**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, 2006





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





For
      the
      transition period from ________________ to _______________





Commission
      File No. 33-55254-38





**General
      Environmental Management, Inc.**


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





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











3191
                Temple Ave., Suite 250, Pomona, CA
            
            91768(Address
                of principal executive offices)
            
            (Zip
                Code)(909)
                444-9500Issuer’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, 2006$.001
                PAR VALUE COMMON STOCK
            
            28,250,635
                SHARES







**GENERAL
      ENVIRONMENTAL MANAGEMENT, INC.**


**QUARTERLY
      REPORT ON FORM 10QSB**


**FOR
      THE FISCAL QUARTER ENDED JUNE 30, 2006**





**TABLE
      OF CONTENTS**




Page
                  No.**Part
                  I Financial Information**Item
                  1. Financial Statements (unaudited)
              3Condensed
                  Consolidated Balance Sheets as of June 30,
                  2006 (Unaudited) and December 31, 2005
              3Condensed
                  Unaudited Consolidated Statements of
                  Operations for the Three Months and Six Months
                ended
                  June 30, 2006 and 2005
              5Condensed
                  Unaudited Consolidated Statement of
                  Stockholders’ Equity for the Six Months EndedJune
                  30, 2006
              6Condensed
                  Unaudited Consolidated Statements of Cash
                  Flows for the Six Months Ended June 30,
                2006
                  and 2005
              7Notes
                  to the Unaudited Condensed Consolidated Financial
                  Statements
              9Item
                  2. Management’s Discussion and Analysis of Financial
                  Condition and Results of Operations
              21Item
                  3. Controls and Procedures
              27**Part
                  II Other Information**Item
                  1. Legal Proceedings
              27Item
                  2. Changes in Securities
              27Item
                  3. Defaults Upon Senior
                  Securities
              27Item
                  4. Submission of Matters to a Vote of Security
                  Holders
              27Item
                  5. Other Information
              27Item
                  6. Exhibits and Reports on Form
                  8K
              27Signatures
              28CEO
                  Certification
              29CFO
                  Certification
              30


2




**PART
      1 - FINANCIAL INFORMATION**





Item
      1. Financial Statements.





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


**CONDENSED
      CONSOLIDATED BALANCE
      SHEETS**




June
                  30,
              
              December
                  31,2006
              
              2005(Unaudited)ASSETSCURRENT
                  ASSETS:Cash
              
              $
              68,474
              
              $
              47,995Accounts
                  receivable, net of allowance for doubtful accounts of
                $238,013
                  and $236,021, respectively
              
              
              3,505,647
              
              
              5,143,754Prepaid
                  expenses and other current assets
              
              
              497,778
              
              
              126,268Total
                  Current Assets
              
              
              4,071,899
              
              
              5,318,017Property
                  and Equipment - Net of accumulated depreciation of
                $1,012,690
                  and $865,814, respectively
              
              
              2,776,152
              
              
              2,478,556Restricted
                  cash
              
              
              878,247
              
              
              566,698Intangibles,
                  net
              
              
              1,612,518
              
              
              306,996Deferred
                  financing fees
              
              
              507,585
              
              
              -Deferred
                  acquisition costs
              
              
              358,799
              
              
              -Deposits
              
              
              135,772
              
              
              59,120Goodwill
              
              
              644,647
              
              
              644,647TOTAL
                  ASSETS
              
              $
              10,985,619
              
              $
              9,374,034




(continued)


3


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


**CONDENSED
      CONSOLIDATED BALANCE SHEETS (continued)**




LIABILITIES
                  AND STOCKHOLDERS’ EQUITY
                
                CURRENT
                  LIABILITIES:Notes
                  payable - financing agreement
              
              $
              558,558
              
              $
              1,094,780Accounts
                  payable
              
              
              2,383,333
              
              
              3,920,923Accrued
                  expenses
              
              
              1,422,272
              
              
              414,616Accrued
                  disposal costs
              
              
              307,373
              
              
              789,414Payable
                  to related party
              
              
              831,736
              
              
              121,123Deferred
                  rent
              
              
              15,502
              
              
              16,255Current
                  portion of notes payable
              
              
              70,904
              
              
              83,106Notes
                  payable to investors
              
              
              692,941
              
              
              1,359,448Total
                  Current Liabilities
              
              
              6,282,619
              
              
              7,799,665Financing
                  agreement, net of current portion
              
              
              1,681,874
              
              
              -Notes
                  payable, net of current portion
              
              
              1,023,295
              
              
              1,536,652Notes
                  payable to investors
              
              
              792,306Total
                  Liabilities
              
              
              9,780,094
              
              
              9,336,317Convertible
                  notes, net of discount
              
              
              91,610
              
              
              -Commitments
                  and contingencies
                
                STOCKHOLDERS’
                  EQUITYSeries
                  A convertible preferred stock, net of offering costs of $ 37,732,
                  10%
                  dividend, liquidation, preference $1 per share, $.001 par value,
                  50,000,000 shares authorized, 250,000 shares issued and outstanding
              
              
              212,628
              
              
              212,628Common
                  stock, $.001 par value, 200,000,000 shares authorized, 28,250,635
                  and
                  27,893,576 shares issued and outstanding
              
              
              28,252
              
              
              27,895Additional
                  paid in capital
              
              
              17,063,903
              
              
              13,083,970Accumulated
                  deficit
              
              
              (16,190,868
              )
              
              (13,286,776
              )Total
                  Stockholders' Equity
              
              
              1,113,915
              
              
              37,717TOTAL
                  LIABILITIES AND STOCKHOLDERS’ EQUITY
              
              $
              10,985,619
              
              $
              9,374,034


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 endedJune
                30, 2006
            
            June
                30, 2005
            
            June
                30, 2006
            
            June
                30, 2005REVENUES
            
            $
            4,349,839
            
            $
            4,246,795
            
            $
            7,997,757
            
            $
            7,541,256COST
                OF REVENUES
            
            
            3,338,327
            
            
            3,670,251
            
            
            6,126,696
            
            
            6,506,777GROSS
                PROFIT
            
            
            1,011,512
            
            
            576,544
            
            
            1,871,061
            
            
            1,034,479OPERATING
                EXPENSES
            
            
            2,191,472
            
            
            2,711,040
            
            
            3,942,749
            
            
            4,473,717OPERATING
                LOSS
            
            
            (1,179,960
            )
            
