UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549




Form
10-Q




(Mark
One)


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





For
the quarterly period ended March 31, 2009


or





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




Commission
File Number: 000-13118




Amerex
Group, Inc.


(Exact
name of registrant as specified in its charter)




Oklahoma
              20-4898182(State
      or other jurisdiction of
                incorporation
      or organization)
              (IRS
      Employer
                Identification
      No.)




1105
N. Peoria Avenue, Tulsa, Oklahoma  74106


(Address
of principal executive offices)




(918)
858-1050


(Registrant’s
telephone number, including area code)




Indicate
by check mark whether the registrant (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 registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.    YES  x    NO   ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
    YES   ̈    NO   ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the
Exchange Act:





Large
      accelerated
filer
               ̈
              Accelerated
      filer
               ̈Non-accelerated
      filer
               ̈
              Smaller
      reporting company
              x




Indicate
by check mark whether registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act):    YES   ̈    NO  x




Number of
shares outstanding of the issuer’s Common Stock, par value $.001 per share, as
of May 11, 2009: 16,577,189.








AMEREX
GROUP, INC.


TABLE
OF CONTENTS


QUARTERLY
REPORT ON FORM 10-Q


FOR
THE QUARTER ENDED MARCH 31, 2009





Page
                  NumberPART
      I. FINANCIAL INFORMATIONItem
      1.  Financial Statements
                3Consolidated
      Balance Sheets at March 31, 2009 and December 31, 2008
      (unaudited)
                3Consolidated
      Statements of Operations for the quarters ended March 31, 2009
      and  2008 (unaudited)
                4Consolidated
      Statements of Cash Flows for the quarters ended March  31, 2009
      and  2008 (unaudited)
                5Notes
      to Unaudited Consolidated Financial Statements
                6Item
      2.  Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
                9Item
      3.  Quantitative and Qualitative Disclosures about Market
      Risk
                15Item
      4.  Controls and Procedures
                15PART
      II. OTHER INFORMATIONItem
      1.  Legal Proceedings
                15Item
      2.  Unregistered Sales of Equity Securities and Use of
      Proceeds
                16Item
      3.  Defaults Upon Senior Securities
                16Item
      4.  Submission of Matters to a Vote of Security
      Holders
                17Item
      5.  Other Information
                17Item
      6.  Exhibits
                17Signatures
                21


2





PART
I. FINANCIAL INFORMATION




ITEM
1. Financial Statements




AMEREX
GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


(Unaudited)





March 31, 2009
                
                
                December 31, 2008AssetsCurrent
      AssetsCash
      and cash equivalents
                
                $
                42,837
                
                
                $
                53,299Accounts
      receivable, trade, net of allowance for doubtful accounts of $70,000 at
      March 31, 2009 and December 31, 2008
                
                
                1,225,678
                
                
                
                1,356,292Other
      current assets
                
                
                442,038
                
                
                
                585,728Total
      current assets
                
                
                1,710,553
                
                
                
                1,995,319Property
      and equipment, at cost
                
                
                2,274,781
                
                
                
                2,274,781Less
      accumulated depreciation
                
                
                (912,078
                )
                
                
                (841,260
                )Net
      property and equipment
                
                
                1,362,703
                
                
                
                1,433,521Assets
      held for sale
                
                
                475,000
                
                
                
                475,000Other
      assets
                
                
                236,390
                
                
                
                545,430Total
      Assets
                
                $
                3,784,646
                
                
                $
                4,449,270Liabilities
      and Stockholders’ Equity (Deficit)Current
      LiabilitiesAccounts
      payable
                
                $
                1,229,081
                
                
                $
                1,272,036Accrued
      expenses
                
                
                1,930,717
                
                
                
                1,600,514Current
      portion of long term debt
                
                
                16,819,311
                
                
                
                16,249,719Accrued
      acquisition liability
                
                
                284,874
                
                
                
                280,900Obligations
      to issue equity instruments
                
                
                443
                
                
                
                443Total
      current liabilities
                
                
                20,264,426
                
                
                
                19,403,612Long
      term debt
                
                
                0
                
                
                
                0Total
      liabilities
                
                
                20,264,426
                
                
                
                19,403,612Redeemable
      common stock, 500,000 shares
                
                
                903,000
                
                
                
                861,000Stockholders’
      Equity (Deficit):Common
      stock - $.001 par value, 100,000,000 shares authorized16,577,189
      shares issued and outstanding at March 31, 2009 and December 31, 2008,
      including redeemable common stock
                
                
                16,077
                
                
                
                16,077Additional
      paid-in capital
                
                
                6,410,706
                
                
                
                6,410,706Accumulated
      deficit
                
                
                (23,809,563
                )
                
                
                (22,242,125
                )Total
      Stockholders’ Equity (Deficit)
                
                
                (17,382,780
                )
                
                
                (15,815,342
                )Total
      Liabilities and Stockholders’ Equity (Deficit)
                
                $
                3,784,646
                
                
                $
                4,449,270




See
Accompanying Notes


3




AMEREX
GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited)





Three Months Ended March 31,2009
                
                
                2008Operating
      Revenue
                
                $
                1,180,074
                
                
                $
                1,607,422Operating
      Expenses:Cost
      of services provided
                
                
                1,096,991
                
                
                
                1,139,901Selling,
      general and administrative
                
                
                638,942
                
                
                
                670,049Professional
      fees
                
                
                197,971
                
                
                
                151,294Non
      cash compensation
                
                
                23,250
                
                
                
                362,673Depreciation
                
                
                70,818
                
                
                
                79,391Amortization
                
                
                9,041
                
                
                
                9,041Total
      Operating Expenses
                
                
                2,037,013
                
                
                
                2,412,349Operating
      Loss
                
                
                (856,939
                )
                
                
                (804,927
                )Other
      Income (Expense):Interest
      expense
                
                
                (589,415
                )
                
                
                (404,513
                )Amortization
      of debt discount
                
                
                (130,254
                )
                
                
                (177,631
                )Remeasurement
      of obligations to issue equity instruments
                
                
                0
                
                
                
                106,272Other
      income
                
                
                9,170
                
                
                
                87,237Net
      Loss
                
                $
                (1,567,438
                )
                
                $
                (1,193,562
                )Loss
      per share:Basic
      and Diluted
                
                $
                (0.10
                )
                
                $
                (0.08
                )Average
      weighted shares outstanding
                
                
                16,077,189
                
                
                
                14,988,337




See
Accompanying Notes


4




AMEREX
GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)




Three Months Ended March
31,2009
                        
                        
                        2008Cash
      Flows from Operating Activities:Net
      loss
                        
                        $
                        (1,567,438
                        )
                        
                        $
                        (1,193,562
                        )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Share
      based compensation and remeasurement of equity obligations
                        
                        
                        23,250
                        
                        
                        
                        362,673Depreciation
      and amortization
                        
                        
                        79,859
                        
                        
                        
                        88,432Amortization
      of debt discount
                        
                        
                        130,254
                        
                        
                        
                        177,631Accrued
      interest added to notes payable
                        
                        
                        66,425
                        
                        
                        
                        0Changes
      in Operating Assets and Liabilities:Accounts
      receivable
                        
                        
                        130,614
                        
                        
                        
                        284,474Other
      current assets
                        
                        
                        120,439
                        
                        
                        
                        (79,996
                        )Other
      assets
                        
                        
                        0
                        
                        
                        
                        4,999Accounts
      payable
                        
                        
                        (42,955
                        )
                        
                        
                        (237,941
                        )Other
      current liabilities
                        
                        
                        376,177
                        
                        
                        
                        337,542Net
      cash used in operating activities
                        
                        
                        (683,375
                        )
                        
                        
                        (255,748
                        )Cash
      Flows from Investing Activities:Acquisition
      of property and equipment
                        
                        
                        0
                        
                        
                        
