**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: **September
        30, 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 September 30, 2007$0.001
                PAR VALUE COMMON STOCK
            
            12,403,082 SHARES









**GENERAL
        ENVIRONMENTAL MANAGEMENT, INC.**
 **QUARTERLY
        REPORT ON FORM 10QSB**
 **FOR
        THE FISCAL QUARTER ENDED SEPTEMBER 30, 2007**
 
 **TABLE
        OF CONTENTS**
  **Page****Part
                  1**
              **Financial
                  Information**Item
                  1
              Financial
                  Statements (Unaudited)Condensed
                  Consolidated Balance Sheets  as of September 30, 2007
                  (Unaudited)and
                  December 31, 2006
              3Condensed
                  Unaudited Consolidated Statements of Operations for the Three Months
                  and
                  Nine Months ended September 30, 2007 and 2006
              4Condensed
                  Unaudited Consolidated Statement of Stockholders’ Equity for the
                  Nine  Months Ended  September 30, 2007
              5Condensed
                  Unaudited Consolidated Statements of Cash Flows for the Nine Months
                  Ended
                  September 30, 2007 and 2006
              6Notes
                  to the Unaudited Condensed Consolidated Financial
                  Statements
              8Item
                  2
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operation
              20Item
                  3
              Controls
                  and Procedures
              28**Part
                  II**
              **Other
                  Information**Item
                  1
              Legal
                  Proceedings
              29Item
                  2
              Changes
                  in Securities
              29Item
                  3
              Defaults
                  Upon Senior Securities
              29Item
                  4
              Submission
                  of Matters to a Vote of Security Holders
              29Item
                  5
              Other
                  Information
              29Item
                  6
              Exhibits
                  and Reports on Form 8K
              29Signatures
              30C.E.O
                  Certification
              31C.F.O
                  Certification
              32
  2
  **PART
        1 - FINANCIAL INFORMATION**
 
 **Item
        1.  Financial Statements.**
  **GENERAL
        ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED BALANCE SHEETS**
  **September
                  30,**
              ****
              ****
              **December
                  31,**
              ********
              ****
              **2007**
              ****
              ****
              **2006**(Unaudited)**ASSETS**CURRENT
                  ASSETS:Cash
              
              $
              73,554
              
              
              $
              618,654Accounts
                receivable, net of allowance for doubtful accountsof
                  $261,781 and $285,000, respectively
              
              
              7,098,274
              
              
              
              5,540,069Prepaid
                  expenses and other current assets
              
              
              571,034
              
              
              
              428,018Total
                  Current Assets
              
              
              7,742,862
              
              
              
              6,586,741Property
                and Equipment – net of accumulated depreciation$1,742,029
                  and $1,248,088, respectively
              
              
              3,924,968
              
              
              
              2,918,690Restricted
                  cash
              
              
              1,175,772
              
              
              
              911,168Intangibles,
                  net
              
              
              1,125,634
              
              
              
              1,191,217Deferred
                  financing fees
              
              
              104,215
              
              
              
              291,529Deposits
              
              
              296,542
              
              
              
              147,742Goodwill
              
              
              946,119
              
              
              
              946,119TOTAL
                  ASSETS
              
              $
              15,316,112
              
              
              $
              12,993,206
 **LIABILITIES
                  AND STOCKHOLDERS’ EQUITY**CURRENT
                  LIABILITIES:Accounts
                  payable
              
              $
              4,336,219
              
              
              $
              3,755,264Accrued
                  expenses
              
              
              2,178,996
              
              
              
              2,149,178Accrued
                  disposal costs
              
              
              810,156
              
              
              
              593,575Payable
                  to related party
              
              
              65,325
              
              
              
              824,783Deferred
                  rent
              
              
              35,194
              
              
              
              25,150Current
                  portion of financing agreement
              
              
              778,390
              
              
              
              1,017,048Current
                  portion of long term obligations
              
              
              263,241
              
              
              
              125,432Current
                  portion of convertible notes payable
              
              
              520,166
              
              
              
              -Total
                  Current Liabilities
              
              
              8,987,687
              
              
              
              8,490,430LONG-TERM
                  LIABILITIES :Financing
                  agreements, net of current portion
              
              
              3,746,474
              
              
              
              2,050,588Long
                  term obligations, net of current portion
              
              
              2,383,286
              
              
              
              1,704,892Convertible
                  Notes payable
              
              
              -
              
              
              
              601,161Total
                  Long-Term Liabilities
              
              
              6,129,760
              
              
              
              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  sharesissued
                  and outstanding
              
              
              -
              
              
              
              2,481Common
                stock, $.001 par value, 1,000,000,000 shares authorized,12,403,082
                  and 5,920,408 shares issued and outstanding
              
              
              12,403
              
              
              
              5,920Additional
                  paid in capital
              
              
              48,297,828
              
              
              
              33,430,095Accumulated
                  deficit
              
              
              (48,111,566
              )
              
              
              (33,292,361
              )Total
                  Stockholders' Equity
              
              
              198,665
              
              
              
              146,135TOTAL
                  LIABILITIES & STOCKHOLDERS’ EQUITY
              
              $
              15,316,112
              
              
              $
              12,993,206
  **See
          accompanying notes to condensed consolidated financial
          statements.**
  3
  **GENERAL
        ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS**
 **(UNAUDITED)**
  **Nine
                  months ended**
              
              
              **Three months
                  ended******
              
              **September
                  30,**
                **2007**
              
              
              **September
                  30,**
                **2006**
              
              
              **September
                  30,**
                **2007**
              
              
              **September
                  30,**
                **2006**REVENUES
              
              $
              21,415,043
              
              
              $
              15,019,548
              
              
              $
              8,555,831
              
              
              $
              7,021,791COST
                  OF REVENUES
              
              
              17,023,247
              
              
              
              11,316,559
              
              
              
              6,878,235
              
              
              
              5,189,863GROSS
                  PROFIT
              
              
              4,391,796
              
              
              
              3,702,989
              
              
              
              1,677,596
              
              
              
              1,831,928OPERATING
                  EXPENSES
              
              
              10,782,081
              
              
              
              6,532,789
              
              
              
              3,034,039
              
              
              
              2,590,040OPERATING
                  LOSS
              
              
              (6,390,285
              )
              
              
              (2,829,800
              )
              
              
              (1,356,443
              )
              
              
              (758,112
              )OTHER
                  INCOME (EXPENSE):Interest
                  income
              
              
              30,056
              
              
              
              15,610
              
              
              
              10,641
              
              
              
              3,939Interest
                  and financing costs
              
              
              (1,815,131
              )
              
              
              (3,174,233
              )
              
              
              (574,998
              )
              
              
              (2,277,346
              )Costs
                  to induce conversion of related party  debt
              
              
              (6,737,413
              )
              
              
              -
              
              
              
              (3,189,726
              )
              
              
              -Other
                  non-operating income
              
              
              93,568
              
              
              
              79,830
              
              
              
              25,329
              
              
              
              27,018Net
                  Loss
              
              
              (14,819,205
              )
              
              
              (5,908,593
              )
              
              
              (5,085,197
              )
              
              
              (3,004,501
              )Preferred
                  stock dividends
              
              
              -
              
              
              
              (21,871
              )
              
              
              -
              
              
              
              (5,000
              )Modification
                  of terms of Series A Convertible preferred stock upon
                  conversion
              