            (2,134,496
            )
            
            (2,071,688
            )
            
            (3,439,238
            )OTHER
                INCOME (EXPENSE):Interest
                income
            
            
            6,323
            
            
            4,643
            
            
            11,671
            
            
            6,132Interest
                and financing costs
            
            
            (610,630
            )
            
            (221,653
            )
            
            (896,887
            )
            
            (366,752
            )Other
                non-operating income
            
            
            22,826
            
            
            31,320
            
            
            52,812
            
            
            107,230Net
                Loss
            
            
            (1,761,441
            )
            
            (2,320,186
            )
            
            (2,904,092
            )
            
            (3,692,628
            )Preferred
                stock dividends
            
            
            (16,871
            )
            
            -
            
            
            (16,871
            )
            
            -Net
                Loss applicable to common share holders
            
            $
            (1,778,312
            )
            $
            (2,320,186
            )
            $
            (2,920,963
            )
            $
            (3,692,628
            )Calculations
                of net loss per common share
                applicable to common share holdersbasic
                and diluted:
            
            $
            (.06
            )
            $
            (.09
            )
            $
            (.10
            )
            $
            (.14
            )Weighted
                average shares of common stockoutstanding,
                basic and diluted
            
            
            28,250,635
            
            
            26,254,698
            
            
            28,168,279
            
            
            25,512,605




See
      accompanying notes to the condensed consolidated financial
      statements.


5


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


**CONDENSED
      CONSOLIDATED STATEMENT OF STOCKHOLDERS’
EQUITY**


**FOR
      THE SIX MONTHS ENDED JUNE 30, 2006**


(Unaudited )







AdditionalCommon
                Stock
            
            Preferred
                Stock
            
            Paid
                In
            
            AccumulatedShares
            
            Amount
            
            Shares
            
            Amount
            
            Capital
            
            Deficit
            
            TotalBalance,
                January 1, 2006
            
            
            27,893,576
            
            $
            27,895
            
            
            250,000
            
            $
            212,628
            
            
            13,083,970
            
            $
            (13,286,776
            )
            $
            37,717Issuance
                of common stock for finders fees
            
            
            247,059
            
            
            247
            
            
            -
            
            
            -
            
            
            209,753
            
            
            -
            
            
            210,000Issuance
                of common stock for settlementof
                payable to
              related
                party
            
            
            110,000
            
            
            110
            
            
            
            
            
            
            
            
            55,990
            
            
            
            
            
            56,100Valuation
                of warrants and beneficialconversion
                feature
              on
                issued notes payableand
                convertible notes payable
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            3,603,568
            
            
            
            
            
            3,603,568Stock
                Compensation Cost
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            110,622
            
            
            
            
            
            110,622Preferred
                stock dividends
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            16,871
            
            
            16,871Net
                loss for the six monthsended
                June 30, 2006
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,920,963
            )
            
            (2,920,963
            )Balance,
                June 30, 2006
            
            
            28,250,635
            
            $
            28,252
            
            
            250,000
            
            $
            212,628
            
            
            17,063,903
            
            $
            (16,190,868
            )
            $
            1,113,915


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
                30,2006
            
            
            2005OPERATING
                ACTIVITIESNet
                loss
            
            $
            (2,904,092
            )
            $
            (3,692,628
            )Adjustments
                to reconcile net loss to cashused
                in operating activities:Depreciation
                and amortization
            
            
            243,960
            
            
            142,813Amortization
                of discount on notes
            
            
            10,416
            
            
            122,073Common
                stock issued for services
            
            
            -
            
            
            914,258Fair
                value of vested options
            
            
            110,622
            
            
            -Amortization
                of discount on convertible debt
            
            
            422,949
            
            
            -Amortization
                of deferred financing fees
            
            
            101,517
            
            
            -Reduction
                of financing costs from issuanceof
                common shares for accounts payable
            
            
            (53,900
            )
            
            -Changes
                in assets and liabilities:Accounts
                Receivable
            
            
            1,638,107
            
            
            (856,162
            )Prepaid
                and other current assets
            
            
            (136,143
            )
            
            47,412Supplies
                inventory
            
            
            (7,468
            )
            
            (3,549
            )Accounts
                Payable
            
            
            (1,537,590
            )
            
            225,781Accrued
                interest on convertible notes
            
            
            60,255
            
            
            50,104Accrued
                expenses and other liabilities
            
            
            411,775
            
            
            (192,797
            )NET
                CASH USED IN OPERATING ACTIVITIES
            
            
            (1,639,592
            )
            
            (3,242,695
            )INVESTING
                ACTIVITIES:Acquisition
            
            
            (1,500,000
            )
            
            -Increase
                in restricted cash
            
            
            (311,549
            )
            
            (19,081
            )Increase
                in permits
            
            
            -
            
            
            (64,453
            )Additions
                to property and equipment
            
            
            (98,840
            )
            
            (56,267
            )NET
                CASH USED IN INVESTING ACTIVITIES
            
            
            (1,910,389
            )
            
            (139,801
            )FINANCING
                ACTIVITIESNet
                advances (payments) on Line of credit
            
            
            (1,094,780
            )
            
            493,112Issuance
                of notes payable
            
            
            37,640
            
            
            -Repayment
                of long term debts
            
            
            
            
            
            (162,013
            )Payments
                of notes to investors
            
            
            -
            
            
            (126,336
            )Payments
                of notes payable
            
            
            (50,186
            )
            
            -Net
                proceeds from issuance of notes
            
            
            3,433,104
            
            
            780,000Proceeds
                from issuance of convertible notes
            
            
            1,288,799
            
            
            -Proceeds
                from sale of common stock
            
            
            -
            
            
            1,510,000Proceeds
                from exercise of warrants
            
            
            -
            
            
            353,126Deferred
                financing fees
            
            
            (789,729
            )
            
            -Advances
                from related parties
            
            
            745,613
            
            
            -NET
                CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            3,570,461
            
            
            2,847,889NET
                INCREASE (DECREASE) IN CASH
            
            
            20,480
            
            
            (534,607
            )Cash
                and cash equivalents at beginning of period
            
            
            47,995
            
            
            553,658CASH
                AND CASH EQUIVALENTS AT END OF PERIOD
            
            $
            68,474
            
            $
            19,051




See
      accompanying notes to condensed consolidated
      financial statements.









SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:Cash
                paid for:Interest
                expense
            
            $
            121,139
            
            $
            185,224






SUPPLEMENTAL
      DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:








Six
                Months Ended
              June
                30,2006
            
            2005Value
                of warrants issued to lenders recorded as debt discount
            
            $
            1,191,262
            
            $
            -Value
                  of beneficial conversion feature of notes issued recordedas debt
                  discount
            
            
            932,168
            
            
            -Valuation
                of warrants issued to advisors recorded as financing costs
            
            
            197,723
            
            
            -Conversion
                of related party debt of $110,000 into common stock 110,000 valued
                at $56,100
            
            
            110,000Issuance
                of common stock for financing costs
            
            
            210,000
            
            
            -Deferred
                financing cost included in payable to related party
            
            
            75,000
            
            
            -Value
                of warrants and beneficial conversion feature on convertible notes
            
            
            1,282,416
            
            
            -






See
      accompanying notes to the condensed consolidated financial
      statements.


8


**GENERAL
      ENVIRONMENTAL MANAGEMENT, INC AND SUBSIDIARIES**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(UNAUDITED)**








**1.**
            **ORGANIZATION
                AND PRINCIPAL ACTIVITIES**





ORGANIZATION
      AND DESCRIPTION OF BUSINESS





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





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





The
      acquisition was accounted for as a reverse merger (recapitalization) with GEM
      deemed to be the accounting acquirer, and Ultronics Corporation the legal
      acquirer. Accordingly, the historical financial information presented in the
      financial statements is that of GEM as adjusted to give effect to any difference
      in the par value of the issuer’s and the accounting acquirer stock with an
      offset to capital in excess of par value. The basis of the assets, liabilities
      and retained earnings of GEM, the accounting acquirer, have been carried over
      in
      the recapitalization. Subsequent to the acquisition, the Company changed its
      name to General Environmental Management, Inc.





BASIS
      OF
      PRESENTATION





The
      condensed consolidated interim financial statements included herein have been
      prepared by the Company, pursuant to the rules and regulations of the Securities
      and Exchange Commission with regard to Regulation S-B and, in the opinion of
      management, include all adjustments which, except, as described elsewhere
      herein, are of a normal recurring nature, necessary for a fair presentation
      of
      the financial position, results of operations, and cash flows for the periods
      presented. The results for the interim periods are not necessarily indicative
      of
      results for the entire year. The financial statements presented herein should
      be
      read in conjunction with the financial statements included in the Company's
      Annual Report on Form 10-KSB for the year ended December 31, 2005 filed with
      the
      Securities and Exchange Commission.




GOING
      CONCERN





The
      accompanying consolidated financial statements have been prepared assuming
      the
      company will continue as a going concern. The Company incurred a net loss of
      $2,904,092 and utilized cash in operating activities of $1,639,592 during the
      six months ended June 30, 2006, and as of June 30, 2006 the Company had current
      liabilities exceeding current assets by $2,210,720. These matters raise
      substantial doubt about the Company’s ability to continue as a going
      concern.





Management
      is continuing to raise capital through the issuance of debt and equity. In
      addition, management believes that the Company will begin to operate profitably
      due to improved operational results, cost cutting practices, and the integration
      of the acquisition made by the Company during the first quarter of 2006.
      However, there can be no assurances that the Company will be successful in
      this
      regard or will be able to eliminate its working capital deficit or operating
      losses. The accompanying financial statements do not contain any adjustments
      which may be required as a result of this uncertainty.


9


**2.**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





(a)  Use
      of
      estimates





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





(b)
      Revenue Recognition.





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





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





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




(c)
      Concentration of Credit Risk




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 looses in such accounts and believes it is not exposed
      to any significant risk in cash.




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


10


During
      the six months ended June 30, 2006 and 2005, one customer accounted for 11.4%
      and 11.1% of revenues, respectively. As of June 30, 2006 , there was one
      customer that accounted for 9.4% of accounts receivable.




(d)
      Income Taxes





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





(e)
      Deferred Acquisition Costs





The
      Company has deferred $358,799 of costs at June 30, 2006 related to a potential
      acquisition and related financing. These costs will be capitalized as part
      of
      the acquisition cost or reflected as a deferred financing fee upon consummation
      of transaction, or expensed if such transaction is not consummated.





(f)
      Stock
      Compensation Costs





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





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





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


11





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
      total
      stock based compensation expense for the six months ended June 30, 2006 was
      $110,622. The value of the unvested options to employees that will be amortized
      over future periods was $283,669 at June 30, 2006. The fair value of options
      was
      estimated on the date of grant using the Black-Scholes option pricing model
      with
      the following weighted-average assumptions for the periods
      indicated:





Six
                Months EndedJune
                30, 2006Dividend
                yield
            --Risk-free
                interest rate
            3.69%Expected
                volatility
            44.5%Expected
                life of options
            8.0
                years





During
      the six months ended June 30, 2005, the Company did not grant any options to
      purchase shares of its common stock, nor were there any options vesting during
      that period. Accordingly, no proforma information for June 30, 2005 is
      required.





(g)
      Recent Accounting Pronouncements





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








**3.**  **ACQUISITIONS**





On
      March
      10, 2006, the Company entered into a stock purchase agreement with K2M Mobile
      Treatment Services, Inc. of Long Beach, California ("K2M"), a privately held
      company, pursuant to which the 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 becomes a wholly-owned subsidiary of the registrant.


