##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2008.
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from

to
 Commission File Number: 0-53287
 Pure Earth, Inc.
  Delaware
    
    84-1385335(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 One Neshaminy Interplex, Suite 201, Trevose, Pennsylvania 19053
  (215) 639-8755
 (Registrants telephone number, including area code)
 N/A
 (Former name, former address and former fiscal year, if
  o þ
 
 *
    
    Pure Earth, Inc. first became subject to Section 13 of the Securities Exchange Act of 1934 on
August 19, 2008, the date that its Exchange Act registration statement on Form 10 automatically
became effective pursuant to Section 12(g) of that Act.  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 Yes o No þ




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##### 



PURE EARTH, INC.
 QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2008
 TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Condensed
Consolidated Balance Sheets at September 30, 2008 (unaudited) and December 31, 2007
    
    
    3Condensed Consolidated Statements of Operations for the three and nine months ended September 30,
2008 and 2007 (unaudited)
    
    
    5Condensed
Consolidated Statement of Stockholders Equity for the nine
months ended September 30, 2008 (unaudited)
    
    
    6Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2008
and 2007 (unaudited)
    
    
    7Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    30Item 4T. Controls and Procedures
    
    
    67PART II OTHER INFORMATION
    
    
    68Item 1. Legal Proceedings
    
    
    68Item 1A. Risk Factors
    
    
    68Item 4. Submission of Matters to a Vote of Security Holders
    
    
    68Item 5. Other Information
    
    
    68Item 6. Exhibits
    
    
    70SIGNATURES
    
    
    72Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 PURE EARTH, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 ASSETS
 September 30 , 2008
    
    
    December 31, 2007(Unaudited)CURRENT ASSETSCash and cash equivalents
    
    $
    3,641,181
    
    
    $
    1,885,014Accounts receivable, less allowance for doubtful
accounts of $401,798 and $431,664
    
    
    16,366,524
    
    
    
    12,622,714Inventories
    
    
    431,662
    
    
    
    269,585Prepaid expenses
    
    
    1,268,870
    
    
    
    987,378Other current assets
    
    
    903,839
    
    
    
    918,185Deferred income tax asset
    
    
    223,912
    
    
    
    223,912Total Current Assets
    
    
    22,835,988
    
    
    
    16,906,788PROPERTY AND EQUIPMENTLand
    
    
    745,500
    
    
    
    745,500Buildings and improvements
    
    
    7,442,750
    
    
    
    6,789,683Leasehold improvements
    
    
    183,512
    
    
    
    148,482Machinery and equipment
    
    
    8,729,206
    
    
    
    8,612,385Trucks and automobiles
    
    
    1,936,483
    
    
    
    2,230,598Office furniture and fixtures
    
    
    268,864
    
    
    
    221,293Computer software
    
    
    54,297
    
    
    
    50,000Construction-in-process
    
    
    1,500
    
    
    
    13,02319,362,112
    
    
    
    18,810,964Less: accumulated depreciation and amortization
    
    
    (4,199,007
    )
    
    
    (2,623,352
    )Property and Equipment, Net
    
    
    15,163,105
    
    
    
    16,187,612OTHER ASSETSDeposits and other assets
    
    
    1,317,546
    
    
    
    1,333,990Deferred financing costs, net of accumulated
amortization of $161,209 and $79,014
    
    
    552,172
    
    
    
    127,787Goodwill
    
    
    759,694
    
    
    
    759,694Permits
    
    
    2,200,000
    
    
    
    2,200,000Other intangible assets, net of accumulated amortization
    
    
    3,708,382
    
    
    
    2,388,753Idle machinery
    
    
    8,037,500
    
    
    
    8,450,000Pending acquisitions
    
    
    310,318
    
    
    
    161,302Total Other Assets
    
    
    16,885,612
    
    
    
    15,421,526TOTAL ASSETS
    
    $
    54,884,705
    
    
    $
    48,515,926
   3




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##### Table of Contents



PURE EARTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 LIABILITIES AND STOCKHOLDERS EQUITY
 September 30, 2008
    
    
    December 31, 2007(Unaudited)CURRENT LIABILITIESLine of credit
    
    $
    2,389,493
    
    
    $
    2,389,493Notes payable
    
    
    75,202
    
    
    
    708,006Current portion of long-term debt
    
    
    1,345,373
    
    
    
    1,240,547Accounts payable
    
    
    6,524,976
    
    
    
    5,807,026Accrued expenses
    
    
    1,840,466
    
    
    
