**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: **June
        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 June 30, 2007$0.001
                PAR VALUE COMMON STOCK
            
            11,024,295
                SHARES





**GENERAL
      ENVIRONMENTAL MANAGEMENT, INC.**


**QUARTERLY
      REPORT ON FORM 10QSB**


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





**TABLE
      OF CONTENTS**




**Page****Part
                1**
            **Financial
                Information**Item
                1
            Financial
                Statements (Unaudited)
            3Condensed
                Consolidated Balance Sheets as of June 30, 2007 (Unaudited)and
                December 31, 2006
            3Condensed
                Unaudited Consolidated Statements of Operations for the Three Months
                and
                Six Months ended June 30, 2007 and 2006
            5Condensed
                Unaudited Consolidated Statement of Shareholders’ Equity for the Six
                Months Ended June 30, 2007
            6Condensed
                Unaudited Consolidated Statements of Cash Flows for the Six Months
                Ended June 30, 2007 and 2006
            7Notes
                to the Unaudited Condensed Consolidated Financial
                Statements
            9Item
                2
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operation
            21Item
                3
            Controls
                and Procedures
            28**Part
                II**
            **Other
                Information**Item
                1
            Legal
                Proceedings
            28Item
                2
            Changes
                in Securities
            28Item
                3
            Defaults
                Upon Senior Securities
            28Item
                4
            Submission
                of Matters to a Vote of Security Holders
            28Item
                5
            Other
                Information
            28Item
                6
            Exhibits
                and Reports on Form 8K
            28Signatures
            29CEO
              Certification
            attachedCFO
              Certification
            attached


2




**PART
      1 - FINANCIAL INFORMATION**





**Item
      1. Financial Statements.**







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


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**






**June
                  30,**
              ****
              ****
              **December
                  31,**
              ********
              ****
              **2007**
              ****
              ****
              **2006**
              ********
              ****
              **(Unaudited)**
              ****
              ****
              ****
              ******ASSETS**CURRENT
                  ASSETS:Cash
              
              $
              98,173
              
              
              $
              618,654Accounts
                receivable, net of allowance for doubtful accountsof
                  $263,390 and $285,000,respectively
              
              
              5,121,009
              
              
              
              5,540,069Prepaid
                  expenses and other current assets
              
              
              727,929
              
              
              
              428,018Total
                  Current Assets
              
              
              5,947,111
              
              
              
              6,586,741Property
                and Equipment – net of accumulated depreciation$1,567,098
                  and $1,248,088, respectively
              
              
              3,736,440
              
              
              
              2,918,690Restricted
                  cash
              
              
              1,165,677
              
              
              
              911,168Intangibles,
                  net
              
              
              1,146,902
              
              
              
              1,191,217Deferred
                  financing fees
              
              
              166,686
              
              
              
              291,529Deposits
              
              
              246,802
              
              
              
              147,742Goodwill
              
              
              946,119
              
              
              
              946,119TOTAL
                  ASSETS
              
              $
              13,355,737
              
              
              $
              12,993,206






**(Continued)**


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





3





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


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(Continued)**






**June
                  30,**
              
              
              **December
                  31,******
              
              **2007**
              
              
              **2006******
              
              **(Unaudited)**
              
              
              ******LIABILITIES
                  AND STOCKHOLDERS’ EQUITY**CURRENT
                  LIABILITIES:Accounts
                  payable
              
              $
              3,781,902
              
              
              $
              3,755,264Accrued
                  expenses
              
              
              1,942,671
              
              
              
              2,149,178Accrued
                  disposal costs
              
              
              680,557
              
              
              
              593,575Payable
                  to related party
              
              
              693,971
              
              
              
              824,783Deferred
                  rent
              
              
              32,618
              
              
              
              25,150Current
                  portion of financing agreement
              
              
              769,638
              
              
              
              1,017,048Current
                  portion of long term obligations
              
              
              252,747
              
              
              
              125,432Current
                  portion of convertible notes payable
              
              
              510,083
              
              
              
              -Total
                  Current Liabilities
              
              
              8,664,187
              
              
              
              8,490,430LONG-TERM
                  LIABILITIES :Financing
                  agreements, net of current portion
              
              
              2,154,184
              
              
              
              2,050,588Long
                  term obligations, net of current portion
              
              
              2,421,200
              
              
              
              1,704,892Convertible
                  Notes payable
              
              
              -
              
              
              
              601,161Total
                  Long-Term  Liabilities
              
              
              4,575,384
              
              
              
              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 sharesauthorized,
                  none and 2,480,500  shares issued and
                  outstanding
              
              
              -
              
              
              
              2,481Common
                stock, $.001 par value, 1,000,000,000 shares authorized, 11,024,295and
                  5,920,408 shares issued and outstanding
              
              
              11,025
              
              
              
              5,920Additional
                  paid in capital
              
              
              43,131,510
              
              
              
              33,430,095Accumulated
                  deficit
              
              
              (43,026,369
              )
              
              
              (33,292,361
              )Total
                  Stockholders' Equity
              
              
              116,166
              
              
              
              146,135TOTAL
                  LIABILITIES & STOCKHOLDERS’ EQUITY
              
              $
              13,355,737
              
              
              $
              12,993,206




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





4





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


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**(UNAUDITED)**






**Three
                    months ended**
                
                
                **Six months
                    ended******
                
                **June
                    30, 2007**
                
                
                **June
                    30, 2006**
                
                
                **June
                    30, 2007**
                
                
                **June
                    30, 2006**REVENUES
                
                $
                6,541,832
                
                
                $
                4,349,839
                
                
                $
                12,859,212
                
                
                $
                7,997,757COST
                    OF REVENUES
                
                
                5,068,675
                
                
                
                3,338,327
                
                
                
                10,145,012
                
                
                
                6,126,696GROSS
                    PROFIT
                
                
                1,473,157
                
                
                
                1,011,512
                
                
                
                2,714,200
                
                
                
                1,871,061OPERATING
                    EXPENSES
                
                
                2,681,502
                
                
                