                        (797
                        )Release
      of escrowed funds
                        
                        
                        300,000
                        
                        
                        
                        0Net
      cash provided by (used in) investing activities
                        
                        
                        300,000
                        
                        
                        
                        (797
                        )Cash
      Flows from Financing Activities:Net
      repayment under line of credit
                        
                        
                        (7,087
                        )
                        
                        
                        0Borrowings
      on long-term debt
                        
                        
                        380,000
                        
                        
                        
                        304,087Net
      cash provided by financing activities
                        
                        
                        372,913
                        
                        
                        
                        304,087Net
      Increase (Decrease) in Cash and Cash Equivalents
                        
                        
                        (10,462
                        )
                        
                        
                        47,542Cash
      and Cash Equivalents, Beginning of Period
                        
                        
                        53,299
                        
                        
                        
                        19,588Cash
      and Cash Equivalents, End of Period
                        
                        $
                        42,837
                        
                        
                        $
                        67,130SUPPLEMENTAL
      CASH FLOW DISCLOSURE INFORMATION:Interest
      Paid
                        
                        $
                        3,975
                        
                        
                        $
                        105,960




See
Accompanying Notes


5


AMEREX
GROUP, INC. AND SUBSIDIARIES


NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS







1.
            Basis of Presentation.In the opinion of management, the accompanying unaudited
      consolidated financial statements contain all normal recurring adjustments
      necessary to present fairly the financial position of Amerex Group, Inc.
      and its wholly-owned subsidiary, AMEREX Companies, Inc. (“Amerex”), and
      its wholly-owned subsidiary, Waste Express, Inc. (collectively, the
      “Company”) at March 31, 2009 and the results of its (i) operations for the
      three months ended March 31, 2009 and 2008 and (ii) cash flows for the
      three months ended March 31, 2009 and 2008.  The financial
      information included herein is taken from the books and records of the
      Company and is unaudited.




Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. These condensed financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company’s annual report on Form 10-K, and Forms 10-Q and 8-K made to date in
2009.




The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  The Company incurred a net loss of
$9,005,639 during the year ended December 31, 2008, a net loss for the three
months ended March 31, 2009 of $1,567,438 and further losses are
anticipated.  As of March 31, 2009, the Company had a working capital
deficiency of $18,553,873 and stockholders’ deficit of
$17,382,780.  Furthermore, the Company has experienced cash flow
difficulties, currently owes the Internal Revenue Service and certain state and
local revenue authorities for past due payroll taxes and is currently in default
according to the terms of its note agreements, which causes the balances to
become due on demand.  The Company does not currently have alternate
sources of capital sufficient to meet such demands, if made.  These
conditions raise substantial doubt about the Company’s ability to continue as a
going concern.  The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.  The Company is currently pursuing various alternatives
to obtain additional funding to repay short-term liabilities, including
mortgaging and selling assets, and management is taking steps to increase
revenues, minimize costs and achieve profitable operations.




2.
            Line of credit.On
      August 31, 2006, the Company entered into an agreement with CAMOFI Master
      LDC for a line of credit with a maximum borrowing equal to the lesser of
      $1,500,000 or 80% of accounts receivable aged less than 90 days in
      consideration for the issuance to CAMOFI Master LDC of a five-year warrant
      to purchase 750,000 shares of our common stock at an exercise price of
      $0.01 per share. This line of credit is secured by our accounts
      receivable. Borrowings under this line of credit bear interest at prime
      plus 4%.The
      credit facility agreement contains debt covenants similar to those
      contained in the Senior Secured Convertible Notes Agreement (see
      below).  An agreement was executed with CAMOFI in December 2007
      that extended the maturity date of the line of credit to November 10,
      2010.  The Company defaulted on its debt covenants with CAMOFI
      and entered into an agreement dated June 9, 2008, pursuant to which CAMOFI
      agreed not to take action with regard to such defaults or enforce its
      security interests prior to September 2008, and which changed the maturity
      date of the line of credit to September 1, 2008 and increased the maximum
      borrowing amount to $1,925,301.  The Company subsequently
      entered into an agreement to extend the maturity date of the line of
      credit to January 1, 2009.  The Company is in default and in
      noncompliance with the CAMOFI line of credit
  agreement.




3.
            Other
      Debt


CAMOFI
Notes





On June
9, 2008, the Company entered into an agreement with CAMOFI to defer principal
and interest payments on the CAMOFI Notes Payable to September 1, 2008 and
increased the $2,027,123 note discussed above to $5,141,648.  The
increase in the note payable included $541,294 of accrued interest and
$1,954,231 of financing penalty fees.  The Company agreed to pay
CAMOFI all of the proceeds from the sale of the Pryor, Oklahoma facility,
proceeds from the sale of Leigh, Texas real estate, and monies held in escrow
for well closures at the wells at the Pryor, Oklahoma
facility.  Agents for the sale of the two properties were to be
obtained by July 31, 2008 and contracts for sale were to be obtained by
September 1, 2008.  The Company also agreed to raise $2,500,000 in
additional equity by September 1, 2008.


6


In
September 2008, the Company entered into agreements with CAMOFI to defer the
principal and interest payments to January 1, 2009, extended the date to retain
agents for the sale of the Company’s real property to September 1, 2008 and
obtain a contract for sale by January 1, 2009, extended the date for sale of
equity of at least $2,500,000 to January 1, 2009, require monthly EBITDA
(earnings before income tax, depreciation and amortization) of at least $400,000
and require annual EBITDA of at least $2,500,000 for 2008 and
2009.  The Company is in default and noncompliance with the note
agreements with CAMOFI.





The
Company has engaged Glenwood Capital to assist in the cash management of the
Company.  Until such time that the borrowing base becomes sufficient
to permit additional borrowing under the Line of Credit, we will be periodically
requesting additional funds from CAMOFI to satisfy ongoing working capital
requirements that are essential to the Company continuing as a going
concern.  CAMOFI has provided funding to the Company from May
2008 through March 2009 totaling approximately $2,727,000.  This
additional funding has been in the form of additional notes payable to
CAMOFI.  CAMOFI is not required to provide the Company with additional
funding in the future.





POOF
Note Payable and Related Redeemable Common Stock





On August
14, 2007, the Company entered into a loan with Professional Offshore Opportunity
Fund, Ltd. (“POOF”), for $750,000.  The Company also issued 500,000
shares of common stock to POOF in connection with this loan.  The
Company agreed to register the shares for sale or to repurchase
them.  If the shares were not registered by January 15, 2008, the
Company was obligated to repurchase the shares for $700,000.  In
accordance with EITF Topic D-98, since the redemption feature is not entirely
within the Company’s control, the redeemable common stock is presented as
temporary equity at December 31, 2008 and March 31, 2009 and has been recorded
at its redemption value at those dates.  The Company was notified by
POOF in May 2008 that the Company was in default of its loan
agreement.  Also, in June 2008, POOF demanded the repurchase of the
500,000 shares issued to POOF for $700,000.  On August 26, 2008, POOF
obtained a default judgment against the Company in the amount of $1,577,231 for
the note payable and redeemable common stock.  Interest will accrue on
the judgment amount at the rate of 20% per annum.




4.
            Loss per share.:  Loss per share
      is presented in accordance with SFAS No. 128 “Earnings Per
      Share”.  Weighted average shares outstanding for the quarters
      ended March 31, 2009 and 2008 were 16,077,189 and 14,988,337,
      respectively.





No
outstanding stock obligations or warrants represent potentially dilutive common
shares for the quarters ended March 31, 2009 and 2008.   As of
March 31, 2009 and 2008, the Company had outstanding common stock warrants to
issue 5,766,667 shares of common stock and had committed to issue 984,000 shares
of common stock to a lender (see Note 3).  During 2007, the Company
issued options to certain board members, officers and consultants to purchase
2,041,250 shares of common stock.  During 2008, the Company issued
options to certain board members, officers, employees and consultants to
purchase 1,691,900 shares of common stock.  These securities were not
included in the computation of diluted earnings per share since to do so would
have been antidilutive for the periods presented.





