UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549







Form
10-Q/A







(Mark
One)


x
            Quarterly
      Report under Section 13 or 15(d) of the Securities Exchange Act of
      1934
              
              For the quarter ended March 31,
  2008





or




 ̈
            Transition
      Report under Section 13 or 15(d) of the Securities Exchange Act of
      1934
              
              For the transition period from 
      to




000-13118


(Commission
File No.)







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, OK 74106


(Address
of principal executive offices, Zip Code)




Registrant’s
telephone number, including area code (918) 858-1050







N/A


(Former
name, former address and former fiscal year, if changed since last
report)




Check
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 registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act):    YES   ̈    NO  x




Indicate
by a check mark whether the registrant is (check one):


an accelerated filer
      [  ]
            a non accelerated
      filer [  ]
            or a smaller
      reporting company [X]




State the
number of shares outstanding of each of the issuer’s classes of common stock, as
of last practicable date.




Class
            
            Outstanding
      at  May 18, 2008Common
      Stock, $.001 par value
            
            14,067,183




Transitional
Small Business Disclosure Format (check
one):    YES   ̈    NO  x












INDEX





Page
              NumberPART I.FINANCIAL INFORMATIONItem 1.
      Financial StatementsCondensed Consolidated Balance
      Sheet at March 31, 2008 and December 31, 2007
      (unaudited)
            3Condensed Consolidated Statements
      of Operations for the three  months ended March 31, 2008 and the
      three months  ended March 31, 2007
      (unaudited)
            4Condensed Consolidated Statements
      of Cash Flows for the three months ended March 31, 2008 and the three
      months ended March 31, 2007 (unaudited)
            5Notes to Unaudited Condensed
      Consolidated Financial Statements
            6Item 2.Management’s Discussion and
      Analysis of Financial Condition and Results of
      Operations
            13Item 3.
      Quantitative and Qualitative Disclosures About Market Risk
            19Item
      4. Controls and
      Procedures
            19PART II.OTHER INFORMATIONItem 2.Changes in
      Securities
            20Item
      3.  Defaults Upon Senior Securities
            20Item 4.Submission of Matters to Vote of
      ShareholdersItem 6.Exhibits and Reports on Form
      8-K
            21SIGNATURE PAGE
            22





2





PART
I. FINANCIAL INFORMATION




ITEM 1.
Financial Statements




AMEREX GROUP, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEET


(Unaudited)




March
      31, 2008
            
            
            December
      31, 2007ASSETSCURRENT
      ASSETSCash
      and cash equivalents
            
            $
            67,130
            
            
            $
            19,588Accounts
      receivable, trade, net of an allowance for doubtful accounts of $15,000 at
      March 31, 2008 and December 31, 2007
            
            
            1,977,922
            
            
            
            2,262,396Other
      current assets
            
            
            752,630
            
            
            
            506,197TOTAL
      CURRENT ASSETS
            
            
            2,797,682
            
            
            
            2,788,181PROPERTY,
      PLANT AND EQUIPMENT, at cost
            
            
            3,964,642
            
            
            
            3,963,844Less
      accumulated depreciation and amortization
            
            
            (708,774
            )
            
            
            (629,382
            )NET
      PROPERTY, PLANT AND EQUIPMENT
            
            
            3,255,868
            
            
            
            3,334,462Other
      assets
            
            
            672,555
            
            
            
            686,595TOTAL
      ASSETS
            
            $
            6,726,105
            
            
            $
            6,809,238LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable
            
            $
            2,238,341
            
            
            $
            2,476,282Accrued
      expenses
            
            
            1,453,751
            
            
            
            1,089,133Current
      portion of long term debt
            
            
            2,795,221
            
            
            
            2,230,000Accrued
      acquisition liability
            
            
            268,975
            
            
            
            265,000Obligations
      to issue equity instruments
            
            
            159,408
            
            
            
            265,680TOTAL
      CURRENT LIABILITIES
            
            
            6,915,696
            
            
            
            6,326,095Long
      term debt, net of debt discount
            
            
            7,428,310
            
            
            
            7,471,592TOTAL
      LIABILITIES
            
            
            14,344,006
            
            
            
            13,797,687Redeemable
      common stock, 500,000 shares
            
            
            735,000
            
            
            
            700,000COMMITMENTS &
      CONTINGENCIESSTOCKHOLDERS’
      EQUITYCommon
      stock - $.001 Par Value, 100,000,000Shares
      authorized, 14,067,183 and 15,709,683 shares issued and outstanding at
      March 31, 2008 and December 31, 2007, respectively, including redeemable
      common stock
            
            
            13,567
            
            
            
            15,210Additional
      paid-in capital
            
            
            6,063,580
            
            
            
            5,532,827Accumulated
      deficit
            
            
            (14,430,048
            )
            
            
            (13,236,486
            )TOTAL
      STOCKHOLDERS’ EQUITY (DEFICIT)
            
            
            (8,352,901
            )
            
            
            (7,688,449
            )TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
            
            $
            6,726,105
            
            
            $
            6,809,238





See
Accompanying Notes




3




ITEM 1.
Financial Statements (cont.)