              
              -
              
              
              
              (522,500
              )
              
              
              -
              
              
              
              (505,629
              )Beneficial
                  conversion feature on issuance of Series B convertible preferred
                  stock
              
              
              -
              
              
              
              (955,040
              )
              
              
              -
              
              
              
              (955,040
              )Net
                  Loss applicable to common stock holders
              
              $
              (14,819,205
              )
              
              $
              (7,408,004
              )
              
              $
              (5,085,197
              )
              
              $
              (4,470,170
              )Net
                  loss per common  share, basic and diluted
              
              $
              (1.53
              )
              
              $
              (.19
              )
              
              $
              (.43
              )
              
              $
              (.07
              )Weighted
                    average shares of common stock outstanding,
                    basic and diluted
              
              
              9,661,979
              
              
              
              39,269,845
              
              
              
              11,737,377
              
              
              
              61,222,046
  **See
        accompanying notes to the condensed consolidated financial
        statements.**
  4
  **GENERAL
        ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)**
 **FOR
        THE NINE  MONTHS ENDED SEPTEMBER  30,
        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 conversionof
                  preferred stock
              
              
              2,067,106
              
              
              
              2,067
              
              
              
              (2,480,500
              )
              
              
              (2,481
              )
              
              
              414
              
              
              
              -
              
              
              
              -Issuance
                of common stock on conversionof
                  debt
              
              
              377,308
              
              
              
              378
              
              
              
              -
              
              
              
              -
              
              
              
              451,224
              
              
              
              -
              
              
              
              451,602Issuance
                of common stock on conversionof
                  notes payable
              
              
              3,252,281
              
              
              
              3,252
              
              
              
              -
              
              
              
              -
              
              
              
              8,602,850
              
              
              
              -
              
              
              
              8,606,102Issuance
                of common stock for settlementof
                  payable to related entity
              
              
              184,874
              
              
              
              185
              
              
              
              -
              
              
              
              -
              
              
              
              219,815
              
              
              
              -
              
              
              
              220,000Issuance
                of common stock pursuant toadvisory
                  agreement
              
              
              426,500
              
              
              
              427
              
              
              
              -
              
              
              
              -
              
              
              
              507,108
              
              
              
              -
              
              
              
              507,535Issuance
                of common stock on conversionof
                  interest on notes payable
              
              
              165,083
              
              
              
              165
              
              
              
              -
              
              
              
              -
              
              
              
              196,607
              
              
              
              -
              
              
              
              196,772Issuance
                of common stock for consultingservices
              
              
              8,251
              
              
              
              8
              
              
              
              -
              
              
              
              -
              
              
              
              22,682
              
              
              
              -
              
              
              
              22,690Issuance
                of common stock on exercise ofstock
                  options
              
              
              119
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              119
              
              
              
              -
              
              
              
              119Shares
                  returned to treasury
              
              
              (4
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Valuation  of
                warrants issued  to related entityas
                  inducement to convert debt to equity
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,078,103
              
              
              
              -
              
              
              
              2,078,103Valuation
                expense on modification of warrantterms
                  with related entity
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              136,082
              
              
              
              -
              
              
              
              136,082Stock
                compensation cost for value of vestedoptions
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              758,291
              
              
              
              -
              
              
              
              758,291Valuation
                of warrants issued in connectionwith
                  advisory fee agreement
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              357,750
              
              
              
              -
              
              
              
              357,750Valuation
                of warrants issued in connectionwith
                  conversion of debt
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              62,163
              
              
              
              -
              
              
              
              62,163Valuation
                of warrants issued in connectionwith
                  conversion of interest
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              36,865
              
              
              
              -
              
              
              
              36,865Valuation
                of warrants issued in connectionwith
                  lease
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              187,128
              
              
              
              -
              
              
              
              187,128Valuation
                of warrants issued for consultingservices
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,248,645
              
              
              
              -
              
              
              
              1,248,645Net
                loss for  the nine  months endedSeptember  30,
                  2007
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (14,819,205
              )
              
              
              (14,819,205
              )Balance,
                  September  30, 2007
              
              
              12,403,082
              
              
              $
              12,403
              
              
              
              -
              
              
              $
              -
              
              
              $
              48,297,828
              
              
              $
              (48,111,566
              )
              
              $
              198,665
  **See
        accompanying notes to consolidated financial statements.**
  5
  **GENERAL
        ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **(UNAUDITED)**
 
 **Nine Months
                  Ended**
              ********
              ****
              **September 30,**
              ********
              ****
              **2007**
              ****
              ****
              **2006**OPERATING
                  ACTIVITIESNet
                  Loss
              
              $
              (14,819,205
              )
              
              $
              (5,908,593
              )Adjustments
                  to reconcile net loss to cash used in operating activitiesDepreciation
                  and amortization
              
              
              559,525
              
              
              
              471,168Amortization
                  of discount on notes
              
              
              21,863
              
              
              
              81,735Fair
                  value of vested options
              
              
              758,291
              
              
              
              172,828Issuance
                  of warrants for services
              
              
              1,606,395
              
              
              
              1,489,429Common
                  stock issued for services
              
              
              530,225
              
              
              
              -Amortization
                  of discount on convertible debt
              
              
              612,405
              
              
              
              541,860Amortization
                  of deferred financing fees
              
              
              187,314
              
              
              
              177,655Costs
                  to induce conversion of related party debt
              
              
              6,737,413
              
              
              
              -Warrants
                  issued to modify  debt
              
              
              279,202
              
              
              
              -Accrued
                  interest on notes payable
              
              
              67,755
              
              
              
              (53,900
              )Changes
                  in assets and liabilities:Accounts
                  Receivable
              
              
              (1,558,205
              )
              
              
              (973,388
              )Prepaid
                  and other current assets
              
              
              (143,016
              )
              
              
              (173,259
              )Accounts
                  Payable
              
              
              580,955
              
              
              
              (361,637
              )Accrued
                  interest on  notes
              
              
              -
              
              
              
              370,431Payable
                  to related party
              
              
              7,999
              
              
              
              (334,832
              )Accrued
                  expenses and other liabilities
              
              
              756,067
              
              
              
              864,194NET
                  CASH USED IN OPERATING ACTIVITIES
              
              
              (3,815,017
              )
              
              
              (3,636,309
              )INVESTING
                  ACTIVITIESAcquisition,
                  net of liabilities assumed
              
              
              -
              
              
              
              (1,500,000
              )Increase
                  in deposits for acquisitions
              
              
              -
              
              
              
              (24,910,510
              )Increase
                  in deferred fees - acquisitions
              
              
              -
              
              
              
              (1,697,057
              )Increase
                  in deposits and restricted cash
              
              
              (413,404
              )
              
              
              (318,430
              )Additions
                  to property and equipment
              
              
              (518,893
              )
              
              
              (224,630
              )NET
                  CASH USED IN INVESTING ACTIVITIES
              
              
              (932,297
              )
              
              
              (28,650,627
              )FINANCING
                  ACTIVITIESNet
                  advances (payments) from line of credit
              
              
              -
              
              
              
              (1,094,780
              )Net
                  advances from notes payable – financing agreement
              
              
              844,822
              
              
              
              -Advances
                  from related parties
              
              
              3,355,243
              
              
              
              745,613Issuance
                  of notes payable
              
              
              -
              
              
              
              128,522Payment
                  of notes payable
              
              
              142
              
              
              
