<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

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

For the quarterly period ended      March 31, 2006
                               ------------------------

[ ]      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                             (I.R.S. Employer
 incorporation or organization)                           Identification Number)


  3191 Temple Ave., Suite 250, Pomona, CA                        91768
 ------------------------------------------                  -------------
  (Address of principal executive offices)                    (Zip Code)


Issuer's telephone number, including area code     (909) 444-9500
                                               ------------------------

         Indicate by check mark whether the Issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the Issuer
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No

         Indicate the number of shares outstanding of each of the Issuer's
classes of common stock, as of the latest practicable date.

           Class                               Outstanding as of  March 31, 2006
-----------------------------                  ---------------------------------
$.001 PAR VALUE COMMON STOCK                          28,250,635 SHARES

<PAGE>

<TABLE>
<S>     <C>
                                                GENRAL ENVIRONMENTAL MANAGEMENT, INC.
                                                   QUARTERLY REPORT ON FORM 10-QSB
                                             FOR THE FISCAL QUARTER ENDED MARCH 31, 2006


                                                          TABLE OF CONTENTS

                                                                                                                           Page No.
                                                                                                                           --------
PART I     FINANCIAL INFORMATION

Item 1.    Financial Statements (unaudited)..................................................................................  3
           Condensed Consolidated Balance Sheets as of March 31, 2006 (Unaudited) and December 31, 2005......................  3
           Condensed Unaudited Consolidated Statements of Operations for the Three Months Ended March 31, 2006 and 2005......  5
           Condensed Unaudited Consolidated Statement of Stockholders' Equity for the Three Months Ended March 31, 2006......  6
           Condensed Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2006 and 2005......  7
           Notes to the Unaudited Condensed Consolidated Financial Statements ...............................................  9
Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations............................. 19
Item 3.    Controls and Procedures........................................................................................... 24


PART II    OTHER INFORMATION

Item 1.    Legal Proceedings................................................................................................. 24
Item 2.    Changes in Securities............................................................................................. 24
Item 3.    Defaults Upon Senior Securities................................................................................... 24
Item 4     Submission of Matters to a Vote of Security Holders............................................................... 24
Item 5.    Other Information................................................................................................. 24
Item 6.    Exhibits and Reports on Form 8K................................................................................... 24

           Signatures........................................................................................................ 26
           CEO & CFO Certifications.......................................................................................... 28


                                                                 2
<PAGE>

                                  PART 1 - FINANCIAL INFORMATION

Item 1.  Financial Statements.

                      GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES
                               CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                     March 31,       December 31,
                                                                       2006              2005
                                                                   ------------      ------------
                                                                   (Unaudited)

                                              ASSETS
CURRENT ASSETS:

Cash                                                               $    196,469      $     47,995

Accounts receivable, net of allowance for doubtful accounts of
     $236,021 and $236,021, respectively                              3,791,791         5,143,754

Supplies inventory                                                       38,608            35,921

Prepaid expenses and  other current assets                              687,125            90,347
                                                                   ------------      ------------

Total Current Assets                                                  4,713,993         5,318,017
                                                                   ------------      ------------

Property and Equipment - Net of accumulated depreciation of
  $932,632 and $865,814, respectively                                 2,789,728         2,478,556

Restricted cash                                                         572,046           566,698

Intangibles                                                           1,684,220           306,996

Deferred financing fees                                                 583,722                --

Deposits                                                                108,581            59,120

Goodwill                                                                644,647           644,647
                                                                   ------------      ------------
TOTAL ASSETS                                                       $ 11,096,937      $  9,374,034

                                                                   ============      ============

                               LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Notes payable - financing agreement                                $    418,041      $  1,094,780

Accounts payable                                                      2,572,558         3,920,923

Accrued expenses                                                      1,133,186           414,616

Accrued disposal costs                                                  307,286           789,414

Payable to related party                                                136,123           121,123

Deferred rent                                                            15,394            16,255

Current portion of notes payable                                         64,809            83,106


Notes payable to investors                                            1,420,469         1,359,448
                                                                   ------------      ------------
Total Current Liabilities                                             6,067,866         7,799,665
                                                                   ------------      ------------

Financing agreement, net of current portion                           1,828,743                --
                                                                   ------------      ------------

Notes payable, net of current portion                                 1,670,570         1,536,652
                                                                   ------------      ------------


              See accompanying notes to condensed consolidated financial statements.

                                                3
<PAGE>

                      GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES
                               CONDENSED CONSOLIDATED BALANCE SHEETS
                                            (CONTINUED)


                                                                     March 31,       December 31,
                                                                       2006              2005
                                                                   ------------      ------------
                                                                   (Unaudited)

Commitments and Contingencies

STOCKHOLDERS' EQUITY

Series A convertible preferred stock, net of offering costs
  of $ 37,732, 10% dividend, liquidation, preference $1 per
  share, $.001 par value, 50,000,000 shares authorized,
  250,000 shares issued and outstanding                                 212,628           212,628

Common stock, $.001 par value, 200,000,000 shares authorized,
  28,250,635 and 27,893,576 shares issued and outstanding                28,252            27,895

Additional paid in capital                                           15,718,305        13,083,970

Accumulated deficit                                                 (14,429,427)      (13,286,776)
                                                                   ------------      ------------

Total Stockholders' Equity                                            1,529,758            37,717
                                                                   ------------      ------------


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $ 11,096,937      $  9,374,034
                                                                   ============      ============


              See accompanying notes to condensed consolidated financial statements.