AMEREX GROUP, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)




Three Months Ended
      March 31,2008
            
            
            2007Revenue
            
            $
            1,607,422
            
            
            
            2,147,872Operating
      Expenses:Cost
      of services provided
            
            
            1,139,901
            
            
            
            1,285,254Non
      cash compensation
            
            
            362,673
            
            
            
            00Selling,
      general and administrative
            
            
            670,049
            
            
            
            645,903Professional
      fees
            
            
            151,294
            
            
            
            78,143Depreciation
            
            
            79,391
            
            
            
            82,305Amortization
            
            
            9,041
            
            
            
            9,041Operating
      Income (Loss)
            
            
            (804,927
            )
            
            
            47,226Other
      Income (Expense)Interest
      expense
            
            
            (404,513
            )
            
            
            (187,631
            )Amortization
      of debt discount
            
            
            (177,631
            )
            
            
            (585,000
            )Amortization
      of capitalized financing fees
            
            
            0
            
            
            
            (200,099
            )Financing
      penalty fees
            
            
            0
            
            
            
            (295,800
            )Remeasurement
      of obligations to issue equity instruments
            
            
            106,272
            
            
            
            0Other
      income
            
            
            87,237
            
            
            
            22Loss
      From Continuing Operations
            
            
            (1,193,562
            )
            
            
            (1,221,282
            )Loss
      From Discontinued Operations
            
            
            0
            
            
            
            (93,711
            )Net
      Loss
            
            $
            (1,193,562
            )
            
            $
            (1,314,993
            )LOSS
      PER SHAREBasic
      and Diluted
            
            $
            (0.08
            )
            
            $
            (0.07
            )Weighted
      average number of common shares outstanding:Basic
      and Diluted
            
            
            14,988,337
            
            
            
            18,773,595




See
Accompanying Notes




4




ITEM 1.
Financial Statements (cont.)




AMEREX GROUP, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)




Three
      Months Ended March 312008
            
            
            2007Cash
      Flows From Operating ActivitiesNet
      Loss
            
            $
            (1,193,562)
            
            
            $
            (1,314,993)Adjustments
      to reconcile net loss to net cash provided by (used in) operating
      activitiesLoss
      on discontinued operations
            
            
            0
            
            
            
            93,711Depreciation
      and amortization
            
            
            88,432
            
            
            
            291,445Amortization
      of debt discount
            
            
            177,631
            
            
            
            585,000Noncash
      compensation
            
            
            362,673
            
            
            
            0Changes
      in:Accounts
      receivable
            
            
            284,474
            
            
            
            694,524Other
      current assets
            
            
            (79,996)
            
            
            
            114,473Other
      assets
            
            
            4,999
            
            
            
            0Accounts
      payable
            
            
            (237,941)
            
            
            
            (165,748)Accrued
      current liabilities
            
            
            337,542
            
            
            
            (50,289)Net
      cash provided by (used in) operating activities
            
            
            (255,748)
            
            
            
            248,123Cash
      flows from Investing ActivitiesAcquisition
      of property, plant and equipment
            
            
            (797)
            
            
            
            (17,750)Disposal
      of property, plant and equipment
            
            
            0
            
            
            
            9,957Restricted
      cash
            
            
            0
            
            
            
            15,000Net
      cash provided by (used in) investing activities
            
            
            (797)
            
            
            
            7,207Cash
      flows from Investing ActivitiesBorrowings
      on Debt
            
            
            304,087
            
            
            
            0Repayment
      of Debt
            
            
            0
            
            
            
            (115,600)Net
      cash provided by (used in) financing activities
            
            
            304,087
            
            
            
            (115,600)Net
      increase in cash and cash equivalents
            
            
            47,542
            
            
            
            139,730Cash
      and cash equivalents at beginning of period
            
            
            19,588
            
            
            
            60,267Cash
      and cash equivalents at end of period
            
            $
            67,130
            
            
            $
            199,997Supplemental
      disclosures - cash paid for:Interest
            
            $
            105,960
            
            
            $
            258,785Income
      taxes
            
            $
            0
            
            
            $
            —




See
Accompanying Notes




5




AMEREX
GROUP, INC. AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




1. Basis of Presentation.
    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-KSB made to date in 2008.
  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  The Company incurred a net loss of
$7,114,098 during the year ended December 31, 2007, a net loss for the three
months ended March 31, 2008 of $1,193,562 and further losses are
anticipated.  As of March 31, 2008, the Company had a working capital
deficiency of $4,118,014 and stockholders’ deficit of
$8,352,901.   Furthermore, the Company has experienced cash flow
difficulties, 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 $1.5 million or
80% of account 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.  An agreement was
executed with CAMOFI in December 2007 that extended the maturity date of the
line of credit to November 10, 2010.
  3. Long
Term Debt.




CAMOFI
Notes




The
Company entered into 10% Senior Secured Convertible Notes (the “Notes”) dated
November 21, 2005 with CAMOFI MASTER LDC and a limited number of Qualified
Institutional Investors.  Interest is payable monthly in arrears, in cash
or, at the option of the Company and subject to certain conditions being met, in
registered common stock. The Notes are collateralized by a first lien on all
current and future assets of the Company and its current and future
subsidiaries.  The Notes are guaranteed by the current and future
subsidiaries of the Company.  The agreement requires the Company to comply
with certain nonfinancial covenants, including restricting the payment of
dividends.




The
stated principal of the Notes was $6,000,000, which was increased to $6,800,000
on February 23, 2006.  However, the original agreement provided for
repayment of the principal according to the following premiums and schedule:
 102% of principal for monthly principal repayments of 1/60 of stated
principal beginning September 2006, 110% of optional principal prepayments prior
to November 21, 2006, 112.5% of optional principal prepayments November 21, 2006
through April 20, 2007, 115% of any principal prepayments thereafter including
the required repayment at November 21, 2007 maturity.  The effect of the
premiums increases the effective interest paid on the amounts borrowed.
 The Convertible Notes are stated at the amount due  with the
debt discount being amortized by the interest method and adjusted over time to
equate the amount initially borrowed to the amount scheduled to be
repaid.




6




NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont.)