12


The
      purchase price was allocated as follows:





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





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





The
      following sets out the pro forma operating results for the six months ended
      June
      30, 2006 and 2005 for the Company had the acquisition occurred as of January
      1,
      2005:






**Unaudited**
              Six
                months ended June 30,
              Pro
                Forma (Unaudited)2006
            
            
            2005Net
                sales
            
            $
            8,516,132
            
            $
            8,459,725Cost
                of sales
            
            
            6,390,030
            
            
            6,973,359Gross
                profit
            
            
            2,126,102
            
            
            1,486,366Operating
                expenses
            
            
            4,293,008
            
            
            4,787,878Operating
                loss
            
            
            (2,166,906
            )
            
            (3,301,512
            )Other
                income (expense):Interest
                income
            
            
            11,671
            
            
            6,132Interest
                expense and amortization of deferred financing costs
            
            
            (897,995
            )
            
            (369,765
            )Other
                non-operating income
            
            
            52,812
            
            
            107,230NET
                LOSS
            
            $
            (3,000,418
            )
            $
            (3,557,915
            )Loss
                per weighted average share, basic and diluted
            
            $
            (.11
            )
            $
            (.14
            )








**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, 2006:





Permit
                costs
            
            $
            315,894Customer
                lists - K2M mobile Treatment
            
            
            1,402,608Accumulated
                amortization
            
            
            (105,984
            )$
            1,612,518





Permit
      costs have been capitalized and are being amortized over the life of the permit,
      including expected renewal periods. Customer lists acquired are being amortized
      over five years.


13


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





During
      the quarter ended June 30, 2006 the Company incurred $242,500 in fees for
      advisory services provided by General Pacific Partners (“GPP”), a company
      operated by a prior member of the Board of Directors of the Company’s wholly
      owned subsidiary, General Environmental Management, Inc. of Delaware. As of
      June
      30, 2006 the Company had $317,500 in amounts payable to General Pacific Partners
      for fees related to advisory services.





During
      the quarter ended June 30, 2006, General Pacific Partners made advances to
      the
      Company totaling $500,000. 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 advance is 10% per annum. The funds
      are due September 30, 2006. As of August 8, 2006, $250,000 of the advance had
      been repaid.





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








**6.
      SECURED FINANCING AGREEMENTS**





Secured
      financing consists of the following notes payable at June 30, 2006 and December
      31, 2005:





June
                30,
              2006
            
            December
                31,
              2005(a)
                Line of credit
            
            $
            -
            
            $
            1,094,780(b)
                Laurus agreementTerm
                Note
            
            
            1,939,394
            
            
            -Secured
                Revolving Note
            
            
            1,819,903
            
            
            -Valuation
                Discount
            
            
            (2,177,444
            )
            
            -Less
                current portion
            
            
            1,581,853
              (558,558
            )
            
            1,094,780
              (1,094,780
            )Notes
                payable, net of current portion
            
            $
            1,023,295
            
            $
            -




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




(b)
            On
                March 3, 2006, the Company entered into a series of agreements with
                Laurus
                Master Fund, Ltd. ("Laurus"), each dated as of February 28, 2006,
                whereby
                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) awarrant
                ("Warrant") to purchase up to 3,218,000 shares of our common stock
                at a
                price of $0.87 per share.
                The Company also agreed to pay out of the Loan proceeds $245,000
                to Laurus
                Capital Management, LLC, the investment advisor to Laurus, and $40,000
                to
                Laurus Capital Management, LLC as reimbursement for its due diligence
                and
                legal fees and expenses incurred in connection with the transaction.
                The
                Company also incurred an additional $ 41,193 of closing costs for
                total
                closing costs of $326,193.




14


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





The
      principal amount of the Note and accrued interest thereon is convertible into
      shares of our common stock at a price of $0.85 per share, subject to
      anti-dilution adjustments. Under the terms of the Note, the monthly principal
      payment amount of approximately $60,606 plus the monthly interest payment
      (together, the "Monthly Payment"), is payable in either cash or, if certain
      criteria are met, including the effectiveness of a current registration
      statement covering the shares of our common stock into which the Note is
      convertible, through the issuance of our common stock. Laurus has the option
      to
      convert the entire principal amount of the Note, together with interest thereon,
      into shares of our common stock, provided that such conversion does not result
      in Laurus beneficially owning at any one time more that 4.99% of our outstanding
      shares of common stock. The Company has agreed to register all of the shares
      that are issuable upon conversion of the Note and exercise of the 3,218,000
      Warrants. The Company has granted Laurus a right of first refusal with respect
      to any debt or equity financings.





The
      revolving note allows the Company to borrow a maximum amount of $5,000,000,
      based on a borrowing base of 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, 2006, the
      Company had outstanding borrowings of $1,172,075
      against the line of credit, and also had received an additional $647,828 from
      an
      over-advance facility from the borrower. The over-advance was paid back to
      Laurus as of July 31, 2006.





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





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


15


**7.
      CONVERTIBLE NOTES PAYABLE**





During
      the period May 1, 2006 to June 30,2006, the Company entered into a convertible
      note agreements with investors to provide working capital funding. The notes
      are
      unsecured and carry an interest rate of eight percent (8%) per annum and are
      due
      within one year . Principal and interest are convertible at the option of the
      Company into common shares equivalent to $0.10 per share. From May 2006 to
      June
      2006, the Company issued forty of these convertible notes totaling $1,282,415.
      As of June 30, 2006 none of the notes have been converted.





In
      accordance with generally accepted accounting principles the difference between
      the conversion price and the Company's stock price on the date of issuance
      of
      the notes was considered to be a beneficial conversion feature and will be
      recognized as interest expense over the period using the effective interest
      method until the notes mature or are converted. The company used the black
      scholes valuation model and determined that the beneficial conversion feature
      was $1,282,415, and recorded such amount as a valuation discount. As of June
      30,
      2006, $91,610 of this discount had been amortized.








**8.
      STOCKHOLDERS’ EQUITY**





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





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





During
      the six months ended June 30, 2006, the Company recognized employee compensation
      cost of $110,622 related to the fair value of options vested during the
      period.








**9.
      STOCK OPTIONS AND WARRANTS**





Stock
      Options





Prior
      to
      acquisition by the Company, General Environmental Management, Inc. of Delaware’s
      Board of Directors approved and implemented the 2005 Stock Option Plan (the
      plan). The plan authorized option grants to employees and other persons closely
      associated with the Company for the purchase of up to 2,643,500 shares. The
      Board of Directors of the Company granted a total of 1,988,500 options to 86
      employees and to two consultants. The exercise price for the options ranged
      between $1.00 and $1.60 market value of the stock at the date of the grant.





On
      April
      1, 2006 the Company granted 100,000 options to one employee as part of an
      employee contract. The exercise price for these options is $0.86, the market
      value of the stock at the date of the grant.