5.
            Share-Based Compensation:The Company records share-based payments to nonemployees based on
      the estimated value of those payments, generally measured at the date
      performance is complete and expensed over the performance
      period.





The
Company records share-based payments to employees based on the estimated value
of those payments, which are expensed over the requisite service periods.
 The measurement date for share-based payments is the grant date for awards
that qualify as equity and the settlement date for awards considered as
liabilities.





On
January 28, 2008, Mr. Onody was issued options to purchase an additional 500,000
shares. On July 10, 2008, Mr. Onody was appointed Interim Chief Executive
Officer.  Employees, directors and consultants were issued options to
purchase 1,191,900 shares of common stock in the first and second quarter
2008.  These options either vested immediately or one year from the
date of the grant, and all such options have ten year terms.  The
exercise price of all options granted in 2008 was $0.50 per share.





The
Company entered into agreements with various consultants during the year ended
December 31, 2008 and issued 2,112,500 shares in connection with those
agreements.  The terms of the agreements were for services to be
provided for terms of up to one year.  The Company has recorded the
issuance of these shares as prepaid consulting and is amortizing the amount over
the terms of the consulting agreements.  At December 31, 2008 and
March 31, 2009, the amount of unamortized prepaid consulting was $25,815 and
$2,566, respectively.





7




The
Company did not enter into any material consulting agreements during the quarter
ended March 31, 2009.




6.
Concentrations:Financial
instruments that potentially subject the Company to concentrations of credit
risk consist primarily of trade receivables with a variety of customers.
 The Company generally does not require collateral related to receivables.
 During the quarters ended March 31, 2009 and 2008, the Company had revenue
from 2 and 3 customers comprising approximately 54% and 79% of total revenues,
respectively.  At March 31, 2009 and December 31, 2008, accounts receivable
from these customers comprised approximately 40% and 45% of total accounts
receivable, respectively.





7.Commitments
andContingencies:The Company leases its Tulsa, Oklahoma offices and facility under a lease
expiring in May 2011 for $6,750 per month.  The offices and facility
in Portland, Oregon are leased on a month to month basis for approximately
$3,000 per month.  The obligations for future minimum lease payments
are $81,000 for 2009, $81,000 for 2010, and $33,750 for 2011.





The
Company is a party to various legal and regulatory proceedings arising in the
ordinary course of its business, none of which, in management’s opinion, will
result in judgments which would have a material adverse effect on the Company’s
financial position.  Please refer to the Company’s Form 10-K filing
for 2008 for a more complete description of the Company’s
litigation.





On
September 2, 2008, a default judgment was granted to Clean Harbors Environmental
Services, Inc. against the Company in the amount of $119,394, plus interest and
court costs for nonpayment of certain invoices.  On February 20, 2009,
the Company entered into a settlement agreement with Clean Harbors whereby the
Company agreed to make weekly payments to Clean Harbors.





The
Company has accrued but failed to pay payroll taxes for certain quarters in 2007
and 2008.  If the Company is unable to enter into a satisfactory
arrangement with the Internal Revenue Service with regard to the Company’s
failure to pay payroll taxes for the period August 17, 2007 through December 31,
2007 and some payments for the period January 1, 2008 through April 30, 2008,
the Internal Revenue Service seize all of the assets of the
Company.  The Company has been notified that the IRS has placed a lien
on the Company’s assets.  The Company has received a notice from the
Internal Revenue Service dated August 4, 2008, of an intent to levy on certain
assets for the non-payment of payroll taxes, penalties and interest totaling
$440,698 for certain quarters in 2007 and 2008.





The
imposition of a lien against the Company’s assets and a levy on its bank
accounts may cause a default under the Company’s indebtedness, which could
permit the Company’s lenders to demand immediate repayment.  The
Company does not have sufficient funds and may not be able to obtain sufficient
funds to repay all of its current indebtedness.  If the lenders demand
immediate repayment and the Company is unable to repay the indebtedness, the
lenders may enforce their lien against the assets and acquire ownership of the
assets.  If the IRS and various state taxing agencies enforce the
liens, they may acquire ownership of the assets. In either case, the enforcement
of a lien could have a material adverse affect on the Company’s business and may
cause it to cease operations.  The Company also has failed to pay
payroll taxes due to several states for 2006, 2007 and 2008.





The State
of Missouri has placed a lien on the Company’s assets for unpaid payroll taxes,
penalties and interest of $42,381.  The Company has established a
payment plan with the State of Missouri.





The State
of Oregon has issued a warrant (court judgment) dated July 18,
2008.  The letter states that unless the past due payroll taxes,
interest and penalties due in the amount of approximately $22,000 are paid, the
State of Oregon will place a lien on the assets of the Company and commence
seizure of those assets.  The Company has established a payment plan
with the State of Oregon.





Amerex
has established a payment plan with the Oklahoma Tax Commission to stay the
immediate injunction against Amerex.  If Amerex fails to comply with
the terms of the payment plan, Amerex will be enjoined from further operations
in the State of Oklahoma.





The State
of Connecticut has issued a delinquency notice on February 9, 2009 for failure
to file withholding tax returns for certain quarters in 2006, 2007 and
2008.




8








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




Forward-looking
Statements:




All
statements made in this report, other than statements of historical fact, are
forward-looking statements. These forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking
statements. The following factors, among others, could cause actual results to
differ materially from those set forth in the forward-looking statements: our
ability to successfully develop our brands and proprietary products through
internal development, licensing and/or mergers and acquisitions. Additional
factors include, but are not limited to the following: the size and growth of
the market for our products, competition, pricing pressures, market acceptance
of our products, the effect of economic conditions, intellectual property
rights, the results of financing efforts, risks in product development, other
risks identified in this report and our other periodic filings with the
Securities and Exchange Commission.




Critical
Accounting Policies




The
preparation of financial statements requires management to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues,
expenses and related disclosures. On an on-going basis, management evaluates our
estimates and assumptions, including but not limited to those related to revenue
recognition and the impairment of long-lived assets, goodwill and other
intangible assets.  Management bases its estimates on historical
experience and various other assumptions that it believes to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.





1.
Revenue recognition




The
Company recognizes revenue when persuasive evidence of an arrangement exists,
delivery has occurred and services have been provided, the price is fixed and
determinable, and collection is reasonably assured. The Company’s primary source
of revenue is through the treatment and disposal of hazardous waste. Revenue for
this service is recognized when the service has been provided.





2. Other
intangibles




Other
intangibles consist of permits acquired through acquisitions which are initially
recorded based upon their estimated fair value, and permits obtained through
operations which are stated at cost. Permit fair values are determined through
the use of external independent appraisals. Permits are amortized on a straight
line basis over their estimated useful lives, currently considered to be 10
years. The Company tests the intangibles for impairment whenever events or
changes in circumstances indicate that the carrying value of an asset may not be
recoverable.




3.
Share-based compensation and multiple element transactions




The
Company records share-based payments to nonemployees based on the estimated
value of those payments, generally measured at the date performance is complete
and expensed over the performance period. The Company records share-based
payments to employees based on the estimated value of those payments, which are
expensed over the requisite service periods. The measurement date for
share-based payments to employees is the grant date for awards that qualify as
equity and the settlement date for awards considered as liabilities. The
estimated value of share-based payments for options, warrants and similar
obligations is determined using a Black-Scholes model and assumptions regarding
stock price volatility, discount rate and exercise period.  A discount
is applied to the values of stock not yet registered to account for the reduced
value associated with the shares not being liquid and readily
saleable.


