As compensation for this service the Company will pay a 2% commitment fee based on the value of the letter of credit, interest at a rate to be negotiated and a warrant to purchase shares of the Company’s common stock at $0.60 per share for a term of seven years. Costs related to letters of credit issued during the third quarter ended September 30, 2008 are $19,945.

Software Support

During the nine months ended September 30, 2008, the Company entered into a three year agreement with Lapis Solutions, LLC, (Lapis) a company managed by a prior member of the Board of Directors of the Company’s wholly owned subsidiary, General Environmental Management, Inc. of Delaware, wherein Lapis would provide support and development services for the Company’s proprietary software GEMWARE. Services costs related to the agreement total $10,800 per month. As of September 30, 2008, $15,255 of the fees related to the fourth quarter had been prepaid to Lapis.

6. SECURED FINANCING AGREEMENTS

During the period 2006 through 2008, the Company entered into a series of financings with Laurus Master Fund (“Laurus”) and CVC California, LLC (“CVC”).

The amounts due under these financings at September 30, 2008 and December 31, 2007 are as follows:

	September 30,			December 31,
	2008			2007
	(Unaudited)
(a) Secured notes from Laurus and affiliated entities	$	-		$	6,413,604
(b) Secured Notes from CVC California		12,830,202			-
Valuation Discount		(3,479,618	)		(2,042,191	)
		9,350,584			4,371,413
Less current portion		(812,500	)		(662,719	)
Financing agreement, net of current portion	$	8,538,084		$	3,708,694

(a) Agreements with Laurus Master Fund and affiliated entities.

On March 3, 2006, General Environmental Management, Inc. entered into an agreement with Laurus Master Fund, Ltd. dated as of February 28, 2006, whereby the Company issued to Laurus a secured convertible term note ("Note") in the principal amount of $2.0 million and a Secured Non-Convertible Revolving Note (“Revolving Note”) of up to $5.0 million. On October 31, 2007, General Environmental Management, Inc entered into an agreement with Laurus Master Fund, Ltd. ("Laurus"), LV Administrative Services, Inc. (“LV Admin”), Valens U.S. SPV I, LLC (“Valens US”) and Valens Offshore SPV II, Corp. (“Valens”), whereby the Company issued to these companies secured convertible term notes ("Valens Notes") in the principal amount of $1.25 million.

(i). Under terms of the initial agreement, the principal amount of the Note carried an interest rate of prime plus three and one half percent, subject to adjustment, and such interest was payable monthly. The Company also was required to make monthly principal payments in the amount of $60,606, commencing June 1, 2006, until its maturity on February 28, 2009, as well as monthly interest payments in the amount of prime plus 3.5%, but in no event less than 8% per annum. On October 31, 2007, the Company entered into an Amendment of, and Joinder to, Existing Financing Documents with Laurus Master Fund Ltd., wherein the Company’s principal payment for the convertible term loan under Secured Convertible Term Loan agreement was changed as follows (i) Monthly principal payment was reduced from $60,606 to $30,303 (from February 2008 to February 2009), (ii) 4-months grace period for principal payment (monthly payment started in March 2008), (iii) Interest is to be paid monthly (based on prime +3.5%), and; (iv) Balloon payment in February 2009 for the remaining balance of the loan. As of December 31, 2007, the Company had outstanding borrowings of $973,623 against the Note.

(ii). The revolving note allowed the Company to borrow a maximum amount of $5,000,000, based on a borrowing base of 90% of all eligible receivables, which were primarily accounts receivables under 90 days. The interest rate on this line of credit was in the amount of prime plus 3.5%, but in no event less than 8% per annum. As of December 31, 2007, the Company had outstanding borrowings of $ $4,194,771 against the Revolving Note.

(iii). The principal amount of the $1,250,000 Valens Notes and accrued interest thereon was convertible into shares of its common stock at a price of $2.78 per share, subject to anti-dilution adjustments. Under the terms of the Note, monthly principal payment amount of approximately $30,303, plus the monthly interest payment (together, the "Monthly Payment"), was payable in either cash or, if certain criteria were met, including the effectiveness of a current registration statement covering the shares of its common stock into which the Note is convertible, through the issuance of its common stock. Valens and Valens US had the option to convert the entire principal amount of the Note, together with interest thereon, into shares of its common stock, provided that such conversion did not result in Valens and Valens US beneficially owning at any one time more than 9.99% of its outstanding shares of common stock. The balance outstanding under these notes at December 31, 2007 was $1,245,210.