The
      Company issues stock options to employees, directors and consultants under
      the
      2005 Stock Option Plan. Employee and Non-employee options vest according to
      the
      terms of the specific grant and expire 8 years from date of grant. Stock option
      activity for the quarter ended June 30, 2006 was as
      follows:


16





**Weighted
                Avg.**
            
            **Weighted
                Avg.****Options**
            
            **Exercise
                Price**Options,
                January 1, 2006
            
            
            1,680,500
            
            
            1.06Options
                granted
            
            
            100,000
            
            
            0.86Options
                exercised
            
            
            -
            
            
            -Options
                cancelled
            
            
            -
            
            
            -Options,
                June 30, 2006
            
            
            1,780,500
            
            $
            1.03





Warrants





Prior
      to
      the acquisition by the Company, General Environmental Management, Inc. of
      Delaware had issued warrants through the sale of common stock; the issuance
      of
      convertible notes, and for services. Under the terms of the agreement and plan
      of merger these warrants became exercisable into the same number of shares
      in
      the Company’s stock on the same terms as issued. As of June 30, 2006 there were
      8,997,522 warrants outstanding with exercise prices ranging from $0.87 to $4.00
      per share of common stock, and expiration dates through February of
      2013.





During
      the quarter ended June 30, 2006 the Company granted 3,752,118 warrants at a
      price of $0.87. These warrants were issued in conjunction with the secured
      financing agreement described in Note 6.





WarrantsWarrants
                outstanding, January 1, 2006
            
            
            5,245,404Warrants
                granted
            
            
            3,752,118Warrants
                exercised
            
            
            -Warrants
                expired
            
            
            -Warrants
                outstanding, June 30, 2006
            
            
            8,997,522








**10.
      COMMITMENTS AND CONTINGENCIES**





ENVIRONMENTAL





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


17


ASSET
      RETIREMENT COSTS AND OBLIGATIONS





In
      accordance with its Part B operating permit, the Company is liable for certain
      costs involving the ultimate closure of its facilities. These expenses include
      costs of decommissioning, remediation, and incremental direct administration
      costs of closing the facilities. Upon acquisition of General Environmental
      Management of Rancho Cordova, LLC in June 2004, the Company continued that
      subsidiary’s implementation of SFAS No. 143, “Accounting for Asset Retirement
      Obligations,” which addresses financial accounting and reporting obligations
      associated with the retirement of tangible long-lived assets and the related
      asset retirement costs. The statement which became effective January 1, 2003,
      requires that a fair value of a liability for an asset retirement obligation
      be
      recognized in the period in which it is incurred and capitalized as part of
      the
      carrying amount of the long lived asset. When a liability is initially recorded,
      the entity capitalizes the cost by increasing the carrying value of the related
      long lived asset. Over time, the liability is accreted to its present value
      each
      period, and the capitalized cost is depreciated over the useful life of the
      related asset. On an annual basis the liability to fulfill the retirement
      obligation is required to be reviewed and adjusted if necessary. Management’s
      review of the liability in 2005 determined no adjustment was necessary. The
      Company determined the estimated obligation, based on current requirements
      and
      proposed regulatory changes and is intended to approximate fair value. The
      estimate of fair value is based on the best available information, including
      the
      results of present value techniques. Once the retirement costs were determined,
      the Company inflated those costs to the expected time of payments and discounts
      the expected future costs back to present value. The costs have been inflated
      in
      current dollars until the expected time of payment using an inflation rate
      of
      2.5 percent and have discounted these costs to present value using a
      credit-adjusted risk-free interest rate of 5.5 percent. The accretion of the
      liability, based on the effective interest method, and amortization of the
      property and equipment, recognized over the estimated life of the location,
      will
      be included in the operating costs and expenses. The discount rate, which is
      based on the rates for the United States Treasury bonds, and the inflation
      rate
      is reviewed by the Company on an annual basis. Upon acquisition of the Part
      B
      permit and facility, the Company’s share of obligation, was a present value
      liability of $35,846 and a net increase to plant and equipment of
      $35,846.





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




LEGAL
      PROCEEDINGS





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




OTHER
      CONTINGENCIES





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




18


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








11.
      SUBSEQUENT EVENTS





On
      August
      10, 2006, the Company entered into a series of agreements (“Agreements”) with
      Laurus Master Fund, Ltd. ("Laurus") whereby the Company agreed to issue to
      Laurus (i) a secured three (3) year term note ("Note") in the face amount of
      $29.5 million; and (ii) seven (7) year warrants ("Warrants") to purchase
      13,636,362 shares (the “Warrant Shares”) of our common stock at an exercise
      price of $.24 per share. The total Note proceeds is $25 million. The Company
      also agreed to pay, out of the Loan proceeds, an Investment Fee of $1,155,000
      to
      Laurus Capital Management, LLC, the manager of Laurus, and the sum of
      approximately $120,000 to Laurus as reimbursement for Laurus' structuring and
      due diligence fees, legal fees, and expenses incurred in connection with the
      transaction.





The
      Note
      proceeds, less the fees, are being held in an escrow account (the “Escrow) and
      are to be released upon certain conditions to be satisfied by certain dates,
      among which are:





1.
      The
      Company raises a minimum of $16 million through the sale of our equity
      securities on or before September 30, 2006, with best efforts to raise $19
      million.





2.
      The
      Company provide Laurus with evidence that the Company has entered into a
      definitive agreement to acquire a target company (“Target”) by a certain date,
      and the Company complete the acquisition of a target company (the “Target”) (see
“Description of Acquisition” below) for purchase price of $35
      million.





3.
      The
      Target, contemporaneously with the payment of the purchase price and acquisition
      of Target by us, issue to Laurus, a warrant (the “Target Warrant), with no
      expiration date, to purchase 35% (30% if we are successful in raising $19
      million in equity) of the equity securities of the Target at a nominal price
      per
      Warrant.





4.
      That
      there are executed a number of agreements, including providing security and
      collateral to Laurus for the repayment of the Note and other
      obligations.





5.
      That
      certain waivers, consents, and releases are obtained.





If
      the
      Company completes the acquisition, Laurus will provide a $5 million Revolving
      Note (the “Revolving Note”) to be secured by the accounts receivable of the
      Target. The interest rate on this credit facility is Prime plus 2%.