                2,191,472
                
                
                
                7,748,042
                
                
                
                3,942,749OPERATING
                    LOSS
                
                
                (1,208,345
                )
                
                
                (1,179,960
                )
                
                
                (5,033,842
                )
                
                
                (2,071,688
                )OTHER
                    INCOME (EXPENSE):Interest
                    income
                
                
                10,948
                
                
                
                6,323
                
                
                
                19,415
                
                
                
                11,671Interest
                    and financing costs
                
                
                (560,120
                )
                
                
                (610,630
                )
                
                
                (1,240,133
                )
                
                
                (896,887
                )Costs
                    to induce conversion of debt
                
                
                (3,428,847
                )
                
                
                -
                
                
                
                (3,547,687
                )
                
                
                -Other
                    non-operating income
                
                
                34,259
                
                
                
                22,826
                
                
                
                68,239
                
                
                
                52,812Net
                    Loss
                
                
                (5,152,106
                )
                
                
                (1,761,441
                )
                
                
                (9,734,008
                )
                
                
                (2,904,092
                )Preferred
                    stock dividends
                
                
                -
                
                
                
                (16,871
                )
                
                
                -
                
                
                
                (16,871
                )Net
                    Loss applicable to common share holders
                
                $
                (5,152,106
                )
                
                $
                (1,778,312
                )
                
                $
                (9,734,008
                )
                
                $
                (2,920,963
                )Calculations
                  of net loss per commonShare,
                    basic and diluted:
                
                $
                (.53
                )
                
                $
                (1.89
                )
                
                $
                (1.13
                )
                
                $
                (3.11
                )Weighted
                    average shares of common stockoutstanding,
                    basic and diluted
                
                
                9,767,147
                
                
                
                941,688
                
                
                
                8,611,020
                
                
                
                938,943
   **See
        accompanying notes to the condensed consolidated financial
        statements.**


5





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


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


**FOR
      THE SIX MONTHS ENDED JUNE 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 onconversion
                  of preferred stock
              
              
              2,067,106
              
              
              
              2,067
              
              
              
              (2,480,500
              )
              
              
              (2,481
              )
              
              
              414
              
              
              
              
              
              
              
              -Issuance
                of common stock onconversion
                  of debt
              
              
              377,308
              
              
              
              378
              
              
              
              
              
              
              
              
              
              
              
              451,224
              
              
              
              
              
              
              
              451,602Issuance
                of common stock onconversion
                  of notes payable
              
              
              1,881,860
              
              
              
              1,883
              
              
              
              
              
              
              
              
              
              
              
              4,707,781
              
              
              
              
              
              
              
              4,709,664Issuance
                of common stock for settlementof
                  payable to related entity
              
              
              184,874
              
              
              
              185
              
              
              
              
              
              
              
              
              
              
              
              219,815
              
              
              
              
              
              
              
              220,000Issuance
                of common stock pursuant toadvisory
                  agreement
              
              
              426,500
              
              
              
              426
              
              
              
              
              
              
              
              
              
              
              
              507,109
              
              
              
              
              
              
              
              507,535Issuance
                of common stock onconversion
                  of interest on notespayable
              
              
              165,083
              
              
              
              165
              
              
              
              
              
              
              
              
              
              
              
              196,607
              
              
              
              
              
              
              
              196,772Valuation  of
                warrants issued  to relatedentity
                  as inducement to convert debtto
                  equity
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,140,328
              
              
              
              
              
              
              
              1,140,328Valuation
                expense on modification ofwarrant
                  terms with related entity
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              136,082
              
              
              
              
              
              
              
              136,082Stock
                compensation cost for value ofvested
                  options
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              634,745
              
              
              
              
              
              
              
              634,745Valuation
                of warrants issued inconnection
                  with advisoryfee
                  agreement
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              357,750
              
              
              
              
              
              
              
              357,750Valuation
                of warrants issued inconnection
                  with conversion of debt
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              62,163
              
              
              
              
              
              
              
              62,163Valuation
                of warrants issued inconnection
                  with conversion of interest
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              36,865
              
              
              
              
              
              
              
              36,865Valuation
                of warrants issued forconsulting
                  services
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,248,645
              
              
              
              
              
              
              
              1,248,645Net
                loss for  the six  months endedJune  30,
                  2007
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (9,734,008
              )
              
              
              (9,734,008
              )Balance,
                  June  30, 2007
              
              
              11,024,295
              
              
              $
              11,025
              
              
              
              -
              
              
              $
              -
              
              
              $
              43,131,510
              
              
              $
              (43,026,369
              )
              
              $
              116,166






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




6




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


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**






**Six Months
                  Ended******
              
              **June 30,******
              
              **2007**
              
              
              **2006**OPERATING
                  ACTIVITIESNet
                  Loss
              
              $
              (9,734,008
              )
              
              $
              (2,904,092
              )Adjustments
                  to reconcile net loss to cash used in operating activitiesDepreciation
                  and amortization
              
              
              363,326
              
              
              
              243,960Amortization
                  of discount on notes
              
              
              10,416
              
              
              
              10,416Fair
                  value of vested options
              
              
              634,745
              
              
              
              110,622Issuance
                  of warrants and common shares for services
              
              
              2,294,104
              
              
              
              -Conversion
                  of accrued interest to common stock
              
              
              48,022
              
              
              
              -Amortization
                  of discount on convertible debt
              
              
              408,270
              
              
              
              422,949Amortization
                  of deferred financing fees
              
              
              124,843
              
              
              
              101,517Costs
                  to induce conversion of debt
              
              
              3,547,687
              
              
              
              -Valuation
                  of warrants to induce conversion of interest payable
              
              
              36,866
              
              
              
              -Gain
                  on issuance of common shares for accounts payable
              
              
              62,163
              
              
              
              (53,900
              )Changes
                  in assets and liabilities:Accounts
                  Receivable
              
              
              419,060
              
              
              
