**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, 2007**




[]
            **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 and 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 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, 2007$0.001
                PAR VALUE COMMON STOCK
            
            9,767,147
                SHARES





**GENERAL
      ENVIRONMENTAL MANAGEMENT, INC.**


**QUARTERLY
      REPORT ON FORM 10QSB**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007**





**TABLE
      OF CONTENTS**




**Page****Part
                1**
            **Financial
                Information**Item
                1
            Financial
                Statements (Unaudited)Condensed
                Consolidated Balance Sheets as of March 31, 2007 (Unaudited)and
                December 31, 2006
            1Condensed
                Unaudited Consolidated Statements of Operations for the Three Months
                Ended
                March 31, 2007 and 2006
            3Condensed
                Unaudited Consolidated Statement of Shareholders’ Equity for the Three
                Months Ended March 31, 2007
            4Condensed
                Unaudited Consolidated Statements of Cash Flows for the Three Months
                Ended
                March 31, 2007 and 2006
            5Notes
                to the Unaudited Condensed Consolidated Financial
                Statements
            7Item
                2
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operation
            18Item
                3
            Controls
                and Procedures
            24**Part
                II**
            **Other
                Information**Item
                1
            Legal
                Proceedings
            25Item
                2
            Changes
                in Securities
            25Item
                3
            Defaults
                Upon Senior Securities
            25Item
                4
            Submission
                of Matters to a Vote of Security Holders
            25Item
                5
            Other
                Information
            25Item
                6
            Exhibits
                and Reports on Form 8K
            25Signatures
            26







**PART
      1 - FINANCIAL INFORMATION**





**Item
      1. Financial Statements.**







**GENERAL
      ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**






**March
                31,**
            
            **December
                31,******
            
            **2007**
            
            **2006**(Unaudited)**ASSETS**CURRENT
                ASSETS:Cash
                in bank
            
            $
            131,087
            
            $
            618,654Accounts
                receivable, net of allowance for doubtful accounts of $278,210 and
                $285,000,respectively
            
            
            5,410,618
            
            
            5,540,069Prepaid
                expenses and other current assets
            
            
            864,922
            
            
            428,018Total
                Current Assets
            
            
            6,406,627
            
            
            6,586,741Property
                and Equipment - Net of accumulated depreciation $1,398,002 and $1,248,088,
                respectively
            
            
            3,623,096
            
            
            2,918,690Restricted
                cash
            
            
            1,155,270
            
            
            911,168Intangibles,
                net
            
            
            1,169,060
            
            
            1,191,217Deferred
                financing fees
            
            
            229,053
            
            
            291,529Deposits
            
            
            257,632
            
            
            147,742Goodwill
            
            
            946,119
            
            
            946,119TOTAL
                ASSETS
            
            $
            13,786,857
            
            $
            12,993,206






**(Continued)**
  **See
          accompanying notes to condensed consolidated financial
          statements.**





1





**GENERAL
      ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS (Continued)**






**March
                31,**
            
            **December
                31,******
            
            **2007**
            
            **2006**(Unaudited)**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**CURRENT
                LIABILITIES:Accounts
                payable
            
            $
            3,466,392
            
            $
            3,755,264Accrued
                expenses
            
            
            2,336,576
            
            
            2,149,178Accrued
                disposal costs
            
            
            609,429
            
            
            593,575Payable
                to related party
            
            
            1,097,069
            
            
            824,783Deferred
                rent
            
            
            29,213
            
            
            25,150Current
                portion of notes payable
            
            
            208,864
            
            
            125,432Current
                portion of financing agreement
            
            
            920,340
            
            
            1,017,048Total
                Current Liabilities
            
            
            8,667,883
            
            
            8,490,430LONG-TERM
                LIABILITIES :Financing
                agreements, net of current portion
            
            
            2,120,739
            
            
            2,050,588Notes
                payable, net of current portion
            
            
            2,312,853
            
            
            1,704,892Convertible
                Notes payable
            
            
            500,000
            
            
            601,161Total
                Long-Term Liabilities
            
            
            4,933,592
            
            
            4,356,641STOCKHOLDERS’
                EQUITYSeries
              B Convertible
              Preferred Stock, net of offering costs of $ 60,960, liquidation preference
              $1 per share, $.001 par value,100,000,000
                shares authorized, none and 2,480,500 shares issued and outstanding
            
            
            -
            
            
            2,481Common
                stock, $.001 par value, 1,000,000,000 shares authorized, 9,767,147
                and
                5,920,408 shares issued and outstanding
            
            
            9,767
            
            
            5,920Additional
                paid in capital
            
            
            38,049,879
            
            
            33,430,095Accumulated
                deficit
            
            
            (37,874,264
            )
            
            (33,292,361
            )Total
                Stockholders' Equity
            
            
            185,382
            
            
            146,135TOTAL
                LIABILITIES & STOCKHOLDERS’ EQUITY
            
            $
            13,786,857
            
            $
            12,993,206






**See
        accompanying notes to condensed consolidated financial
        statements.**





2





**GENERAL
      ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)**






**Three
                Months****Ended**
              **March
                31,******
            
            **2007**
            
            **2006**REVENUES
            
            $
            6,317,380
            
            $
            3,647,918COST
                OF REVENUES
            
            
            5,076,337
            
            
            2,788,369GROSS
                PROFIT
            
            
            1,241,043
            
            
            859,549OPERATING
                EXPENSES
            
            
            5,066,540
            
            
            1,751,277OPERATING
                LOSS
            
            
            (3,825,497
            )
            