The Notes
are convertible at any time into common stock at a fixed conversion price. The
fixed conversion price to convert the debt to equity is set at $0.50 per share,
subject to downward adjustment for any subsequent equity transactions at prices
less than $0.50 per share.  In connection with the issuance of the
Notes, the holders of the Notes were issued five-year warrantsto
purchase 2,000,000 shares of common stock at an exercise price of $0.01 per
share.  The warrants are exercisable on a cashless basis and include
certain anti-dilution provisions.  When the Notes were amended to
increase the outstanding principal to $6,800,000, the number of warrants issued
was increased to 2,266,667.
  In
accordance with EITF Issue No. 98-5 and No. 00-27, the $6 million proceeds
received were allocated to the Notes and warrants based on their estimated fair
values, resulting in the recording of a debt discount. The allocated value of
the warrants, which was $980,834, resulted in recording of a debt discount and a
liability to issue equity instruments.  The additional warrants issued
in February 2006 increased this value by $130,778.  The determination
of the fair value assumed exercise at the end of 5 years and 17.44% stock price
volatility.  Since the Notes possess a beneficial conversion feature, an
additional debt discount and increase to additional paid-in capital of $980,834
at November 2005 and $130,778 at February 2006 were recorded based on the
intrinsic value of the conversion feature.  Since the shares of the
Company’s common stock were not readily convertible to cash at December
31,  2006, neither the warrants nor beneficial conversion feature were
subject to SFAS 133 derivative accounting through December 31,
2006.  Due to the liquidated damages discussed in the following
paragraph, the warrants were recorded as a liability through December 31, 2006
based on the guidance in EITF 00-19.
  In
December 2006, the FASB issued Staff Position FSP EITF 00-19-2, “Accounting for
Registration Payment Arrangements”.  This pronouncement was adopted by
the Company effective January 1, 2007, which resulted in the reclassification of
these warrants, valued at $1,479,000 at January 1, 2007, from liabilities to
equity.
  A
separate agreement with holders of the Notes provided that the Company would pay
liquidated damages to the holders of the Notes if a registration statement was
not filed and declared effective by certain dates in 2006.  In 2006, the
Company agreed to issue 984,000 shares of common stock to the holders of the
Notes to settle such damages, assuming the registration statement was effective
by October 30, 2006.  We recorded the estimated fair value of these shares
of $1,971,987 as a liability and nonoperating expense as of December 31, 2006.
 This obligation was adjusted to its estimated fair value of $265,680 as of
December 31, 2007.  Holders of the Notes are entitled to additional
liquidated damages for delays in the effectiveness of the registration statement
to register the warrants and conversion shares beyond October 30, 2006.  
Additional liquidated damages continued to accrue through December 31, 2007,
which were settled as discussed below.
  On
February 23, 2006, the 10% Senior Secured Convertible Notes Agreement was
amended and restated.  In connection therewith, the aggregate outstanding
principal balance of the Notes increased by $800,000 to $6,800,000 and
additional five-year warrants for the purchase of 266,667 shares of common stock
were issued.  The warrants were valued at $130,778 and the intrinsic value
of the Notes’ beneficial conversion feature was $130,778.  The percentages
and timing of premiums on principal repayment as originally stated were not
changed.  The Company’s amortization of debt discounts was adjusted
accordingly.
  On
December 19, 2007, the Company executed an agreement with CAMOFI to modify the
terms of the notes payable to CAMOFI.  The agreement specifies, among
other things, that a new note payable in the amount of $2,027,123 would be
issued to CAMOFI for registration rights penalties and accrued
interest.  The new agreement requires monthly payment of interest of
10% cash beginning April 1, 2008 and 2% increase in notes
payable.  Principal payments are $250,000 beginning August 1, 2008,
with the remaining balance due November 10, 2010.  The agreement also
provided for the issuance of 561,087 shares of common stock to
CAMOFI.  The issuance of the stock has been recorded at its estimated
fair value of $156,543 at December 19, 2007, and resulted in a beneficial
conversion feature with an intrinsic value of $156,543, which was recorded
consistent with the preceding discussion.  The agreement also extended
the exercise period for the warrants for an additional five years, and required
the Company to raise additional equity by March 31, 2008.  The Company
was in violation of the covenant regarding additional equity and certain other
covenants as of April 1, 2008.  As such, the Company is in default of
its Notes agreement and no waiver has yet been obtained from the
lender
  Upon a default, the holder of our
Senior Secured Convertible Notes has the right to take sole control of the
lockbox and all deposits then in the lockbox account or thereafter deposited
into the lockbox account.  CAMOFI has taken sole control of the
lockbox and all deposits in the lockbox account and being deposited from
customers into the lockbox account.




7




NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont.)




As
of May 2008, as a result of decreased revenue and subsequent billings during the
current period, we were in an overdrawn position with respect to the August 31,
2006 Line of Credit agreement with CAMOFI.  Cash arriving into the
lockbox will be used to pay down the Line of Credit.  The Company
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 capital
requirements.
  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 financing was used
to fulfill vendor and other obligations.  The note was originally
structured to require monthly installments commencing on September 14, 2007 and
on the 10th
day of each month thereafter through February 10, 2008.  The loan
bears interest at 5% per annum and is payable in cash or with shares of Company
common stock discounted at 30% from the average bid price for the five days
preceding the installment.  The Company was also obligated to pay a
monthly utilization fee of 10% of the monthly installment.  The
Company did not make the scheduled payments on the POOF loan, and verbally
agreed to monthly extensions of the amount due.
  The
Company also issued 500,000 shares of common stock to POOF in connection with
this loan.  The Company has agreed to register the shares for sale or
to repurchase them at specified amounts and times.  If the shares were
not registered by January 15, 2008, the Company was obligated to repurchase the
shares for $700,000.  If the Company does not pay the amounts due, the
Company’s obligation to repurchase the shares will bear interest at 2% per
month.  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, 2007 and has been
recorded at its redemption value, considering that it was probable at that date
that the shares would not be registered by January 15, 2008, which did not
happen.
  The
$750,000 loan was initially recorded as $300,000 of notes payable (net of debt
discount) and $450,000 as redeemable common stock, based on the estimated fair
values of the note and common stock.  The redeemable common stock has
been adjusted to its expected redemption value plus accrued
interest.
  The
POOF note payable is secured by shares of the Company’s common stock pledged by
Ron Brewer and Richard Coody, former officers and directors of the
Company.  Each pledged 1,450,000 shares of stock.  POOF can
exercise its rights by selling the shares to apply against the Company’s
obligations to POOF.  POOF also has the right to sell the shares
directly in the absence of a default.  The pledge is without recourse
to the Company.  The Company has agreed to pay Mr. Coody and Mr.
Brewer amounts equal to 22% of the proceeds of any of their shares of common
stock sold by POOF under the pledge.  The funds would be retained in
escrow and paid in 2009.