The Notes were secured by all of the Company’s assets and the assets of its direct subsidiary, General Environmental Management, Inc. (Delaware) and its direct subsidiary, General Environmental Management of Rancho Cordova LLC, a California Limited Liability Company (including the real property owned by General Environmental Management of Rancho Cordova LLC), as well as by a pledge of the equity interests of General Environmental Management, Inc. (Delaware), GEM Mobile Treatment Services, Inc. (California) and General Environmental Management of Rancho Cordova LLC.

The aggregate amount due under these notes at December 31, 2007 was $6,413,604. On September 4, 2008 the entire amount due on these notes was paid in full with the proceeds of CVC notes described below.

In connection with the above financings, the Company paid to Laurus closing fees of $326,193, and issued to Laurus 1,099,994 warrants initially valued in the aggregate at $2,000,243, and determined the aggregate benefical conversion feature of the convertible notes to be $1,368,397. The closing fees, the value of the warrants and the calculated beneficial conversion feature was reflected by the Company as a valuation discount and offset to the face amount of the Notes, and was being amortized to interest expense over the life of the loan based upon the effective interest method. During the nine months ended September 30, 2008 and 2007 the Company amortized $1,166,968 and $612,405 of this amount which is included in interest expense in the accompanying statement of operations. Unamortized valuation discount was $2,042,191 as of December 31, 2007. The remaining balance of the valuation discount was fully amortized in September 2008 as part of the new financing agreement with CVC California described below.

In conjunction with the above financings, the Company also incurred fees to various investment advisors that facilitated the transaction, including the issuance of shares of our common stock and issuance of warrants. The fees paid to the finders and the value of the warrants issued to the finders were reflected as deferred financing costs in the accompanying balance sheet and were amortized over the life of the loan. During the nine months ended September 30, 2008 and 2007 the Company amortized $394,082 and $187,416, respectively, which is included in interest expense in the accompanying statement of operations. Unamortized deferred financing fees were $394,082 as of December 31, 2007. The remaining balance of deferred financing fees was fully amortized in September 2008 as part of the new financing agreement with CVC California described below.

(b) Note Agreements with CVC California

On September 4, 2008 General Environmental Management, Inc. (the “Company”) entered into a series of agreements with CVC California, LLC, a Delaware limited liability company (“CVC”), each dated as of August 31, 2008, whereby the Company issued to CVC (i) a secured convertible term note ("Note") in the principal amount of $6.5 million and (ii) a secured non-convertible revolving credit note ("Revolving Note") of up to $7.0 million; (iii) 6 year warrants to purchase 1,350,000 shares of our common stock at a price of $0.60 per share; (iv) 6 year warrants to purchase 1,350,000 shares of our common stock at a price of $1.19 per share; and, (v) 6 year warrants to purchase 300,000 shares of our common stock at a price of $2.25 per share. The principal amount of the Note carries an interest rate of nine and one half percent, subject to adjustment, with interest payable monthly commencing October 1, 2008. The Note further provides that commencing on April 1, 2009, the Company will make monthly principal payments in the amount of $135,416. Although the stated principal amount of the Term Loan was $6,500,000, the Lender was only required to fund $5,000,000 with the difference being treated as a discount to the note.

(i). The principal amount of the Note and accrued interest thereon is convertible into shares of our common stock at a price of $3.00 per share, subject to anti-dilution adjustments. Under the terms of the Note, the monthly principal payment amount of approximately $135,416 plus the monthly interest payment (together, the "Monthly Payment"), is payable in either cash or, if certain criteria are met, including the effectiveness of a current registration statement covering the shares of our common stock into which the Note is convertible, through the issuance of our common stock. The Company has agreed to register all of the shares that are issuable upon conversion of the Note and exercise of warrants. As of September 30, 2008 the Company had an outstanding balance of $6,500,000.