            (891,728
            )OTHER
                INCOME (EXPENSE):Interest
                income
            
            
            8,466
            
            
            5,348Interest
                and financing costs
            
            
            (798,852
            )
            
            (286,257
            )Other
                non-operating income
            
            
            33,980
            
            
            29,986NET
                LOSS
            
            $
            (4,581,903
            )
            $
            (1,142,651
            )NET
                LOSS PER COMMON SHARE, BASIC AND DILUTED:Net
                loss applicable to common shareholders
            
            $
            (.62
            )
            $
            (1.22
            )Weighted
                average shares of common stock outstanding, basic and
                diluted
            
            
            7,442,046
            
            
            936,167




**See
        accompanying notes to the condensed consolidated financial
        statements.**


3





**GENERAL
      ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (UNAUDITED)**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007**






****
              ****
              ****
              **Preferred
                  Stock**
              ****
              **Additional**
              ****
              ****
              ****
              ****
              ********
              ****
              **Common
                  Stock**
              ****
              **Series
                  B**
              ****
              **Paid-in**
              ****
              **Accumulated**
              ****
              ****
              ********
              ****
              **Shares**
              ****
              **Amount**
              ****
              **Shares**
              ****
              **Amount**
              ****
              **Capital**
              ****
              **Deficit**
              ****
              **Total**Balance,
                  January 1, 2007
              
              
              5,920,408
              
              $
              5,920
              
              
              2,480,500
              
              $
              2,481
              
              $
              33,430,095
              
              $
              (33,292,361
              )
              $
              146,135Issuance
                  of common stock for cash
              
              
              1,156
              
              
              1
              
              
              
              
              
              
              
              
              1,887
              
              
              
              
              
              1,888Issuance
                  of common stock on conversion of preferred stock
              
              
              2,067,106
              
              
              2,067
              
              
              (2,480,500
              )
              
              (2,481
              )
              
              414
              
              
              
              
              
              -Issuance
                  of common stock on conversion of accrued expenses
              
              
              377,308
              
              
              378
              
              
              
              
              
              
              
              
              451,224
              
              
              
              
              
              451,602Issuance
                  of common stock on conversion of notes payable to related
                  entity
              
              
              624,712
              
              
              625
              
              
              
              
              
              
              
              
              749,022
              
              
              
              
              
              749,647Issuance
                  of common stock for settlement of payable to related
                  entity
              
              
              184,874
              
              
              185
              
              
              
              
              
              
              
              
              219,815
              
              
              
              
              
              220,000Issuance
                  of common stock pursuant to advisory agreement
              
              
              426,500
              
              
              426
              
              
              
              
              
              
              
              
              507,109
              
              
              
              
              
              507,535Issuance
                  of common stock on conversion of interest on notes payable
              
              
              165,083
              
              
              165
              
              
              
              
              
              
              
              
              196,607
              
              
              
              
              
              196,772Valuation
                warrants
                issued to related entity as inducement to convert debt toequity
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              162,932
              
              
              
              
              
              162,932Valuation
                  expense on modification of warrant terms with related
                  entity
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              136,082
              
              
              
              
              
              136,082Stock
                  compensation cost for value of vested options
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              489,269
              
              
              
              
              
              489,269Valuation
                  of warrants issued in connection with advisory fee
                  agreement
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              357,750
              
              
              
              
              
              357,750Valuation
                  of warrants issued in connection with conversion of debt
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              62,163
              
              
              
              
              
              62,163Valuation
                  of warrants issued in connection with conversion of
                  interest
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              36,865
              
              
              
              
              
              36,865Valuation
                  of warrants issued for consulting services
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,248,645
              
              
              
              
              
              1,248,645Net
                  loss for the three months ended March 31, 2007
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (4,581,903
              )
              
              (4,581,903
              )Balance,
                  March 31, 2007
              
              
              9,767,147
              
              $
              9,767
              
              
              -
              
              $
              -
              
              $
              38,049,879
              
              $
              (37,874,264
              )
              $
              185,382






**See
      accompanying notes to consolidated financial statements.**




4




**GENERAL
      ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**






**Three
                  Months Ended******
              
              **March
                  31,******
              
              **2007**
              
              **2006**OPERATING
                  ACTIVITIESNet
                  Loss
              
              $
              (4,581,903
              )
              $
              (1,142,651
              )Adjustments
                  to reconcile net loss to cash used in operating activitiesDepreciation
                  and amortization
              
              
              172,073
              
              
              91,626Amortization
                  of discount on notes
              
              
              5,208
              
              
              5,208Fair
                  value of vested options
              
              
              489,269
              
              
              47,439Issuance
                  of warrants and common shares for services
              
              
              2,294,104
              
              
              -Conversion
                  of accrued interest to common stock
              
              
              48,022
              
              
              -Amortization
                  of discount on convertible debt
              
              
              204,135
              
              
              99,104Amortization
                  of deferred financing fees
              
              
              62,476
              
              
              25,381Valuation
                  of warrants to induce conversion of notes payable
              
              
              118,840
              
              
              -Valuation
                  of warrants to induce conversion of interest payable
              
              
              99,029
              
              
              -Gain
                  on issuance of common shares for accounts payable
              
              
              
              
              