    1,274,004Accrued payroll and payroll taxes
    
    
    389,324
    
    
    
    619,906Due to affiliates
    
    
    303,281
    
    
    
    Other current liabilities
    
    
    1,557,143
    
    
    
    2,116,828Accrued disposal costs
    
    
    60,274
    
    
    
    278,432Contingent consideration
    
    
    
    
    
    
    176,435Income taxes payable
    
    
    
    
    
    
    1,024,603Total Current Liabilities
    
    
    14,485,532
    
    
    
    15,635,280LONG-TERM LIABILITIESLong-term debt, net of current portion
    
    
    3,863,725
    
    
    
    4,513,526Line of credit
    
    
    5,919,715
    
    
    
    4,011,104Mandatorily redeemable Series B preferred
stock, $.001 par value; authorized 20,000
shares; issued and outstanding 6,300 and 0
shares
    
    
    4,318,107
    
    
    
    Note payable  related party
    
    
    966,822
    
    
    
    1,008,463Accrued disposal costs
    
    
    21,482
    
    
    
    1,093,796Contingent consideration
    
    
    2,540,771
    
    
    
    1,176,235Warrants with contingent redemption provisions
    
    
    2,263,223
    
    
    
    Deferred income taxes
    
    
    5,219,800
    
    
    
    5,273,840Deferred income taxes  permits
    
    
    880,000
    
    
    
    880,000Total Long-Term Liabilities
    
    
    25,993,645
    
    
    
    17,956,964TOTAL LIABILITIES
    
    
    40,479,177
    
    
    
    33,592,244REDEEMABLE PREFERRED STOCK, $.001 par value;
Series A convertible preferred stock: authorized
50,000 shares; issued and outstanding 0 and
20,000 shares
    
    
    
    
    
    
    930,190COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITYCommon stock, $.001 par value; authorized
25,000,000 shares; issued and outstanding

17,621,799 and 17,218,465
    
    
    17,622
    
    
    
    17,218Additional paid-in capital
    
    
    13,788,729
    
    
    
    12,323,847Retained earnings
    
    
    599,177
    
    
    
    1,652,427TOTAL STOCKHOLDERS EQUITY
    
    
    14,405,528
    
    
    
    13,993,492TOTAL LIABILITIES, REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS EQUITY
    
    $
    54,884,705
    
    
    $
    48,515,926
   4




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##### Table of Contents



PURE EARTH INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)REVENUES
    
    $
    19,131,047
    
    
    $
    15,144,827
    
    
    $
    51,638,690
    
    
    $
    43,967,731COST OF REVENUES (including depreciation and amortization
expense of $1,893,089 and $1,581,496 for the nine months
ended September 30, 2008 and 2007 and $620,710 and
$673,808 for the three months ended September 30, 2008
and 2007
    
    
    15,481,079
    
    
    
    11,191,496
    
    
    
    41,901,758
    
    
    
    33,789,279GROSS PROFIT
    
    
    3,649,968
    
    
    
    3,953,331
    
    
    
    9,736,932
    
    
    
    10,178,452OPERATING EXPENSESSalaries and related expenses
    
    
    1,590,422
    
    
    
    1,043,588
    
    
    
    4,616,856
    
    
    
    3,014,976Occupancy and other office expenses
    
    
    225,349
    
    
    
    187,074
    
    
    
    790,502
    
    
    
    673,006Professional fees
    
    
    359,354
    
    
    
    291,095
    
    
    
    1,424,856
    
    
    
    966,554Other operating expenses
    
    
    565,769
    
    
    
    408,247
    
    
    
    1,297,266
    
    
    
    922,730Insurance
    
    
    356,916
    
    
    
    258,847
    
    
    
    956,106
    
    
    
    730,678Depreciation and amortization
    
    
    145,351
    
    
    
    48,251
    
    
    
    399,570
    
    
    
    130,778Impairment of idle machinery
    
    
    
    
    
    
    
    
    
    
    412,500
    
    
    
    Gain on sale of equipment
    
    
    (634
    )
    
    
    (25,363
    )
    
    
    (256,979
    )
    
    
    (25,690
    )TOTAL OPERATING EXPENSES
    
    
    3,242,527
    
    
    
    2,212,009
    
    
    
    9,640,677
    
    
    
    6,413,032INCOME FROM OPERATIONS
    
    
    407,441
    
    
    
    1,741,322
    
    
    
    96,255
    
    
    
    3,765,420OTHER INCOME (EXPENSES)Interest income
    
    
    29,482
    
    
    