(ii). The revolving note allows the Company to borrow a maximum amount of $7,000,000, based on a borrowing base of 90% of all eligible receivables, which are primarily accounts receivables under 90 days. The interest rate on this line of credit is in the amount of prime plus 2.0%, but in no event less than 7% per annum. The Revolving Note is secured by all assets of the Company and is subject to the same security agreement as discussed in (e) above. The note is due August 31, 2011. As of September 30, 2008 the Company had an outstanding balance of $6,330,202.

The Notes are secured by all of our assets and the assets of our direct subsidiary, General Environmental Management, Inc. (Delaware) and its direct subsidiaries, General Environmental Management of Rancho Cordova LLC, a California Limited Liability Company (including the real property owned by General Environmental Management of Rancho Cordova LLC), GEM Mobile Treatment Services Inc., Island Environmental Services, Inc. as well as by a pledge of the equity interests of General Environmental Management, Inc. (Delaware), General Environmental Management of Rancho Cordova LLC, GEM Mobile Treatment Services Inc. and Island Environmental Services, Inc.

In connection with the CVC financing, the Company paid closing fees of $405,000 and issued warrants to acquire an aggregate of 3,000,000 shares of our common stock as described above to CVC. The Company calculated that the fair value of the warrants issued was $1,674,035, based upon the relative value of the Black Scholes valuation of the warrants and the underlying debt amount. For the Black Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 4.78%, expected volatility of 78.57 % and an expected term for the warrants of 7 years. The relative value of the warrants of $1,674,035 and the $1,500,000 discount on issuance has been reflected by the Company as a valuation discount at issuance and offset to the face amount of the Notes. The Valuation discount is being amortized to interest expense over the life of the loan based upon the effective interest method. Unamortized valuation discount was $3,479,618 at September 30, 2008.

The Company also incurred expenses of approximately $100,000 to various professional firms as reimbursement for CVC's due diligence and legal fees and expenses incurred in connection with the transaction. The aggregate amount of these costs have been reflected as deferred financing fees and are being amortized to interest expense over the life of the loan based upon the effective interest method.

7. LONG TERM OBLIGATIONS

Long term debt consists of the following at September 30, 2008 and December 2007:

	September 30, 2008		December 31, 2007
	(Unaudited)
(a) Vehicle notes	$	15,242	$	22,303
(b) Notes Payable, Alliance		-		1,250,000
(c) Equipment notes		75,154		97,628
(d) Notes Payable, Costales		1,062,500		-
(e) Notes Payable, NCF Charitable Trust		187,500		-
		1,340,396		1,369,931
Loan Discount		-		(15,625	)
		1,340,396		1,354,306
Less current portion		43,763		1,274,464
Notes payable, net of current portion	$	1,296,633	$	79,842

(a) Note payable in monthly installments of $815 including interest at 1.9% per annum, through April 2010. The note is secured by a vehicle.

(b) On September 12, 2005, our wholly owned subsidiary, General Environmental Management of Rancho Cordova, LLC, (“GEM LLC”) entered into a $1.25 million secured, long-term financing arrangement with The Alliance Portfolio (the “2005 Loan”). The loan is secured by real estate.

The terms of the loan provide that GEM LLC will pay monthly payments of interest only from November 1, 2005 through October 1, 2008, with the principal balance due on October 1, 2008. The 2005 Loan may be prepaid without premium or penalty after the twelfth month. If the 2005 Loan is prepaid prior to the twelfth month, then the prepayment penalty is 6 months interest on any principal prepaid in excess of 20% of the principal. Subject to the terms and conditions of the loan documentation, interest is due on the unpaid principal balance of the 2005 Loan at a rate of 12.99% per annum until June 1, 2007, at which time the interest rate may rise based upon a formula set forth in the loan documentation. The interest rate reset to 14.07% on June 1, 2007. In no event will the interest rate be less than 12.99% per annum. In connection with obtaining the loan, the Company paid a $62,500 loan origination fee which is being amortized over the term of the loan. The loan was paid in full on August 31, 2008 as part of the refinancing agreement with CVC California, LLC as detailed in section 6.

(c) The equipment note is for equipment utilized by GEM Mobile Treatment Services. It requires monthly payments of $3,417 with an interest rate of 12.35% and matures in October 2010. The note is secured by the equipment.