              (53,900
              )Changes
                  in assets and liabilities:Accounts
                  Receivable
              
              
              129,451
              
              
              1,351,963Prepaid
                  and other current assets
              
              
              (436,905
              )
              
              (94,374
              )Accounts
                  Payable
              
              
              (288,872
              )
              
              (1,348,365
              )Accrued
                  interest on convertible notes
              
              
              47,589
              
              
              29,962Accrued
                  expenses and other liabilities
              
              
              658,917
              
              
              122,494NET
                  CASH USED IN OPERATING ACTIVITIES
              
              
              (978,567
              )
              
              (866,113
              )INVESTING
                  ACTIVITIESAcquisition,
                  net of liabilities assumed
              
              
              -
              
              
              (1,500,000
              )Increase
                  in deposits and restricted cash
              
              
              (353,992
              )
              
              (5,348
              )Additions
                  to property and equipment
              
              
              (115,512
              )
              
              (31,784
              )NET
                  CASH USED IN INVESTING ACTIVITIES
              
              
              (469,504
              )
              
              (1,537,132
              )FINANCING
                  ACTIVITIESNet
                  advances (payments) from line of credit
              
              
              -
              
              
              (1,094,780
              )Net
                  advances from notes payable - financing agreement
              
              
              (230,692
              )Advances
                  from related parties
              
              
              1,241,933
              
              
              50,000Payment
                  of notes payable
              
              
              (52,625
              )
              
              (24,741
              )Proceeds
                  from issuance of notes
              
              
              -
              
              
              4,302,170Proceeds
                  from issuance of common stock
              
              
              1,888
              
              
              -Deferred
                  financing fees
              
              
              -
              
              
              (430,930
              )Escrow
                  to former lender
              
              
              -
              
              
              (250,000
              )NET
                  CASH PROVIDED BY FINANCING ACTIVITIES
              
              
              960,504
              
              
              2,551,719INCREASE
                  (DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              (487,567
              )
              
              148,474Cash
                  and cash equivalents at beginning of period
              
              
              618,654
              
              
              47,995CASH
                  AND CASH EQUIVALENTS AT END OF PERIOD
              
              $
              131,087
              
              $
              196,469SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:Cash
                  paid for:Interest
                  Expense
              
              $
              230,949
              
              $
              78,123
   **(continued)**
  **See
            accompanying notes to the condensed consolidated financial
            statements.**
  5


**GENERAL
      ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**




(CONTINUED)






**Three
                Months Ended******
            
            **March
                31,******
            
            **2007**
            
            **2006**SUPPLEMENTAL
                DISCLOSURE OF NON - CASH INVESTING AND FINANCING
                ACTIVITIES:Value
                of warrants issued to lenders recorded as debt discount
            
            $
            -
            
            $
            1,191,262Value
                of beneficial conversion feature of notes issued recorded as debt
                discount
            
            
            -
            
            
            932,168Valuation
                of warrants issued to advisors recorded as financing costs
            
            
            -
            
            
            197,723Conversion
                of related party debt to common stock
            
            
            969,647
            
            
            110,000Conversion
                of investor interest to common stock
            
            
            148,750
            
            
            -Issuance
                of common stock for financing costs
            
            
            -
            
            
            210,000Deferred
                financing cost included in payable to related party
            
            
            -
            
            
            75,000Issuance
                of capital lease obligations
            
            
            738,810
            
            
            -Conversion
                of accrued expenses to equity
            
            
            451,602
            
            
            -






**See
        accompanying notes to the condensed consolidated financial
        statements.**
  6


**GENERAL
      ENVIRONMENTAL MANAGEMENT, INC AND SUBSIDIARIES**


**NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**THREE
      MONTHS ENDED MARCH 31, 2007 AND 2006**


**(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.





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.





On
      January 29, 2007 a special meeting of the shareholders of the Company was held
      in Pomona, CA. 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 the
      effect of a one for thirty reverse stock split.




**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, 2006 filed with the
      Securities and Exchange Commission.




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




7





**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 $4,581,903 and utilized cash in operating activities of $978,567
      during the three months ended March 31,2007, and as of March 31,2007 the Company
      had current liabilities exceeding current assets by $2,261,256. 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 completion
      of the integration of an 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 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 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.




8





(c)
      Concentrations




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 three months ended March 31, 2007 and 2006, one customer accounted for
      24.5%
      and 12.3% of revenues, respectively. As of March 31, 2007 and December 31,
      2006,
      there was one customer that accounted for 27% and 22 % of accounts receivable,
      respectively.





(d)
      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.





(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 quarter ended March 31, 2007 and 2006 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 quarters
      ended
      March 31, 2007 and 2006.





At
      March
      31, 2007 and 2006, potentially dilutive securities consisted of convertible
      securities, outstanding common stock purchase warrants and stock options to
      acquire an aggregate of 8,700,371 shares and 4,569,194 shares,
      respectively.




9





(f)
      Stock
      Compensation Costs





The
      Company periodically issues stock options and warrants to employees and
      non-employees in non-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 EITF00-18 “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)
      Adoption Of New Accounting Policy





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 March 31,
      2007, the Company does not have a liability for unrecognized tax
      uncertainties.





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 March 31, 2007 the Company has no accrued
      interest or penalties related to uncertain tax positions.