              (79,337
              )Proceeds
                  from issuance of acquisition notes
              
              
              -
              
              
              
              23,810,000Proceeds
                  from issuance of  notes
              
              
              -
              
              
              
              4,142,223Proceeds
                  from issuance of common stock
              
              
              1,888
              
              
              
              955,040Proceeds
                  from issuance of convertible notes
              
              
              -
              
              
              
              4,753,277Proceeds
                  from exercise of warrants
              
              
              119
              
              
              
              -Deferred
                  financing fees
              
              
              -
              
              
              
              (426,550
              )NET
                  CASH PROVIDED BY FINANCING ACTIVITIES
              
              
              4,202,214
              
              
              
              32,934,008INCREASE
                  (DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              (545,100
              )
              
              
              647,072Cash
                  at beginning of period
              
              
              618,654
              
              
              
              47,995CASH
                  AT END OF PERIOD
              
              $
              73,554
              
              
              $
              695,067SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:Cash
                  paid for:Interest
                  Expense
              
              $
              669,811
              
              
              $
              242,549
  See
        accompanying notes to consolidated
        financial statements.
  6
  **GENERAL
        ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)**
 **(UNAUDITED)**
 
 **Nine Months
                  Ended**
              ********
              ****
              **September 30,**
              ********
              ****
              **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
              
              
              3,902,700
              
              
              
              110,000Conversion
                  of investor interest to common stock
              
              
              196,772
              
              
              
              -Issuance
                  of common stock for financing costs
              
              
              -
              
              
              
              210,000Deferred
                  financing cost included in payable to related party
              
              
              -
              
              
              
              75,000Issuance
                  of capital lease obligations
              
              
              981,327
              
              
              
              -Value
                  of warrants and beneficial conversion feature on convertible
                  notes
              
              
              -
              
              
              
              955,039Conversion
                  of Preferred stock to common stock
              
              
              -
              
              
              
              212,628Valuation
                  of warrants allocated to deferred fees
              
              
              451,602
              
              
              
              282,306Modification
                  of Series A preferred stock
              
              
              -
              
              
              
              522,500Preferred
                  stock dividend included in accounts payable
              
              
              -
              
              
              
              21,871Value
                  of warrants issued in connection with lease
              
              
              187,128
              
              
              
              -Conversion
                  of fees due in related party to common stock
              
              
              220,000
              
              
              
              -
 
 **See
          accompanying notes to the condensed consolidated financial
          statements.**
  7
  **GENERAL
        ENVIRONMENTAL MANAGEMENT, INC AND SUBSIDIARIES**
 **NOTES
        TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
   **1.**
              **ORGANIZATION
                  AND PRINCIPAL ACTIVITIES**
 
 ORGANIZATION
        AND DESCRIPTION OF BUSINESS
 
 Ultronics
        Corporation (a development stage company) ( “the Company”)  was
        incorporated in the state of Nevada on March 14, 1990 to serve as a vehicle
        to
        effect a merger, exchange of capital stock, asset acquisition or other business
        combination with a domestic or foreign private business.  The
        Company’s fiscal year end is December 31.
 
 On
        February 14, 2005 the Company acquired all of the outstanding shares of General
        Environmental Management, Inc (“GEM”), a Delaware Corporation in exchange for
        18,914,408 shares of its class A common stock and as a result GEM became
        a
        wholly owned subsidiary of Ultronics Corporation.
 
 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.  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 a one for thirty reverse stock split. All
        share
        and per share amounts have been restated to show the effects of the reverse
        stock split as if it occurred at the beginning of the earliest period
        presented.
  BASIS
        OF
        PRESENTATION
 
 The
        condensed consolidated interim financial statements included herein have
        been
        prepared by the Company, pursuant to the rules and regulations of the Securities
        and Exchange Commission with regard  to Regulation S-B and, in the
        opinion of management, include all adjustments which, except, as described
        elsewhere herein, are of a normal recurring nature, necessary for a fair
        presentation of the financial position, results of operations, and cash flows
        for the period presented. The financial statements presented herein should
        be
        read in conjunction with the financial statements included in the Company’s
        Annual Report on Form 10-KSB for the year ended December 31, 2006 filed with
        the
        Securities and Exchange Commission.
 
 The
        results for the interim periods are not necessarily indicative of results
        for
        the entire year.
  8
  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
        $14,819,205 and utilized cash in operating activities of $3,815,017 during
        the
        nine  months  ended  September 30, 2007, and as of
        September 30, 2007 the Company had current liabilities exceeding current
        assets
        by $1,244,825. These matters raise substantial doubt about the Company’s ability
        to continue as a going concern.
 
 Management
        is continuing to raise capital through the issuance of debt and equity. In
        addition, management believes that the Company will begin to operate profitably
        due to increased size, improved operational results and cost cutting practices.
        However, there can be no assurances that the Company will be successful in
        this
        regard or will be able to eliminate its working capital deficit or operating
        losses. The accompanying condensed consolidated financial statements do not
        contain any adjustments which may be required as a result of this
        uncertainty.
 
 **2.****SUMMARY
        OF
        SIGNIFICANT ACCOUNTING POLICIES**
 
 (a)  Use
        of estimates
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires the Company’s
        management to make certain estimates and assumptions. These estimates and
        assumptions affect the reported amounts of assets and liabilities and disclosure
        of the contingent assets and liabilities at the date of the financial
        statements.  These estimates and assumptions will also
        affect   the reported amounts of certain revenues and expenses
        during the reporting period.  Actual results could differ materially
        based on any changes in the estimates and assumptions that the Company uses
        in
        the preparation of its financial statements that are reviewed no less than
        annually.  Actual   results could also differ
        materially from these estimates and assumptions due to changes in
        environmental-related regulations or future operational plans, and the inherent
        imprecision associated with estimating such future matters.
 
 (b)
        Revenue Recognition.
 
 The
        Company recognizes revenue when persuasive evidence of an arrangement exists,
        delivery has occurred  or services have been rendered, the price is
        fixed or determinable, and collection is reasonably assured.
 
 The
        Company is a fully integrated environmental service firm structured to provide
        field services, technical services, transportation, off-site treatment, on-site
        treatment services, and environmental health and safety (“EHS”) compliance
        services.  We assist clients in meeting regulatory requirements from
        the designing   stage to the waste disposition stage. The
        technicians who provide these services are billed at negotiated rates, or
        the
        service is bundled into a service package.  These services are billed
        and revenue recognized when the service is performed and completed. When
        the
        service is billed, expected 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.
  9
 
 (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 nine months ended September 30, 2007 and 2006, one customer accounted
        for
        15.5% and 20% of revenues, respectively. During the three months ended September
        30, 2007 and 2006, one customer accounted for 25.6% and 11% of revenues,
        respectively. As of September 30, 2007, there were two customers that accounted
        for 21.80% and 16.68% of accounts receivable, respectively and as of December
        31, 2006, one customer accounted for 22% of accounts receivable.
 
 (d)
        Income Taxes
 
 The
        Company accounts for income taxes using the liability method whereby deferred
        income tax assets and liabilities are recognized for the tax consequences
        of
        temporary differences by applying statutory  tax  rates
        applicable to future years to the difference between the financial statement
        carrying  amounts and  the tax  bases of certain
        assets and liabilities.  Changes in deferred tax assets and
        liabilities include the impact of any tax rate changes enacted during the
        year.
 