In
      the
      event that the Company does not complete the acquisition, or is unable to
      fulfill other conditions of the Escrow, the funds in escrow will be returned
      to
      Laurus. However, Laurus will not be obligated to return any fees or expenses
      to
      us. The Warrants will be deemed cancelled.





The
      principal amount of the Note will carry an interest rate of prime plus two
      percent (but at least 8.00%), subject to adjustment, and will require that
      the
      Company must make monthly payments of at least $416,666.66 commencing April
      1,
      2007, toward the outstanding non-restricted principal amount. The Note will
      be
      secured by all of our assets and the assets of our subsidiaries, General
      Environmental Management, Inc. (Delaware) and its subsidiary, General
      Environmental Management of Rancho Cordova LLC, a California Limited Liability
      Company, K2M Mobile Treatment Service, Inc. a California corporation, and by
      a
      pledge of all of our stock in General Environmental Management, Inc. (Delaware),
      General Environmental Management of Rancho Cordova LLC, K2M Mobile Treatment
      Services, Inc, and Target.


19


If
      the
      Company completes the acquisition, the proceeds from the Note will be released,
      and the Company and our subsidiaries (including Target) are expected to enter
      into a new series of additional agreements with Laurus. Among other things,
      the
      Company will issue an Amended and Restated Secured Convertible Term Note (the
      “Convertible Note”) to replace the Note. $12.5 million of the principal amount
      of the Convertible Note will be convertible into shares of our common stock
      at a
      price of $0.17 per share (73,529,411 shares) subject to certain adjustments.
      Under the terms of the proposed Convertible Note, the monthly principal payment
      amount of approximately $416,666.66, plus the monthly interest payment
      (together, the "Monthly Payment"), will be payable in cash. The Company and
      our
      subsidiaries, including Target as an obligor and guarantor, will also amend
      and
      restate certain agreements relating to our existing credit facility with Laurus,
      provide additional security, and other agreements.





Under
      the
      terms of the Warrants and the Convertible Note, Laurus may exercise the Warrants
      or convert the Convertible Notes, provided that such exercise and/or conversion
      do not result in Laurus beneficially owning more that 4.99% of our outstanding
      shares of common stock. The Company has agreed that the Company will register
      all of the shares that are issuable upon exercise of the Warrants and conversion
      of the Convertible Note.





To
      obtain
      the required $16 million in equity, the Company intends to sell shares of our
      common stock or preferred stock at the equivalent of $.05 per share of common
      stock, to accredited investors in private placement transactions.





Of
      the
      $16 million in equity we are required to raise, we have raised a total of
      approximately $4,053,800. These funds were raised during the period May 22,
      2006
      through August 10, 2006 through the sale of convertible notes (the May
      Convertible Notes”). Each one dollar of principal of the May Convertible Notes
      is convertible into 10 shares of the Company’s Common Stock. The May Convertible
      Notes are convertible at any time at the option of the Company. During that
      period we sold a total of $4,053,800 in May Convertible Notes to 112 accredited
      investors.(see below Item 3.02 below). The Company intends to convert the May
      Convertible Notes within the next 30 days.





The
      Company currently has 200 million shares of Common Stock and 50 million shares
      of “Blank Check” Preferred Stock authorized. Since the Company has 28,250,635
      shares of common stock outstanding, the authorized number of shares of Common
      Stock would be insufficient to issue, or reserve for issuance, those number
      of
      shares of common stock which would otherwise be issued to raise the requisite
      $16 million at the proposed per share price of $.05 and the shares that would
      be
      issuable upon the conversion of the Convertible Note. Accordingly, in order
      to
      facilitate the raising of this capital, the Board of Directors has determined
      to
      designate a Series “B” Preferred Stock (the “Series “B”), subject to obtaining
      any requisite consents from the holders of Series A Preferred Stock. The Company
      anticipates each share of Series “B” will: (i) be automatically converted into
      20 shares of Common Stock upon the approval and filing of the Amendment; (ii)
      be
      entitled to cast 20 votes per share to vote at any meeting of the stockholders
      of the Common Stock, (iii) be entitled to receive any dividends on the same
      basis as common stockholders based on the ratio into which they would be
      convertible; and (iii) be entitled to a liquidation preference, only over the
      holders of the shares of Common Stock.





Shortly
      after the acquisition of Target, the Company will then seek to increase the
      number of authorized Common Stock to one billion by calling a meeting of the
      stockholders (the “Meeting”) to approve an amendment (the “Amendment”) to the
      Articles of Incorporation providing for such increase.





In
      order
      to conduct the Meeting, the Company is required to provide our stockholders
      with
      a Proxy Statement that has been filed with the United States Securities &
Exchange Commission (“SEC”.) The Company expects that it will take a minimum of
      60 days until the Meeting may be held.





In
      anticipation of the sale of the equivalent of approximately 320 million shares
      of Common Stock, and the possible issuance of more than 86 million shares of
      Common Stock to Laurus upon the exercise of its warrants and the conversion
      of
      the Convertible Note, the Company plans to reduce the total amount of Common
      Stock outstanding to below 30 million. Accordingly, the Company anticipates
      that
      the Board of Directors will authorize a one for twenty “reverse split” of the
      issued and outstanding common stock, which would be effective immediately after
      the filing of the Amendment.


20


In
      May,
      2006, the Board of Directors authorized the private placement sale to accredited
      investors of up to $10 million in convertible notes (the (May Convertible
      Notes”). Each one dollar of principal of the May Convertible Notes was
      convertible into 10 shares of the Company’s Common Stock . The May Convertible
      Notes are convertible at the Company’s option at any time. The Company has
      entered into a Placement Agent Agreement with Ascendiant Securities LLC
      (“Ascendiant”) pursuant to which Ascendiant agreed to use its best efforts to
      sell the May Convertible Notes. Ascendiant will receive a commission of 6%
      of
      all monies received by us and a number of warrants that is equal to 6% of the
      number of shares into which the May Convertible Notes are convertible. The
      Company reserved the right to sell the May Convertible Notes through its
      officers. As of August11, 2006, the Company has sold $4,053,800 in May
      Convertible Notes. The Company intends to convert the May Convertible Notes
      within the next 30 days.