              1,638,107Prepaid
                  and other current assets
              
              
              (299,911
              )
              
              
              (143,611
              )Accounts
                  Payable
              
              
              26,638
              
              
              
              (1,537,590
              )Accrued
                  interest on convertible notes
              
              
              -
              
              
              
              60,255Accrued
                  expenses and other liabilities
              
              
              397,217
              
              
              
              411,775NET
                  CASH USED IN OPERATING ACTIVITIES
              
              
              (1,660,562
              )
              
              
              (1,639,592
              )INVESTING
                  ACTIVITIESAcquisition,
                  net of liabilities assumed
              
              
              -
              
              
              
              (1,500,000
              )Increase
                  in deposits and restricted cash
              
              
              (353,569
              )
              
              
              (311,549
              )Additions
                  to property and equipment
              
              
              (187,576
              )
              
              
              (98,840
              )NET
                  CASH USED IN INVESTING ACTIVITIES
              
              
              (541,145
              )
              
              
              (1,910,389
              )FINANCING
                  ACTIVITIESNet
                  advances (payments) from line of credit
              
              
              -
              
              
              
              (1,094,780
              )Net
                  advances from notes payable – financing agreement
              
              
              (552,084
              )
              
              
              -Advances
                  from related parties
              
              
              2,347,400
              
              
              
              745,613Issuance
                  of notes payable
              
              
              -
              
              
              
              37,640Payment
                  of notes payable
              
              
              (115,978
              )
              
              
              (50,186
              )Proceeds
                  from issuance of notes
              
              
              -
              
              
              
              3,433,104Proceeds
                  from issuance of convertible notes
              
              
              -
              
              
              
              1,288,799Proceeds
                  from issuance of common stock
              
              
              1,888
              
              
              
              -Deferred
                  financing fees
              
              
              -
              
              
              
              (789,729
              )NET
                  CASH PROVIDED BY FINANCING ACTIVITIES
              
              
              1,681,226
              
              
              
              3,570,461INCREASE
                  (DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              (520,481
              )
              
              
              20,480Cash
                  at beginning of period
              
              
              618,654
              
              
              
              47,995CASH
                  AT END OF PERIOD
              
              $
              98,173
              
              
              $
              68,475SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:Cash
                  paid for:Interest
                  Expense
              
              $
              463,558
              
              
              $
              121,139






**(continued)**


**See
            accompanying notes to the condensed consolidated financial
            statements.**
  7


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


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**


**(Continued)**




**Six Months
                    Ended******
                
                **June 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
                
                
                2,478,212
                
                
                
                110,000Conversion
                    of investor interest to common stock
                
                
                148,750
                
                
                
                -Issuance
                    of common stock for financing costs
                
                
                -
                
                
                
                210,000Deferred
                    financing cost included in payable to related party
                
                
                -
                
                
                
                75,000Issuance
                    of capital lease obligations
                
                
                949,185
                
                
                
                -Value
                    of warrants and beneficial conversion feature on convertible
                    notes
                
                
                -
                
                
                
                1,282,416Conversion
                    of accrued expenses to equity
                
                
                451,602
                
                
                
                -
   **See
        accompanying notes to the condensed consolidated financial
        statements.**
  8
 
  **GENERAL
            ENVIRONMENTAL MANAGEMENT, INC AND SUBSIDIARIES**
 **NOTES
            TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
            THE THREE AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006
            (UNAUDITED)**
 
 **1.** **ORGANIZATION
            AND PRINCIPAL ACTIVITIES**
 
 ORGANIZATION
            AND DESCRIPTION OF BUSINESS
 
 Ultronics
            Corporation (a development stage company) ( “the Company”)  was
            incorporated in the state of Nevada on March 14, 1990 to serve as a vehicle
            to
            effect a merger, exchange of capital stock, asset acquisition or other
            business
            combination with a domestic or foreign private business.  The
            Company’s fiscal year end is December 31.
 
 On
            February 14, 2005 the Company acquired all of the outstanding shares
            of General
            Environmental Management, Inc (“GEM”), a Delaware Corporation in exchange for
            18,914,408 shares of its class A common stock and as a result GEM became
            a
            wholly owned subsidiary of Ultronics Corporation.
 
 The
            acquisition was accounted for as a reverse merger (recapitalization)
            with GEM
            deemed to be the accounting acquirer, and Ultronics Corporation the legal
            acquirer.  Accordingly, the historical financial information presented
            in the financial statements is that of GEM as adjusted to give effect
            to any
            difference in the par value of the issuer’s and the accounting acquirer stock
            with an offset to capital in excess of par value.  The basis of the
            assets, liabilities and retained earnings of GEM, the accounting acquirer,
            have
            been carried over in the recapitalization.  Subsequent to the
            acquisition, the Company changed its name to General Environmental Management,
            Inc.
 
 On
            January 29, 2007 a special meeting of the shareholders of the Company
            was
            held.  The shareholders approved the amendment and restatement of the
            Company’s Articles of Incorporation.  The restated articles included
            the increase of the authorized number of shares of common stock to one
            billion,
            the increase of the authorized number of shares of preferred stock to
            100,000,000; and of a one for thirty reverse stock split. 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.
  9
  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
            $9,734,008 and utilized cash in operating activities of $1,660,562 during
            the
            six  months  ended June 30, 2007, and as of June 30, 2007
            the Company had current liabilities exceeding current assets by $2,717,076.
            These matters raise substantial doubt about the Company’s ability to continue as
            a going concern.
 
 Management
            is continuing to raise capital through the issuance of debt and equity.
            In
            addition, management believes that the Company will begin to operate
            profitably
            due to increased size, improved operational results and cost cutting
            practices.
            However, there can be no assurances that the Company will be successful
            in this
            regard or will be  able to eliminate its working capital deficit or
            operating losses. The accompanying condensed consolidated financial statements
            do not contain any adjustments which may be required as a result of this
            uncertainty.
 