9




4. Equity
obligations




The
Company has certain obligations to issue equity instruments which do not meet
the accounting criteria to be recorded as equity, and therefore are recorded as
liabilities and remeasured to their estimated fair values until such time that
the obligation is settled or the accounting criteria for equity classification
is met.  Such obligations are valued largely using the methods and
assumptions described in the preceding paragraphs as applicable.




5. Accrued
liabilities and contingencies




The
Company accrues environmental remediation liabilities based on estimates of the
associated costs, as supported by assessments by external firms and specialists
as considered necessary.  The Company accrues liabilities and assesses
the adequacy of disclosures for litigation, assessments and related matters with
assistance from external attorneys to the extent considered
necessary.  Other accruals and contingencies are evaluated by
management for proper recording and disclosure, with external assistance
obtained when considered necessary.




6. Valuation
of assets held for sale and impairment of long-lived assets




The
Company owns property in Leigh, Texas (approximately 25 acres) and Pryor,
Oklahoma (approximately 155 acres).  At December 31, 2008, the Company
held the property for sale.  The estimated fair value of the Leigh,
Texas property was $75,000 and the Pryor, Oklahoma property was $400,000 at
December 31, 2008.  The Company used estimates of fair value of
property of similar size and close proximity.  The Company recognized
an impairment of real estate held for sale at December 31, 2008 of $1,024,250,
in the consolidated statement of operations for the year ended December 31,
2008.




Recently
Issued Accounting Pronouncements:




In
December 2007, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 141 (revised 2007), Business Combinations(“SFAS 141R”). SFAS 141R establishes principles and
requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
non-controlling interest in the acquiree and the goodwill acquired.
SFAS 141R also establishes disclosure requirements to enable the evaluation
of the nature and financial effects of the business combination. SFAS 141R
is effective for fiscal years beginning after December 15, 2008. The
adoption of this standard will impact the accounting for any business
combinations entered into by the Company after the adoption date.





In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities(“SFAS 161”). This statement
requires companies to provide enhanced disclosures about (a) how and why
they use derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under Statement 133 and its related
interpretations, and (c) how derivative instruments and related hedged
items affect a company’s financial position, financial performance, and cash
flows. SFAS 161 is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008. The Company
will provide additional disclosures in its consolidated financial statements
when the Company enters into derivative or hedging transactions.




In April
2008, FASB Staff Position No. 142-3, Determination of the Useful Life of
Intangible Assets (“FSP 142-3”) was issued. This standard amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under FASB
Statement No. 142, Goodwill and Other Intangible
Assets. FSP 142-3 is effective for financial statements issued for fiscal
years beginning after December 15, 2008, and interim periods within those
fiscal years. The Company has adopted FSP 142-3, but has determined that the
adoption does change the useful lives of amortizable intangible
assets.





In
May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles (“SFAS 162”). SFAS 162 is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with U.S. GAAP. SFAS 162 is effective 60 days
following the Securities and Exchange Commission’s approval of the Public
Company Accounting Oversight Board auditing amendments to AU Section 411,
“The Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles.” We do not expect SFAS 162 to have an effect on our consolidated
financial statements.





In
May 2008, the FASB issued FSP APB 14-1, Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement) (“FSP APB 14-1”). FSP ABP 14-1 requires the issuer of certain
convertible debt instruments that may be settled in cash (or other assets) on
conversion to separately account for the liability (debt) and (conversion
option) components of the instrument in a manner that reflects the issuer’s
non-convertible debt borrowing rate. FSP APB 14-1 is effective for fiscal years
beginning after December 15, 2008 on a retroactive basis.  The
Company has determined that the FSP will not impact the consolidated financial
statements because the convertible debt issued by the Company is not required to
be settled in cash upon conversion.


10


In June
2008, the FASB issued Emerging Issues Task Force Issue No. 07-5, Determining whether an Instrument
(or Embedded Feature) is Indexed to an Entity’s Own Stock (“EITF
07-5”).  EITF No. 07-5 is effective for financial statements issued
for fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. Paragraph 11(a) of SFAS No. 133 specifies that a contract
that would otherwise meet the definition of a derivative but is both
(a) indexed to the Company’s own stock and (b) classified in
stockholders’ equity in the statement of financial position would not be
considered a derivative financial instrument.  EITF 07-5 provides a
new two-step model to be applied in determining whether a financial instrument
or an embedded feature is indexed to an issuer’s own stock and thus able to
qualify for the SFAS No. 133 paragraph 11(a) scope exception.  The
adoption of the EITF had no effect on our consolidated financial
statements.





In
December 2008, FASB Staff Position FAS 140-4 and FIN 46(R)-8, Disclosures by Public Entities
(Enterprises) about Transfers of Financial Assets and Interests in Variable
Interest Entitieswas issued.  The FSP amends Statement 140 to
require public entities to provide additional disclosures about transferors’
continuing involvements with transferred financial assets.  It also
amends Interpretation 46(R) to require public enterprises, including sponsors
that have a variable interest in a variable interest entity, to provide
additional disclosures about their involvement with variable interest
entities.  The FSP also requires disclosures by a public enterprise
that is (a) a sponsor of a qualifying special-purpose entity (SPE) that holds a
variable interest in the qualifying SPE but was not the transferor of financial
assets to the qualifying SPE and (b) a servicer of a qualifying SPE that holds a
significant variable interest in the qualifying SPE but was not the transferor
of financial assets to the qualifying SPE.  The SFP and FIN are
effective for annual and interim reporting periods ending after December 15,
2008.  The Company adopted these pronouncements, which had no material
effect on its consolidated financial statements.





In April
2009, FASB Staff Position 107-1 and APB 28-1, Interim Disclosures about Fair Value
of Financial Instruments was issued.  The FSP amends Statement
107 to require public entities to provide disclosures about fair value of
financial instruments for interim reporting periods, in addition to those
disclosures required in annual financial statements.    The
FSP is effective for interim reporting periods ending after June 15,
2009.  The Company has determined that the adoption of the FSP will
require additional disclosures in its interim financial statements of the fair
value of financial instruments.




In April
2009, the FASB issued three new FASB Staff Positions (FSPs) all of which impact
the accounting and disclosure related to certain financial instruments. FSP
FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly” (FSP FAS 157-4) provides additional guidance for
estimating fair value in accordance with SFAS 157 when the volume and level of
activity for the asset or liability have significantly decreased. It also
includes guidance on identifying circumstances that indicate a transaction is
not orderly. FSP FAS 115-2 and FAS 124-2, “Recognition of
Other-Than-Temporary Impairment” (FSP FAS 115-2 and FAS 124-2) amends the
other-than-temporary impairment guidance for debt securities to make the
guidance more operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial
statements. FSP FAS 107-1 and APB 28-1 “Interim Disclosures about Fair
Value of Financial Instruments” (FSP FAS 107-1 and APB 28-1) amends FASB
Statement No. 107 to require disclosures about the fair value of financial
instruments on an interim basis in addition to the annual disclosure
requirements. The Company is required to adopt these three FSPs beginning
in the second quarter of fiscal 2009. We do not expect adoption of these
staff positions to have a material impact on the Company’s results of operations
or financial position.




Basis
of Presentation:




The
following is an overview of the Company's financial operations. Additional
information regarding the matters presented is provided in the more detailed
discussions that follow. We have also included information with respect to the
three-month periods ending March 31, 2009 and 2008.  We have prepared
these statements and they have not been audited by our independent
auditors.


11


Results
of Operations:




Three
Months Ended March 31, 2009 Compared With Three Months Ended March 31,
2008




The
following should be read in conjunction with our consolidated financial
statements and the related notes thereto included elsewhere herein. The
following table sets forth, as a percentage of sales, certain items appearing in
our consolidated statements of operations.