(d), (e) On August 31, 2008, the Company entered into a stock purchase agreement with Island Environmental as detailed in note 3. As part of the consideration for the purchase the Company, issued two three year promissory notes totaling $1.25 million.

The first note is payable to the former owners in the amount of $1,062,500. The second note is payable to NCF Charitable Trust in the amount of $187,500. The notes bear interest at eight percent (8%) with interest only payments payable quarterly and the entire balance of interest and principal payable August 31, 2011.

8. OBLIGATIONS UNDER CAPITAL LEASES

The Company has entered into various capital leases for equipment with monthly payments ranging from $598 to $26,500 per month, including interest, at interest rates ranging from 9.8% to 19.7% per annum. At September 30, 2008, monthly payments under these leases aggregated $70,953. The leases expire at various dates through 2014. The amounts outstanding under the capital lease obligations were $2,518,447 and $1,233,935 as of September 30, 2008 and December 31, 2007, respectively.

Minimum future payments under capital lease obligations are as follows:

Years Ending December 31,
2008	$	224,750
2009		895,476
2010		723,822
2011		674,455
2012		566,859
2013		193,361
Thereafter		56,275
Total payments		3,334,998
Less: amount representing interest		(816,551	)
Present value of minimum lease payments		2,518,447
Less: current portion		(613,857	)
Non-current portion	$	1,904,590

9. STOCK OPTIONS AND WARRANTS

Options

On March 28, 2007 the Board of Directors approved and implemented the 2007 Stock Option Plan (the “Plan”). The plan authorized option grants to employees and other persons closely associated with the Company for the purchase of up to 5,500,000 shares. The Board of Directors granted a total of 4,397,500 options to 102 employees and one consultant. The exercise price of the options was $1.19.

On January 2, 2008 the Stock Option Committee approved the issuance of 43,000 options to six employees. The exercise price for the options was $1.70 per share and was based on the closing market price on the date of issuance.

On April 1, 2008 the Stock Option Committee approved the issuance of 22,000 options to eleven employees. The exercise price for the options was $1.99 per share and was based on the closing market price on the date of issuance.

On July 1, 2008 the Stock Option Committee approved the issuance of 45,000 options to fifteen employees. The exercise price for the options was $1.05 per share and was based on the closing market price on the date of issuance.

A summary of the option activity during the period is as follows:

	Weighted Avg.			Weighted Avg.		Weighted Avg.
	Options			Exercise Price		Life in Years
Options outstanding, January 1, 2008		5,000,193			1.64		9.32
Options granted		110,000			1.49		9.31
Options exercised		-			-		-
Options cancelled		(180,047	)		1.57		-
Options outstanding, September 30, 2008		4,930,146			1.64		8.59
Options exercisable, September 30, 2008		2,940,863			1.77		8.49

The aggregate intrinsic value of the 4,930,146 options outstanding as of September 30, 2008 was $2,213. The aggregate intrinsic value for the options is calculated as the difference between the price of the underlying shares and quoted price of the Company's common shares for the options that were in-the-money as of September 30, 2008.

For the nine months ended September 30, 2008 and 2007, the fair value of options vesting during the period was $634,213 and $758,290 respectively, and has been reflected as compensation cost. As of September 30, 2008, the Company has unvested options valued at $1,408,799 which will be reflected as compensation cost over the estimated remaining vesting period of 9.83 years.

Warrants

A summary of the warrant activity during the period is as follows:

			Range of exercise prices		Weighted Avg. in Years
Warrants outstanding, January 1, 2008	5,981,635		$	0.60-$120.00		3.93
Warrants granted	3,574,500		$	0.60-$2.25		4.07
Warrants exercised	-			-		-
Warrants expired	(210,741	)	$	1.20- $120.00		-
Warrants outstanding, September 30, 2008	9,345,394		$	0.60-$120.00		4.13

The aggregate intrinsic value of the 9,345,394 warrants outstanding as of September 30, 2008 was $2,261,565. The aggregate intrinsic value for the warrants is calculated as the difference between the price of the underlying shares and quoted price of the Company's common shares for the warrants that were in-the-money as of September 30, 2008.