 **2.****SUMMARY
            OF SIGNIFICANT ACCOUNTING POLICIES**
 
 (a)  Use
            of estimates
 
 The
            preparation of financial statements in conformity with accounting principles
            generally accepted in the United States of America requires the Company’s
            management to make certain estimates and assumptions. These estimates
            and
            assumptions affect the reported amounts of assets and liabilities and
            disclosure
            of the contingent assets and liabilities at the date of the financial
            statements.  These estimates and assumptions will also
            affect  the reported amounts of certain revenues and expenses during
            the reporting period.  Actual results could differ materially based on
            any changes in the estimates and assumptions that the Company uses in
            the
            preparation of its financial statements that are reviewed no less than
            annually.  Actual results could also differ materially from these
            estimates and assumptions due to changes in environmental-related regulations
            or
            future operational plans, and the inherent imprecision associated with
            estimating such future matters.
 
 (b)
            Revenue Recognition.
 
 The
            Company recognizes revenue when persuasive evidence of an arrangement
            exists,
            delivery has occurred  or services have been rendered, the price is
            fixed or determinable, and collection is reasonably assured.
 
 The
            Company is a fully integrated environmental service firm structured to
            provide
            field services, technical services, transportation, off-site treatment,
            on-site
            treatment services, and environmental health and safety (“EHS”) compliance
            services.  We assist clients in meeting regulatory requirements from
            the designing   stage to the waste disposition stage. The
            technicians who provide these services are billed at negotiated rates,
            or the
            service is bundled into a service package.  These services are billed
            and revenue recognized when the service is performed and completed. When
            the
            service is billed, client costs are accumulated and accrued.
 
 Our
            field
            services consist primarily of handling, packaging, and transporting a
            wide
            variety of liquid and solid wastes of varying amounts. We provide the
            fully
            trained labor and materials to properly package hazardous and non-hazardous
            waste according to requirements of the Environmental Protection Agency
            and the
            Department of Transportation. Small quantities of laboratory chemicals
            are
            segregated according to hazard class and packaged into appropriate containers
            or
            drums. Packaged waste is profiled for acceptance at a client’s selected
            treatment, storage and disposal facility (TSDF) and tracked electronically
            through our systems. Once approved by the TSDF, we provide for the
            transportation of the waste utilizing tractor-trailers or bobtail trucks.
            The
            time between picking up the waste and transfer to an approved TSDF is
            usually
            less than 10 days.  The Company recognizes revenue for waste picked up
            and received waste at the time pick up or receipt occurs and recognizes
            the
            estimated cost of disposal in the same period. For the Company’s TSDF located in
            Rancho Cordova, CA, costs to dispose of waste materials located at the
            Company’s
            facilities are included in accrued disposal costs.  Due to the limited
            size of the facility, waste is held for only a short time before transfer
            to a
            final treatment, disposal or recycling facility.
  10
 
 (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 six months ended June 30, 2007 and 2006, one customer accounted for
            13% and
            11.4% of revenues, respectively. As of June 30, 2007, there was one customer
            that accounted for 21% 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 six months ended June 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 six months ended June 30, 2007
            and
            2006.
 
 At
            June
            30, 2007 and 2006, potentially dilutive securities consisted of convertible
            securities, outstanding common stock purchase warrants and stock options
            to
            acquire an aggregate of 9,007,015 shares and 3,677,407 shares,
            respectively.
 
 (f)
            Stock
            Compensation Costs
 
 The
            Company periodically issues stock options and warrants to employees and
            non-employees in capital raising transactions, for services and for financing
            costs.  The Company adopted SFAS No. 123R effective January 1, 2006,
            and is using the modified prospective method in which compensation cost
            is
            recognized beginning with the effective date (a) based on the requirements
            of
            SFAS No. 123R for all share-based payments granted after the effective
            date and
            (b) based on the requirements of SFAS No. 123R for all awards granted
            to
            employees prior to the effective date of SFAS No. 123R that remain unvested
            on
            the effective date.  The Company accounts  for stock option
            and warrant grants issued and vesting to non-employees in accordance
            with EITF
            No. 96-18: "Accounting for Equity Instruments that are Issued to Other
            Than
            Employees for Acquiring, or in Conjunction with Selling, Goods or Services” and
            EITF No. 00-18 “Accounting Recognition for Certain Transactions involving Equity
            Instruments Granted to Other Than Employees” whereas the value of the stock
            compensation is based upon the measurement date as determined at either
            a) the
            date at which a performance commitment is reached, or b) at the date
            at which
            the necessary performance to earn the equity instruments is
            complete.
  11
  (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 June
            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  June 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.
 
 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.
  12
  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 six months
            ended June
            30, 2006 for the Company had  the acquisition occurred as of January
            1, 2006:
  **Six
                        months ended June 30, 2006**
                    ********
                    ****
                    **Unaudited**Net
                        sales
                    
                    $
                    8,516,132Cost
                        of sales
                    
                    
                    6,390,030Gross
                        profit
                    
                    
                    2,126,102Operating
                        expenses
                    
                    
                    4,293,008Operating
                        loss
                    
                    
                    (2,166,906
                    )Other
                        income (expense):Interest
                        income
                    
                    
                    11,671Interest
                        expense and amortization of deferred financing costs
                    
                    
                    (897,995
                    )Valuation
                        – conversion of notes to common stock
                    
                    
                    -Other
                        non-operating income
                    
                    
                    52,812NET
                        LOSS
                    
                    $
                    (3,000,418
                    )Loss
                      per weighted average share, basic and diluted
                    
                    $
                    (3.19
                    )
  13
  **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 June 30, 2007:
 
 Rancho
                      Cordova acquisition – permit
                  
                  $
                  475,614Prime
                      acquisition – customers
                  
                  
                  400,422K2M  acquisition
                      – customers
                  
                  
                  438,904K2M  acquisition
                      – permits
                  
                  
                  27,090Accumulated
                      amortization
                  
                  
                  (195,128
                  )$
                  1,146,902
 
 Permit
            costs have been capitalized and are being amortized over the life of
            the permit,
            including expected renewal periods.  Customer Lists acquired are being
            amortized over eleven years (Prime acquisition) or twelve years (K2M
            acquisition).
  **5.** **RELATED
            PARTY TRANSACTIONS**
 
 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 12 % of the Company’s common stock at June 30,
            2007.  The following summarizes the transactions with GPP during the
            three and six months ended June 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
            7 years.
  14
 
 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, and
            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 $3,960,017 ($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.
 