 (e)
        Net
        Loss per Share
 
 Statement
        of Financial Accounting Standards No. 128, "Earnings per Share", requires
        presentation of basic earnings per share ("Basic EPS") and diluted earnings
        per
        share ("Diluted EPS").  Basic income (loss) per share is computed by
        dividing income (loss) available to common stockholders by the weighted average
        number of common shares outstanding during the period.  Diluted
        earnings per share gives effect to all dilutive potential common shares
        outstanding during the period.
 
 These
        potentially dilutive securities were not included in the calculation of loss
        per
        share for the three and nine months ended September 30, 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 three and nine months ended September 30, 2007
        and
        2006.
 
 At
        September 30, 2007 and 2006, potentially dilutive securities consisted of
        convertible securities, outstanding common stock purchase warrants and stock
        options to acquire an aggregate of 9,312,594 shares and 3,685,823 shares,
        respectively**.**
  10
 
 (f)
        Stock
        Compensation Costs
 
 The
        Company periodically issues stock options and warrants to employees and
        non-employees in capital raising transactions, for services and for financing
        costs.  The Company adopted SFAS No. 123R effective January 1, 2006,
        and is using the modified prospective method in which compensation cost is
        recognized beginning with the effective date (a) based on the requirements
        of
        SFAS No. 123R for all share-based payments granted after the effective date
        and
        (b) based on the requirements of SFAS No. 123R for all awards granted to
        employees prior to the effective date of SFAS No. 123R that remain unvested
        on
        the effective date.  The Company accounts  for stock option
        and warrant grants issued and vesting to non-employees in accordance with
        EITF
        No. 96-18: "Accounting for Equity Instruments that are Issued to Other Than
        Employees for Acquiring, or in Conjunction with Selling, Goods or Services” and
        EITF No. 00-18 “Accounting Recognition for Certain Transactions involving Equity
        Instruments Granted to Other Than Employees” whereas the value of the stock
        compensation is based upon the measurement date as determined at either a)
        the
        date at which a performance commitment is reached, or b) at the date at which
        the necessary performance to earn the equity instruments is
        complete.
 
 (g)
        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  September 30, 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  September 30, 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.
  11
 
 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.
 
 **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 nine months ended
        September 30, 2006 for  the Company had  the acquisition
        occurred as of January 1, 2006:
 
 **Nine**
                **months
                  ended**
                **September
                  30,**
                **2006******
              ****
              **(Unaudited)**Net
                  sales
              
              $
              15,537,923Cost
                  of sales
              
              
              11,579,892Gross
                  profit
              
              
              3,958,031Operating
                  expenses
              
              
              6,883,048Operating
                  loss
              
              
              (2,925,017
              )Other
                  income (expense):Interest
                  income
              
              
              15,610Interest
                  expense and amortization of deferred financing costs
              
              
              (3,175,341
              )Other
                  non-operating income
              
              
              79,830NET
                  LOSS
              
              $
              (6,004,918
              )Loss
                  per weighted average share, basic and diluted.
              
              $
              (.15
              )
  **4.**
              **GOODWILL
                  AND INTANGIBLE ASSETS**
 
 The
        Company accounts for goodwill and intangible assets pursuant to SFAS No.
        142,
        Goodwill and Other Intangible Assets.  Under SFAS 142, intangibles
        with definite lives continue to be amortized on a straight-line basis over
        the
        lesser of their estimated useful lives or contractual terms.  Goodwill
        and intangibles with indefinite lives are evaluated at least annually for
        impairment by comparing the asset’s estimated fair values with its carrying
        value, based on cash flow methodology.
 
 Intangible
        assets consist of the following at:
 
 **September
                  30,**
              ****
              ****
              **December
                  31,**
              ********
              ****
              ****
              ****
              ****
              **2007**
              ****
              ****
              **2006**Rancho
                  Cordova acquisition – permit
              
              
              
              
              
              $
              476,504
              
              
              $
              475,614Prime
                  acquisition – customers
              
              
              
              
              
              
              400,422
              
              
              
              400,422GMTS  acquisition
                  – customers
              
              
              
              
              
              
              438,904
              
              
              
              438,903GMTS  acquisition
                  – permits
              
              
              
              
              
              
              27,090
              
              
              
              27,090Accumulated
                  amortization
              
              
              
              
              
              
              (217,286
              )
              
              
              (150,812
              )$
              1,125,634
              
              
              $
              1,191,217
 
 Permit
        costs have been capitalized and are being amortized over the life of the
        permit,
        including expected renewal periods.  Customer Lists acquired are being
        amortized over their useful life.
  **5.**
              **RELATED
                  PARTY TRANSACTIONS**
 
 The
        Company entered into several transactions with General Pacific Partners (“GPP”),
        a company operated by a prior member of the Board of Directors of the Company’s
        wholly owned subsidiary, General Environmental Management, Inc. of
        Delaware.  GPP owns 10 % of the Company’s common stock at September
        30, 2007.  The following summarizes the transactions with GPP during
        the three and nine months ended September 30, 2007 and 2006.
 
 Issuance
        and conversion of assignable notes
 
 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 further 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 was converted to 624,712 shares of common stock. As an inducement
        to
        convert, the holders were issued 182,831 two 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
        2 years.
  12
 
 During
        the quarter ended June 30, 2007, GPP made further unsecured advances to the
        Company utilizing assignable notes totaling $1,100,000. 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 a value of $1.20 per share.
        During the quarter ended June 30, 2007, $1,508,565 of these notes were converted
        to 1,257,148 shares of common stock. The fair value of the shares at the
        time of
        conversion was $3,960,016 ($3.15) per share, resulting in a cost to induce
        conversion of debt of $2,451,451.  As a further inducement to convert,
        the holders were issued 374,948 two 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 $977,396 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 52.12 % and an expected term for the warrants of 2
        years.
 
 During
        the quarter ended September 30, 2007, GPP made further unsecured advances
        to the
        Company utilizing assignable notes totaling $1,220,750. 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 a value of $1.20 per share,
        and
        during the quarter ended September 30, 2007, $1,644,488 of these notes were
        converted to 1,370,421 shares of common stock. The fair value of the shares
        at
        the time of conversion was $3,896,440 per share, resulting in a cost to induce
        conversion of debt of $2,251,952.  As a further inducement to convert,
        the holders were issued 408,925 two 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 $937,774 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 28.04 % and an
        expected term for the warrants of 2 years.
 
 The
        aggregate value of common stock issued in excess of the notes exchanged of
        $4,703,403 and the value of the warrants issued of $2,034,010 was $6,737,413
        and
        was reflected as costs to induce conversion of debt in the accompanying
        statement of operations for the nine months ended September 30,
        2007.
 
 As
        of
        September 30, 2007, all of these unsecured advances have been
        converted.
 
 Advisory
        fees
 
 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, 2007 relating to these
        transactions.
  13
 
 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 seven year warrants to purchase 55,462 shares
        of
        the Company’s common stock at $0.60 per share. 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
        September 30, 2007 and December 31, 2006, the Company had $33,664 and $270,000
        respectively, in amounts payable to GPP for expenses related to advisory
        services and accrued interest.
 