(h)
      Recent Accounting Pronouncements





In
      September 2006, the FASB issued FAS No. 157 (“FAS 157”), “Fair
      Value Measurements,” which establishes a framework for measuring fair value in
      accordance with GAAP and expands disclosures about fair value measurements.
      FAS
      157 does not require any new fair value measurements but rather eliminates
      inconsistencies in guidance found in various prior accounting pronouncements.
      FAS 157 is effective for fiscal years beginning after November 15, 2007.
      The Company is currently evaluating the impact this standard will have on its
      consolidated financial condition, results of operations, cash flows or
      disclosures.





In
      February 2007, the Financial Accounting Standards Board (FASB) issued FASB
      Statement No. 159, “The Fair Value Option for Financial Assets and
      Financial Liabilities —Including an amendment of FASB Statement No. 115”
(FAS 159).  FAS 159, which becomes effective for the company on
      January 1, 2008, permits companies to choose to measure many financial
      instruments and certain other items at fair value and report unrealized gains
      and losses in earnings. Such accounting is optional and is generally to be
      applied instrument by instrument. The company does not anticipate that election,
      if any, of this fair-value option will have a material effect on its
      consolidated financial condition, results of operations, cash flows or
      disclosures.




10




In
      December 2006, the FASB issued a Staff Position (“FSP”) on EITF 00-19-2,
“Accounting for Registration Payment Arrangements (“FSP 00-19-2”).
      This FSP specifies that the contingent obligation to make future payments or
      otherwise transfer consideration under a registration payment arrangement,
      whether issued as a separate agreement or included as a provision of a financial
      instrument or other agreement, should be separately recognized and measured
      in
      accordance with SFAS No. 5, “Accounting for Contingencies.” If the transfer of
      consideration under a registration payment arrangement is probable and can
      be
      reasonably estimated at inception, the contingent liability under the
      registration payment arrangement is included in the allocation of proceeds
      from
      the related financing transaction (or recorded subsequent to the inception
      of a
      prior financing transaction) using the measurement guidance in SFAS No. 5.
      This
      FSP is effective immediately for registration payment arrangements and the
      financial instruments subject to those arrangements that are entered into or
      modified subsequent to the issuance of the FSP. For prior arrangements, the
      FSP
      is effective for financial statements issued for fiscal years beginning after
      December 15, 2006 and interim periods within those years. The Company does
      not
      believe the adoption of this FSP will have a material impact on its consolidated
      financial condition, results of operations, cash flows or disclosures.





**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 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. In consideration of the
      acquisition of the issued and outstanding common stock of K2M, the Company
      paid
      $1.5 million in cash to the stockholders of K2M. As a result of the agreement,
      K2M became a wholly-owned subsidiary of the Company.




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




**Three
                months**
              **ended**
              **March
                31,**
              **2006****Pro
                Forma****(Unaudited)**Net
                Sales
            
            $
            4,181,293Cost
                of Sales
            
            
            3,075,325Gross
                Profit
            
            
            1,105,968Operating
                Expenses
            
            
            1,917,081Operating
                Loss
            
            
            (811,113
            )Other
                Income/(Expense):Interest
                expense and amortization of deferred financing costs
            
            
            (288,165
            )Other
                non-operating income
            
            
            35,335NET
                LOSS
            
            $
            (1,063,943
            )Loss
                per weighted average share, basic and diluted
            
            $
            (1.14
            )




11




**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, 2007:





Rancho
                Cordova acquisition - permit
            
            $
            475,614Prime
                acquisition - customers
            
            
            400,422K2M
                acquisition - customers
            
            
            438,904K2M
                acquisition - permits
            
            
            27,090Accumulated
                amortization
            
            
            (172,970
            )$
            1,169,060





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 eleven years (Prime acquisition) or twelve years (K2M acquisition).


**5.**
              **RELATED
                  PARTY TRANSACTIONS**


During
      the three months ended March 31, 2007 the Company 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 also owns 14 % of the
      Company’s common stock
      at
      March 31, 2007.




During
      the three months ended March 31, 2007, the Company entered into a twelve month
      advisory agreement with GPP. The fees under the agreement consisted of an
      initial cash fee of $55,500, expenses of $35,000, the issuance of 426,500 shares
      of restricted common stock valued at $507,535 and the issuance of seven year
      warrants to purchase 450,000 shares of the Company’s common stock at $0.60 per
      share. The Company valued the warrants at $357,750 using a Black - Scholes
      option pricing model. For the Black - Scholes calculation, the Company assumed
      no dividend yield, a risk free interest rate of 4.78 %, expected volatility
      of
      33.17 % and an expected term for the warrants of 7 years. The Company also
      agreed to modify certain terms of two sets of warrants issued during 2006
      including the modification of the exercise price (from $1.20 per share to $
      0.60
      per share) and the life of the warrants (from 5.5 years to 6.5 years). The
      second set of warrants included the modification of the life of the warrants
      (from 1.75 years to 6.75 years). The Company valued the modification of these
      warrants as $136,082 which was based on the difference of the warrant before
      and
      after the modification. For the Black - Scholes calculation, the Company assumed
      no dividend yield, a risk free interest rate of 4.78 %, expected volatility
      of
      33.17 % and an expected term for the warrants of 6.5 and 6.75 years. The Company
      reflected an aggregate charge of $1,091,867 during the three months ended March
      31, 2006 relating to these transactions.