Three Months
                  Ended
                  March 31,
                  2009
                
                
                Three Months
                  Ended
                  March 31,
                  2008Operating
      Revenue
                
                
                100
                %
                
                
                100
                %Cost
      of Services Provided
                
                
                93
                %
                
                
                71
                %Gross
      Profit
                
                
                7
                %
                
                
                29
                %Operating
      Expenses
                
                
                80
                %
                
                
                79
                %Total
      Operating Expense
                
                
                173
                %
                
                
                150
                %Operating
      Loss
                
                
                (73
                )
      %
                
                
                (50
                )
      %Other
      Income (Expense)
                
                
                (60
                )
      %
                
                
                (24
                )
      %Net
      Loss
                
                
                (133
                )
      %
                
                
                (74
                )
      %




Revenue




Revenue
for the quarter ended March 31, 2009, was $1,180,074 as compared to revenue of
$1,607,422 for the quarter ended March 31, 2008.  This decrease was
primarily due to the elimination of services performed for the Drug Enforcement
Agency (“DEA”) and Environmental Compliance Consultant (“ECC”).  For
the three months ending March 31, 2008, revenue from both the DEA and ECC
totaled $518,783 as compared with $0 for the comparable period ending March 31,
2009.




Cost
of Services Provided




During
the three month period ending March 31, 2008 our total cost of services was
$1,139,901 or 71% of total revenues for a gross profit of $467,521 or 29% as
compared to total cost of services provided of $1,096,991 or 93% of total
revenues for a gross profit of $83,083 or 7% for the comparable three month
period ending March 31, 2009.  Cost of services increased from the
quarter ended March 31, 2008 to March 31, 2009 due to a $54,921 or 31% increase
in disposal costs and $63,853 or 105% increase in supplies due to two large jobs
in 2009 which required an increased expenditure for disposal costs and supplies,
than other jobs.  This increase was offset by a decrease of $175,161
or 64% in contract services expenses and decrease of $20,519 or 7% in labor
costs which was caused by the decrease in DEA/ECC revenue.  Overall
gross profit decreased from 29% for the three months ended March 31, 2008 to 7%
for the three months ended March 31, 2009 due to the large decrease in revenue
from DEA and ECC.  DEA and ECC had higher margins than revenue from
other customers.  Management is working to increase the revenue of the
Company and evaluating the pricing of its services to maximize its gross
margin.




Operating
Expenses




During
the three month period ended March 31, 2009 our operating expenses (which
includes selling, general and administrative, professional fees, non cash
compensation, and amortization and depreciation expenses) were $940,022 or 80%
of revenue resulting in an operating loss of $856,939 as compared to operating
expenses of $1,272,448 or 79% of revenue resulting in an operating loss of
$804,927 for the comparable three month period ending March 31,
2008.  The decrease in operating expenses from the quarter ended March
31, 2008 to March 31, 2009 was primarily a result of decreases in non cash
compensation expense of $339,423 or 94% and in insurance expense of $16,572 or
9%.  Non cash compensation decreased $339,423 from $362,673 for the
three month period ending March 31, 2008 to $23,250 for the three month period
ending March 31, 2009, primarily due to the timing of the issuance of stock and
options to consultants and employees.  Insurance expense decreased due
to a reduction of workers compensation costs related to a decrease in
rates.  Labor expense increased $18,161 or 8% from the quarter ended
March 31, 2008 to March 31, 2009 while payroll taxes decreased $29,112 or 45%.
The increase in operating labor expense is related to the increase in selling
and administrative personnel over the same quarter in the prior
year.  The decrease in payroll tax expense is due to the accrual of
payroll tax penalties on unpaid payroll taxes in the quarter ended March 31,
2008.


12




Non-Operating
Expenses




During
the three month period ending March 31, 2009, our net non-operating expenses
were $710,499 resulting in a net loss of $1,567,438, as compared with $388,635
in net non-operating expenses and a net loss of $1,193,562 for the three months
ended March 31, 2008.  The decrease in net non-operating expenses in
the current year period was due to the decrease in amortization of debt
discount, and the decrease in income recognized for the remeasurement of
obligations to issue equity instruments, partially offset by an increase in
interest expense.  Amortization of debt discount decreased from
$177,631 for the quarter ended March 31, 2008 to $130,254 for the quarter ended
March 31, 2009.  The amortization of debt discount is dependent on
timing of the refinancing of debt with CAMOFI and the additional borrowings from
CAMOFI.  The remeasurement of obligations to issue equity instruments
income decreased from $106,272 for the quarter ended March 31, 2008 to $0 for
the quarter ended March 31, 2009.  The remeasurement of equity
instruments expense/income is dependent upon the market price of the Company’s
stock for the quarter.  A decrease in the market price of the
Company’s stock results in remeasurement of equity instruments income for the
quarter.  The closing market price of the Company’s stock did not
change for the quarter ended March 31, 2009.  Interest expense rose
$184,902 from $404,513 for the quarter ending March 31, 2008 to $589,415 in the
comparable period ending March 31, 2009.  The increase in interest
expense is directly related to the increase in the total amount of notes payable
from $10,441,632 at March 31, 2008 to $16,558,489 at March 31,
2009.




Financial
Condition, Liquidity, and Capital Resources




At March
31, 2009 our cash and cash equivalents amounted to $42,837 and our accounts
receivable were $1,225,678. Our total current assets as of March 31, 2009 were
$1,710,553.  As of December 31, 2008 our cash and cash equivalents
amounted to $53,299, and our accounts receivable were $1,356,292.  Our
total current assets as of December 31, 2008 were $1,710,584.  Other
current assets decreased from $585,728 at December 31, 2008 to $442,038 at March
31, 2009 due to a decrease in prepaid expenses, including prepaid insurance and
prepaid consulting.  Other assets decreased from $545,430 at December
31, 2008 to $236,390 due primarily to the release of $300,000 of funds held in
escrow for the closure of injection wells at the Pryor, Oklahoma
property.




At March
31, 2009 the Company had current liabilities of $20,264,426 comprised of notes
payable, line of credit, accounts payable, accrued expenses, and obligations to
issue equity instruments.  At December 31, 2008 our current
liabilities were $19,403,612.  The increase in current liabilities was
due to additional borrowings from CAMOFI of $380,000 and an increase in accrued
interest expense of $477,015.  The Company had negative working
capital of $18,553,873 as of March 31, 2009 compared to negative working capital
$17,408,293 as of December 31, 2008.




For the
three month period ended March 31, 2009 and 2008 the Company had cash used in
operating activities of $683,375 and $255,748, respectively.  For the
three month period ended March 31, 2009 the Company realized an overall decrease
in cash and cash equivalents of $10,462, primary due to cash provided by
financing activities of $372,913, net cash provided by investing activities of
$300,000 and the aforementioned cash used in operating activities of
$683,375.  For the three months ended March 31, 2008 the Company
realized a increase in cash and cash equivalents of $47,542, primarily due to
cash used in investing activities of $797 and the aforementioned cash used in
operating activities of $255,748, partially offset by cash provided by financing
activities of $304,087.




The
Company's management has previously obtained additional funding in the form of
subordinated debt, draws on a line of credit, and additional borrowings from
CAMOFI.  However, there are no assurances that additional funding will
be available to the Company or, if available, will be on terms acceptable to the
Company.  Additionally, there are no assurances that such additional
funding, if available, will be sufficient to execute the Company’s business
plan.  If we fail to secure additional capital, we will be forced to
curtail or discontinue our operations and cease to be a going
concern.




The
continuation of our company as a going concern is dependent upon our company
attaining and maintaining profitable operations and raising additional
capital.  In addition, the loss of the DEA contract has had a material
adverse effect on the Company’s ability to continue as a going
concern.  As of March 31, 2009 the Company had, and as of the date of
this report, the Company continues to have insufficient funds to pay its
obligations incurred in the ordinary course as and when they are due, including
salaries and payroll taxes.