                                                4
<PAGE>

               GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                     (UNAUDITED)


                                                         Three months ended
                                                ------------------------------------
                                                 March 31, 2006       March 31, 2005
                                                ---------------      ---------------

REVENUES                                        $     3,647,918      $     3,294,461

COST OF REVENUES                                      2,788,369            2,836,526
                                                ---------------      ---------------

GROSS PROFIT                                            859,549              457,935

OPERATING EXPENSES                                    1,751,277            1,762,677
                                                ---------------      ---------------
OPERATING LOSS                                         (891,728)          (1,304,742)

OTHER INCOME (EXPENSE):

Interest income                                           5,348                1,489

Interest and financing costs                           (286,257)            (145,099)

Other non-operating income                               29,986               75,910
                                                ---------------      ---------------
Net Loss                                        $    (1,142,651)     $    (1,372,442)
                                                ===============      ===============

Net loss per common share basic and diluted     $          (.04)     $          (.06)
                                                ===============      ===============

Weighted average shares of common stock
  outstanding, basic and diluted                     28,085,007           24,762,267
                                                ===============      ===============


      See accompanying notes to the condensed consolidated financial statements

                                          5
<PAGE>

                                       GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES
                                      CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                              FOR THE THREE MONTHS ENDED MARCH 31, 2006
                                                             (Unaudited)


                                    Common Stock                Preferred Stock         Additional
                            ---------------------------   ---------------------------     Paid In      Accumulated
                               Shares         Amount         Shares         Amount        Capital        Deficit          Total
                            ------------   ------------   ------------   ------------   ------------   ------------    ------------

Balance, January 1, 2006      27,893,576   $     27,895        250,000   $    212,628     13,083,970   $(13,286,776)   $     37,717

Issuance of common stock
  for finders fees               247,059            247             --             --        209,753             --         210,000

Issuance of common stock
  for settlement of
  payable to related party       110,000            110             --             --         55,990             --          56,100

Valuation of warrants and
  beneficial conversion
  feature on issued notes
  payable                             --             --             --             --      2,321,153             --       2,321,153

Fair value of vested options          --             --             --             --         47,439             --          47,439

Net loss for the quarter
  ended March 31, 2006                --             --             --             --             --     (1,142,651)     (1,142,651)
                            ------------   ------------   ------------   ------------   ------------   ------------    ------------
Balance, March 31, 2006       28,250,635   $     28,252        250,000   $    212,628     15,718,305   $(14,429,427)   $  1,529,758
                            ============   ============   ============   ============   ============   ============    ============


                                See accompanying notes to condensed consolidated financial statements

                                                                 6
<PAGE>

                    GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES
                        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (UNAUDITED)

                                                                       Three Months Ended
                                                                           March 31,
                                                                  ----------------------------
                                                                      2006             2005
                                                                  -----------      -----------
OPERATING ACTIVITIES
   Net loss                                                       $(1,142,651)     $(1,372,442)
   Adjustments to reconcile net loss to cash
     used in operating activities:
       Depreciation and amortization                                   91,626           61,018
       Amortization of discount on notes                                5,208           23,402
       Common stock issued for services                                    --            2,678
       Fair value of vested options                                    47,439               --
       Amortization of discount on convertible debt                    99,104               --
       Amortization of deferred financing fees                         25,381               --
       Gain on issuance of common shares for accounts payable         (53,900)              --

       Changes in assets and liabilities:
         Accounts Receivable                                        1,351,963         (250,882)
         Prepaid and other current assets                             (91,687)         (10,694)
         Supplies inventory                                            (2,687)           1,113
         Accounts Payable                                          (1,348,365)        (526,744)
         Accrued interest on convertible notes                         29,962           24,897
         Accrued expenses and other liabilities                       122,494         (109,816)
                                                                  -----------      -----------
           NET CASH USED IN OPERATING ACTIVITIES                     (866,113)      (2,157,470)
                                                                  -----------      -----------

INVESTING ACTIVITIES:
   Acquisition, net of cash received                               (1,500,000)              --
   Increase in restricted cash                                         (5,348)         (34,703)
   Increase in permits                                                     --          (34,996)
   Additions to property and equipment                                (31,784)         (19,628)
                                                                  -----------      -----------
           NET CASH USED IN INVESTING ACTIVITIES                   (1,537,132)         (89,327)
                                                                  -----------      -----------

FINANCING ACTIVITIES
   Net advances  (payments) on Line of credit                      (1,094,780)         221,899
   Repayments of convertible notes                                         --         (125,145)
   Payment of notes payable                                           (24,741)         (75,528)
   Net proceeds from issuance of notes                              4,302,170        1,375,000
   Proceeds from issuance of common stock                                  --          105,000
   Proceeds from exercise of warrants                                      --          353,126
   Deferred financing fees                                           (430,930)              --
   Escrow to former lender                                           (250,000)              --
   Advances from directors and stockholders                            50,000               --
                                                                  -----------      -----------
           NET CASH PROVIDED BY FINANCING ACTIVITIES                2,551,719        1,854,352
                                                                  -----------      -----------

NET INCREASE (DECREASE) IN CASH                                       148,474         (392,445)

Cash and cash equivalents at beginning of period                       47,995          553,658
                                                                  -----------      -----------

           CASH AND CASH EQUIVALENTS AT END OF PERIOD             $   196,469      $   161,213
                                                                  ===========      ===========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
   Interest expense                                               $    78,123      $   121,697
                                                                  ===========      ===========

           See accompanying notes to the condensed consolidated financial statements

                                               7
<PAGE>

                               GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES
                                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     (UNAUDITED)
                                                     (CONTINUED)


SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

                                                                                           Three Months Ended
                                                                                                March 31,
                                                                                     -------------------------------
                                                                                         2006               2005
                                                                                     -------------     -------------

     Value of warrants issued to lenders recorded as debt discount                   $   1,191,262     $          --
     Value of beneficial conversion feature of notes issued recorded
       as debt discount                                                                    932,168                --
     Valuation of warrants issued to advisors recorded as financing costs                  197,723                --
     Conversion of related party debt to common stock                                      110,000                --
     Issuance of common stock for financing costs                                          210,000                --
     Deferred financing cost included in payable to related party                           75,000                --


                      See accompanying notes to the condensed consolidated financial statements

                                                         8
</TABLE>
<PAGE>

             GENERAL ENVIRONMENTAL MANAGEMENT, INC AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.   ORGANIZATION AND PRINCIPAL ACTIVITIES

     ORGANIZATION AND DESCRIPTION OF BUSINESS

     Ultronics Corporation (a development stage company) ( "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. See Note 9.

     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.

     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 periods presented. The results for the interim periods
     are not necessarily indicative of results for the entire year. 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, 2005 filed with the Securities and
     Exchange Commission.

     GOING CONCERN

     The accompanying consolidated financial statements have been prepared
     assuming the company will continue as a going concern. The Company incurred
     a net loss of $1,142,651 and utilized cash in operating activities of
     $866,113 during the three months ended March 31, 2006, and as of March 31,
     2006 the Company had current liabilities exceeding current assets by
     $1,353,873. 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 improved operational results, cost cutting
     practices, and the integration of the acquisition made by the Company
     during the first quarter of 2006. 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 financial
     statements do not contain any adjustments which may be required as a result
     of this uncertainty.


                                       9
<PAGE>

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 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. 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, 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.

     (c) Income Taxes

     The Company accounts for income taxes using the asset and 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.


                                       10
<PAGE>

     (d) Stock Compensation Costs

            Statement of Financial Accounting Standards No. 123, "Accounting for
     Stock-Based Compensation" ("SFAS No. 123"), established a fair value method
     of accounting for stock-based compensation plans and for transactions in
     which an entity acquires goods or services from non-employees in exchange
     for equity instruments. SFAS No. 123 was amended by Statement of Financial
     Accounting Standards No. 148, "Accounting for Stock-Based Compensation
     -Transition and Disclosure", which required companies to disclose in
     interim financial statements the pro forma effect on net income (loss) and
     net income (loss) per common share of the estimated fair market value of
     stock options or warrants issued to employees. Through December 31, 2005,
     the Company accounted for stock-based compensation utilizing the intrinsic
     value method prescribed in Accounting Principles Board Opinion No. 25,
     "Accounting for Stock Issued to Employees" ("APB No. 25"), with pro forma
     disclosures of net income (loss) as if the fair value method had been
     applied. Accordingly, compensation cost for stock options was measured as
     the excess, if any, of the fair market price of the Company's stock at the
     date of grant over the amount an employee must pay to acquire the stock.

            As the exercise price of stock options and warrants issued to
     employees was not less than the fair market value of the Company's common
     stock on the date of grant, and in accordance with accounting for such
     options utilizing the intrinsic value method, there was no related
     compensation expense recorded in the Company's 2005 consolidated financial
     statements. The fair value of stock options and warrants issued to
     officers, directors and employees at not less than fair market value of the
     Company's common stock on the date of grant was estimated using the
     Black-Scholes option-pricing model, and the effect on the Company's results
     of operations was shown as if such stock options and warrants had been
     accounted for pursuant to SFAS No. 123.

            In December 2004, the Financial Accounting Standards Board ("FASB")
     issued SFAS No. 123 (revised 2004), "Share Based Payment" ("SFAS No.
     123R"), a revision to SFAS No. 123, "Accounting for Stock-Based
     Compensation". SFAS No. 123R superseded APB No. 25 and amended SFAS No. 95,
     "Statement of Cash Flows". Effective January 1, 2006, SFAS No. 123R
     requires that the Company measure the cost of employee services received in
     exchange for equity awards based on the grant date fair value of the
     awards, with the cost to be recognized as compensation expense in the
     Company's financial statements over the vesting period of the awards.
     Accordingly, the Company will recognize compensation cost for equity-based
     compensation for all new or modified grants issued after December 31, 2005.
     In addition, commencing January 1, 2006, the Company is required to
     recognize the unvested portion of the grant date fair value of awards
     issued prior to adoption of SFAS No. 123R based on the fair values
     previously calculated for disclosure purposes over the remaining vesting
     period of the outstanding stock options and warrants.

            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.


                                       11
<PAGE>

     The total stock based compensation expense for the three months ended March
     31, 2006 was $47,439. The value of the unvested options to employees that
     will be amortized over future periods was $346,852 at March 31, 2006. The
     fair value of options was estimated on the date of grant using the
     Black-Scholes option pricing model with the following weighted-average
     assumptions for the periods indicated:

                                          Three Months
                                             Ended
                                         March 31, 2006
                                         --------------

     Dividend yield                              --
     Risk-free interest rate                   3.69%
     Expected volatility                      44.5%
     Expected life of options              8.0 years


     During the three months ended March 31, 2005, the Company did not grant any
     options to purchase shares of its common stock, nor were there any options
     vesting during that period. Accordingly, no proforma information for March
     31, 2005 is required.