12





During
      the year ended December 31, 2006, GPP made unsecured advances to the Company
      utilizing assignable notes totaling $850,000. The proceeds were used for due
      diligence on a proposed capital raise and working capital until proceeds from
      the capital raise were received. The rate of interest on the assignable notes
      is
      10% per annum. As of December 31, 2006, $300,000 of the advance had been repaid,
      and $550,000 remained outstanding. During the quarter ended March 31, 2007,
      GPP
      made additional unsecured advances to the Company utilizing assignable notes
      totaling $1,180,000. With the approval of the Board of Directors, the Company
      offered holders of the assignable notes the ability to convert the notes to
      common stock at the existing fair value. During the three months ended March
      31,
      2007, $749,647 of these notes were converted to 624,712 shares of common stock.
      As an inducement to convert, the holders were issued 182,831 seven year warrants
      to purchase a number of shares equal to 30% of the number of shares they will
      receive upon conversion of the principal note amount due to them at an exercise
      price of $0.60. The Company valued the warrants at $118,840 using a Black -
      Scholes option pricing model and such cost was recognized as an expense during
      the three months ended March 31, 2007. For the Black - Scholes calculation,
      the
      Company assumed no dividend yield, a risk free interest rate of 4.78 %, expected
      volatility of 33.17 % and an expected term for the warrants of 7 years. As
      of
      March 31 2007, $1,048,695 of these amounts remain outstanding.





On
      March
      31, 2007 General Pacific Partners agreed to convert $220,000 of accrued advisory
      fees and expenses into 184,874 shares of common stock based upon the existing
      fair value of the Company’s common stock. As an inducement to convert, the
      Company issued GPP 55,462 seven year warrants to purchase common stock at $0.60.
      These warrants were valued at $44,092 using the Black - Scholes valuation model
      and such cost was recognized as an expense during the three months ended March
      31, 2007. For the Black - Scholes calculation, the Company assumed no dividend
      yield, a risk free interest rate of 4.78 %, expected volatility of 33.17 %
      and
      an expected term for the warrants of 7 years.





As
      of
      March 31, 2007 and December 31, 2006, the Company had $48,374 and $270,000
      respectively, in amounts payable to GPP for expenses related to advisory
      services and accrued interest.


**6.**
                **SECURED
                      FINANCING AGREEMENT**


Secured
      financing consists of the following notes payable to Laurus Master Fund at
      March
      31, 2007 and


December
      31,2006 :




**March
                  31,**
              
              **December
                  31,******
              
              **2007**
              
              **2006**(a)
                  Secured convertible Term Note
              
              $
              1,393,939
              
              $
              1,575,757Secured non-convertible Revolving Note
              
              
              3,067,291
              
              
              2,971,277(b)
                  Secured Short Term Note
              
              
              144,888
              
              
              289,776Valuation Discount
              
              
              (1,565,039
              )
              
              (1,769,174
              )3,041,079
              
              
              3,067,636Less
                  current portion
              
              
              (920,340
              )
              
              (1,017,048
              )Financing
                  agreement, net of current portion
              
              $
              2,120,739
              
              $
              2,050,588




(a)
      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 the
      Company 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 107,267 shares of our common stock at a price
      of
      $26.10 per share .
      The
      Company also agreed to pay out of the Loan proceeds $245,000 to Laurus Capital
      Management, LLC, the investment advisor to Laurus, and $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.




13




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 through February 25, 2009. The amount outstanding under
      this loan at March 31, 2007 was $1,393,939. 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 $25.50 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 make its best efforts to
      register all of the shares that are issuable upon conversion of the Note and
      exercise of the 107,267 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 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 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, 2007, the
      Company had outstanding borrowings of $3,067,291 against the line of
      credit.





The
      Company calculated that the fair value of the 107,267 warrants issued to Laurus
      as $1,224,657 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 3.68%,
      expected volatility of 109.33% and an expected term for the warrants of 7 years.
      The Company determined that the beneficial conversion feature of the convertible
      note approximated $932,168. The closing costs paid to Laurus of $326,193, the
      value of the warrants issued to the Laurus of $1,224,657 and the $898,774 of
      calculated beneficial conversion feature have been reflected by the Company
      as a
      valuation discount and offset to the face amount of the Notes and is being
      amortized to interest expense over the life of the loan based upon the effective
      interest method. During the three months ended March 31, 2007 the Company
      amortized $204,135 of this amount which is included in interest expense in
      the
      accompanying statement of operations.





In
      conjunction with the financing, the Company also incurred fees to various
      investment advisors that facilitated the transaction. These fees totaled
      $552,000, of which $210,000 was paid through the issuance of 8,236 shares of
      our
      common stock. In addition, the Company issued these finders warrants to purchase
      17,804 shares of common stock at a price of $26.10 per share. The Company
      calculated that the fair value of the warrants issued to the finders was
      $197,653 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 3.68%,
      expected volatility of 109.33% and an expected term for the warrants of 7
      years.





14





(b)
      On
      August 10, 2006 we entered into a series of agreements with Laurus Master Fund,
      Ltd. to provide acquisition funding. A summary of the terms of the agreements
      is
      contained in our 8K Report filed on August 14, 2006. Subsequently, we entered
      into a definitive agreement to acquire PCI on August 15, 2006; however, we
      were
      not able to raise the additional capital required through the sale of our
      securities nor were we able to complete the acquisition of PCI. In accordance
      with the terms of the agreements, the Note proceeds were returned to Laurus.
      The
      balance due to Laurus on the Note was $289,776. On December 5, 2006 we executed
      a Second Amended and Restated Secured Term Note in the principal sum of
      $289,776, with a maturity date of June 7, 2007. The note bears interest at
      prime
      plus 3 1⁄2% with monthly amortization payments of $48,296 per month, commencing on
      January 1, 2007. The balance on the note at March 31, 2007 was $
      144,888.