 The
            aggregate value of common stock issued in excess of the notes exchanged
            of
            $2,451,451 and the value of the warrants issued of $118,840 and $977,396
            was
            $3,547,687 and was reflected as costs to induce conversion of debt in
            the
            accompanying statement of operations for the three and six months ended
            June 30,
            2007.
 
 As
            of
            June 30, 2007, $648,911 of these unsecured advances remain
            outstanding.
 
 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.
 
 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.
  15
  As
            of
            June 30, 2007 and December 31, 2006, the Company had $45,060 and $270,000
            respectively, in amounts payable to GPP for expenses related to advisory
            services and accrued interest.
  **6.** **SECURED
            FINANCING AGREEMENT**
 
 Secured
            financing consists of the following notes payable to Laurus Master Fund
            at June
            30, 2007 and December
            31, 2006:
 
 **June
                      30,**
                  ****
                  ****
                  **December
                      31,**
                  ********
                  ****
                  **2007**
                  ****
                  ****
                  **2006**
                  ********
                  ****
                  **(Unaudited)**
                  ****
                  ****(a)
                      Secured convertible Term Note
                  
                  $
                  1,212,121
                  
                  
                  $
                  1,575,757(a) Secured
                      non-convertible Revolving Note
                  
                  
                  3,072,605
                  
                  
                  
                  2,971,277(b)
                      Secured Short Term Note
                  
                  
                  -
                  
                  
                  
                  289,776Valuation
                      Discount
                  
                  
                  (1,360,904
                  )
                  
                  
                  (1,769,174
                  )2,923,822
                  
                  
                  
                  3,067,636Less
                      current portion
                  
                  
                  (769,638
                  )
                  
                  
                  (1,017,048
                  )Financing
                      agreement, net of current portion
                  
                  $
                  2,154,184
                  
                  
                  $
                  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.
 
 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 June 30, 2007 and December 31,
            2006  was $1,212,121 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.
  16
 
 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
            June 30, 2007 and December 31, 2006, the Company had outstanding borrowings
            of
            $3,072,605 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 six months
            ended June
            30, 2007 the Company amortized $408,270 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.
 (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.
  17
  **7.INCOME
            TAXES**
 
 The
            Company's net deferred tax assets  consisted of the following at June
            30, 2007 and December 31, 2006:
 
 **June
                      30,**
                    **2007**
                  ****
                  ****
                  **December
                      31, 2006**Deferred
                      tax asset, net operating loss
                  
                  $
                  6,106,336
                  
                  
                  $
                  7,516,674Less
                      valuation allowance
                  
                  
                  (6,106,336
                  )
                  
                  
                  (7,516,674
                  )Net
                      deferred tax asset
                  
                  $
                  -
                  
                  
                  $
                  -
  As
            of
            June 30, 2007, the Company had federal net operating loss carry forwards
            of
            approximately $17,959,812 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 June 30, 2007.
 
 Reconciliation
            of the effective income tax rate to the United States statutory income
            tax rate
            for the six months ended June 30, 2007 and 2006 is as follows:
 
 **Six
                      months ended**
                  ********
                  ****
                  **June
                      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
                  
                  
                  -
                  
                  
                  
                  -
  **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.
  18
  **9.STOCK
            OPTIONS AND
            WARRANTS**
 
 On
            March
            28, 2007 the Board of Directors approved and implemented the 2007 Stock
            Option
            Plan (the “Plan”).  The plan authorized option grants to employees and
            other persons closely associated with the Company for the purchase of
            up to
            5,500,000 shares.  The Board of Directors granted a total of 4,397,500
            options to 102 employees and one consultant.  The exercise price of
            the options was $1.19.
 
 A
            summary
            of the option activity during the period is as follows:
  **Weighted
                      Avg.**
                  
                  
                  **Weighted
                      Avg.**
                  
                  
                  **Weighted
                      Avg.****Options**
                  
                  
                  **Exercise
                      Price**
                  
                  
                  **Life
                      in Years**Options,
                      January 1, 2007
                  
                  
                  67,067
                  
                  
                  
                  28.20
                  
                  
                  
                  6.48Options
                      granted
                  
                  
                  4,397,500
                  
                  
                  
                  1.19
                  
                  
                  
                  9.75Options
                      exercised
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Options
                      cancelled
                  
                  
                  (6,348
                  )
                  
                  
                  7.66
                  
                  
                  
                  -Options,
                      June 30, 2007
                  
                  
                  4,458,219
                  
                  
                  
                  1.59
                  
                  
                  
                  9.69Options
                      exercisable, June 30,2007
                  
                  
                  1,426,025
                  
                  
                  
                  2.22
                  
                  
                  
                  9.61
  The
            aggregate intrinsic value of the 4,458,219 options outstanding and 1,426,025
            options exercisable as of June 30, 2007 was $ 8,609,667 and $ 2,693,444,
            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
            June 30,
            2007.
 