On
      August
      9, 2006 the Board of Directors authorized a modification in the terms of the
      May
      Convertible Notes so that each one dollar of principal of the May Convertible
      Note is convertible into 20 shares of Common Stock. The additional shares of
      Common Stock to be issued upon conversion of the May Convertible Notes will
      be
      upon the condition that each purchaser waive any claims they may have against
      the Company relating to its proposed or actual sale of Series B Preferred Stock,
      which would be convertible into shares of common stock at the equivalent of
      $.05
      per share of Common Stock. On August 9, 2006 the Company ceased any further
      sale
      of the May Convertible Notes.








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





FORWARD
      LOOKING STATEMENTS





In
      addition to historical information, this Quarterly Report contains
      forward-looking statements, which are generally identifiable by use of the
      words
“believes”, “expects”, “intends”, “anticipates”, “plans to”, “estimates”, “
projects”, or similar expressions. These forward-looking statements are subject
      to certain risks and uncertainties that could cause actual results to differ
      materially from those reflected in these forward-looking statements. Factors
      that might cause such a difference include, but are not limited to, those
      discussed in the section entitled “Management’s Discussion and Analysis of
      Financial Condition and Results of Operations - Factors That May Affect Future
      Results”. Readers are cautioned not to place undue reliance on these
      forward-looking statements, which reflect management’s opinions only as of the
      date hereof. We undertake no obligation to revise or publicly release the
      results of any revision to these forward-looking statements. Readers should
      carefully review the risk factors described in other documents the company
      files
      from time to time with the Securities and Exchange Commission ( the “SEC”),
      including the Quarterly Reports on form 10QSB to be filed by us in the fiscal
      year 2006.





OVERVIEW





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





The
      acquisition was accounted for as a reverse merger (recapitalization) with GEM
      deemed to be the accounting acquirer, and Ultronics Corporation the legal
      acquirer. Accordingly, the historical financial information presented in the
      financial statements is that of GEM as adjusted to give effect to any difference
      in the par value of the issuer’s and the accounting acquirer stock with an
      offset to capital in excess of par value. The basis of the assets, liabilities
      and retained earnings of GEM, the accounting acquirer, have been carried over
      in
      the recapitalization. Subsequent to the acquisition, the Company changed its
      name to General Environmental Management, Inc.


21


GEM
      is a
      fully integrated environmental service firm structured to provide EHS compliance
      services, field services, transportation, off-site treatment, and on-site
      treatment services. Through its services GEM assists clients in meeting
      regulatory requirements for the disposal of hazardous and non-hazardous waste.
      GEM provides its clients with access to GEMWare, an internet based software
      program that allows clients to maintain oversight of their waste from the time
      it leaves their physical control until final disposition by recycling,
      destruction, or landfill. The GEM business model is to grow both organically
      and
      through acquisitions.





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





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





The
      accompanying consolidated statements have been prepared assuming that the
      Company will continue as a going concern. The company incurred a net loss of
      $2,904,092 and utilized cash in operating activities of $1,639,592 during the
      six months ended June 30, 2006. The Company currently has a working capital
      deficit, as current liabilities exceed current assets by $2,210,720 as of June
      30, 2006. There can be no assurances that the Company will be successful in
      eliminating the deficit, as such, there is doubt about the Company’s ability to
      continue as a going concern.








COMPARISON
      OF THREE MONTHS ENDED JUNE 30, 2006 AND 2005





Revenues





Total
      revenues were $4,349,839 for the three months ended June 30, 2006, representing
      an increase of $103,044 or 2.4% compared to the three months ended June 30,
      2005. The increase in revenue can be attributed to the acquisition of K2M in
      March 2006.





Cost
      of
      Revenues





Cost
      of
      revenues for the three months ended June 30, 2006 were $3,338,327 or 76.7%
      of
      revenue, as compared to $3,670,251 or 86.4% of revenue for the three months
      ended June 30, 2005. 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 efficiencies
      obtained from continuing cost reduction programs and also from the acquisition
      of K2M Mobile Treatment Services which produces higher margin
      returns.


22


Operating
      Expenses





Operating
      expenses for the three months ended June 30, 2006 were $2,191,472 or 50.4%
      of
      revenue as compared to $2,711,040 or 63.8% of revenue for the same period in
      2005. Operating expenses include sales and administrative salaries and benefits,
      insurance, rent, legal, accounting and other professional fees. The decrease
      in
      expenses from the prior periods is attributable to elimination of the fees
      incurred in the reverse merger of February 2005. The improvement in the cost
      as
      a percentage of revenue resulted from control of expenses and the Company’s
      ability to achieve economies of scale during the integration of recent
      acquisitions.




Depreciation
      and Amortization





Depreciation
      and amortization expenses for the three months ended June 30, 2006 were
      $152,334, or 4% of revenue, as compared to $81,795, or 1.9% of revenue for
      the
      same period in 2005. The increase in expenses is related to the increase in
      property, plant and equipment and increased amortization expense related to
      intangibles acquired from recent acquisitions.





Interest
      Expense





Interest
      expense for the three months ended June 30, 2006 was $610,630 or 14.04% of
      revenue, as compared to $221,653, or 5.2% of revenue for the same period in
      2005. 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.





Other
      Non-Operating Income





The
      Company had other non-operating income for the three months ended June 30, 2006
      of $22,826, or .52 % of revenue, and $31,320 for the same period in 2005.
      Non-Operating income for the three months ended June 30,2006 consisted of
      continuing rental income from the lease of an office building in Rancho Cordova,
      California.





Net
      Loss





The
      net
      loss for the three months ended June 30, 2006 was $1,761,441 or 40.5% of revenue
      as compared to a loss of $2,320,186, or 54.6% of revenue for the same period
      in
      2005. The loss is attributable to a general and administrative infrastructure
      created in anticipation of a larger revenue base to be developed through
      acquisition and organic growth and additional financing costs related to the
      acquisition of K2M and restructuring of the Company’s current borrowing
      facility.








COMPARISON
      OF SIX MONTHS ENDED JUNE 30, 2006 AND 2005





Revenues





For
      the
      six months ended June 30, 2006, the Company reported consolidated revenue of
      $7,997,757 representing an increase of $456,501 or 6.1 % compared to the six
      months ended June 30, 2005. The increase in revenue can be attributed to organic
      growth and the acquisition of K2M in March 2006.