10. INCOME TAXES

The Company's net deferred tax assets consisted of the following at September 30, 2008 and December 31, 2007:

	September 30, 2008			December 31, 2007
	(Unaudited)
Deferred tax asset, net operating loss	$	13,344,893		$	11,677,897
Less valuation allowance		(13,344,893	)		(11,677,897	)
Net deferred tax asset	$	-		$	-

As of September 30, 2008, the Company had federal net operating loss carry forwards of approximately $39,249,686 expiring in various years through 2025, which can be used to offset future taxable income, if any. No deferred asset benefit for these operating losses has been recognized in the financial statements due to the uncertainty as to their realizability in future periods.

As a result of the Company's significant operating loss carryforward and the corresponding valuation allowance, no income tax expense (benefit) has been recorded at September 30, 2008 or December 31, 2007.

Reconciliation of the effective income tax rate to the United States statutory income tax rate for the nine months ended September 30, 2008 and 2007 is as follows:

	Nine months ended September30,
	2008		2007
Tax expense at U.S. statutory income tax rate	(34.0	) %	(34.0	) %
Increase in the valuation allowance	34.0		34.0
Effective rate	-		-

Effective January 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes (“FIN 48”) an interpretation of FASB Statement No. 109, Accounting for Income Taxes.” The Interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FIN 48 also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of September 30, 2008, the Company does not have a liability for unrecognized tax uncertainties.

The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of September 30, 2008 the Company has no accrued interest or penalties related to uncertain tax positions.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD LOOKING STATEMENTS

In addition to historical information, this Quarterly Report contains forward-looking statements, which are generally identifiable by use of the words “believes”, “expects”, “intends”, “anticipates”, “plans to”, “estimates”, “ projects”, or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Factors That May Affect Future Results”. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the risk factors described in other documents the company files from time to time with the Securities and Exchange Commission ( the “SEC”), including the Quarterly Reports on form 10-Q filed by us in the fiscal year 2008.

Statements made in this Form 10-Q (the “Quarterly Report”) that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Quarterly Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

The words “we,” “us,” “our,” and the “Company,” refer to General Environmental Management, Inc. The words or phrases “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate,” or “continue,” “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions, or the negative thereof, are intended to identify “forward-looking statements.” Actual results could differ materially from those projected in the forward looking statements as a result of a number of risks and uncertainties, including but not limited to: (a) our failure to implement our business plan within the time period we originally planned to accomplish; and (b) other risks that are discussed in this Quarterly Report or included in our previous filings with the Securities and Exchange Commission (“SEC”).

OVERVIEW

Ultronics Corporation (Ultronics) was a non-operating company formed for the purpose of evaluating opportunities to acquire an operating company. On February 14, 2005 Ultronics acquired General Environmental Management, Inc. through a reverse merger between Ultronics Acquisition Corp., a wholly owned subsidiary of Ultronics and General Environmental Management, Inc., whereby General Environmental Management, Inc. (GEM) was the surviving entity.

The acquisition was accounted for as a reverse merger (recapitalization) with GEM deemed to be the accounting acquirer, and Ultronics Corporation the legal acquirer. Accordingly, the historical financial information presented in the financial statements is that of GEM as adjusted to give effect to any difference in the par value of the issuer’s and the accounting acquirer stock with an offset to capital in excess of par value. The basis of the assets, liabilities and retained earnings of GEM, the accounting acquirer, have been carried over in the recapitalization. Subsequent to the acquisition, the Company changed its name to General Environmental Management, Inc. GEM is a fully integrated environmental service firm structured to provide EHS compliance services, field services, transportation, off-site treatment, and on-site treatment services. Through its services GEM assists clients in meeting regulatory requirements for the disposal of hazardous and non-hazardous waste. GEM provides its clients with access to GEMWare, an internet based software program that allows clients to maintain oversight of their waste from the time it leaves their physical control until final disposition by recycling, destruction, or landfill. The GEM business model is to grow both organically and through acquisitions.

During 2003 and 2004 GEM acquired the assets of Envectra, Inc., Prime Environmental Services, Inc. (Prime) and 100% of the membership interest in Pollution Control Industries of California, LLC, now named General Environmental Management of Rancho Cordova, LLC. The assets of Envectra, Inc. included an internet based integrated environmental management software now marketed by the Company as GEMWare. The acquisition of the assets of Prime resulted in a significant increase in the revenue stream of the company and a presence in the Washington State and Alaska markets through Prime’s Seattle office. All Prime services are now offered under the GEM name. The primary asset of Pollution Control Industries of California, LLC was a fully permitted Part B Treatment Storage Disposal Facility (TSDF) in Rancho Cordova, California. The facility provides waste management services to field service companies and allows the Company to bulk and consolidate waste into larger more cost effective containers for outbound disposal.