     (e) Recent Accounting Pronouncements

     In May 2005, the FASB issued Statement No. 154 (" SFAS 154") "Accounting
     Changes and Error Corrections - a replacement of APB Opinion No. 20 and
     FASB Statement No. 3." SFAS 154 changes the requirements for the accounting
     for and reporting of a change in accounting principle. APB Opinion 20
     previously required that most voluntary changes in accounting principle be
     recognized by including in net income of the period of the change the
     cumulative effect of changing to the new accounting principle. SFAS 154
     requires retrospective application to prior periods' financial statements
     of changes in accounting principle, unless it is impracticable to determine
     either the period-specific effects of the cumulative effect of the change.
     In the event of such impracticality, SFAS 154 provides for other means of
     application. In the event the Company changes accounting principles, it
     will evaluate the impact of SFAS 154.


3.   ACQUISITIONS

     On March 10, 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 registrant 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. In
     consideration of the acquisition of the issued and outstanding common stock
     of K2M registrant paid $1.5 million in cash to the stockholders of K2M. As
     a result of the agreement, K2M becomes a wholly-owned subsidiary of the
     registrant.

     The purchase price was allocated as follows:

     Property and Equipment             345,630
     Intangibles - Customer lists     1,402,608
     Accrued Liabilities               (113,088)
     Note Payable                      (135,150)
                                    ------------
     Total                          $ 1,500,000
                                    ============


                                       12
<PAGE>

     The Company allocated the excess of net assets acquired to customer lists
     and expects to amortize these amounts over five years. The Company has not
     yet finalized the purchase price allocation which may change upon the
     completion of an independent third party evaluation of the assets
     purchased.

     The following sets out the pro forma operating results for the quarter
     ended March 31, 2006 and 2005 for the Company had the acquisition occurred
     as of January 1, 2005:

<TABLE>
                                                                        Three months ended March 31,
                                                                           Pro Forma (Unaudited)
                                                                        ----------------------------
                                                                            2006             2005
                                                                        -----------      -----------
<S>                                                                     <C>              <C>
     Net sales                                                          $ 4,181,293      $ 3,859,672
     Cost of sales                                                        3,075,325        3,140,610
                                                                        -----------      -----------
                Gross profit                                              1,105,968          719,062
                                                                        -----------      -----------

     Operating expenses                                                   1,917,081        1,923,224
                                                                        -----------      -----------
              Operating loss                                               (811,113)      (1,204,162)

     Other income (expense):
      Interest expense and amortization of deferred financing costs        (288,165)        (149,304)
      Other non-operating income                                             35,335           77,399
                                                                        -----------      -----------
                    NET LOSS                                            $(1,063,943)     $(1,276,067)
                                                                        ===========      ===========

     Loss per weighted average share, basic and diluted                 $      (.04)     $      (.05)
                                                                        ===========      ===========
</TABLE>


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 March 31, 2006:


            Permit costs                                  $  315,894
            Customer lists - K2M mobile Treatment          1,402,608
            Accumulated amortization                         (34,282)
                                                          -----------
                                                          $1,684,220
                                                          ===========

     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 five years.


                                       13
<PAGE>

5.   RELATED PARTY TRANSACTIONS

     During the quarter ended March 31, 2006 the Company incurred $75,000 in
     fees for advisory services provided by 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. As of March 31, 2006 the Company had $136,123 in amounts
     payable to General Pacific Partners for fees related to advisory services.

     During the quarter ended March 31, 2006, the Company converted $110,000 of
     amounts due to GPP for services in exchange for the issuance of 110,000
     shares of the Company's common stock. The shares issued were valued at the
     market price at the date of issuance, which resulted in a reduction in cost
     of $53,900 upon conversion that has been offset to operating expenses in
     the accompanying statement of operations.


6.   SECURED FINANCING AGREEMENT

     The secured financing consists of the following at March 31, 2006 and
     December 31, 2005:

          -------------------------------- ---------------- -----------------
                                              March 31,        December 31,
                                                 2006              2005
          -------------------------------- ---------------- -----------------
          (a) Line of credit                $          -       $  1,094,780
          -------------------------------- ---------------- -----------------
          (b) Laurus agreement
          -------------------------------- ---------------- -----------------
                 Term Note                     2,000,000                 -
          -------------------------------- ---------------- -----------------
                 Secured Revolving Note        2,628,363                 -
          -------------------------------- ---------------- -----------------
                 Valuation Discount           (2,381,579)                -
          -------------------------------- ---------------- -----------------
                                               2,246,784         1,094,780
          Less current portion                   418,041         1,094,780
          -------------------------------- ---------------- -----------------
          Notes, net of current portion     $  1,828,743     $           -
          -------------------------------- ---------------- -----------------

     (a)  The Company's wholly owned subsidiary, General Environmental
          Management, Inc. of Delaware entered into a revolving accounts
          receivable funding agreement (the "Agreement") with a lender beginning
          May 2002. The Agreement was amended on October 14, 2004 and again on
          December 12, 2005. Under the terms of the December 12, 2005 amended
          Agreement, the lender purchased from General Environmental Management,
          Inc. of Delaware's accounts receivable (the "Purchased Accounts"),
          advancing cash to General Environmental Management, Inc. of Delaware
          up to 80% of the Purchased Accounts, up to a maximum indebtedness of
          $2,000,000. The amended agreement was to continue until March 31,
          2006. The amounts due to the lender under this agreement were
          $1,094,780 as of December 31, 2005. The loan was paid off in full and
          terminated on March 3, 2006.