Cost
      of
      Revenues





Cost
      of
      revenues for the six months ended June 30, 2006 were $6,126,696 or 76.6 % of
      revenue, as compared to $6,506,777 or 86.3 % of revenue for the six months
      ended
      June 30, 2005. 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 efficiencies obtained from
      continuing cost reduction programs and also from the acquisition of K2M Mobile
      Treatment Services which produces higher margin returns.


23


Operating
      Expenses





Operating
      expenses for the six months ended June 30, 2006 were $3,942,749 or 49.3% of
      revenue as compared to $ 4,473,717 or 59.3% of revenue for the same period
      in
      2005. Operating expenses include sales and administrative salaries and benefits,
      insurance, rent, legal and accounting and other professional fees. The decrease
      in expenses from the prior period is attributable to elimination of the fees
      incurred in the reverse merger of February 2005. The improvement in the cost
      as
      a percentage of revenue resulted from control of expenses and the Company’s
      ability to achieve economies of scale during the integration of recent
      acquisitions.




Depreciation
      and Amortization





Depreciation
      and amortization expenses for the six months ended June 30, 2006 were $243,960
      or 5.6% of revenue, as compared to $142,813 or 1.9% of revenue for the same
      period in 2005. The increase in expenses is related to the increase in property,
      plant and equipment and increased amortization expense related to intangibles
      acquired from recent acquisitions.





Interest
      Expense





Interest
      expense for the six months ended June 30,2006 were $896,887 or 11.2% of revenue,
      as compared to $ 366,752, or 4.9% of revenue for the same period in 2005.
      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..





Other
      Non-Operating Income





The
      Company had other non-operating income for the six months ended June 30, 2006
      of
      $52,812, or .7% of revenue, and $107,230 for the same period in 2005.
      Non-Operating income for the six months 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, 2006 was $2,904,092, or 36.3% of revenue
      as compared to a loss of $3,692,628, or 49% of revenue for the same period
      in
      2005.The loss is attributable to a general and administrative infrastructure
      created in anticipation of a larger revenue base to be developed through
      acquisition and organic growth and additional financing costs related to the
      acquisition of K2M and restructuring of the Company’s current borrowing
      facility.











LIQUIDITY
      AND CAPITAL RESOURCES





Cash





Our
      primary sources of liquidity are cash provided by operating, investing, and
      financing activities. Net cash used in operations for the three months ended
      June 30, 2006 was $773,479 as compared to $1,085,225 for the same period in
      2005. Net cash used in operations for the six months ended June 30, 2006 was
      $1,639,592 as compared to $ 3,242,695 for the same period in
      2005.


24


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
      $2,904,092 and utilized cash in operating activities of $1,639,592 during the
      six months ended June 30, 2006. As of June 30, 2006 the Company had current
      liabilities exceeding current assets by $2,210,720. These matters raise
      substantial doubt about the Company’s ability to continue as a going
      concern.





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





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





Cash
      Flows for the Six Months Ended June 30, 2006





Operating
      activities for the six months ended June 30, 2006 used $1,639,592 in cash.
      Accounts receivable, net of allowances for bad debts, totaled $3,505,647 as
      of
      June 30, 2006 as compared to the June 30, 2005 balance of $3,409,609. The
      increase in accounts receivable is directly related to the increase in sales
      over the same period for 2006 as noted above. Accounts payable totaled
      $2,383,333 as of June 30, 2006 as compared to an accounts payable balance of
      $3,095,171 for June 30, 2005. The decrease in accounts payable over the prior
      year was due to efficiencies obtained in the integration of the company’s
      operations and the provision of additional working capital from
      investors.





The
      Company used cash for the acquisition of K2M, investment in property and
      equipment, and in deposits totaling $1,910,389 for the six months ended June
      30,
      2006. The company used $139,801 in cash for investment purposes during the
      same
      period in 2005.





The
      Company raised $3,570,461 cash from financing activity, net of repayments of
      debt and the payoff of the former lender’s line of credit, through the issuance
      of notes related to the new financing transaction, and advances from a related
      party.








**Critical
      Accounting Policies and Estimates**





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




(a)
      Allowance for doubtful accounts





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


25


(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.





**Recent
      Accounting Pronouncements**





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


26


**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, 2006. This
      evaluation was carried out under the supervision and with the participation
      of
      our CEO, Mr. Tim Koziol and our CFO, Mr. Brett Clark. Based upon that
      evaluation, our CEO and CFO concluded that our disclosure controls and
      procedures are effective in timely alerting management to material information
      relating to us that is required to be included in our periodic SEC filings.
      There have been no significant changes in our internal controls or in other
      factors that could significantly affect internal controls subsequent to the
      date
      we carried out our evaluation.





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









**PART
      II - OTHER INFORMATION**





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





**Item
                2.**
            
            **Unregistered
                Sales of Securities and Use of Proceeds -**None





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





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




**Item
                5**.
            
            **Other
                Information**-
                None





**Item
              6.**
            **Exhibits
                and Reports**





(a) Exhibits


Exhibit
                  2.1
              Plan
                  of purchase, sale, reorganization, arrangement, liquidation, or
                  succession
                  - Acquisition of General Environmental Management, Inc.; incorporated
                  by
                  reference previously filed on form 8K with the commission on
                  12/23/2004Exhibit
                  2.2
              Notification
                  of the completion of the acquisition effective 2/14/05; incorporated
                  by
                  reference previously filed with the commission on form 8K on
                  2/18/05Exhibit
                  22.1
              Published
                  report regarding matters submitted to a vote of security holders;
                  incorporated by reference filed on PRE 14A filed with the commission
                  on
                  2/22/05Exhibit
                  22.2
              Amendments
                  to Articles of Incorporation or Bylaws; incorporated by reference
                  and
                  filed with the commission on 3/23/05Exhibit
                  31.1
              Section
                  302 - CEO Certification
 Exhibit
                      31.2
                  Section
                      302 - CFO CertificationExhibit
                      32.1
                  Section
                      906 - CEO CertificationExhibit
                      32.2
                  Section
                      906 - CFO Certification


(b)  Reports
      on Form 8-K




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


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




27





**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, 2006
            By:
            /s/ Timothy
              J.
              KoziolTimothy J. Koziol, President, CEO and
              Chairman of the Board ofDirectors


Date: August
                14, 2006
              By:
              /s/ Brett
                M. ClarkVice President of Finance, Chief Financial
                  Officer







28