During 2006, the Company entered into a stock purchase agreement with K2M Mobile Treatment Services, Inc. of Long Beach, California ("K2M"), a privately held company, pursuant to which the Company acquired all of the issued and outstanding common stock of K2M. K2M is a California-based provider of mobile wastewater treatment and vapor recovery services. Subsequent to the acquisition in March 2006, the Company opened a vapor recovery service division in Houston, Texas and will be looking to expand its operations in the Gulf coast area.

COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

Revenues

Total revenues were $8,630,972 for the three months ended September 30, 2008, representing an increase of $75,141 or .9% compared to the three months ended September 30, 2007. The increase in revenue can be attributed to increased revenue for GEM’s mobile treatment business offset by a decrease in revenues in the Enviroconstruction market sector.

Cost of Revenues

Cost of revenues for the three months ended September 30, 2008 were $6,860,275 or 79.5% of revenue, as compared to $6,878,235 or 80% of revenue for the three months ended September 30, 2007. The cost of revenues includes disposal costs, transportation, fuel, outside labor and operating supplies. The change in the cost of revenue in comparison to the prior year is primarily due to implementation of additional operating cost controls in the third quarter.

Operating Expenses

Operating expenses for the three months ended September 30, 2008 were $1,845,179 or 21.3% of revenue as compared to $3,034,039 or 35.5% of revenue for the same period in 2007. Operating expenses include sales and administrative salaries and benefits, insurance, rent, legal, accounting and other professional fees. The decrease in operating expenses is primarily attributable to a reduction in general expenses over the last nine months.

Depreciation and Amortization

Depreciation and amortization expenses for the three months ended September 30, 2008 were $360,765 or 4.1% of revenue, as compared to $196,199 or 2.3% of revenue for the same period in 2007. The increase in expense is due to additions to property, plant and equipment and increase of assets acquired under capitalized leases.

Interest and financing costs

Interest and financing costs for the three months ended September 30, 2008 were $2,087,673 or 24.1% of revenue, as compared to $574,998 or 6.7% of revenue for the same period in 2007. Interest expense consists of interest on the line of credit, short and long term borrowings, and advances to related parties. It also includes amortization of deferred finance fees and amortization of valuation discounts generated from beneficial conversion features related to the fair value of warrants and conversion features of long term debt. The increase in interest expense is due to higher costs of amortization of valuation discounts generated from conversion features of warrants and long term debt and the refinancing described in section 6.

Other Non-Operating Income

The Company had other non-operating income for the three months ended September 30, 2008 of $18,480 or 0.21 % of revenue, and $25,329 or .3% of revenue for the same period in 2007. Non-Operating income for the three months ended September 30, 2008 consisted of continuing rental income from the lease of warehouse space in Kent, Washington. The lease in Rancho Cordova which accounted for the majority of the 2007 non- operating income was terminated in July 2007.

Net Loss

The net loss for the three months ended September 30, 2008 was $2,137,593 or 24.7% of revenue as compared to a loss of $5,085,197, or 59.4% of revenue for the same period in 2007. The reduced loss is attributable to reductions in operating expenses over the last nine months and less non-cash charges related to convertible debt instruments issued in 2007.

COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

Revenues

For the nine months ended September 30, 2008, the Company reported consolidated revenue of $24,989,210 representing an increase of $3,574,167 or 16.7 % compared to the nine months ended September 30, 2007. The increase in revenue can be attributed to organic growth of the base business and an increase in revenues attributable to GEM’s mobile treatment services.

Cost of Revenues

Cost of revenues for the nine months ended September 30, 2008 were $20,327,989 or 81.3 % of revenue, as compared to $17,023,247 or 79.5 % of revenue for the nine months ended September 30, 2007. The cost of revenue includes disposal costs, transportation, fuel, outside labor and operating supplies. The change in the cost of revenue in comparison to the prior year is primarily due to higher volumes and an increase in costs attributable to fuel related expenses.