     (b)  On March 3, 2006, the Company entered into a series of agreements with
          Laurus Master Fund, Ltd. ("Laurus"), each dated as of February 28,
          2006, whereby we issued to Laurus (i) a secured convertible term note
          ("Note") in the principal amount of $2.0 million; (ii) a Secured
          Non-Convertible Revolving Note of up to $5.0 million; and, (iii) a
          warrant ("Warrant") to purchase up to 3,218,000 shares of our common
          stock at a price of $0.87 per share. Of the Note proceeds, $973,774
          was paid to Gibraltar Financial Corporation ("Gibraltar") in repayment
          in full of the outstanding indebtedness then owing by the Company to
          Gibraltar and $250,000 (included in other assets on the accompanying
          March 31, 2006 Balance sheet) to be placed into an escrow account for
          a period of 120 days to cover certain potential liabilities that may
          become owing to Gibraltar pursuant to certain indemnification


                                       14
<PAGE>

          obligations which survive the repayment of the Gibraltar indebtedness.
          The Company also agreed to pay, out of the Loan proceeds, the sum of
          $245,000 to Laurus Capital Management, LLC, the investment advisor to
          Laurus, and the sum of $40,000 to Laurus Capital Management, LLC as
          reimbursement for its due diligence and legal fees and expenses
          incurred in connection with the transaction. The Company also incurred
          an additional $ 41,193 of closing costs for total closing costs of
          $326,193.

     The principal amount of the Note carries an interest rate of prime plus
     three and one half percent, subject to adjustment, and such interest is
     payable monthly. The Company must also make monthly principal payments in
     the amount of $60,606 commencing June 1, 2006. The Note is secured by all
     of our assets and the assets of our 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 owed by General
     Environmental Management of Rancho Cordova, LLC), as well as by a pledge of
     the equity interests of General Environmental Management, Inc. (Delaware)
     and General Environmental Management of Rancho Cordova, LLC.

     The principal amount of the Note and accrued interest thereon is
     convertible into shares of our common stock at a price of $0.85 per share,
     subject to anti-dilution adjustments. Under the terms of the Note, the
     monthly principal payment amount of approximately $60,606 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.
     Laurus has the option to convert the entire principal amount of the Note,
     together with interest thereon, into shares of our common stock, provided
     that such conversion does not result in Laurus beneficially owning at any
     one time more that 4.99% of our outstanding shares of common stock. The
     Company has agreed to register all of the shares that are issuable upon
     conversion of the Note and exercise of the 3,218,000 Warrants. The Company
     has granted Laurus a right of first refusal with respect to any debt or
     equity financings.

     The revolving note allows the Company to borrow a maximum amount of
     $5,000,000, based on a borrowing base of 80% 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 3.5%, but in no event
     less than 8% per annum. The Revolving Note is secured by all assets of the
     Company and is subject to the same security agreement as discussed above.
     As of March 31, 2006, the Company had outstanding borrowings of $1,980,535
     against the line of credit, and also had received an additional $647,828
     from an over-advance facility from the borrower.

     The Company calculated that the fair value of the warrants issued to Laurus
     was $1,191,262 based upon the relative value of the black scholes valuation
     of the warrants and the underlying debt amount. The Company determined that
     the beneficial conversion feature of the note approximated $932,168. The
     closing costs paid to Laurus of $326,193, the value of the warrants issued
     to the Laurus of $1,191,262 and the $932,168 of calculated BCF have been
     reflected by the Company as a valuation discount and offset to the face
     amount of the Notes, and are being amortized to interest expense over the
     life of the loan based upon the effective interest method.

     In conjunction with the financing, the Company also incurred fees to
     various investment advisors that facilitated the transaction. These fees
     totaled $716,000, of which $210,000 was paid through the issuance of
     247,059 shares of our common stock. In addition, the Company issued these
     finders warrants to purchase 534,118 shares of common stock at a price of
     $0.87 per share. The Company calculated that the fair value of the warrants
     issued to the finders was $197,723 based upon the relative value of the
     black scholes valuation of the warrants and the underlying debt amount. The
     fees paid to the finders and the value of the warrants issued to the
     finders have been reflected as deferred financing costs in the accompanying
     balance sheet and are being amortized over the life of the loan.


                                       15
<PAGE>

7.   STOCKHOLDERS' EQUITY

     The Company issued 110,000 shares of common stock valued at $56,100 to
     General Pacific Partners in settlement of $110,000 of accounts payable due
     to them, resulting in a gain on settlement of $53,900. See Note 5, Related
     Party Transactions.

     As part of the fee arrangement related to the secured financing agreement
     (See Note 6), the Company issued 247,059 shares of common stock valued at
     $210,000 to its financial advisor.

     During the first quarter of 2006, employee compensation cost of $47,439 was
     recorded as expense in accordance with SFAS 123R. See Note 1.

     In conjunction with the secured financing arrangement (See Note 6), the
     Company recorded the value of warrants issued and a beneficial conversion
     feature. The value of the warrants, computed using the fair value method,
     was $1,388,985. The beneficial conversion feature related to the term note
     was $932,168.

     From February 2005 to March 2005, the Company issued twenty five
     convertible notes totaling $1,405,000. These notes were issued in lieu of
     common stock, as the Company did not have sufficient authorized shares
     available to issue the required shares of common stock. The notes carried
     an interest rate of eight percent (8%) per annum and, once the Company had,
     by vote of the shareholders, increased the authorized shares of common
     stock to 200 million shares, the notes were subject to mandatory conversion
     on a dollar for dollar basis for principal and accrued interest into common
     stock at a share price of $1.00 per share. On March 15, 2005 the
     Shareholders of the company approved the increase in authorized shares by
     amendment and restatement of the Company's Articles of Incorporation. As of
     April 2005 all notes, including $18,706 of accrued interest, had been
     converted into 1,423,706 shares of common stock at a price of $1.00 per
     share. The issuance of these convertible notes has been characterized as an
     equity issuance by the Company, as the transaction was in essence a sale of
     common stock. The notes were attached with a warrant to purchase one share
     of common stock for $1.25 per share of common stock for each $2.00 of
     principal and accrued interest converted to common stock, resulting in the
     issuance of, 711,946 warrants with an exercise price of $1.25 and
     expiration dates through June 30, 2008.