13




On June
9, 2008 we executed an agreement with CAMOFI Master LDC, the holder of our
Senior Secured Convertible Notes.  Under the terms of this new
agreement (a) the Maturity Date of the Note was changed from November 21, 2007
to November 21, 2010, (b) the principal and interest payments were deferred
until September 1, 2008, (c) the interest rate was increased from 10% payable in
cash to 10% payable in cash and 2% payable in additional notes, and (d) we
agreed to issue a new note in the amount of $5,141,648 with the same terms as
the existing Note, to settle liquidated damages and other amounts due under the
original note agreement, (e) the monthly redemption amount was changed to either
$250,000 per month or $150,000 per month depending on the amount of funds that
are available to be applied to the principal amount of the Notes from the sale
of the Pryor, Oklahoma, and Leigh, Texas properties, (f) the monthly redemption
amount was to begin on September 1, 2008, (g) Amerex was required to use the
proceeds from the sale of the Pryor, Oklahoma facility and Leigh,
Texas  properties, as well as the proceeds from the release of the
escrowed funds of $300,000 securing the closure of the injection wells in Pryor,
Oklahoma, to pay down the indebtedness, (h) we agreed to affirmative covenants
to secure at least $2,500,000 in additional equity financing before September 1,
2008, (i) to file a registration statement prior to September 1, 2008, (j)
CAMOFI shall maintain its right to convert up to 100% of the outstanding
indebtedness into Common Stock, (k) the Company will issue CAMOFI that number of
additional shares equal to 4.5% of its outstanding stock, (l) Amerex extended
the term of CAMOFI’s warrants to December 31, 2012, and (m) we agreed to make
our principal officers and financial personnel available for an on-site review
of the financial condition of the Company.  In September 2008, the
Company entered into agreements with CAMOFI to defer the principal and interest
payments to January 1, 2009, extend the date to retain agents for the sale of
the Company’s real property to September 1, 2008 and obtain a contract for sale
by January 1, 2009, extended the date for sale of equity of at least $2,500,000
to January 1, 2009, require monthly EBITDA (earnings before income tax,
depreciation and amortization) of at least $400,000 beginning January 2009, and
require annual EBITDA of at least $2,500,000 for 2008 and 2009.  The
Company is in default on the CAMOFI note agreements and in noncompliance with
certain covenants.




On August
31, 2006 we entered into an agreement with CAMOFI Master LDC for a line of
credit in consideration for the issuance to CAMOFI Master LDC of a five-year
warrant to purchase 750,000 shares of our common stock at an exercise price of
$0.01 per share. The line of credit is secured by our accounts receivable. The
maximum borrowing on this line is the lesser of $1,500,000 or 80% of accounts
receivable aged less than 90 days. The credit facility agreement contains debt
covenants similar to those contained in the Senior Secured Convertible Notes
Agreement.  An agreement was executed with CAMOFI in December 2007
that extended the maturity date of the line of credit to November 10,
2010.  The Company defaulted on its debt covenants with CAMOFI and
entered into an agreement dated June 9, 2008, pursuant to which CAMOFI agreed
not to take action with regard to such defaults or enforce its security
interests prior to September 2008, and extended the line of credit to September
1, 2008 and increased the maximum borrowing amount to $1,925,301.  The
Company has entered into an agreement which extended the maturity date of the
line of credit to January 1, 2009.  The Company is in default and in
noncompliance with the CAMOFI line of credit agreement.




The
Company has engaged Glenwood Capital to assist in the cash management of the
Company.  Until such time that the borrowing base becomes sufficient
to permit additional borrowing under the Line of Credit, we will be periodically
requesting additional funds from CAMOFI to satisfy ongoing working capital
requirements that are essential to the Company continuing as a going
concern.  CAMOFI has provided funding to the Company from May
2008 through March 2009 totaling approximately $2,727,000.  This
additional funding has been in the form of additional notes payable to
CAMOFI.  CAMOFI is not required to provide the Company with additional
funding in the future.




The
Company was notified by POOF in a letter dated May 30, 2008 that the Company was
in default of its loan agreement.  Also, in a letter dated June 20,
2008, POOF demanded the repurchase of the 500,000 shares issued to POOF for
$700,000.  On August 26, 2008, POOF obtained a default judgment
against the Company in the amount of $1,577,231 for the note payable and
redeemable common stock.  Interest will accrue on the judgment amount
at the rate of 20% per annum.





The
Company has not paid all of the payroll taxes due for 2006, 2007 and 2008 to the
Internal Revenue Service and the States of Oklahoma, Missouri, Colorado,
Connecticut, and Oregon.  The total amount accrued for unpaid payroll
taxes, and estimated penalties and interest at March 31, 2009 was
$752,088.  The Internal Revenue Service and the States have filed an
intent to levy for payroll taxes owed or placed liens on the Company’s
assets.




The
Company is currently addressing its liquidity and negative working capital
issues as of March 31, 2009 by the following actions:




14




·
            The
      Company will seek alternative financing which may include equity financing
      or additional debt. The Company is currently in discussions with several
      institutions for the purpose of securing additional
    funding.




·
            The
      Company continues to pursue additional customers and increased
      revenues.




·
            The
      Company is actively soliciting parties interested in the purchase of our
      property in Pryor, Oklahoma. Proceeds from this sale, if it is concluded,
      will be used to pay down the 10% Senior Secured Convertible
      Notes.




·
            The
      Company is has made efforts to sell its property owned in Leigh,
      Texas.




·
            The
      Company continues to implement plans to further reduce operating costs as
      a percentage of revenue by improved process control and greater
      productivity.




However,
there is no guarantee that any of these strategies will enable the Company to
meet its financial obligations for the foreseeable future, or that CAMOFI will
continue to provide working capital to the Company, any or all of which could
have a material adverse effect on our business, results of operations and
financial condition.




ITEM
3.  Quantitative and Qualitative Disclosures about Market
Risk





Not
applicable.





ITEM
4.  Controls and Procedures





As
required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end
of the period covered by the quarterly report, we have carried out an evaluation
of the effectiveness of the design and operation of our company’s disclosure
controls and procedures. This evaluation was carried out under the supervision
and with the participation of our company officers and directors. Based upon
that evaluation, disclosure controls and procedures are deemed adequate as of
the end of the period covered by this report.  Management is currently
addressing several issues which may be material weaknesses in its internal
control over financial reporting – a.) The Company is currently without a CFO or
senior financial expert, b.) Management believes that the Company is in need of
another bookkeeper with experience in Quickbooks, c.) Invoicing is often slow
and receivables can be collected sooner with adequate staffing, d) The Company
needs to improve its assessment of the proper application of generally accepted
accounting principles including the timing and recognition of the impairment of
assets held for sale, and e) Due to the small number of accounting personnel,
the Company has a lack of segregation of duties.  There have been no
significant changes in our internal controls over financial reporting that
occurred during our most recent fiscal year that have materially affected, or
are reasonably likely to materially affect, our internal controls over financial
reporting.





Disclosure
controls and procedures are designed to ensure that information required to be
disclosed in our reports or submitted under the Securities Exchange Act of 1934
is recorded, processed, summarized and reported within the time period 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 that is required to be disclosed in our reports filed
under the Securities Exchange Act of 1934 is accumulated and communicated to
management, including our president and interim chief executive officer, to
allow timely decisions regarding the required disclosure.




PART
II. OTHER INFORMATION




ITEM
1. Legal Proceedings





On
September 2, 2008, a default judgment was granted to Clean Harbors Environmental
Services, Inc. against the Company in the amount of $119,394, plus interest at
12% per annum and court costs for nonpayment of certain invoices.  On
February 20, 2009, the Company entered into a settlement agreement with Clean
Harbors whereby the Company agreed to make weekly payments to Clean
Harbors.