**7.**
                **INCOME
                      TAXES**


The
      Company's net deferred tax assets (using a federal corporate income rate of
      34%)
      consisted of the following at March 31, 2007.




**2007**Deferred
                tax asset, net operating loss
            
            $
            4,521,774Less
                valuation allowance
            
            
            (4,521,774
            )Net
                deferred tax asset
            
            $
            -




As
      of
      March 31, 2007, the Company had federal net operating loss carry forwards of
      approximately $13,299,335 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 March 31, 2007.





Reconciliation
      of the effective income tax rate to the United States statutory income tax
      rate
      for the years ended March 31, 2007 is as follows:





**2007**Tax
                expense at U.S. statutory income tax rate
            
            
            (34.0)
            %Increase
                in the valuation allowance
            
            
            34.0Effective
                rate
            
            
            -




15





**8.**
                  **STOCKHOLDERS’
                        EQUITY**


During
      the period September 1, 2006 to December 5, 2006, the Company raised capital
      and
      paid fees through the issuance of 2,480,500 units of Series B convertible
      preferred stock. These shares were convertible at the option of the Company
      into
      common shares at $1.20 per share. After approval by the shareholders of an
      increase in the authorized common shares in January 2007, the Company converted
      the Series B convertible preferred stock into 2,067,106 shares of common stock
      in accordance with their conversion terms.





During
      the three months ended March 31, 2007, Ascendiant Securities LLC, an advisor
      to
      the Company, agreed to convert $312,768 in advisory fees and expenses into
      260,641 shares of common stock based upon the fair value of the stock at the
      date of the agreement. In addition, a consultant to the Company agreed to
      convert $138,834 of accrued services performed in conjunction with acquisitions
      and advisory services performed during 2006 into 116,667 shares of common stock
      based upon the fair value of the stock at the date of the
      agreement.





During
      the three months ended March 31, 2007, holders of convertible notes issued
      during 2004 and 2006, agreed to convert $196,772 in accrued interest into
      165,083 shares of common stock based upon the fair value of the stock at the
      date of the agreement.




**9.**
                    **STOCK
                          OPTIONS AND WARRANTS**


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.




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,
                January 1, 2007
            
            
            67,067
            
            $
            28.20
            
            
            6.48Options
                granted
            
            
            4,397,500
            
            $
            1.19
            
            
            10.00Options
                exercised
            
            
            -
            
            
            -
            
            
            -Options
                cancelled
            
            
            -
            
            
            -
            
            
            -Options,
                March 31, 2007
            
            
            4,464,567
            
            $
            1.60
            
            
            9.95Options
                exercisable, March 31,2007
            
            
            1,148,833
            
            $
            2.41
            
            
            9.83





The
      options had no intrinsic value at March 31, 2007.




16





For
      the
      three months ended March 31, 2007 and 2006, the value of options vesting during
      the period was $489,269 and $ 47,439 respectively, and has been reflected as
      compensation cost. As of March 31, 2007, the Company has unvested options valued
      at $1,542,723 which will be reflected as compensation cost over the estimated
      remaining vesting period of 3 years.





**WARRANTS**




During
      the quarter ended March 31, 2007, the Board of Directors awarded 2,085,000
      warrants to purchase common stock of the Company to various individuals and
      consultants. These awards included 650,000 warrants to the Chairman of the
      Board, 500,000 warrants to the Chief Financial Officer, 35,000 warrants to
      the
      Chairman of the Audit committee, 400,000 warrants to Revete Capital Partners,
      LLC, a consultant to the Company and 500,000 shares to Extend Services Pty
      Ltd.,
      also a consultant to the Company. The warrants are exercisable at $1.19 per
      share and have a 7 year life. The value of these warrants was calculated at
      $1,248,645 and was reflected as compensation cost and consulting fees in the
      three months ended March 31, 2007. For the Black - Scholes calculation, the
      Company assumed no dividend yield, a risk free interest rate of 4.78 %, expected
      volatility of 33.17 % and an expected term for the warrants of 7 years.





During
      the quarter ended March 31, 2007, the Company issued 688,293 warrants to General
      Pacific Partners, LLC in connection with an advisory agreement, the conversion
      of fees from a previous advisory agreement and as an inducement to convert
      several assignable notes. (see Note 5)





During
      the quarter ended March 31, 2007 the Company issued 164,582 warrants valued
      at
      $36,865 to three stockholders in connection with the conversion of the accrued
      interest on three notes payable. The company also issued 78,193 warrants valued
      at $62,163 to Ascendiant Securities LLC as an incentive to convert their fees
      to
      equity. The Company valued the warrants using a Black-Scholes option pricing
      model and reflected the value of the warrants as additional expense during
      the
      three months ended March 31, 2007. For the Black-Scholes calculation, the
      Company assumed no dividend yield, a risk free interest rate of 4.78 %, expected
      volatility of 33.17 % and an expected term for the warrants of 7
      years.