8.   STOCK OPTIONS AND WARRANTS

     Stock Options

     Prior to acquisition by the Company, General Environmental Management, Inc.
     of Delaware's Board of Directors approved and implemented the 2005 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
     2,643,500 shares. The Board of Directors of the Company granted a total of
     1,988,500 options to 86 employees and to two consultants. The exercise
     price for the options ranged between $1.00 and $1.60 market value of the
     stock at the date of the grant.


                                       16
<PAGE>

     The Company issues stock options to employees, directors and consultants
     under the 2005 Stock Option Plan. Employee and Non-employee options vest
     according to the terms of the specific grant and expire 8 years from date
     of grant. Stock option activity for the quarter ended March 31, 2006 was as
     follows:

                                           WEIGHTED AVG.       WEIGHTED AVG.
                                             OPTIONS          EXERCISE PRICE
                                          --------------      --------------

          Options, January 1, 2006           1,680,500                1.06
          Options granted                          --                  --
          Options exercised                        --                  --
          Options cancelled                        --                  --
                                           -----------         -----------
          Options, March 31, 2006           1,680,500          $     1.06
                                           ===========         ===========


     Warrants

     Prior to the acquisition by the Company, General Environmental Management,
     Inc. of Delaware had issued warrants through the sale of common stock; the
     issuance of convertible notes, and for services. Under the terms of the
     agreement and plan of merger these warrants became exercisable into the
     same number of shares in the Company's stock on the same terms as issued.
     As of March 31, 2006 there were 8,997,522 warrants outstanding with
     exercise prices ranging from $0.87 to $4.00 per share of common stock, and
     expiration dates through February of 2013.

     During the quarter ended March 31, 2006 the Company granted 3,752,118
     warrants at a price of $0.87. These warrants were issued in conjunction
     with the secured financing agreement described in Note 6.

                                                                  Warrants
                                                                -----------
     Warrants outstanding, January 1, 2006                       5,245,404
     Warrants granted                                            3,752,118
     Warrants exercised                                                 --
     Warrants expired                                                   --
                                                                -----------
     Warrants outstanding, March 31, 2006                        8,997,522
                                                                ===========


9.   COMMITMENTS AND CONTINGENCIES

     ENVIRONMENTAL

     The Company is regulated as a hazardous waste transporter and is subject to
     various stringent federal, state, and local environmental laws and
     regulations relating to pollution, protection of public health and the
     environment, and occupational safety and health. The Company is subject to
     periodic inspection by the Department of Toxic Substance Control. The
     Company has not been subject to any contingencies pursuant to any
     environmental law or regulation. Although compliance with these laws and
     regulations may affect the costs of the Company's operations, compliance
     costs to date have not been material.

     ASSET RETIREMENT COSTS AND OBLIGATIONS

     In accordance with its Part B operating permit, the Company is liable for
     certain costs involving the ultimate closure of its facilities. These
     expenses include costs of decommissioning, remediation, and incremental
     direct administration costs of closing the facilities.Upon acquisition of
     General Environmental Management of Rancho Cordova, LLC in June 2004, the
     Company continued that subsidiary's implementation of SFAS No. 143,
     "Accounting for Asset Retirement Obligations," which addresses financial
     accounting and reporting obligations associated with the retirement of
     tangible long-lived assets and the related asset retirement costs. The


                                       17
<PAGE>

     statement which became effective January 1, 2003, requires that a fair
     value of a liability for an asset retirement obligation be recognized in
     the period in which it is incurred and capitalized as part of the carrying
     amount of the long lived asset. When a liability is initially recorded, the
     entity capitalizes the cost by increasing the carrying value of the related
     long lived asset. Over time, the liability is accreted to its present value
     each period, and the capitalized cost is depreciated over the useful life
     of the related asset. On an annual basis the liability to fulfill the
     retirement obligation is required to be reviewed and adjusted if necessary.
     Management's review of the liability in 2005 determined no adjustment was
     necessary. The Company determined the estimated obligation, based on
     current requirements and proposed regulatory changes and is intended to
     approximate fair value. The estimate of fair value is based on the best
     available information, including the results of present value techniques.
     Once the retirement costs were determined, the Company inflated those costs
     to the expected time of payments and discounts the expected future costs
     back to present value. The costs have been inflated in current dollars
     until the expected time of payment using an inflation rate of 2.5 percent
     and have discounted these costs to present value using a credit-adjusted
     risk-free interest rate of 5.5 percent. The accretion of the liability,
     based on the effective interest method, and amortization of the property
     and equipment, recognized over the estimated life of the location, will be
     included in the operating costs and expenses. The discount rate, which is
     based on the rates for the United States Treasury bonds, and the inflation
     rate is reviewed by the Company on an annual basis.Upon acquisition of the
     Part B permit and facility, the Company's share of obligation, was a
     present value liability of $35,846 and a net increase to plant and
     equipment of $35,846.

     In the State of California, the environmental regulatory agencies
     overseeing the Company's operations require the Company to provide
     assurance that funds will be available for these costs. The Company has a
     cash deposit of $572,046 to cover the ultimate cost of closure at its
     facility and is reflected as restricted cash in the accompanying balance
     sheet.