 Related
        Party Lease Agreement
 
 During
        the third quarter ended September 30, 2007, the Company entered into a lease
        for
        $180,846 of equipment with current investors of the Company.  The
        lease transaction was organized by General Pacific Partners, a related party,
        with these investors.  The five year lease with payments of $4,000 per
        month began August 1, 2007.  As an inducement to enter into the lease,
        the Company issued the leasing entity 100,000 two year warrants to purchase
        common stock at $1.20. These warrants were valued at $187,128 using the Black
        -
        Scholes valuation model and such cost will be amortized to expense over the
        life
        of the lease.  For the Black - Scholes calculation, the Company
        assumed no dividend yield, a risk free interest rate of 4.78 %, expected
        volatility of 56.60 % and an expected term for the warrants of 2
        years.
  **6.**
              **SECURED
                  FINANCING AGREEMENT**
 
 Secured
        financing consists of the following notes payable to Laurus Master Fund at
        September 30, 2007 and December
        31, 2006:
 
 **September
                  30,**
              ****
              ****
              **December
                  31,**
              ********
              ****
              **2007**
              ****
              ****
              **2006**(Unaudited)(a)
                  Secured convertible Term Note
              
              $
              1,040,267
              
              
              $
              1,575,757(a)
                  Secured non-convertible Revolving Note
              
              
              4,641,365
              
              
              
              2,971,277(b)
                  Secured Short Term Note
              
              
              -
              
              
              
              289,776Valuation
                  Discount
              
              
              (1,156,768
              )
              
              
              (1,769,174
              )4,524,864
              
              
              
              3,067,636Less
                  current portion
              
              
              (778,390
              )
              
              
              (1,017,048
              )Financing
                  agreement, net of current portion
              
              $
              3,746,474
              
              
              $
              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.
  14
 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 September 30, 2007 and December 31, 2006 was
        $1,040,267 and $1,575,757 respectively. 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  September 30, 2007 and December 31, 2006, the Company had
        outstanding borrowings of $4,641,365 and $2,971,277 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 nine months ended
        September 30, 2007 the Company amortized $612,405 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.
  15
 
 (b)
              On
                  August 10, 2006 the Company 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, the Company entered into a definitive agreement
                  to
                  acquire PCI on August 15, 2006; however, the Company was  not
                  able to raise the additional capital required through the sale
                  of our
                  securities nor was the Company  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 the Company 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. In accordance with the terms of
                  the note,
                  the balance was paid off on June 7,
                  2007.
 **7.**
                **INCOME
                    TAXES**
 The
        Company's net deferred tax assets  consisted of the following at
        September 30, 2007 and December 31, 2006:
 
 **September
                  30,**
                **2007**
              
              
              **December
                  31,**
                **2006**Deferred
                  tax asset, net operating loss
              
              $
              5,615,558
              
              
              $
              7,516,674Less
                  valuation allowance
              
              
              (5,615,558
              )
              
              
              (7,516,674
              )Net
                  deferred tax asset
              
              $
              -
              
              
              $
              -
 
 As
        of
        September 30, 2007, the Company had federal net operating loss carry forwards
        of
        approximately $16,516,347 expiring in various years through 2025, which can
        be
        used to offset future taxable income, if any. No deferred asset benefit for
        these operating losses has been recognized in the financial statements due
        to
        the uncertainty as to their realizability in future periods.
 
 As
        a
        result of the Company's significant operating loss carryforward and the
        corresponding valuation allowance, no income tax expense (benefit) has been
        recorded at September 30, 2007.
 
 Reconciliation
        of the effective income tax rate to the United States statutory income tax
        rate
        for the nine months ended September 30, 2007 and 2006 is as
        follows:
  **Nine
                  months ended**
              ********
              ****
              **September
                  30,**
              ********
              ****
              **2007**
              ****
              ****
              **2006**Tax
                  expense at U.S. statutory income tax rate
              
              
              (34.0
              )%
              
              
              (34.0
              )%Increase
                  in the valuation allowance
              
              
              34.0
              
              
              
              34.0Effective
                  rate
              
              
              -
              
              
              
              -
  16
 **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 six months ended June 30, 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 six months ended June 30, 2007, holders of convertible notes issued during
        2004 and 2006, agreed to convert $196,772 of accrued interest into 165,083
        shares of common stock based upon the fair value of the stock at the date
        of the
        agreement.
 
 During
        the three months ended September 30, 2007, a consultant to the company agreed
        to
        convert $22,690 in expenses into 8,251 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
                  outstanding, January 1, 2007
              
              
              67,067
              
              
              
              28.20
              
              
              
              6.48Options
                  granted
              
              
              4,397,500
              
              
              
              1.19
              
              
              
              9.50Options
                  exercised
              
              
              -
              
              
              
              -
              
              
              
              -Options
                  cancelled
              
              
              (174,785
              )
              
              
              1.43
              
              
              
              -Options
                  outstanding, September 30, 2007
              
              
              4,289,782
              
              
              
              1.61
              
              
              
              9.44Options
                  exercisable, September 30,2007
              
              
              1,694,790
              
              
              
              1.96
              
              
              
              9.39
 
 The
        aggregate intrinsic value of the 4,289,782 options outstanding and 1,694,790
        options exercisable as of September 30, 2007 was $6,589,830 and $2,571,853,
        respectively. The aggregate intrinsic value for the options is calculated
        as the
        difference between the price of the underlying awards and quoted price of
        the
        Company's common shares for the options that were in-the-money as of September
        30, 2007.
  17
 
 For
        the
        nine months ended September 30, 2007 and 2006, the fair value of options
        vesting
        during the period was $758,291 and $172,828 respectively, and has been reflected
        as compensation cost. As of September 30, 2007, the Company has unvested
        options
        valued at $1,205,961 which will be reflected as compensation cost over the
        estimated remaining vesting period of 2 and a half years.
  Warrants
 
 During
        the six months ended June 30, 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 six months ended June 30, 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. During the quarter ended June 30, 2007, the Company
        issued 374,948 warrants to General Pacific Partners, LLC as an inducement
        to
        convert several assignable notes. During the quarter ended September 30,
        2007,
        the Company issued 408,925 and 100,000 warrants to General Pacific Partners
        as
        an inducement to convert several assignable notes and in connection with
        a lease
        agreement, see Note 5.
 
 During
        the six months ended June 30, 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
              
              
              3,899,941Warrants
                  exercised
              
              
              -Warrants
                  expired
              
              
              (78,951
              )Warrants
                  outstanding, September 30, 2007
              
              
              5,004,979
  The
        aggregate intrinsic value of the 5,004,979 warrants outstanding as of September
        30, 2007 was $9,013,030.The
        aggregate intrinsic value for the warrants is calculated as the difference
        between the price of the underlying shares and quoted price of the Company's
        common shares for the warrants that were in-the-money as of September 30,
        2007.
  18
 
 **10.**
                  **COMMITMENTS
                      AND CONTINGENCIES**
 During
        July 2007, General Environmental Management, Inc. (“GEM”) hired five senior
        industry executives who were formerly employed by Romic Environmental
        Technologies, Inc. (“RET”).  These executives have combined experience
        of more than 75 years in the Company’s industry.  The executives will
        assist the Company in executing our expansion plans.
 