4. Loss per share.
  Loss per
share is presented in accordance with SFAS No. 128 “Earnings Per
Share”.  Weighted average shares outstanding for the quarter ended
March 31, 2007 were 18,773,595.  Weighted average shares outstanding for
the quarter ended March 31, 2008 were 14,988,337 and reflect the issuance of
shares during the three months ended March 31, 2008 to consultants and the
retirement of 3,000,000 shares returned by Mr. Ron
Brewer.
  No
outstanding stock obligations or warrants represent dilutive potential common
shares for the quarters ended March 31, 2008 and 2007.  As ofMarch 31, 2008
and 2007, 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).  Mr. Onody,
our Chief Operating Officer, was issued options to purchase 350,000 shares in
June 2007 and September 2007.  On November 13, 2007, the Board of
Directors consented to the issuance of 160,000 shares of common stock to Craig
McMahon, our Vice President of Operations, 60,000 shares of common stock to Paul
Koons, our Manager of Emergency Response Services, 80,000 shares of common stock
to Greg Gadbois, the manager of our Portland, Oregon office, and 92,000 shares
of common stock, in the aggregate to 34 other employees. .  The
Company issued 1,691,250 stock options to employees, directors and consultants
in November 2007 and 1,195,000 stock options to employees, directors and
consultants during first quarter 2008.   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.




8





NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont.)




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.
  Prior to September 2005, the Company
agreed to issue 12,755,000 shares of the Company’s common stock to three
founding employees and 2,450,000 shares to a consultant for work performed in
organizing the Company.  Since these individuals were legally entitled to
receive the shares at that time as no further performance was required and since
the Company was considered to have minimal value at the grant date, no
compensation expense was recorded.  In 2006, the Company agreed to issue
375,000 shares of common stock to employees and 1,000,000 shares to nonemployees
upon completion of a reverse merger with a public company.  All of these
shares were issued during third quarter 2006.  The estimated value of
awards at the grant date for employees and at the date of completion of
performance for nonemployees is being recorded to expense over the requisite
service periods.
  Mr. Onody
assumed the position of Chief Operating Officer in June 2007.  As part
of his initial four-month consulting agreement he was provided with options to
purchase up to 100,000 shares.  On September 7, 2007, Mr. Onody was
issued options to purchase 250,000 shares.  On January 28, 2008, Mr.
Onody was issued options to purchase an additional 500,000 shares. Employees,
directors and consultants were issued options to purchase 1,691,250 shares of
common stock in November 2007 and options to purchase 695,000 shares of common
stock in February 2008.
  We
entered into no other material consulting agreements during the three months
ending March 31, 2008.
  6. A cquisition of Pryor and
Discontinued Operations.
  On February 1, 2006, the Company acquired certain fixed
assets located in Pryor, Oklahoma from Kaiser Aluminum and Chemical Company for
$700,000 plus related costs of $12,070.  Properties acquired contain
asbestos, which the Company initially estimated the cost to remove to be
$875,000, such estimate being recorded as an environmental remediation
liability.  The total cost to remediate the asbestos was estimated to be
$768,000 at March 31, 2006.  As part of the asset purchase agreement,
the Company assumed all obligations for removing the asbestos within 18 months,
and was required to provide an $800,000 letter of credit to the seller.  If
the asbestos obligations have not been settled within the required period, the
seller may draw upon the letter of credit for any costs incurred by the seller
to complete the asbestos removal and any damages permitted to be recovered under
the agreement.  The Company placed approximately $800,000 in a separate
bank account as collateral to the bank issuing the letter of credit.  The
$1,587,070 fixed asset cost was allocated to the individual assets based on
their estimated fair values. The Company identified selected assets to sell, to
which it assigned a cost of $656,062.  As a result of sales, this
amount has been reduced to $260,280, which is presented as assets held for sale
at December 31, 2006 and included in the Amerex segment. Since these assets are
considered as a separate asset group to be disposed, they are classified as a
discontinued operation. The Company sold all of these remaining assets during
2007. Net proceeds from the disposal of these assets are included in the caption
“loss from discontinued operations”. The Company intends to convert the property
to be retained into a licensed waste management facility.