The
Company has not paid all of the payroll taxes due for 2006, 2007 and 2008 to the
Internal Revenue Service and the States of Oklahoma, Missouri, Colorado,
Connecticut, and Oregon.  The total amount accrued for unpaid payroll
taxes, and estimated penalties and interest at March 31, 2009 was
$752,088.  The Internal Revenue Service and the States have filed an
intent to levy for payroll taxes owed or placed liens on the Company’s
assets.


15


The
Company was notified by POOF in a letter dated May 30, 2008 that the Company was
in default of its loan agreement.  Also, in a letter dated June 20,
2008, POOF demanded the repurchase of the 500,000 shares issued to POOF for
$700,000.  On August 26, 2008, POOF obtained a default judgment
against the Company in the amount of $1,577,231 for the note payable and
redeemable common stock.  Interest will accrue on the judgment amount
at the rate of 20% per annum.




ITEM
2. Unregistered Sales of Equity Securities and Use of Proceeds




None.




ITEM
3.  Defaults Upon Senior Securities


We
are in default under our Senior Secured Convertible Notes Agreement




On June
9, 2008 we executed an agreement with CAMOFI Master LDC, the holder of our
Senior Secured Convertible Notes.  Under the terms of this agreement
(a) the Maturity Date of the Note was changed from November 21, 2007 to November
21, 2010, (b) the principal and interest payments were deferred until September
1, 2008, (c) the interest rate was increased from 10% payable in cash to 10%
payable in cash and 2% payable in additional notes, and (d) we agreed to issue a
new note in the amount of $5,141,648 with the same terms as the existing Note,
to settle liquidated damages and other amounts due under the original note
agreement, (e) the monthly redemption amount was changed to either $250,000 per
month or $150,000 per month depending on the amount of funds that are available
to be applied to the principal amount of the Notes from the sale of the Pryor,
Oklahoma, and Leigh, Texas properties, (f) the monthly redemption amount began
on September 1, 2008, (g) Amerex was required to use the proceeds from the sale
of the Pryor, Oklahoma facility and Leigh, Texas properties, as well as the
proceeds from the release of the escrowed funds of $300,000 securing the closure
of the injection wells in Pryor, Oklahoma, to pay down the indebtedness, (h) we
agreed to affirmative covenants to secure at least $2,500,000 in additional
equity financing before September 1, 2008, (i) to file a registration statement
prior to September 1, 2008, (j) CAMOFI shall maintain its right to convert up to
100% of the outstanding indebtedness into Common Stock, (k) the Company will
issue CAMOFI that number of additional shares equal to 4.5% of its outstanding
stock, (l) Amerex extended the term of CAMOFI’s warrants to December 31, 2012,
and (m) we agreed to make our principal officers and financial personnel
available for an on-site review of the financial condition of the
Company.  In September 2008, the Company entered into agreements with
CAMOFI to defer the principal and interest payments to January 1, 2009, extend
the date to retain agents for the sale of the Company’s real property to
September 1, 2008 and obtain a contract for sale by January 1, 2009, extend the
date for sale of equity of at least $2,500,000 to January 1, 2009, require
monthly EBITDA (earnings before income tax, depreciation and amortization) of at
least $400,000 beginning January 2009, and require annual EBITDA of at least
$2,500,000 for 2008 and 2009.  The Company is currently in default on
the CAMOFI note agreements and in noncompliance with certain
covenants.




On August
31, 2006 we entered into an agreement with CAMOFI Master LDC for a line of
credit in consideration for the issuance to CAMOFI Master LDC of a five-year
warrant to purchase 750,000 shares of our common stock at an exercise price of
$0.01 per share. This line of credit is secured by our accounts receivable. The
maximum borrowing on this line is the lesser of $1,500,000 or 80% of accounts
receivable aged less than 90 days. The credit facility agreement contains debt
covenants similar to those contained in the Senior Secured Convertible Note
Agreements.  An agreement was executed with CAMOFI in December 2007
that extended the maturity date of the line of credit to November 10,
2010.  The Company defaulted on its debt covenants with CAMOFI and
entered into an agreement dated June 9, 2008, pursuant to which CAMOFI agreed
not to take action with regard to such defaults or enforce its security
interests prior to September 2008, and extend the line of credit to September 1,
2008 and increased the maximum borrowing amount to $1,925,301.  The
Company has entered into an agreement to extend the maturity date of the line of
credit to January 1, 2009.  The Company is in default and in
noncompliance with the CAMOFI line of credit agreement.




The
Company has engaged Glenwood Capital to assist in the cash management of the
Company. Until such time that the borrowing base becomes sufficient to permit
additional borrowing under the Line of Credit, we will be periodically
requesting additional funds from CAMOFI to satisfy ongoing working capital
requirements that are essential to the Company continuing as a going
concern.  CAMOFI has provided funding to the Company from May
2008 through March 2009 totaling approximately $2,727,000.  This
additional funding has been in the form of additional notes payable to
CAMOFI.  CAMOFI is not required to provide the Company with additional
funding in the future.




16




The
Company was notified by POOF in a letter dated May 30, 2008 that the Company was
in default of its loan agreement.  Also, in a letter dated June 20,
2008, POOF demanded the repurchase of the 500,000 shares issued to POOF for
$700,000.  On August 26, 2008, POOF obtained a default judgment
against the Company in the amount of $1,577,231 for the note payable and
redeemable common stock.  Interest will accrue on the judgment amount
at the rate of 20% per annum.


ITEM
4.  Submission of Matters to a Vote of Security Holders




None.




ITEM
5.  Other Information





On July
10, 2008, Nicholas J. Malino resigned his position as Chief Executive Officer
and Chairman of the Board of Directors of the Company.  Stephen K.
Onody was appointed as the Interim Chief Executive Officer of the
Company.




ITEM 6.
Exhibits





Exhibit
      No.
              Document2.1
              Share
      Exchange Agreement dated as of July 5, 2006 among Amerex Group, Inc.,
      James P. Frack, AMEREX Companies, Inc., and the Stockholders of AMEREX
      Companies, Inc. (incorporated by reference to Exhibit 2.1 of Form 8-K
      filed July 11, 2006)2.2
              Agreement
      of Merger between CDX.com Colorado and CDX.com Merger Co (Oklahoma) dated
      July 28, 2005 (incorporated by reference to Exhibit 2.1of Form 10-QSB for
      the quarter ended September 30, 2004).2.3
              Stock
      Purchase Agreement between United Assurance and Amerex Group, Inc. dated
      August 1, 2005 (incorporated by reference to Exhibit 2.2 of  Form
      10-QSB for the quarter ended September 30, 2004)2.4
              Agreement
      and Plan of Merger between Amerex Group, Inc, and CDX.com Merger, Inc.,
      and CDX.com (Oklahoma), dated July 28, 2005 (incorporated by reference to
      Exhibit 2.3 of  Form 10-QSB for the quarter ended September 30,
      2004)2.5
              Default
      Judgment entered on August 26, 2008, Professional Offshore Opportunity
      Fund, Ltd. (“POOF”), incorporated by reference to Exhibit 2.1 of Form 8-K
      filed on September 10, 20082.6
              Restraining
      Notice dated August 27, 2008 in favor of POOF, incorporated by reference
      to Exhibit 8.1 of Form 8-K, filed on September 10, 2008.2.7
              Judgment
      by Default Upon Assessment of Damages, for the benefit of Clean Harbors
      Environmental Services Inc., incorporated by reference to Exhibit 8.1 of
      Form 8-K, filed on September 10, 2008.3.1
              Restated
      Articles of Incorporation filed 7/27/2005 (incorporated by reference to
      Exhibit 3.1 of  Form 10-QSB for the quarter ended September 30,
      2004)3.2
              Certificate
      of Incorporation of Amerex Group, Inc. (incorporated by reference to
      Exhibit 3.4 of Form 10-QSB for the quarter ended September 30,
      2004)