 A
        lawsuit
        was instituted by RET against the Company and the five former RET senior
        executives.  In the lawsuit, RET alleges that the Company and the five
        executives are liable to RET for, among other things, (1) Violation of
        Non-Disclosure Agreements and Termination Protection Agreements, (2) Intentional
        Interference with contracts, and (3) Misappropriation of Trade Secrets and
        Unfair Competition.  RET alleges damages of Fifteen Million Dollars,
        requests certain injunctive relief, punitive damages, and other
        remedies.  The Company believes that the lawsuit has no merit and
        intends to vigorously defend the action.
  **11.**
                    **SUBSEQUENT
                        EVENTS**
  On
        October 31, 2007, General Environmental Management, Inc. (the “Company”) entered
        into a series of agreements with Laurus Master Fund, Ltd. ("Laurus"), LV
        Administrative Services, Inc. (“LV Admin”), Valens U.S. SPV I, LLC (“Valens US”)
        and Valens Offshore SPV II, Corp. (“Valens”), each dated as of October 31, 2007,
        whereby we issued to Valens US and Valens (i) secured convertible term notes
        ("Notes") in the principal amount of $1.25 million;  (ii) an
        assignment of the Laurus Secured Non-Convertible Revolving Note; (iii) an
        amendment to modify the amortization of the remaining balance of the Laurus
        February 28, 2006 Secured Convertible Term Note; (iv) a warrant ("Warrant
        1") to
        purchase up to 661,818 shares of our common stock at a price of $1.38 per
        share
        and, (v) a warrant ("Warrant 2") to purchase up to 330,909 shares of our
        common
        stock at a price of $2.75 per share. Of the Note proceeds, $64,751 was paid
        to
        Firestone Associates, Inc. and $64,751 was paid to Firestone Environmental
        Services, Inc. in repayment in full of the outstanding indebtedness then
        owing
        by the Company.  The Company also agreed to pay, out of the Loan
        proceeds, the sum of $45,000 to Valens US, Valens and Valens Capital Management,
        LLC, and the sum of $72,209 to various legal firms as reimbursement for its
        due
        diligence and legal fees and expenses incurred in connection with the
        transaction.
  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 $60,606.06, commencing March 1, 2008. The Note is secured by all
        of
        our assets and the assets of our direct subsidiary, General Environmental
        Management, Inc. (Delaware) and its direct subsidiaries, General Environmental
        Management of Rancho Cordova LLC, a California Limited Liability Company
        (including the real property owed by General Environmental Management of
        Rancho
        Cordova LLC), GEM Mobile Treatment Services Inc., as well as by a pledge
        of the
        equity interests of General Environmental Management, Inc. (Delaware), General
        Environmental Management of Rancho Cordova LLC and GEM Mobile Treatment Services
        Inc.
 
 The
        principal amount of the Note and accrued interest thereon is convertible
        into
        shares of our common stock at a price of $2.78 per share, subject to
        anti-dilution adjustments. Under the terms of the Note, the monthly principal
        payment amount of approximately $60,606.06, 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. Valens and Valens
        US have
        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 Valens and Valens US beneficially owning at any one time
        more
        than 9.99% of our outstanding shares of common stock. The Company  has
        agreed to register all of the shares that are issuable upon conversion of
        the
        Note and exercise of the Warrant.
 
 The
        Company  has granted Valens and Valens US a right of first refusal
        with respect to any debt or equity financings.
  19
  **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", "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
  Statements
        made in this Form 10-Q (the “Quarterly Report”) that are not historical or
        current facts are “forward-looking statements” made pursuant to the safe harbor
        provisions of Section 27A of the Securities Act of 1933, as amended (the
“Act”),
        and Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).  We intend that such forward-looking statements be
        subject to the safe harbors for such statements.  We wish to caution
        readers not to place undue reliance on any such forward-looking statements,
        which speak only as of the date made.  Any forward-looking statements
        represent management’s best judgment as to what may occur in the
        future.  The forward-looking statements included herein are based on
        current expectations that involve numerous risks and uncertainties.
 Assumptions relating to the foregoing involve judgments with respect to,
        among other things, future economic, competitive and market conditions and
        future business decisions, all of which are difficult or impossible to predict
        accurately and many of which are beyond our control.  Although we
        believe that the assumptions underlying the forward-looking statements are
        reasonable, any of the assumptions could be inaccurate and, therefore, there
        can
        be no assurance that the forward-looking statements included in this Quarterly
        Report will prove to be accurate.  In light of the significant
        uncertainties inherent in the forward-looking statements included herein,
        the
        inclusion of such information should not be regarded as a representation
        by us
        or any other person that our objectives and plans will be
        achieved.  We disclaim any obligation subsequently to revise any
        forward-looking statements to reflect events or circumstances after the date
        of
        such statement or to reflect the occurrence of anticipated or unanticipated
        events.
  The
        words
“we,” “us,” “our,” and the “Company,” refer to General Environmental Management,
        Inc.  The words or phrases “may,” “will,” “expect,” “believe,”
“anticipate,” “estimate,” “approximate,” or “continue,” “would be,” “will
        allow,” “intends to,” “will likely result,” “are expected to,” “will continue,”
“is anticipated,” “estimate,” “project,” or similar expressions, or the negative
        thereof, are intended to identify “forward-looking
        statements.”  Actual results could differ materially from those
        projected in the forward looking statements as a result of a number of risks
        and
        uncertainties, including but not limited to:  (a) our failure to
        implement our business plan within the time period we originally planned
        to
        accomplish; and (b) other risks that are discussed in this Quarterly Report
        or
        included in our previous filings with the Securities and Exchange Commission
        (“SEC”).
  20
  OVERVIEW
 
 Ultronics
        Corporation (Ultronics) was a non-operating company formed for the purpose
        of
        evaluating opportunities to acquire an operating company.  On February
        14, 2005 Ultronics acquired General Environmental Management, Inc. through
        a
        reverse merger between Ultronics Acquisition Corp., a wholly owned subsidiary
        of
        Ultronics and General Environmental Management, Inc., whereby General
        Environmental Management, Inc. (GEM) was the surviving entity.
 
 The
        acquisition was accounted for as a reverse merger (recapitalization) with
        GEM
        deemed to be the accounting acquirer, and Ultronics Corporation the legal
        acquirer.  Accordingly, the historical financial information presented
        in the financial statements is that of GEM as adjusted to give effect to
        any
        difference in the par value of the issuer’s and the accounting acquirer stock
        with an offset to capital in excess of par value.  The basis of the
        assets, liabilities and retained earnings of GEM, the accounting acquirer,
        have
        been carried over in the recapitalization.  Subsequent to the
        acquisition, the Company changed its name to General Environmental Management,
        Inc.
 
 GEM
        is a
        fully integrated environmental service firm structured to provide EHS compliance
        services, field services, transportation, off-site treatment, and on-site
        treatment services.  Through its services GEM assists clients in
        meeting regulatory requirements for the disposal of hazardous and non-hazardous
        waste.  GEM provides its clients with access to GEMWare, an internet
        based software program that allows clients to maintain oversight of their
        waste
        from the time it leaves their physical control until final disposition by
        recycling, destruction, or landfill.  The GEM business model is to
        grow both organically and through acquisitions.
 