     LEGAL PROCEEDINGS

     The Company is party to legal proceedings that arise through the normal
     course of business. The outcomes of these proceedings are not expected to
     have a material impact on these financial statements.


     OTHER CONTINGENCIES

     The Company is subject to various regulatory requirements, including the
     procurement of requisite licenses and permits at its facilities and for its
     vehicles and drivers. These licenses and permits, without which the
     Company's operations would be adversely affected, are subject to periodic
     renewal. The Company anticipates that, once a license or permit is issued
     with respect to a facility, the license or permit will be renewed at the
     end of its term if the facility's operations are in compliance with the
     applicable regulatory requirements.

     Under the Company's insurance programs, coverage is obtained for
     catastrophic exposures, as well as those risks required to be insured by
     law or contract. The company retains a certain amount of risk through per
     occurrence deductibles on its insurance policies.


                                       18
<PAGE>

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 10QSB to be filed by us in the fiscal
year 2006.

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.

GEM, prior to the acquisition by the Company, focused its efforts in the second
half of 2004 on integration of the above noted purchases and on continued
organic growth. During 2005 the company has streamlined its operations to
achieve greater efficiencies at the TSDF and at its field service operations in
both Southern and Northern California, the states of Washington and Alaska. In
March 2006, GEM acquired the assets of K2M Mobile Treatment Services, a
California based provider of Mobile Wastewater treatment and vapor recovery
services. This acquisition broadens our customer base in the Western United
States as well as adding the Gulf Coast to our geographic reach.


                                       19
<PAGE>

The accompanying consolidated statements have been prepared assuming that the
Company will continue as a going concern. The company realized a net loss of
$1,142,651 and utilized cash in operating activities of $866,113 during the
three months ended March 31, 2006. The Company currently has a working capital
deficit, and the amount current liabilities exceed current assets, of $1,353,873
as of March 31, 2006. There can be no assurances that the Company will be
successful in eliminating the deficit, as such, there is doubt about the
Company's ability to continue as a going concern.


THREE MONTHS ENDED MARCH 31, 2006 VERSUS THE THREE MONTHS ENDED MARCH 31, 2005

Revenues

Total revenues were $3,647,918 for the three months ended March 31, 2006,
representing an increase of $353,457 or 10.7% compared to the three months ended
March 31, 2005. The increase in revenue can be attributed to improved market
penetration in the Western United States and the acquisition of K2M in March
2006.

Cost of Revenues

Cost of revenues for the three months ended March 31, 2006 were $2,788,369 or
76% of revenue, as compared to $2,836,526 or 86% of revenue for the three months
ended March 31, 2005. The change in the cost of revenue in comparison to the
prior year is due to efficiencies obtained upon the completion of the
integration of the Prime acquisition and from reduced disposal costs related to
the economies of scale achieved by bulking waste for disposal at the Company's
TSDF in Rancho Cordova, California.

Operating Expenses

Operating expenses for the three months ended March 31, 2006 were $1,751,277 or
48% of revenue as compared to $1,762,677 or 54% of revenue for the same period
in 2005. The decrease in expenses from the prior periods is attributable to
elimination of the fees incurred in the reverse merger of February 2005. The
improvement in the cost as a percentage of revenue resulted from control of
expenses and the Company's ability to achieve economies of scale during the
integration of recent acquisitions.

Depreciation and Amortization

Depreciation and amortization expenses for the three months ended March 31, 2006
were $91,626, or 2.5% of revenue, as compared to $61,018, or 1.9% of revenue for
the same period in 2005. The increase in expenses is related to the increase in
property, plant and equipment and increased amortization expense.

Interest Expense

Interest expense for the three months ended March 31, 2006 were $286,257 or 7.8%
of revenue, as compared to $145,099, or 4.4% of revenue for the same period in
2005. The increase in interest expense is due to higher average loan balances
outstanding under the Company's revolving credit agreement with Gibraltar
Financial and the additional debt issued as part of the Company's fund raising
activities during 2005 and the first quarter of 2006.

Other Non-Operating Income

The Company had other non-operating income for the three months ended March 31,
2006 of $29,986, or 0.8 % of revenue, and $75,910 for the same period in 2005.
Non-Operating income for the first quarter of 2005 included a one time benefit
from a legal settlement of approximately $53,000. Rental income from the lease
of an office constituted the remainder of the income.


                                       20
<PAGE>

Net Loss

The net loss for the three months ended March 31, 2006 was $1,142,651 or 31.3%
of revenue as compared to a loss of $1,372,442, or 41.7% of revenue for the same
period in 2005. The loss is attributable to a general and administrative
infrastructure created in anticipation of a larger revenue base to be developed
through acquisition and organic growth and additional financing costs related to
the acquisition of K2M and restructuring of the Company's current borrowing
facility.


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
March 31, 2006 was $866,113 as compared to $2,157,470 for the same period in
2005.

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 $1,142,651 and utilized cash in operating activities of $866,113 during
the three months ended March 31, 2006. As of March 31, 2006 the Company had
current liabilities exceeding current assets by $1,353,873. 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,
cost cutting practices, and the completion of the integration of acquisitions.
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 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 Three Months Ended March 31, 2006

Operating activities for the three months ended March 31, 2006 used $866,113 in
cash. Accounts receivable, net of allowances for bad debts, totaled $3,791,791
as of March 31, 2006 as compared to the March 31, 2005 balance of $2,804,329.
The increase in accounts receivable is directly related to the increase in sales
over the same period for 2006 as noted above. Accounts payable totaled
$2,572,558 as of March 31, 2006 as compared to an accounts payable balance of
$2,601,678 for March 31, 2005. The decrease in accounts payable over the prior
year was due to efficiencies obtained in the integration of the company's
operations.