9






7.  Related
Party Transactions.




During
the year ended December 31, 2006, the Company recorded  $558,000 in
consulting fees plus expenses as debt finance costs paid to this consulting
company as well as $6,000 in rent and $15,000 in other consulting
fees.  In 2007, we paid $3,000 to this consultant for
rent.
  During
the year ended December 31, 2007, the Company paid consulting fees of $15,000 to
a board member of the Company.  The Company incurred expenses of
$4,143 for miscellaneous goods and services provided by a company partially
owned by a director of the Company during the year ended December 31,
2007.
  In August
2006 the Company entered into a month-to-month lease with Tulsa Equipment Sales,
Inc. for use of a 25 ton crane in connection with the demolition and salvage of
materials at our Pryor, OK facility. The cost per month is $5,000. One of the
Company’s directors is an owner of Tulsa Equipment Sales Inc. During the three
months ended March 31, 2007 the Company incurred expense of $15,000 under this
lease. This lease was terminated in March of 2007.
  During
2007, the Company agreed to issue 20,000 shares of common stock to a former
director of the Company for consulting services rendered for a total value of
$15,750.
  In 2007,
the Company entered agreements with Mr. Richard Coody, a former director, and
Mr. Ron Brewer, a former director and officer, in which Mr. Coody and Mr. Brewer
agreed to return 4,805,000 shares and 3,000,000 shares, respectively, of the
Company’s stock which they owned to the Company in exchange for indemnification
against any claims that may be brought against them in their prior roles with
the Company.  Mr. Coody’s 4,805,000 shares were returned and retired
in 2007, while Mr. Brewer’s shares were returned and canceled in February
2008.  Considering the nature of the transactions involving a
nonreciprocal transfer of nonmonetary assets to owners, the Company determined
that no income recognition was appropriate and to record the transfers based on
the book value of the indemnification given, which resulted in no net entry
apart from retirement of the stock against paid-in capital.
  On August
2, 2007, the Company entered into agreements with Mr. Richard Coody and Mr. Ron
Brewer in which they each agreed to pledge 1,450,000 shares of stock which they
own to collateralize a $750,000 loan to the Company from POOF (see Note
3).  In addition to the pledge of the stock as collateral, Mr. Coody
and Mr. Brewer agreed to pay the Company $850,000 each in exchange for a full
release from any and all future claims the Company may have against them as a
result of a dispute among the parties with regard to management of daily
operations.  Messrs. Coody and Brewer will receive credit against
their respective obligations to the Company for any shares of theirs that are
sold under the pledge.  The Company has agreed to pay to Mr. Coody and
Mr. Brewer amounts equal to 22% of the proceeds of any of their shares sold by
POOF under the pledge.  The funds will be retained in an escrow
account and disbursed during 2009.
  Segment Reporting-The
Company’s operating segments are defined as components for which separate
financial information is available that is evaluated regularly by the chief
operating decision maker.  The Company’s reportable segments consist
of Waste Express and Amerex.  Amerex revenues for the three months
ended March 31, 2008 consist primarily of waste management services similar to
those performed by Waste Express.
  The
accounting policies of the operating segments are the same as those described in
the summary of significant accounting policies.  The Company manages
its business segments primarily based on earnings before income
taxes.  Selected financial information for reportable segments for the
three months ended March 31, 2008 is as follows:




10




NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont.)




Waste
      Express
            
            
            Amerex
            
            
            Eliminations
            
            
            ConsolidatedRevenues
            
            
            302,110
            
            
            
            1,305,312
            
            
            
            
            
            
            1,607,422Operating
      loss
            
            
            (139,830
            )
            
            
            (665,097
            )
            
            
            
            
            
            (804,927
            )Other
      income
            
            
            1,239
            
            
            
            85,998
            
            
            
            
            
            
            87,237Interest
      expense, penalties and amortization of debt costs and debt
      discount
            
            
            (2,736
            )
            
            
            (473,136
            )
            
            
            
            
            
            (475,872
            )Loss
      from continuing operations
            
            
            (142,567
            )
            
            
            (1,050,995
            )
            
            
            
            
            
            (1,193,562
            )Income
      (loss) from discontinued operations
            
            
            0
            
            
            
            0
            
            
            
            
            
            
            0Net
      loss
            
            
            (142,567
            )
            
            
            (1,050,995
            )
            
            
            
            
            
            (1,193,562
            )Segment
      assets
            
            
            1,299,532
            
            
            
            5,799,282
            
            
            
            (372,709
            )
            
            
            6,726,105Expenditures
      for acquisitions, property
      and equipment
            
            
            0
            
            
            
            797
            
            
            
            
            
            
            
            797




Selected
financial information for reportable segments for the three months ended March
31, 2007 is as follows:





Waste
      Express
            
            
            Amerex
            
            
            Eliminations
            
            
            ConsolidatedRevenues
            
            
            604,918
            
            
            
            1,542,954
            
            
            
            
            
            
            2,147,872Operating
      income (loss)
            
            
            (81,184
            )
            
            
            128,410
            
            
            
            
            
            
            47,226Other
      income
            
            
            0
            
            
            
            23
            
            
            
            
            
            
            23Interest
      expense, penalties and amortization of debt costs and debt
      discount
            
            
            0
            
            
            
            (1,268,530
            )
            
            
            
            
            
            (1,268,530
            )Loss
      from continuing operations
            
            
            (81,184
            )
            
            
            (1,140,098
            )
            
            
            
            
            
            (1,221,282
            )Income
      (loss) from discontinued operations
            
            
            0
            
            
            
            (93,711
            )
            
            
            
            
            
            (93,711
            )Net
      loss
            
            
            (81,184
            )
            
            
            (1,233,809
            )
            
            
            
            
            
            (1,314,993
            )Segment
      assets
            
            
            1,640,467
            
            
            
            7,062,101
            
            
            
            (288,725
            )
            
            
            8,413,843Expenditures
      for acquisitions, property
      and equipment
            
            
            0
            
            
            
            17,750
            
            
            
            
            
            
            
            17,750





11


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont.)




9. 
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 three months ended
March 31, 2008, and the three months ended March 31, 2007, the Company had
revenue from 3 customers comprising approximately 61% and 71% of total revenues,
respectively.  At March 31, 2008 and December  31, 2007 accounts
receivable from these customers comprised approximately 55% and 61% of total
accounts receivable, respectively.





10.Commitments and
Contingencies.




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.




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, the Internal
Revenue Service may place a lien upon all of the assets of the
Company.  The imposition of a lien against the Company’s assets 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 Internal Revenue Service imposes a lien and then
enforces the lien, it 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.





12




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.  The discount to be applied to stock not yet registered is
determined based on internal analyses and the results of the external valuation
analysis discussed in the following paragraph.




13




The
Company engaged a third-party valuation expert to provide an opinion as to the
fair value, as of August 14, 2007, of 500,000 unregistered shares (the “Shares”)
of Amerex Group, Inc. (the “Company”) issued to a single investor in connection
with a $750,000 loan to the Company by the investor (the “POOF
Loan”).  The purpose of this opinion is to determine the appropriate
amount of debt discount to apply to the Note evidencing such
loan.  The third party expert utilized the valuation guidelines
provided by SFAS 157.  In accordance with SFAS 157, “fair value is the
price that would be received to sell an asset...in an orderly transaction between
market participants at the measurement date.”  The opinion of the
third-party expert was thus applied to properly value this
instrument.  However, as with many financial analyses, it is not
unlikely that experts may differ on the specific methodologies applied and that
these various methodologies may be populated with different assumptions by
different experts, thereby making it likely that values reported by different
evaluators utilizing different methodologies and different assumptions may yield
different results.