 During
        2003 and 2004 GEM acquired the assets of Envectra, Inc., Prime Environmental
        Services, Inc. (Prime) and 100% of the membership interest in Pollution Control
        Industries of California, LLC, now named General Environmental Management
        of
        Rancho Cordova, LLC.  The assets of Envectra, Inc. included an
        internet based integrated environmental management software now marketed
        by the
        Company as GEMWare.  The acquisition of the assets of Prime resulted
        in a significant increase in the revenue stream of the company and a presence
        in
        the Washington State and Alaska markets through Prime’s Seattle
        office.  All Prime services are now offered under the GEM
        name.  The primary asset of Pollution Control Industries of
        California, LLC was a fully permitted Part B Treatment Storage Disposal Facility
        (TSDF) in Rancho Cordova, California.  The facility provides waste
        management services to field service companies and allows the Company to
        bulk
        and consolidate waste into larger more cost effective containers for outbound
        disposal.
 
 During
        2006, the Company entered into a stock purchase agreement with K2M Mobile
        Treatment Services, Inc. of Long Beach, California ("K2M"), a privately held
        company, pursuant to which the Company  acquired all of the issued and
        outstanding common stock of K2M. K2M is a California-based provider of mobile
        wastewater treatment and vapor recovery services. Subsequent to the acquisition
        in March 2006, the Company opened a vapor recovery service division in Houston,
        Texas and will be looking to expand its operations in the Gulf coast
        area.
  21
  COMPARISON
        OF THREE  MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
 
 Revenues
 
 Total
        revenues were $8,555,831 for the three months
        ended  September  30, 2007, representing an increase of
        $1,534,040 or 21.8% compared to the three months ended September 30,
        2006.  The increase in revenue can be attributed to improved market
        penetration in the Western United States and a 145% increase in revenues
        in the
        Enviroconstruction market sector.
 
 Cost
        of
        Revenues
 
 Cost
        of
        revenues for the three months ended September 30, 2007 were $6,878,235 or
        80% of
        revenue, as compared to $5,189,863 or 74% of revenue for the three months
        ended
        September 30, 2006.The cost ofrevenues
        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 margins on third quarter Enviroconstruction projects.
 
 Operating
        Expenses
 
 Operating
        expenses for the three months ended September 30, 2007 were $3,034,039 or
        35.5%
        of revenue ascompared
        to $2,590,040 or 36.9% 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 increase in operating
        expenses is primarily attributable to increases in administrative salaries
        and
        benefits in association with our continued growth and expansion.
 
 Depreciation
        and Amortization
 
 Depreciation
        and amortization expenses for the three months ended September 30, 2007 were
        $196,199, or 2.3% of revenue, as compared to $227,208 or 3.2% of revenue
        for the
        same period in 2006. The decrease in expense is due to the use of accelerated
        depreciation rates in the write off of the cost of property, plant and
        equipment.
 
 Interest
        and financing costs
 
 Interest
        and financing costs for the three months ended September 30, 2007 were $574,998
        or 6.7% of revenue, ascompared to $2,277,346
        or
        32.4% 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 decrease in interest
        expense is due to lower costs of amortization of valuation discounts generated
        from conversion features of warrants and long term debt in 2007 versus
        2006.
 
 Other
        Non-Operating Income
 
 The
        Company had other non-operating income for the three months ended September
        30,
        2007 of $25,329 or  0.30
        % of  revenue, and $27,018 for the same period in
        2006.  Non-Operating income for the  three monthsended September 30,
        2007
        consisted of continuing rental income from the lease of an office building
        in
        Rancho Cordova, California and warehouse space in Kent, Washington. The lease
        in
        Rancho Cordova was terminated in July 2007.
 
 Costs
        to
        induce conversion of related party debt
  During
        the quarter ended September 30, 2007, the Company converted $1,644,488 of
        assignable notes to   a related party common stock and warrants
        (see Note 5).  The fair value of the stock and warrants in excess of
        the note balance converted was a non cash charge to non operating expense
        for
        $3,189,726.
  22
 
 Net
        Loss
 
 The
        net
        loss for the three months ended September 30, 2007 was $5,085,197 or 59.4%
        of
        revenue as compared  to a loss of $3,004,501 or 42.8%
        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
        costs to induce conversion of debt as discussed in Note 5.
 
  COMPARISON
        OF NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
  Revenues
 
 For
        the
        nine months ended September 30, 2007, the Company reported consolidated revenue
        of $21,415,043 representing an increase of $6,395,495 or 42.6 % compared
        to the
        nine months ended September 30, 2006.The increase in
        revenue can be attributed to organic growth, an increase of $3,600,486 in
        revenues in the Enviroconstruction market sector, an increase of $1,560,639
        in
        revenues attributable to Gem Mobile Treatment Services (K2M) and $ 471,308
        in
        third party broker business at our TSDF in Rancho Cordova.
 
 Cost
        of
        Revenues
  Cost
        of
        revenues for the nine months ended September 30, 2007 were $17,023,247 or
        79.5 %
        of revenue, as compared to $11,316,559 or 75.3 % of revenue for the
        nine  months ended September 30, 2006. The cost of revenue 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
        margins on Enviroconstruction  projects.
 
 Operating
        Expenses
 
 Operating
        expenses for the nine months ended September 30, 2007 were $10,782,081 or
        50% of
        revenue as compared to $ 6,532,789 or 43% of revenue for the same period
        in
        2006.  Operating expenses include sales and administrative salaries
        and benefits, insurance, rent, legal and accounting and other professional
        fees.
        The first quarter included 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 first 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.  For the nine months ended September 30, 2007 the value of
        options vested during the period was $758,291.
  Depreciation
        and Amortization
 
 Depreciation
        and amortization expenses for the nine  months ended September 30,
        2007 were $559,525 or 2.6% of revenue, as compared to $471,168 or 3.1% of
        revenue for the same period in 2006. The increase in expenses is related
        to the
        increase in property, plant and equipment and increased amortization expense
        related to intangibles acquired from recent acquisitions.
  23
  Interest
        and financing costs
 
 Interest
        and financing costs for the nine months ended September 30, 2007 were $1,815,131
        or 8.4% of revenue, ascompared to $ 3,174,233
        or
        21% 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 decrease in interest expense is due to lower
        costs of amortization of valuation discounts generated from conversion features
        of warrants and long term debt in 2007 versus 2006.
 
 Costs
        to
        induce conversion of related party debt
 
 During
        the nine months ended September 30, 2007, the Company converted $3,902,700
        of
        assignable notes to a related party common stock and warrants (see Note
        5).  The fair value of the stock and warrants in excess of the note
        balance converted was a non cash charge to non operating expense for
        $6,737,413.
 
 Other
        Non-Operating Income
 
 The
        Company had other non-operating income for the  nine  months
        ended September 30, 2007 of $93,568,  or .4% of revenue, and
        $79,830  or .5% for the same period in 2006. Non-Operating income for
        the nine months ended 2007 consisted of continuing rental income from the
        lease
        of an office building in Rancho Cordova, California and warehouse space in
        Kent,
        Washington. The lease in Rancho Cordova terminated in July 2007.
 
 Net
        Loss
  The
        net
        loss for the nine months ended September 30, 2007 was $14,819,205, or 69%
        of
        revenue as compared to a loss of $5,908,593, or 39% of revenue for the same
        period in 2006. The loss is primarilyattributable to a non-cash
        charge for consulting and advisory fees of $2,136,620 originating from the
        issuance of common stock and warrants; a non-cash charge of $758,291 related
        to
        the term value of options vested, and non-cash charges described above related
        to costs to induce conversion of debt as discussed in Note 5.
   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
        nine  months ended September 30, 2007 was $3,815,017 as compared to
        $3,636,309 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 $14,819,205 and utilized cash in operating activities of $3,815,017
        during the nine months ended September 30, 2007.  As of September 30,
        2007 the Company had current liabilities exceeding current assets by $1,244,825.
        These matters raise substantial doubt about the Company’s ability to continue as
        a going concern.
  24
 
 Management
        is continuing to raise capital through the issuance of debt and equity and
        believes it will be able to raise sufficient capital over the next twelve
        months
        to finance operations. In addition, management believes that the company
        will
        begin to operate profitably due to improved operational results, cost cutting
        practices, and the completion of the integration of
        acquisitions.  However, there can be no assurances that the Company
        will be successful in this regard or will be able to eliminate 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.
 