The Company used cash for the acquisition of K2M, investment in property and
equipment, and in deposits totaling $1,537,132 for the three months ended
March 31, 2006. The company used $89,327 in cash for investment purposes
during the same period in 2005.


                                       21
<PAGE>

The Company raised $2,551,719 cash from financing activity, net of repayments
of debt and the payoff of the former lender's line of credit, through the
issuance of notes related to the new financing transaction, and advances from
a related party.


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

(c) 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. 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, 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


                                       22
<PAGE>

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. Revenue is recognized on contracts
with retainage when services have been rendered and collectability is reasonably
assured.


RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004 FASB issued SFAS No. 123(R) which revised SFAS No. 123 to
require a public entity to measure the cost of employee services received in
exchange for an award of equity instruments based on the grant-date fair value
of the award (with limited exceptions). That cost will be recognized over the
period during which an employee is required to provide service in exchange for
the award--the requisite service period (usually the vesting period). No
compensation cost is recognized for equity instruments for which employees do
not render the requisite service. Employee share purchase plans will not result
in recognition of compensation cost if certain conditions are met; those
conditions are much the same as the related conditions in Statement 123. A
public entity will initially measure the cost of employee services received in
exchange for an award of liability instruments based on its current fair value;
the fair value of that award will be re-measured subsequently at each reporting
date through the settlement date. Changes in fair value during the requisite
service period will be recognized as compensation cost over that period. A
nonpublic entity may elect to measure its liability awards at their intrinsic
value through the date of settlement. The statement is not effective for small
business issuers until the first interim or annual reporting period beginning
after December 15, 2005. The company adopted the requirements of SFAS No. 123(R)
beginning fiscal 2006 which resulted in a $47,439 expense for stock
compensation.

In November, 2004, the FASB issued Statement of Financial Accounting standards
No. 151, "Inventory Costs". This statement amends the guidance in ARB No. 43
Chapter 4 Inventory Pricing, to require items such as idle facility costs,
excessive spoilage, double freight and re-handling costs to be expenses in the
current period, regardless if they are abnormal amounts or not. This Statement
will become effective for the Company in the first quarter of 2006. The company
is primarily a service provider and as such the adoption of SFAS 151 is not
expected to have a significant effect on the Company's financial statements.

In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement no. 153 ("SFAS 153"), "Exchanges of Non-monetary Assets," an amendment
of APB Opinion No. 29. SFAS 153 is effective for non-monetary transactions
occurring in fiscal periods beginning after June 15, 2005. SFAS 153 generally
will no longer allow non-monetary exchanges to be recorded at book value with no
gain being recognized. Non-monetary exchanges will be accounted for at fair
value, recognizing any gain or loss, if the transactions meet a commercial
substance criterion and fair value is determinable. To prevent gain recognition
on exchanges of real estate when the risks and rewards of ownership are not
fully transferred, SFAS 153 precludes a gain from being recognized if the entity
has significant continuing involvement with the real estate given up in the
exchange. Adoption is not expected to affect us.

In May 2005, the FASB issued Statement No. 154 (" SFAS 154") "Accounting Changes
and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement
No. 3." SFAS 154 changes the requirements for the accounting for and reporting
of a change in accounting principle. APB Opinion 20 previously required that
most voluntary changes in accounting principle be recognized by including in net
income of the period of the change the cumulative effect of changing to the new
accounting principle. SFAS 154 requires retrospective application to prior
periods' financial statements of changes in accounting principle, unless it is
impracticable to determine either the period-specific effects of the cumulative
effect of the change. In the event of such impracticality, SFAS 154 provides for
other means of application. In the event the Company changes accounting
principles, it will evaluate the impact of SFAS 154.


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<PAGE>

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 March 31, 2006.
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

None.


                           PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS - No litigation other than that in the normal
           course of business

ITEM 2.    UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS - None

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

           Exhibit 2.1     Plan of purchase, sale, reorganization, arrangement,
                           liquidation, or succession - Acquisition of General
                           Environmental Management, Inc.; incorporated by
                           reference previously filed on form 8K with the
                           commission on 12/23/2004

           Exhibit 2.2     Notification of the completion of the acquisition
                           effective 2/14/05; incorporated by reference
                           previously filed with the commission on form 8K on
                           2/18/05

           Exhibit 22.1    Published report regarding matters submitted to a
                           vote of security holders; incorporated by reference
                           filed on PRE 14A filed with the commission on 2/22/05

           Exhibit 22.2    Amendments to Articles of Incorporation or Bylaws;
                           incorporated by reference and filed with the
                           commission on 3/23/05

           Exhibit 31.1    Section 302 Certification of CEO - Page 27

           Exhibit 31.2    Section 302 Certification of CFO - Page 28

           Exhibit 32.1    Section 906 Certification of CEO - Page 29

           Exhibit 32.2    Section 906 Certification of CFO - Page 30


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<PAGE>

     (b)   Reports on Form 8-K

           1. Material definitive agreement and Sales of Equity; filed with
              the Commission on 3/7/06

           2. Stock Purchase agreement K2M; filed with the commission on 3/16/06


                                       25
<PAGE>

                                   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:   May 22, 2006         /s/ Timothy J. Koziol
         ------------         --------------------------------------------------
                              Timothy J. Koziol, President, CEO and
                              Chairman of the Board of Directors

Dated:   May 22, 2006         /s/ Brett M. Clark
         ------------         --------------------------------------------------
                              Vice President of Finance, Chief Financial Officer


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