Operating Expenses

Operating expenses for the nine months ended September 30, 2008 were $5,651,106 or 22.6% of revenue as compared to $ 10,782,081 or 50.3% of revenue for the same period in 2007. Operating expenses include sales and administrative salaries and benefits, insurance, rent, legal and accounting and other professional fees. The decrease in operation expenses is primarily attributable to general expense reductions made in late 2007 and a decrease in non-cash charges for consulting and advisory fees of $2,294,104.

Depreciation and Amortization

Depreciation and amortization expenses for the nine months ended September 30, 2008 were $827,861 or 3.3% of revenue, as compared to $559,525 or 2.6% of revenue for the same period in 2007. The increase in expense is due to additions to property, plant and equipment and increase of assets acquired under capitalized leases.

Interest and financing costs

Interest and financing costs for the nine months ended September 30, 2008 were $3,748,992 or 15% of revenue, as compared to $ 1,815,131 or 8.5% of revenue for the same period in 2007. Interest expense consists of interest on the line of credit, short and long term borrowings, and advances to related parties. It also includes amortization of deferred finance fees and amortization of valuation discounts generated from beneficial conversion features related to the fair value of warrants and conversion features of long term debt. The increase in interest expense is due to additional costs of amortization of valuation discounts and deferred fees related to the August 31, 2008 refinancing with CVC California, LLC.

Other Non-Operating Income

The Company had other non-operating income for the nine months ended September 30, 2008 of $35,173, or .14% of revenue, and $93,568 or .43% for the same period in 2007. Non-Operating income for the nine months ended September 30, 2008 consisted of continuing rental income from the lease of warehouse space in Kent, Washington. The lease in Rancho Cordova which accounted for the majority of the 2007 non- operating income was terminated in July 2007.

Net Loss

The net loss for the nine months ended September 30, 2008 was $4,687,810, or 18.7% of revenue as compared to a loss of $14,819,205, or 69.1% of revenue for the same period in 2007. The reduced loss is attributable to reductions in operating expenses over the last nine months and less non-cash charges related to advisory fees and convertible debt instruments issued in 2007.

LIQUIDITY AND CAPITAL RESOURCES

Cash

Our primary sources of liquidity are cash provided by operating, investing, and financing activities. Net cash used in operations for the three months ended September 30, 2008 was $156,806 as compared to $2,154,455 for the same period in 2007. Net cash used in operations for the nine months ended September 30, 2008 was $1,046,595 as compared to $3,815,017 for the same period in 2007.

Liquidity

The accompanying consolidated financial statements have been prepared assuming that the company will continue as a going concern. The Company incurred a net loss of $4,687,810 and utilized cash in operating activities of $1,046,595 during the nine months ended September 30, 2008. As of September 30, 2008 the Company had current liabilities exceeding current assets by $1,108,837. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

Management is continuing to raise capital through the issuance of debt and equity and believes it will be able to raise sufficient capital over the next twelve months to finance operations. In addition, management believes that the company will begin to operate profitably due to improved operational results and cost reductions made in late 2007. However, there can be no assurances that the Company will be successful in this regard or will be able to maintain its working capital surplus or eliminate operating losses. The accompanying financial statements do not contain any adjustments which may be required as a result of this uncertainty.

The Company’s capital requirements consist of general working capital needs, scheduled principal and interest payments on debt, obligations, and capital expenditures. The Company’s capital resources consist primarily of cash generated from operations and proceeds from issuances of debt and common stock. The Company’s capital resources are impacted by changes in accounts receivable as a result of revenue fluctuations, economic trends and collection activities.

Cash Flows for the Nine Months Ended September 30, 2008

Operating activities for the nine months ended September 30, 2008 used $1,046,595 in cash. Accounts receivable, net of allowances for bad debts, were reduced by $1,365,335 as of September 30, 2008 and accounts payable were reduced by $1,477,501. Depreciation and amortization for the nine months ended September 30, 2008 totaled $827,861. The net loss of $4,687,810 included a number of non-cash expenses incurred by the Company including $410,127 representing amortization of deferred financing fees. Prepaid expenses increased by $264,700 primarily due to insurance premiums that will be amortized in 2008. Accrued expenses were reduced by $256,861.