4. Equity
obligations




The
Company has certain equity instruments and 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. 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.




Recently
Issued Accounting Pronouncements





In
September 2006, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 157, Fair Value Measures (SFAS
157). This Statement defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles (GAAP), and expands
disclosures about fair value measurements. This Statement applies under other
accounting pronouncements that require or permit fair value measurements, the
Board having previously concluded in those accounting pronouncements that fair
value is a relevant measurement attribute. Accordingly, this Statement does not
require any new fair value measurements. However, for some entities, the
application of this Statement will change current valuation and accounting
practices. Effective January 1, 2008, the Company adopted SFAS 157 for financial
assets and liabilities and any assets and liabilities that are carried at fair
value on a recurring basis in the financial statements.  SFAS 157
implementation for other non-financial assets and liabilities has been deferred
to fiscal years beginning after November 15, 2008.  Management is
still assessing the effect, if any, adoption of SFAS157 will have on the
Company’s financial position and results of operations in 2008.




In
February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities, including and amendment of FASB Statement
No. 115 (“SFAS 159”). FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. Although SFAS 159 is
effective and was adopted by the Company as of January 1, 2008, management has
not chosen to measure any new items at fair value besides those currently
required to be measured at fair value under GAAP, and has no plans to do so at
this time.  Therefore, SFAS 159 is not expected to have any impact on
the Company’s financial position and results of operations.




In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations(“SFAS 141(R)”). SFAS 141(R) 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 141(R) also establishes disclosure requirements to enable the
evaluation of the nature and financial effects of the business combination.
SFAS 141(R) is effective for fiscal years beginning after December 15,
2008. Earlier adoption is prohibited. The adoption of this standard will
impact the accounting for any business combinations entered into by the Company
after the adoption date.




14




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 adopt the new disclosure requirements on or before the required effective
date and thus will provide additional disclosures in its consolidated financial
statements when adopted.




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. Early adoption is
prohibited. The Company has not determined the impact on its financial
statements of this accounting standard.




Basis
of Presentation




Our
results of operations for the periods prior to our acquisition of Amerex
Companies, Inc. are not material to the results of operations of AirGuide as we
had been inactive for the 5 years prior to this acquisition. In addition, the
acquisition of Amerex Companies, Inc. has been treated as a reverse acquisition
for accounting purposes, and future filings with the SEC will reflect the
historical financial statements of Amerex Companies, Inc. for periods prior to
the acquisition.   Therefore, unless otherwise noted, consolidated
financial information presented in this document are of Amerex Companies, Inc.
for the pre-acquisition period.




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, 2008 and 2007.  We have prepared these
statements ourselves and they have not been audited by our independent
auditors.




Results
of Operations




Three
Months Ended March 31, 2008 Compared With Three Months Ended March 31,
2007




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 condensed consolidated statements of operations.




Three Months
              Ended
              March 31,
      2008
            
            
            Three
      Months
              Ended
              March 31,
      2007Net
      Sales
            
            
            100
            %
            
            
            100
            %Cost
      of Sales
            
            
            71
            %
            
            
            60
            %Gross
      Profit
            
            
            29
            %
            
            
            40
            %Selling,
      General, and Administrative Expense
            
            
            42
            %
            
            
            30
            %Total
      Operating Expense
            
            
            150
            %
            
            
            98
            %Income
      (Loss) from Operations
            
            
            (50
            )
      %
            
            
            2
            %Other
      Income (Expense)
            
            
            (24
            )
      %
            
            
            (59
            )
      %Loss
      from Continuing Operations
            
            
            (74
            )
      %
            
            
            (57
            )
      %




15





Revenues




Revenue
for the quarter ended March 31, 2008, was $1,607,422 as compared to revenue of
$2,147,872 for the three months ended March 31, 2007. This decrease was
primarily due to a reduction in the services performed for the U.S. Department
of Justice, Drug Enforcement Agency (“DEA”). For the three month period ending
March 31, 2007, revenue from the DEA totaled $972,607 as compared with $518,783
for the comparable period ending March 31, 2008. Also contributing to the
reduction was a decrease in revenue from the DEA subcontractors.




Cost
of Services Provided




During
the three month period ending March 31, 2007 our total cost of services was
$1,139,901 or 71% of total revenues for a gross profit of $467,521 as compared
to total cost of services provided of  $1,285,254 or 60% of total
revenues for a gross profit of $862,618 or 40%  for the comparable
three month period ending March 31, 2007.  The overall decrease in
gross margin resulted primarily from an increase in labor and contract labor
costs. While labor costs rose only $31,958 or 11% from $279,440 for the three
month period ending March 31, 2007 to $311,398 for the comparable period ending
March 31, 2008, this represented an increase of 49% as a percentage of revenue.
For the period ending March 31, 2007 labor costs were 13% of revenue as compared
to 19% of revenue for the period ending March 31, 2008. The reason for this
increase was the rapid reduction in the revenue from the Drug Enforcement
Agency. The Drug Enforcement Agency failed to provide us ample notification
required to react quickly enough to the reduction in revenue. We have since made
such adjustments and expect gross margin to rise. Travel costs also increased
from $35,792 for the three month period ending March 31, 2007 to $52,414 for the
comparable period ending March 31, 2008. The principal reason for the rise is
the increased fuel costs. While most of our contracts contain surcharge
provisions for fuel, some do not and others are based on fuel prices from
earlier periods which means that we still absorb a portion of the increasing
costs of diesel fuel.