 For
            the
            six months ended June 30, 2007 and 2006, the fair value of options vesting
            during the period was $634,745 and $110,622 respectively, and has been
            reflected
            as compensation cost. As of June 30, 2007, the Company has unvested options
            valued at $1,395,340 which will be reflected as compensation cost over
            the
            estimated remaining vesting period of 3 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.
  19
 
 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, 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
                  
                  
                  3,391,016Warrants
                      exercised
                  
                  
                  -Warrants
                      expired
                  
                  
                  (26,209
                  )Warrants
                      outstanding, June 30,2007
                  
                  
                  4,548,796
  **10.COMMITMENTS
            AND
            CONTINGENCIES**
 
 During
            July 2007, General Environmental Management, Inc. (“GEM”) hired four 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 four former RET senior
            executives.  In the lawsuit, RET alleges that the Company and the four
            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.
  20
  **ITEM
            2. Management’s Discussion and Analysis of Financial Condition and Results of
            Operations**
 
 FORWARD
            LOOKING STATEMENTS
 
 In
            addition to historical information, this Quarterly Report contains
            forward-looking statements, which are generally identifiable by use
            of  the words “believes”, “expects”, “intends”, “anticipates”, “plans
            to”, “estimates”, “ projects”, or similar expressions.  These
            forward-looking statements are subject to certain risks and uncertainties
            that
            could cause actual results to differ materially from those reflected
            in these
            forward-looking statements.  Factors that might cause such a
            difference include, but are not limited to, those discussed in the section
            entitled “Management’s Discussion and Analysis of Financial Condition and
            Results of Operations – Factors That May Affect Future
            Results”.  Readers are cautioned not to place undue reliance on these
            forward-looking statements, which reflect management’s opinions only as of the
            date hereof.  We undertake no obligation to revise or publicly release
            the results of any revision to these forward-looking
            statements.  Readers should carefully review the risk factors
            described in other documents the company files from time to time with
            the
            Securities and Exchange Commission  ( the “SEC”), including the
            Quarterly Reports on form 10QSB to be filed by us in the fiscal year
            2007.
 
 OVERVIEW
 
 Ultronics
            Corporation (Ultronics) was a non-operating company formed for the purpose
            of
            evaluating opportunities to acquire an operating company.  On February
            14, 2005 Ultronics acquired General Environmental Management, Inc. through
            a
            reverse merger between Ultronics Acquisition Corp., a wholly owned subsidiary
            of
            Ultronics and General Environmental Management, Inc., whereby General
            Environmental Management, Inc. (GEM) was the surviving entity.
 
 The
            acquisition was accounted for as a reverse merger (recapitalization)
            with GEM
            deemed to be the accounting acquirer, and Ultronics Corporation the legal
            acquirer.  Accordingly, the historical financial information presented
            in the financial statements is that of GEM as adjusted to give effect
            to any
            difference in the par value of the issuer’s and the accounting acquirer stock
            with an offset to capital in excess of par value.  The basis of the
            assets, liabilities and retained earnings of GEM, the accounting acquirer,
            have
            been carried over in the recapitalization.  Subsequent to the
            acquisition, the Company changed its name to General Environmental Management,
            Inc.
 
 GEM
            is a
            fully integrated environmental service firm structured to provide EHS
            compliance
            services, field services, transportation, off-site treatment, and on-site
            treatment services.  Through its services GEM assists clients in
            meeting regulatory requirements for the disposal of hazardous and non-hazardous
            waste.  GEM provides its clients with access to GEMWare, an internet
            based software program that allows clients to maintain oversight of their
            waste
            from the time it leaves their physical control until final disposition
            by
            recycling, destruction, or landfill.  The GEM business model is to
            grow both organically and through acquisitions.
 
 During
            2003 and 2004 GEM acquired the assets of Envectra, Inc., Prime Environmental
            Services, Inc. (Prime) and 100% of the membership interest in Pollution
            Control
            Industries of California, LLC, now named General Environmental Management
            of
            Rancho Cordova, LLC.  The assets of Envectra, Inc. included an
            internet based integrated environmental management software now marketed
            by the
            Company as GEMWare.  The acquisition of the assets of Prime resulted
            in a significant increase in the revenue stream of the company and a
            presence in
            the Washington State and Alaska markets through Prime’s Seattle
            office.  All Prime services are now offered under the GEM
            name.  The primary asset of Pollution Control Industries of
            California, LLC was a fully permitted Part B Treatment Storage Disposal
            Facility
            (TSDF) in Rancho Cordova, California.  The facility provides waste
            management services to field service companies and allows the Company
            to bulk
            and consolidate waste into larger more cost effective containers for
            outbound
            disposal.
 
 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
 
 The
            accompanying consolidated statements have been   prepared
            assuming that the Company will continue   as a going concern. The
            company realized a net loss of $9,734,008 and utilized cash in operating
            activities of $1,660,562 during the six  months ended June 30,
            2007.  The Company currently has a working capital deficit, and the
            amount current liabilities exceed current assets, of $2,717,076 as of
            June 30,
            2007.  There can be no assurances that the Company will be successful
            in eliminating the deficit, as such, there is doubt about the Company’s ability
            to continue as a going concern.
 
 COMPARISON
            OF THREE  MONTHS ENDED JUNE  30, 2007 AND
            2006
 
 Revenues
 
 Total
            revenues were $6,541,832 for the three months ended June 30, 2007, representing
            an increase of $2,191,993 or 50.4% compared to the three months ended
            June 30,
            2006.  The increase in revenue can be attributed to improved market
            penetration in the Western United States, an increase in revenues in
            the
            Enviroconstruction market sector and the acquisition of K2M in March
            2006.
 
 Cost
            of
            Revenues
 
 Cost
            of
            revenues for the three months ended June 30, 2007 were $5,068,675 or
            77.5% of
            revenue, as compared to $3,338,327 or 76.7% of revenue for the three
            months
            ended June 30, 2006.  The cost of revenues includes disposal costs,
            transportation, outside labor and operating supplies. The change in the
            cost of
            revenue in comparison to the prior year is primarily due to higher volume
            with  slightly lower than anticipated margins on second quarter
            Enviroconstruction projects which were partially offset by higher margin
            business from GEM Mobile Treatment Services (K2M).
 
 Operating
            Expenses
 
 Operating
            expenses for the three months ended June 30, 2007 were $2,681,502 or
            41% of
            revenue as compared to $2,191,472 or 50.4% 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 anticipation of further growth and
            expansion.
 