17





3.3
              Bylaws
      of Amerex Group, Inc. (incorporated by reference to Exhibit 3.6 of
       Form 10-QSB for the year ended September 30, 2004)4.1
              10%
      Senior Convertible Note issued to CAMOFI Master LDC in the acquisition on
      July 5, 2006 (incorporated by reference to Exhibit 4.1of Amendment to Form
      SB-2 filed on January 17, 2007).4.2
              Warrant
      issued to CAMOFI Master LDC in the acquisition on July 5, 2006
      (incorporated by reference to Exhibit 4.2 of Amendment to Form 10-SB filed
      on January 17, 2007).4.3
              Form
      of warrant issued to former AMEREX Companies, Inc. warrant holders in the
      acquisition on July 5, 2006 (incorporated by reference to Exhibit 4.3 of
      Amendment to Form 10-SB filed on January 17, 2007).4.4
              AMEREX
      Companies, Inc. 8% Secured Promissory Note, dated September 2, 2005, in
      the amount of $450,000 issued to Professional Traders Fund, LLC.
      (incorporated by reference to Exhibit 4.6 of Form 8-K filed July 11,
      2006)4.5
              Warrant
      issued to CAMOFI Master LDC in connection with a line of credit on
      November 10, 2006 (incorporated by reference to Exhibit 4.2 of Amendment
      to Form 10-SB filed on January 17, 2007).4.6
              Non-Qualified
      Stock Option Award Agreementfor the benefit of
      Stephen K. Onody, dated January 28, 20085.1
              Opinion
      of Sichenzia Ross Friedman Ference LLP (incorporated by reference to
      Exhibit 5.1 of Amendment to Form 10-SB filed on January 17,
      2007).10.1
              Securities
      Purchase Agreement, dated November 21, 2005, between AMEREX Companies,
      Inc. and CAMOFI Master LDC. (incorporated by reference to Exhibit 10.1 of
      Amendment to Form 10-SB filed on January 17, 2007).10.2
              Form
      of Lock-Up Agreement dated November 21, 2005, between CAMOFI Master LDC
      and each of Richard Coody, Nick Malino, Ron Brewer, Robert Roever, John
      Smith, and Marwaan Karame (incorporated by reference to Exhibit 10.2 of
      Form 8-K filed on July 11, 2006)10.3
              Registration
      Rights Agreement, dated November 21, 2005, between AMEREX Companies, Inc.
      and CAMOFI Master LDC. (incorporated by reference to Exhibit 10.3 of Form
      8-K filed on July 11, 2006)10.4
              Escrow
      Agreement, dated November 21, 2005, between AMEREX Companies, Inc. and
      CAMOFI Master LDC. (incorporated by reference to Exhibit 10.4 of Form 8-K
      filed on July 11, 2006)10.5
              Subsidiary
      Guarantee, dated November 21, 2005, of Waste Express to CAMOFI Master LDC
      (incorporated by reference to Exhibit 10.5 of Form 8-K filed on July 11,
      2006)10.6
              Subsidiary
      Agreement, dated November 21, 2005, between Amerex Acquisition Corp. and
      CAMOFI Master LDC (incorporated by reference to Exhibit 10.6 of Form 8-K
      filed on July 11, 2006)10.7
              Intercreditor
      Agreement, dated November 21, 2005, between CAMOFI and PTF. (incorporated
      by reference to Exhibit 10.7 of Form 8-K filed on July 11,
      2006)10.8
              Loan
      Agreement, dated August 12, 2005 between DCI USA Inc. and AMEREX
      Companies, Inc. (incorporated by reference to Exhibit 10.8 of Form 8-K
      filed July 11, 2006)10.9
              Amendment,
      dated June 30, 2006 to Contract for Sale and Purchase of Business Assets,
      dated September 1, 2005, between Enhanced Operating Co., LLC and AMEREX
      Companies, Inc. (incorporated by reference to Exhibit 10.10 of Form 8-K
      filed on July 11, 2006)


18





10.11
              Amendment,
      dated November 13, 2005, to Contract for Sale and Purchase of Business
      Assets, dated September 13, 2005, among NES Technology LLC, Industrial
      Waste Services LLC and AMEREX Companies, Inc. (incorporated by reference
      to Exhibit 10.13 of Form 8-K filed on July 11, 2006)10.12
              Employment
      Agreement, dated October 1, 2005, between AMEREX Companies, and Richard
      Coody.  (incorporated by reference to Exhibit 10.23 of Form 8-K
      filed on July 11, 2006)10.13
              Lease
      Agreement, dated December 1, 2005, between Amerex Companies, Inc. and
      Capitoline Advisors, Inc. (incorporated by reference to Exhibit 10.29 of
      Form 8-K filed on July 11, 2006)10.14
              Lease
      Agreement, dated December 30, 2005, between Amerex Companies, Inc. and
      CDI, Inc. (incorporated by reference to Exhibit 10.30 of Form 8-K filed on
      July 11, 2006)10.15
              Line
      of Credit with CAMOFI Master LDC (incorporated by reference to Exhibit
      10.15 of Amendment No. 1 to Form SB-2 filed on March 20,
    2007)10.16
              Secured
      Loan Agreement with Professional Offshore Opportunity Fund, Ltd.
      (incorporated by reference to Exhibit 10.16 of Form 8-K filed August 16,
      2007)10.17
              Letter
      Agreement with Professional Offshore Opportunity Fund, Ltd. (incorporated
      by reference to Exhibit 10.17 of Form 8-K filed August 16,
      2007)10.18
              Pledge
      Agreement between Richard Coody and Ron Brewer and Professional Offshore
      Opportunity Fund, Ltd. (incorporated by reference to Exhibit 10.18 of Form
      8-K filed August 16, 2007)10.19
              Indemnification
      Agreement with Richard Coody (incorporated by reference to Exhibit 10.19
      of Form 8-K filed August 16, 2007)10.20
              Agreement
      with Richard Coody (incorporated by reference to Exhibit 10.20 of Form 8-K
      filed August 16, 2007)10.21
              Indemnification
      Agreement with Ron Brewer (incorporated by reference to Exhibit 10.21 of
      Form 8-K filed August 16, 2007)10.22
              Agreement
      with Ron Brewer (incorporated by reference to Exhibit 10.22 of Form 8-K
      filed August 16, 2007)10.23
              Conformed
      Letter of Intent to purchase Perma-Fix Treatment Solutions, Inc.
      (“Perma-Fix”) of Tulsa, OK from Perma-Fix Environmental Services, Inc.
      (incorporated by reference to Exhibit 10.23 of Form 8-K filed August 29,
      2007)10.31
              Letter
      Agreement between Amerex Group, Inc. and CAMOFI Master LDC dated
      December 19, 2007 (incorporated by reference to Exhibit 10.31 of Form
      8-K filed January 7, 2008)10.32
              Letter
      Agreement, dated May 7, 2008, between the Company and Glenwood Capital
      LLC, (incorporated by reference to Exhibit 10.32 of Form 10-QSB filed May
      20, 2008)10.33
              Letter
      Agreement between Amerex Group, Inc. and CAMOFI Master LDC dated June 9,
      2008 (incorporated by reference to Exhibit 10.1 of Form 8-K filed June 13,
      2008)21.1
              Subsidiaries
      of Registrant (incorporated by reference to Exhibit 21 of Form 8-K filed
      on July 11, 2006).


19





31.1
              Certification of Chief Executive
      Officer and Principal Financial and Accounting Officer - Sarbanes-Oxley
      Act Section 302,filed
    herewith32.1
              Certification of Chief Executive
      Officer and Principal Financial and Accounting Officer - Sarbanes-Oxley
      Act Section 906,filed
    herewith


20





SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.




AMEREX
      GROUP, INC.Date:
      May 15, 2009
              By:
              /s/ Stephen K. OnodyStephen
      K. Onody, Interim Chief Executive Officer,
                Principal
      Financial and Accounting Officer and
                Director


21