The Company used cash for investment in plant, property and equipment and deposits totaling approximately $2,440,946 for the nine months ended September 30, 2008. Capital expenditures increased due to the acquisition of Island Environmental and the issuance of capital lease obligations for the expansion of our transportation assets. Financing activities provided $3,137,486 for the nine months ended September 30, 2008 primarily from the new financing agreement with CVC California, LLC.

These activities resulted in a $350,055 reduction in cash balances from year end December 31, 2007 to the end of the quarter September 30, 2008.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our consolidated financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses. The following are the areas that we believe require the greatest amount of estimates in the preparation of our financial statements: allowances for doubtful accounts, impairment testing and accruals for disposal costs for waste received at our TSDF.

(a) Allowance for doubtful accounts

We establish an allowance for doubtful accounts to provide for accounts receivable that may not be collectible. In establishing the allowance for doubtful accounts, we analyze specific past due accounts and analyze historical trends in bad debts. In addition, we take into account current economic conditions. Actual accounts receivable written off in subsequent periods can differ materially from the allowance for doubtful accounts provided.

(b) Impairment of Long-Lived Assets

Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, established guidelines regarding when impairment losses on long-lived assets, which include property and equipment, should be recognized and how impairment losses should be measured. This statement also provides a single accounting model for long-lived assets to be disposed of and significantly changes the criteria that would have to be met to classify an asset as held-for-sale. The Company periodically reviews, at least annually, such assets for possible impairment and expected losses. If any losses are determined to exist they are recorded in the period when such impairment is determined.

The Company is a fully integrated environmental service firm structured to provide field services, technical services, transportation, off-site treatment, on-site treatment services, and environmental health and safety (“EHS”) compliance services. Through our services, we assist clients in meeting regulatory requirements from the designing stage to the waste disposition stage. The technicians who provide these services are billed at negotiated rates, or the service is bundled into a service package. These services are billed and revenue recognized when the service is performed and completed. When the service is billed, expected costs are accumulated and accrued.

Effective January 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes (“FIN 48”). —an interpretation of FASB Statement No. 109, Accounting for Income Taxes.” The Interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FIN 48 also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of September 30, 2008, the Company does not have a liability for unrecognized tax benefits.

The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is subject to U.S. federal or state income tax examinations by tax authorities for years after 2002. During the periods open to examination, the Company has net operating loss and tax credit carry forwards for U.S. federal and state tax purposes that have attributes from closed periods. Since these NOLs and tax credit carry forwards may be utilized in future periods, they remain subject to examination. The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of September 30, 2008, the Company has no accrued interest or penalties related to uncertain tax positions.

Recent Accounting Pronouncements

The Company does not believe that the adoption of the above recent pronouncements will have a material effect on the Company’s consolidated results of operations, financial position, or cash flows.

ITEM 3. Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the "Exchange Act"), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2008. This evaluation was carried out under the supervision and with the participation of our CEO, Mr. Tim Koziol and our CFO, Mr. Brett Clark. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures are effective in timely alerting management to material information relating to us that is required to be included in our periodic SEC filings. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date we carried out our evaluation.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our CEO and CFO, to allow timely decisions regarding required disclosure.

PART II - OTHER INFORMATION

Item 1. Legal Proceeding - None

Item 2. Unregistered Sales of Securities and Use of Proceeds – S-1/A Registration Statement; filed with the commission on May 5, 2008.

Item 3. Defaults upon Senior Securities - None

Item 4. Submission of Matters to a Vote of Security Holders - None

Item 5. Other Information - None

Item 6. Exhibits and Reports

(a) Exhibits

(b) Reports on Form 8-K

1. Stock Purchase agreement Island Environmental Svcs.; filed with the Commission on 9/24/08

2. Material definitive agreement and Sales of Equity; filed with the Commission on 9/24/08

SIGNATURES

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

	GENERAL ENVIRONMENTAL MANAGEMENT, INC

Dated: November 14, 2008	By:	/s/ Timothy J. Koziol
		Timothy J. Koziol CEO and Chairman of the Board of Directors

Dated: November 14, 2008	By:	/s/ Brett M. Clark
		Brett M. Clark Executive Vice President of Finance, Chief Financial Officer