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





Warrants
                outstanding, January 1, 2007
            
            
            1,183,989Warrants
                granted
            
            
            3,016,068Warrants
                exercised
            
            
            -Warrants
                expired
            
            
            (24,742
            )Warrants
                outstanding, March 31, 2007
            
            
            4,175,315




17




**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 2007.




**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.




18





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.





The
      accompanying consolidated statements have been prepared assuming that the
      Company will continue as a going concern. The company realized a net loss of
      $4,581,903 and utilized cash in operating activities of $978,567 during the
      three months ended March 31, 2007. The Company currently has a working capital
      deficit, and the amount current liabilities exceed current assets, of $2,261,256
      as of March 31, 2007. 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.






**COMPARISON
      OF THREE MONTHS ENDED MARCH 31, 2007 AND 2006**





**Revenues**




Total
      revenues were $6,317,380 for the three months ended March 31, 2007, representing
      an increase of $2,669,462 or 73% compared to the three months ended March 31,
      2006. The increase in revenue can be attributed to improved market penetration
      in the Western United States, an increase in revenues in the Enviroconstruction
      market sector and the acquisition of K2M in March 2006.





**Cost
      of Revenues**





Cost
      of
      revenues for the three months ended March 31, 2007 were $5,076,337 or 80% of
      revenue, as compared to $2,788,369 or 76% of revenue for the three months ended
      March 31, 2006. The cost of revenues includes disposal costs, transportation,
      outside labor and operating supplies. The change in the cost of revenue in
      comparison to the prior year is primarily due to lower than anticipated margins
      on first quarter Enviroconstruction projects which were partially offset by
      higher margin business from GEM Mobile Treatment Services.





**Operating
      Expenses**





Operating
      expenses for the three months ended March 31, 2007 were $5,066,540 or 80% of
      revenue as compared to $1,751,277 or 48% of revenue for the same period in
      2006.
      Operating expenses include sales and administrative salaries and benefits,
      insurance, rent, legal, accounting and other professional fees. The quarter
      includes a non-cash charge for consulting and advisory fees of $2,294,104
      originating from the issuance of common stock and warrants. Also during the
      quarter, the Company created the 2007 Stock Option plan (see Note 9). In
      accordance with SFAS 123, the fair value of vested options are charged to
      expense during the period vested. Since 25% of the options issued under the
      new
      plan vested at grant date, a non-cash charge of $479,616 was made to operating
      expenses.




19




**Depreciation
      and Amortization**





Depreciation
      and amortization expenses for the three months ended March 31, 2007 were
      $172,073, or 2.7% of revenue, as compared to $91,626, or 2.5% of revenue for
      the
      same period in 2006. The increase in expenses is related to the increase in
      property, plant and equipment and the increase in intangibles related to the
      acquisition made during the quarter ended March 31, 2006.





**Interest
      Expense**





Interest
      expense for the three months ended March 31, 2007 were $798,852 or 12.6% of
      revenue, as compared to $286,257 or 7.8% of revenue for the same period in
      2006.
      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 $111,755 resulting from the amortization of valuation discounts on assignable
      notes, $204,135 resulting from the amortization of valuation discounts on the
      Laurus transaction, and $62,476 resulting from the write off of deferred fees
      related to the Laurus notes payable.





**Other
      Non-Operating Income**





The
      Company had other non-operating income for the three months ended March 31,
      2007
      of $33,980 or
      0.5 %
      of revenue, and $29,986 for the same period in 2006. Non-Operating income for
      the first quarter of 2007 consisted of continuing rental income from the lease
      of an office building in Rancho Cordova, California.





**Net
      Loss**





The
      net
      loss for the three months ended March 31, 2007 was $4,581,903 or 72.5% of
      revenue as compared to a loss of $1,142,651, or 31.3% of revenue for the same
      period in 2006. 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. It also includes non-cash charges
      described above related to convertible debt instruments and the use of common
      stock and warrants
      to compensate employees, advisors and consultants.




**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, 2007 was $978,567 as compared to $866,113 for the same period in
      2006.





**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
      $4,581,903 and utilized cash in operating activities of $978,567 during the
      three months ended March 31, 2007. As of March 31, 2007 the Company had current
      liabilities exceeding current assets by $2,261,256. These matters raise
      substantial doubt about the Company’s ability to continue as a going
      concern.




20





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 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 Three Months Ended March 31, 2007**





Operating
      activities for the three months ended March 31, 2007 used $978,567 in cash.
      Accounts receivable, net of allowances for bad debts, decreased $129,451 as
      of
      March 31, 2007 and accounts payable were reduced by $288,872.  Depreciation and amortization for the quarter totaled $172,073. The net loss
      of
      $4,581,903 included a number of non-cash expenses incurred by the Company
      through the issuance of common stock and the issuance of warrants to purchase
      common stock (see Note 8 to the Financial Statements). These items included
      $489,269 which represents the fair value of vested options on the 2005 and
      the
      2007 stock option plans, $204,135 representing discount amortization on
      convertible debt, $62,476 representing amortization of deferred financing fees
      and $2,294,104 representing the value of warrants and common shares issued
      for
      consulting and advisory services. Other non-cash expenses totaled $271,099.
      Prepaid expenses used $436,905 in cash for the payment of insurance premiums
      that will be amortized in 2007. Accrued expenses increased by
      $207,315.