 On
        October 31, 2007, General Environmental Management, Inc. (the “Company”) entered
        into a series of agreements with Laurus Master Fund, Ltd. ("Laurus"), LV
        Administrative Services, Inc. (“LV Admin”), Valens U.S. SPV I, LLC (“Valens US”)
        and Valens Offshore SPV II, Corp. (“Valens”), each dated as of October 31, 2007,
        whereby we issued to Valens US and Valens (i) secured convertible term notes
        ("Notes") in the principal amount of $1.245 million;  (ii) an
        amendment to modify the amortization of the remaining balance of the Laurus
        February 28, 2006 Secured Convertible Term Note; (iii) warrants  to
        Valens US to purchase up to 344,145 shares of our common stock at a price
        of
        $1.38 per share.and up to 172,013 shares of our common stock at a price of
        $2.75
        per share, (iv) warrants  to Valens to purchase up to 317,673 shares
        of our common stock at a price of $1.38 per share.and up to 158,836 shares
        of
        our common stock at a price of $2.75 per share. Of the Note proceeds, $64,751
        was paid to Firestone Associates, Inc. and $64,751 was paid to Firestone
        Environmental Services, Inc. in repayment in full of the outstanding
        indebtedness then owing by the Company.  The Company also agreed to
        pay, out of the Loan proceeds, the sum of $45,000 to Valens US, Valens and
        Valens Capital Management, LLC, and the sum of $72,209 to various legal firms
        as
        reimbursement for its due diligence and legal fees and expenses incurred
        in
        connection with the transaction.
 
 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 $60,606.06,
        commencing March 1, 2008.
  Cash
        Flows for the Nine Months Ended September 30, 2007
 
 Operating
        activities for the nine months ended September 30, 2007 used $3,815,017 in
        cash.  Accounts receivable, net of allowances for bad debts, increased
        by $1,558,205 as of  September 30, 2007 and accounts payable were
        increased by $588,954.  Depreciation and amortization for the nine
        months ended September 30, 2007 totaled $559,525. The net loss of $14,819,205
        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
        $758,291 which represents the fair value of vested options on the 2005 and
        the
        2007 stock option plans, $612,405 representing discount amortization on
        convertible debt, $187,314 representing amortization of deferred financing
        fees,
        $2,136,620  representing the value of warrants and common shares
        issued for consulting and advisory services and $6,737,413 resultingfrom the conversion
        of
        notes to common stock and warrants. Other non-cash expenses totaled
        $368,820.Prepaid
        expenses used $143,016 in cash for the payment of insurance premiums that
        will
        be amortized in 2007.  Accrued expenses increased by
        $756,067.
  25
 
 The
        Company used cash for investment in plant, property and equipment and deposits
        totaling  $932,297 for the nine months ended September 30,
        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 nine   months. The Company
        raised $4,202,214 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  Notes.
 
 These
        activities resulted in a $545,100 reduction in cash balances from year end
        December 31, 2006 to the end of the quarter September 30, 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.
 
 (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, expected costs are accumulated and accrued.
  26
 
 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.
 
 Effective
        January 1, 2007, the Company adopted Financial Accounting Standards Board
        Interpretation No. 48, “Accounting for Uncertainty in Income Taxes (“FIN
        48”). —an interpretation of FASB Statement No. 109, Accounting for Income
        Taxes.” The Interpretation addresses the determination of whether tax benefits
        claimed or expected to be claimed on a tax return should be recorded in the
        financial statements. Under FIN 48, we may recognize the tax benefit from
        an
        uncertain tax position only if it is more likely than not that the tax position
        will be sustained on examination by the taxing authorities, based on the
        technical merits of the position. The tax benefits recognized in the financial
        statements from such a position should be measured based on the largest benefit
        that has a greater than fifty percent likelihood of being realized upon ultimate
        settlement. FIN 48 also provides guidance on derecognition, classification,
        interest and penalties on income taxes, accounting in interim periods and
        requires increased disclosures. At the date of adoption, and as of September
        30, 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 September 30, 2007, the Company has no accrued interest or
        penalties related to uncertain tax positions.
 
 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.
  27
 
 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.
 
 
 **ITEM
        3. Controls and Procedures**
 
 As
        required by Rule 13a-15 under the Securities Exchange Act of 1934 (the "Exchange
        Act"), we carried out an evaluation of the effectiveness of the design and
        operation of our disclosure controls and procedures as of September 30, 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.
  28
  **PART
        II - OTHER INFORMATION**
 
 **Item
                  1.**
              **Legal
                  Proceeding -**During July 2007, General Environmental Management,
                  Inc. (“GEM”) hired five senior industry executives who were formerly
                  employed by Romic Environmental Technologies, Inc. (“RET”). These
                  executives have combined experience of more than 75 years in the
                  Company’s
                  industry.  The executives will assist the Company in executing
                  our expansion plans.
                
                A
                    lawsuit was instituted by RET against the Company and the five
                    former RET
                    senior executives.  In the lawsuit, RET alleges that the Company
                    and the five executives are liable to RET for, among other things,
                    (1)
                    Violation of Non-Disclosure Agreements and Termination Protection
                    Agreements, (2) Intentional Interference with contracts, and
                    (3)
                    Misappropriation of Trade Secrets and Unfair Competition.  RET
                    alleges damages of Fifteen Million Dollars, requests certain
                    injunctive
                    relief, punitive damages, and other remedies.  The Company
                    believes that the lawsuit has no merit and intends to vigorously
                    defend
                    the action. Filed  on form 8K with the commission on July 18,
                    2007.
  **Item
                  2.**
              **Unregistered
                  Sales of Securities and Use of Proceeds –******Form
                  8k filed with the commission on November 6,
                  2007.
 
 **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**31.1
                CEO
                    Certification - Page Attached32.1
                CFO
                    Certification - Page Attached32.1
                CEO
                    Certification - Page Attached32.2
                CEO
                    Certification - Page Attached**(b)**
                **Reports
                    on Form 8-K**1.
                Reverse
                    Stock Split of the Company’s Common Stock; filed with the commission on
                    1/03/072.
                Other
                      events, filed with the commission on 7/18/07.3.
                Entry
                    into a Material Definitive Agreement and Unregistered Sales of
                    Equity
                    Securities related to secured convertible term notes, modification
                    of the
                    existing secured convertible term note along with warrants to
                    purchase
                    common stock; filed with the Commission on November 6,
                    2007.
 29
  **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:
                  November
                  14, 2007
              By:
              /s/ Timothy
                J. KoziolTimothy
                J. KoziolCEO
                  and Chairman of the Board of Directors
  Date:
                  November
                  14, 2007
              By:
              /s/ Brett
                M. ClarkBrett
                M. ClarkExecutive
                  Vice President of Finance, Chief Financial Officer






30