SG&A




During
the three month period ending March 31, 2008 our operating expenses (which
includes non cash compensation, selling, general and administrative,
professional fees, amortization and depreciation expenses) were $1,272,448 or
79% of revenue resulting in an operating loss of $804,927 as compared to
operating expenses of $815,392 or 38% of revenue resulting in an operating
income of $47,226 for the comparable three month period ending March 31, 2007
..This increase was primarily as a result of increases in insurance costs and
professional fees. Insurance costs increased by $29,701 or 19% from $155,829 for
the period ending March 31, 2007 to $185,530 in the comparable period ending
March 31, 2008. Professional fees rose $73,151 or 93% from $78,142 for the
period ending March 31, 2007 to $151,294 in the comparable period ending March
31, 2008. These increases were partially offset by a decrease in labor expense
of $23,710 or 9% from $250,310 for the period ending March 31, 2007 to $226,600
in the comparable period ending March 31, 2008 and a decrease in repair expenses
of $22,535.




Non-Operating
Expenses




During
the three month period ending March 31, 2008, our net non-operating expenses
were $388,635 resulting in a net loss from continuing operations of
$(1,193,562),  as compared with $1,268,508 in net non-operating
expenses and a net loss from continuing operations of $(1,221,282) for the three
months ended March 31, 2007.  The decrease in the current year period
was due to the completion of the amortization of financing fees which were
$200,099 for the previous period ending March 31, 2007 and the absence of
financing penalty fees which amounted to $295,800 for the previous
period.




Loss from continuing
operations for the three months ended March 31, 2008 was $(1,193,562)
compared to $(1,221,282) in the prior year period.




16




Net losswas $(1,193,562) for
the three months ended March 31, 2008, compared with a net loss of $(1,314,993)
for the three months ended March 31, 2007. The Company realized a loss of
$(93,711) in the three months ended March 31, 2007 resulting from expenses
related to its discontinued operations.




Segment
Results of Operations




The
Company's operating segments are defined as components for which separate
financial information is available that is evaluated regularly by the chief
operating decision maker. The Company's reportable segments consist of Waste
Express and Amerex. Amerex revenues for the three months ended March 31, 2008
consist primarily of waste management services similar to those performed by
Waste Express. For the three months ended March 31, 2008, the Amerex segment
reported a operating loss of $(665,096) as compared to the three months ended
March 31, 2007 in which the Amerex segment reported an operating income of
$128,410. During the three months ended March 31, 2008, the Waste Express
segment recorded an operating loss of $(139,830) as compared to the three months
ended March 31, 2007 in which the Waste Express segment reported an operating
loss of $(81,184). The accounting policies of the operating segments are the
same as those described in the summary of significant accounting policies;
however the majority of the Company's corporate expenses are included within the
Amerex segment. These expenses include professional fees for legal, accounting
and information systems consulting as well as insurance, administrative
salaries, non cash compensation and benefits and rent and repairs of its
corporate headquarters. In addition, the Amerex segment contains more
depreciable assets than that of the Waste Express segment which results in
increased depreciation expense for the Amerex segment compared to the Waste
Express segment. Inclusion of these expenses within the Amerex segment reduces
the profitability for that segment when compared to the Waste Express
segment.




Financial
Condition, Liquidity, and Capital Resources




At March
31, 2008 our cash and cash equivalents amounted to $67,130 and our accounts
receivable we $1,977,922. Our total current assets as of March 31, 2008 were
$2,797,682. As of March 31, 2007 our cash and cash equivalents amounted to
$199,997, which did not include restricted cash of $797,666 and our accounts
receivable was $1,944,373.  Our total current assets as of March 31, 2007
were $3,521,471.   Our accounts receivable increased to
$1,977,922 as of March 31, 2008, which included unbilled receivables of
$573,229. Our accounts receivable as of March 31, 2007 were $1,944,373. The
reduction in the total current assets occurred as a result of asset acquisitions
and greater debt related expenses.




At March
31, 2008 the Company had current liabilities of $6,915,696 comprised of the
current portion of long term debt, accounts and notes payable, accrued expenses,
, and obligations to issue equity instruments During the period ended March 31,
2007 our current liabilities were $13,092,169. The decrease in current
liabilities from $13,092,169 to $6,915,696 resulted from the renewal and
extension of the CAMOFI notes payable and the reduction in the obligations to
issue equity instruments. As a result the Company has negative working capital
of $4,118,014 as of March 31, 2008 compared to negative working capital
$9,570,698 as of March 31, 2007.




For the
three month period ended March 31, 2008 and March 31, 2007 the Company
had  cash used in operating activities of $255,748 and used cash
provided by  operating activities of $248,123,
respectively.  For the three month period ended March 31, 2008 the
Company realized an overall increase in cash and cash equivalents primary due to
cash provided by financing activities of $304,087 offset by net cash used in
investing activities of $(797) and the aforementioned cash used in operating
activities of $255,748.  For the three months ended March 31, 2007 the
Company realized a increase in cash and cash equivalents of $139,730, primarily
due to cash provided by  investing activities of $7,207 and the
aforementioned cash provided by  operating activities of $248,123,
partially offset by cash used in  financing activities of
$115,600.




The
Company's management has previously obtained additional funding in the form of
subordinated debt and a line of credit. However, there are no assurances that
additional funding is 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, 2008 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.




17




On
December 31, 2007 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 interest payments have been deferred until April
1, 2008, (c) the Interest Rate has been 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 $2,027,123 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 will be 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, OK., and Leigh, TX. properties, (f) the monthly redemption amount
will now begin on August 1, 2008, (g) Amerex will use the proceeds from the sale
of the Pryor and Leigh properties, as well as the proceeds from the release of
the escrowed funds of $400,000 securing the closure of the injection wells in
Pryor, OK, to pay down the indebtedness, (h) we have agreed to affirmative
covenants to secure at least $2.5 million in additional equity financing before
March 31, 2008, (i) we have agreed to file a registration statement prior to
June 30, 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 will extend the term of CAMOFI’s warrants to December 31, 2012, and (m)
we will make our principal officers and financial personnel available for an
on-site review of the financial condition of the Company.  The note
currently is in default due to the Company’s noncompliance with certain of the
foregoing and other terms.