 Depreciation
            and Amortization
 
 Depreciation
            and amortization expenses for the three months ended June 30, 2007 were
            $191,253, or 2.9% of revenue, as compared to $152,334, or 4% of revenue
            for the
            same period in 2006. The increase in expenses is related to the increase
            in
            property, plant and equipment and the increase in intangibles related
            to the
            acquisition made during the quarter ended March 31, 2006.
 
 Interest
            Expense
 
 Interest
            expense for the three months ended June 30, 2007 were $560,120 or 8.56%
            of
            revenue, as compared  to $610,630 or 14.04% 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.
  22
 
 Other
            Non-Operating Income
 
 The
            Company had other non-operating income for the three months ended June
            30, 2007
            of $34,259 or  0.52
            % of revenue, and $22,826 for the same period in 2006.  Non-Operating
            income for the  three months ended June 30, 2007 consisted of
            continuing rental income from the lease of an office building in Rancho
            Cordova,
            California.
 
 Valuation
            – Conversion of notes to common stock
 
 During
            the quarter ended June 30, 2007, the Company converted $1,508,565 of
            assignable
            notes to 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 $3,428,847.
 
 Net
            Loss
 
 The
            net
            loss for the three months ended June 30, 2007 was $5,152,106 or 78.76%
            of  revenue  as compared  to a loss of $1,761,441,
            or 40.5% of  revenue for the same period in 2006.  The loss
            is attributable to a general  and administrative infrastructure
            created in anticipation of a larger revenue base to be developed through
            acquisition and organic growth. It also includes non-cash charges described
            above related to convertible debt instruments and the use of common stock
            and
            warrants to  compensate  employees, advisors and
            consultants.
  COMPARISON
            OF SIX MONTHS ENDED JUNE 30, 2007 AND 2006
  Revenues
 
 For
            the
            six months ended June 30, 2007, the Company reported consolidated revenue
            of
            $12,859,212   representing an increase of $4,861,455 or 60.8 %
            compared to the six months ended June 30, 2006.  The increase in
            revenue can be attributed to organic growth, an increase of $2,243,406
            in
            revenues in the Enviroconstruction  market sector and an increase of
            $1,629,582 in revenues attributable to  K2M.
 
 Cost
            of
            Revenues
 
 Cost
            of
            revenues for the six months ended June 30, 2007 were $10,145,012 or 79
            % of
            revenue, as compared to $6,126,696 or 76.6 % of revenue for the six months
            ended
            June 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 than anticipated
            margins
            on Enviroconstruction  projects which were partially offset by higher
            margin business from GEM Mobile Treatment Services (K2M).
  23
 
 Operating
            Expenses
 
 Operating
            expenses for the six months ended June 30, 2007 were $7,748,042 or 60%
            of  revenue as compared to $ 3,942,749 or 49.3% 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 six months ended June 30, 2007 the value of options
            vested during the period was $634,745.
 
 Depreciation
            and Amortization
 
 Depreciation
            and amortization expenses for the six months ended June 30, 2007 were
            $363,326
            or 2.8% of revenue, as compared to $243,960 or 5.6% 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.
 
 Interest
            Expense
 
 Interest
            expense for the six months ended June 30, 2007 were $1,240,133 or 9.6%
            of
            revenue, as compared to $ 896,887 or 11.2% of revenue for the same period
            in
            2006.  Interest expense consists of interest on the line of credit,
            short and long term borrowings, and advances to related parties.  It
            also includes amortization of deferred finance fees and amortization
            of
            valuation discounts generated from beneficial conversion features related
            to the
            fair value of warrants and conversion features of long term debt. The
            increase
            in interest expense is due to higher average loan balances outstanding
            under the
            Company’s revolving credit agreement with Laurus Master Fund, Ltd  and
            the additional debt issued related to the K2M acquisition.
 
 Costs
            to
            induce conversion of debt
 
 During
            the quarter ended June 30, 2007, the Company converted $1,508,565 of
            assignable
            notes to 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 $3,547,687.
 
 Other
            Non-Operating Income
 
 The
            Company had other non-operating income for the  six  months
            ended June 30, 2007 of $68,239, or .53% of revenue, and $52,812  or
            .7% for the same period in 2006. Non-Operating income for the six months
            ended
            2007 consisted of continuing rental income from the lease of an office
            building
            in Rancho Cordova, California.
 
 Net
            Loss
 
 The
            net
            loss for the six months ended June 30, 2007 was $9,734,008, or 75.7%
            of revenue
            as compared  to a loss of $2,904,092, or 36.3% of revenue for the same
            period in 2006. The loss is primarily attributable to a non-cash charge
            for
            consulting and advisory fees of $2,294,104 originating from the issuance
            of
            common stock and warrants; a non-cash charge of $634,745 related to the
            term
            value of options vested and a charge of $3,547,687 related to the conversion
            of
            notes to common stock.
  24
  LIQUIDITY
            AND CAPITAL RESOURCES
 
 Cash
 
 Our
            primary sources of liquidity are cash provided by operating, investing,
            and
            financing activities.  Net cash used in operations for the three
            months ended June 30, 2007 was $681,995 as compared to $773,479 for the
            same
            period in 2006.  Net cash used in operations for the six months ended
            June 30, 2007 was $1,660,562 as compared to $1,639,592 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 $9, 734,008 and utilized cash in operating activities of
            $1,660,562
            during the six months ended June 30, 2007.  As of June 30, 2007 the
            Company had current liabilities exceeding current assets by $2, 717,076.
            These
            matters raise substantial doubt about the Company’s ability to continue as a
            going concern.
 
 Management
            is continuing to raise capital through the issuance of debt and equity
            and
            believes it will be able to raise sufficient capital over the next twelve
            months
            to finance operations. In addition, management believes that the company
            will
            begin to operate profitably due to improved operational results, cost
            cutting
            practices, and the completion of the integration of
            acquisitions.  However, there can be no assurances that the Company
            will be successful in this regard or will be able to maintain its working
            capital surplus or eliminate operating losses.  The accompanying
            financial statements do not contain any adjustments which may be required
            as a
            result of this uncertainty.
 