The
      Company used cash for investment in plant , property and equipment and deposits
      totaling approximately $469,504 for the three months ended March 31, 2007.
      Deposits increased based on additional collateral due for the expanded permit
      at
      our facility in Rancho Cordova, California. Capital expenditures increased
      based
      on the expansion of our transportation assets during the first
      quarter.





The
      Company raised $960,504 from financing activity net of repayments of debt,
      through the issuance of notes and common stock, execution of capital leases
      and
      advances from related parties through the issuance of assignable notes. These
      increases were offset by a decrease in the outstanding balance of the Company’s
      secured non-convertible Revolving Note (see Note 6 to the Financial
      Statements).





These
      activities resulted in a $487,567 reduction in cash balances from year end
      December 31, 2006 to the end of the quarter March 31, 2007.




**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.




21




**(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
      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.





22




**RECENT
      ACCOUNTING PRONOUNCEMENTS**





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 March 31,
      2007, 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 March 31, 2007, the Company has no accrued interest or
      penalties related to uncertain tax positions.





In
      September 2006, the FASB issued FAS No. 157 (“FAS 157”), “Fair
      Value Measurements,” which establishes a framework for measuring fair value in
      accordance with GAAP and expands disclosures about fair value measurements.
      FAS
      157 does not require any new fair value measurements but rather eliminates
      inconsistencies in guidance found in various prior accounting pronouncements.
      FAS 157 is effective for fiscal years beginning after November 15, 2007.
      The Company is currently evaluating the impact this standard will have on its
      (consolidated) financial condition, results of operations, cash flows or
      disclosures.





In
      February 2007, the Financial Accounting Standards Board (FASB) issued FASB
      Statement No. 159, “The Fair Value Option for Financial Assets and
      Financial Liabilities — Including an amendment of FASB Statement
      No. 115” (FAS 159).  FAS 159, which becomes effective for the
      company on January 1, 2008, permits companies to choose to measure many
      financial instruments and certain other items at fair value and report
      unrealized gains and losses in earnings. Such accounting is optional and is
      generally to be applied instrument by instrument. The company does not
      anticipate that election, if any, of this fair-value option will have a material
      effect on its (consolidated) financial condition, results of operations, cash
      flows or disclosures.





In
      December 2006, the FASB issued a Staff Position (“FSP”) on EITF 00-19-2,
“Accounting for Registration Payment Arrangements (“FSP 00-19-2”). This FSP
      specifies that the contingent obligation to make future payments or otherwise
      transfer consideration under a registration payment arrangement, whether issued
      as a separate agreement or included as a provision of a financial instrument
      or
      other agreement, should be separately recognized and measured in accordance
      with
      SFAS No. 5, “Accounting for Contingencies.” If the transfer of consideration
      under a registration payment arrangement is probable and can be reasonably
      estimated at inception, the contingent liability under the registration payment
      arrangement is included in the allocation of proceeds from the related financing
      transaction (or recorded subsequent to the inception of a prior financing
      transaction) using the measurement guidance in SFAS No. 5. This FSP is effective
      immediately for registration payment arrangements and the financial instruments
      subject to those arrangements that are entered into or modified subsequent
      to
      the issuance of the FSP. For prior arrangements, the FSP is effective for
      financial statements issued for fiscal years beginning after December 15, 2006
      and interim periods within those years. The Company does not believe the
      adoption of this FSP will have a material impact on its (consolidated) financial
      condition, results of operations, cash flows or disclosures.




23





**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, 2007. 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.





24





**PART
      II - OTHER INFORMATION**




**Item
                1.**
            **Legal
                Proceeding -**No
                litigation other than that in the normal course of
                business





**Item
                2.**
            **Unregistered
                   Sales of Securities and Use of Proceeds -******





**Item
                3.**
            **Defaults
                upon Senior Securities -**None





**Item
                4.**
            **Submission
                of Matters to a Vote of Security
                Holders**




On
      January 29, 2007 a special meeting of the shareholders of the Company was held
      in Pomona, CA. 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 the
      effect of a one for thirty reverse stock split.


**Item
                  5.**
              **Other
                  Information**-
                  None
  **Item
                      6.**
                  **Exhibits
                      and Reports**
  **(a)**
                      **Exhibits**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
                          12/23/20042.2
                      Notification
                          of the completion of the acquisition effective 2/14/05;
                          incorporated by
                          reference previously filed with the commission on form
                          8K on
                          2/18/0522.1
                      Published
                          report regarding matters submitted to a vote of security
                          holders;
                          incorporated by reference filed on PRE 14A filed with the
                          commission on
                          2/22/0522.2
                      Amendments
                          to Articles of Incorporation or Bylaws; incorporated by
                          reference and
                          filed with the commission on 3/23/0531.1
                      CEO
                          Certification - attached31.2
                      CFO
                        Certification - attached32.1
                      CEO
                          Certification - attached32.2
                      CFO
                        Certification - attached**(b)**
                      **Reports
                        on Form 8-K**1.
                      Reverse
                          Stock Split of the Company’s Common Stock; filed with the commission on
                          1/03/07
   25








**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**Date: May
              21, 2007
            By:
            /s/ Timothy
              J. KoziolTimothy
                J. Koziol,President,
                CEO and Chairman of the Board of
                Directors




Date: May
              21, 2007
            By:
            /s/ Brett
              M.
              ClarkBrett
              M. ClarkVice
                President of Finance, Chief Financial
                Officer






26