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 closed on September 21, 2006 and is secured
by our accounts receivable. The maximum borrowing on this line is the lesser of
$1.5 million 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. The Company was in noncompliance
with certain of these covenants as of September 30, 2007.  The
Company currently is in default under the credit line agreement, precluding any
further advances under the line of credit to pay such obligations or other
expenses of the Company.




The
Senior Secured Convertible Notes is secured by a lien against substantially all
of the assets of the Company and the line of credit is further secured by a
“lockbox” account that is administered by a bank.  Until a default by
the Company, the holder of our Senior Secured Convertible Notes allows the
Company use of a portion of the cash receivables of the Company deposited into
the account, based upon a formula.  Upon a default, the holder of our
Senior Secured Convertible Notes has the right to take sole control of the
lockbox and all deposits then in the lockbox account or thereafter deposited
into the lockbox account.  The line of credit and the Senior Secured
Convertible Notes are in default and CAMOFI has taken sole control of the
lockbox and all deposits in the lockbox account and payments from customers
being deposited into the lockbox account.




The
Company is currently addressing its liquidity and negative working capital
issues as of March 31, 2008 by the following actions:




·
            The
      Company will seek alternative financing which may include equity financing
      or additional subordinated debt . The Company is currently ion discussions
      with several institutions for the purpose of securing additional equity
      and debt 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, OK. Proceeds from this sale, if it is concluded, will
      be used to pay down the 10% Senior Secured Convertible
    Notes.




·
            The
      Company is considering the sale of its property owned in Harrison County,
      Texas.




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




As of May
2008, the Company 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 continue to make
periodic requests for additional funds from CAMOFI to satisfy ongoing capital
requirements.




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




18





ITEM 3.  Quantitative
and Qualitative Disclosures About Market Risk




None.





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 annual 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. Our
independent auditors have reported to the Company’s Audit Committee and
Management several material weaknesses in our accounting controls and procedures
including limited staffing resulting in insufficient review of transactions in
inadequate segregation of duties of the accounting personnel. Also, those
procedures must be developed that ensure that all new agreements become timely
entered into the general ledger system. In addition, we need to recruit and hire
more experienced accounting personnel capable of understanding and documenting
complex accounting issues, such as nontraditional financing in which the Company
is frequently involved. .  We believe that we have addressed
satisfactorily the issue of timely posting of receipts as the bank now provides
us with updated material one day in arrears in the form of scanned images of
each check (front and back) received the previous day. There have been no
significant changes in our internal controls over financial reporting that
occurred during our most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal controls over financial
reporting.




Disclosure
controls and procedures and other procedures that 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 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 financial
officer as appropriate, to allow timely decisions regarding required
disclosure.




19




PART
II. OTHER INFORMATION




ITEM 2. Changes in Securities




None.




ITEM
3.  Defaults Upon Senior Securities




We
are in default under our Senior Secured Convertible Notes Agreement




On
December 31, 2007 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 interest payments have been deferred until April
1, 2008, (c) the Interest Rate has been 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 $2,027,123 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 will be 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, OK., and Leigh, TX. properties, (f) the monthly redemption amount
will now begin on August 1, 2008, (g) Amerex will use the proceeds from the sale
of the Pryor and Leigh properties, as well as the proceeds from the release of
the escrowed funds of $400,000 securing the closure of the injection wells in
Pryor, OK, to pay down the indebtedness, (h) we have agreed to affirmative
covenants to secure at least $2.5 million in additional equity financing before
March 31, 2008, (i) we have agreed to file a registration statement prior to
June 30, 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 will extend the term of CAMOFI’s warrants to December 31, 2012, and (m)
we will make our principal officers and financial personnel available for an
on-site review of the financial condition of the Company.  The note
currently is in default due to the Company’s noncompliance with certain of the
foregoing and other terms.




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 closed on September 21, 2006 and is secured
by our accounts receivable. The maximum borrowing on this line is the lesser of
$1.5 million 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.  The Company currently is
in default under the credit line agreement, precluding any further advances
under the line of credit to pay such obligations or other expenses of the
Company.




The Senior Secured Convertible Notes is
secured by a lien against substantially all of the assets of the Company and the
line of credit is further secured by a “lockbox” account that is administered by
a bank.  Until a default by the Company, the holder of our Senior
Secured Convertible Notes allows the Company use of a portion of the cash
receivables of the Company deposited into the account, based upon a
formula.  Upon a default, the holder of our Senior Secured Convertible
Notes has the right to take sole control of the lockbox and all deposits then in
the lockbox account or thereafter deposited into the lockbox
account.  The line of credit and the Senior Secured Convertible Notes
are in default and CAMOFI has taken sole control of the lockbox and all deposits
in the lockbox account and being deposited from customers into the lockbox
account.




As of May
2008,the Company 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 continue to make
periodic requests for additional funds from CAMOFI to satisfy ongoing capital
requirements These additional funds will be added to the outstanding balance on
the 10% Senior Secured Convertible Notes.




20




PART
II. OTHER INFORMATION (Continued)




ITEM 6. Exhibits and Reports on Form 8-K




A. 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)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)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 LCD 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 LCD 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 LCD 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)..




21




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 LCD
      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)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)




22




10.15
            Line
      of Credit with CAMOFI Master LCD. (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, filed herewith21.1
            Subsidiaries
      of Registrant (incorporated by reference to Exhibit 21 of Form 8-K filed
      on July 11, 2006).31.1
            Chief Executive Officer -
      Sarbanes-Oxley Act Section 302 Certification, filed
      herewith31.2
            Chief Financial Officer -
      Sarbanes-Oxley Act Section 302 Certification, filed
      herewith32.1
            Chief Executive Officer -
      Sarbanes-Oxley Act Section 906 Certification, filed
      herewith32.2
            Chief Financial Officer -
      Sarbanes-Oxley Act Section 906 Certification, filed
      herewith





B.
Reports on Form
8-K
  23


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:
      June 13, 2008
            
            By:
            
            /s/
      Nicholas J. MalinoNicholas
      J. Malino, President
              Chief
      Executive Officer, Principal Financial Officer and
  Director