 The
            Company’s capital requirements consist of general working capital needs,
            scheduled principal and interest payments on debt, obligations, and capital
            expenditures.  The Company’s capital resources consist primarily of
            cash generated from operations and proceeds from issuances of debt and
            common
            stock.  The Company’s capital resources are impacted by changes in
            accounts receivable as a result of revenue fluctuations, economic trends
            and
            collection activities.
  Cash
            Flows for the Six Months Ended June 30, 2007
 
 Operating
            activities for the six months ended June 30, 2007 used $1,660,562 in
            cash.  Accounts receivable, net of allowances for bad debts, decreased
            $419,060 as of June 30, 2007 and accounts payable were increased by
            $26,638.  Depreciation and amortization for the six months ended June 30,
            2007 totaled $363,326. The net loss of $9,734,008 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 $634,745 which represents the fair
            value of vested options on the 2005 and the 2007 stock option plans,
            $408,270
            representing discount amortization on convertible debt, $124,843 representing
            amortization of deferred financing fees, $2,294,104 representing the
            value of
            warrants and common shares issued for consulting and advisory services
            and
            $3,547,687 resulting from the conversion of notes to common stock and
            warrants.
            Other non-cash expenses totaled $205,056.  Prepaid expenses used
            $299,911 in cash for the payment of insurance premiums that will be amortized
            in
            2007.  Accrued expenses increased by $397,217.
 
 The
            Company used cash for investment in plant, property and equipment and
            deposits
            totaling approximately $541,145 for the six months ended June 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 six months. The Company raised $1,681,226
            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 (see Note 6 to the Financial Statements).
  25
 
 These
            activities resulted in a $520,481 reduction in cash balances from year
            end
            December 31, 2006 to the end of the quarter June 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, client costs are accumulated and accrued.
 
 Our
            field
            services consist primarily of handling, packaging, and transporting a
            wide
            variety of liquid and solid wastes of varying amounts. We provide the
            fully
            trained labor and materials to properly package hazardous and non-hazardous
            waste according to requirements of the Environmental Protection Agency
            and the
            Department of Transportation. Small quantities of laboratory chemicals
            are
            segregated according to hazard class and packaged into appropriate containers
            or
            drums. Packaged waste is profiled for acceptance at a client’s selected
            treatment, storage and disposal facility (TSDF) and tracked electronically
            through our systems. Once approved by the TSDF, we provide for the
            transportation of the waste utilizing tractor-trailers or bobtail trucks.
            The
            time between picking up the waste and transfer to an approved TSDF is
            usually
            less than 10 days.  The Company recognizes revenue for waste picked up
            and received waste at the time pick up or receipt occurs and recognizes
            the
            estimated cost of disposal in the same period. For the Company’s TSDF located in
            Rancho Cordova, CA, costs to dispose of waste materials located at the
            Company’s
            facilities are included in accrued disposal costs.  Due to the limited
            size of the facility, waste is held for only a short time before transfer
            to a
            final treatment, disposal or recycling facility. Revenue is recognized
            on
            contracts with retainage when services have been rendered and collectability
            is
            reasonably assured.
  26
 
 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 June
            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 June 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.
 
 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.
  27
  **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 June 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.
  **PART
              II - OTHER INFORMATION**
  **Item
                        1.**
                    **Legal
                        Proceeding -**A
                        lawsuit was instituted by RET against the Company and the
                        four former RET
                        senior executives; incorporated by reference previously filed
                        on form 8K
                        with the commission on 7/18/2007
 
 **Item
                        2.**
                    **Unregistered
                        Sales of Securities and Use of Proceeds -******
 
 **Item
                        3.**
                    **Defaults
                        upon Senior Securities -**None
 
 **Item
                        4.**
                    **Submission
                        of Matters to a Vote of Security
                        Holders**
  On
                January 29, 2007 a special meeting of the shareholders of the Company
                was held
                in Pomona, CA.  The shareholders approved the amendment and
                restatement of the Company’s Articles of Incorporation.  The restated
                articles included the increase of the authorized number of shares
                of common
                stock to one billion; the increase of the authorized number of shares
                of
                preferred stock to 100,000,000; and the effect of a one for thirty
                reverse stock
                split.
 **Item
                          5.**
                      **Other
                          Information**-
                          None
  **Item
                              6.**
                          **Exhibits
                              and Reports**
 **(a)**
                                **Exhibits**2.1
                                Plan
                                      of purchase, sale, reorganization, arrangement,
                                      liquidation, or succession
                                      – Acquisition of General Environmental Management,
                                      Inc.; incorporated by
                                      reference previously filed on form 8K with
                                      the commission on
                                      12/23/20042.2
                                Notification
                                      of the completion of the acquisition effective
                                      2/14/05; incorporated by
                                      reference previously filed with the commission
                                      on form 8K on
                                      2/18/0522.1
                                Published
                                      report regarding matters submitted to a vote
                                      of security holders;
                                      incorporated by reference filed on PRE 14A
                                      filed with the commission on
                                      2/22/0522.2
                                Amendments
                                      to Articles of Incorporation or Bylaws; incorporated
                                      by reference and
                                      filed with the commission on 3/23/0531.1
                                CEO
                                    Certification - attached31.2
                                CFO
                                  Certification - attached32.1
                                CEO
                                    Certification - attached32.2
                                CFO
                                  Certification - attached**(b)**
                                **Reports
                                  on Form 8-K**1.
                                Reverse
                                      Stock Split of the Company’s Common Stock; filed with the commission on
                                      1/03/072.
                                Other
                                  events, filed with the commission on
                                  7/18/07.
 28
  **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: August
                      14, 2007
                    By:
                    /s/ Timothy
                      J.
                      KoziolTimothy
                        J. Koziol,President,
                        CEO and Chairman of the Board of
                        Directors
  Date: August
                      14, 2007
                    By:
                    /s/ Brett
                      M.
                      ClarkBrett
                      M. ClarkVice
                        President of Finance, Chief Financial
                        Officer
   29