    145
    
    
    
    92,292
    
    
    
    62,619Interest expense
    
    
    (522,131
    )
    
    
    (381,009
    )
    
    
    (1,388,536
    )
    
    
    (878,678
    )Other income
    
    
    48,908
    
    
    
    
    
    
    
    161,661
    
    
    
    TOTAL OTHER INCOME (EXPENSES)
    
    
    (443,741
    )
    
    
    (380,864
    )
    
    
    (1,134,583
    )
    
    
    (816,059
    )INCOME (LOSS) BEFORE INCOME TAXES
    
    
    (36,300
    )
    
    
    1,360,458
    
    
    
    (1,038,328
    )
    
    
    2,949,361PROVISION FOR (BENEFIT FROM) INCOME TAXES
    
    
    (47,081
    )
    
    
    569,116
    
    
    
    (462,923
    )
    
    
    1,260,289NET INCOME (LOSS)
    
    
    10,781
    
    
    
    791,342
    
    
    
    (575,405
    )
    
    
    1,689,072Less: preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    477,845
    
    
    
    NET INCOME (LOSS) AVAILABLE FOR
COMMON STOCKHOLDERS
    
    $
    10,781
    
    
    $
    791,342
    
    
    $
    (1,053,250
    )
    
    $
    1,689,072NET INCOME (LOSS) PER SHAREBasic
    
    $
    0.00
    
    
    $
    0.05
    
    
    $
    (0.06
    )
    
    $
    0.10Diluted
    
    $
    0.00
    
    
    $
    0.05
    
    
    $
    (0.06
    )
    
    $
    0.10WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDINGBasic
    
    
    17,621,799
    
    
    
    16,700,022
    
    
    
    17,360,519
    
    
    
    16,255,852Diluted
    
    
    18,388,914
    
    
    
    17,188,911
    
    
    
    17,360,519
    
    
    
    16,634,581
   5




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PURE EARTH INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 For the Nine Months Ended September 30, 2008
(Unaudited)
 Additional
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Retained
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    EquityBALANCE  January 1, 2008
    
    
    17,218,465
    
    
    $
    17,218
    
    
    $
    12,323,847
    
    
    $
    1,652,427
    
    
    $
    13,993,492Restricted stock grant to customer
    
    
    5,000
    
    
    
    5
    
    
    
    14,995
    
    
    
    
    
    
    
    15,000Issuance of common stock for
acquisition of companies and
specific assets
    
    
    25,000
    
    
    
    25
    
    
    
    74,475
    
    
    
    
    
    
    
    74,500Issuance of common stock to
employees and consultants
    
    
    40,000
    
    
    
    40
    
    
    
    117,960
    
    
    
    
    
    
    
    118,000Issuance of common stock to
Series A preferred stockholders
    
    
    111,134
    
    
    
    111
    
    
    
    327,485
    
    
    
    
    
    
    
    327,596Conversion of Series A preferred
stock into common stock
    
    
    222,200
    
    
    
    223
    
    
    
    929,967
    
    
    
    
    
    
    
    930,190Dividends declared on Series A
preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (477,845
    )
    
    
    (477,845
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (575,405
    )
    
    
    (575,405
    )BALANCE  September 30, 2008
    
    
    17,621,799
    
    
    $
    17,622
    
    
    $
    13,788,729
    
    
    $
    599,177
    
    
    $
    14,405,528
   6




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##### Table of Contents



PURE EARTH INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine Months EndedSeptember 30,2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    (575,405
    )
    
    $
    1,689,072Adjustments to reconcile net income (loss) to net cash used in
operating activitiesDepreciation and amortization
    
    
    1,926,354
    
    
    
    1,594,919Other intangible assets amortization
    
    
    370,371
    
    
    
    106,316Deferred financing cost amortization
    
    
    82,195
    
    
    
    48,160Interest expense for accretion of warrant and debt discount
    
    
    135,420
    
    
    
    Interest expense for Series B preferred stock payment-in-kind
    
    
    145,910
    
    
    
    Impairment of idle equipment
    
    
    412,500
    
    
    
    Provision for doubtful accounts
    
    
    (29,866
    )
    
    
    113,678Gain on sale of property and equipment
    
    
    (256,979
    )
    
    
    (25,690
    )Restricted stock grant
    
    
    74,500
    
    
    
    Deferred income taxes
    
    
    (54,040
    )
    
    
    Changes in operating assets and liabilitiesAccounts receivable
    
    
    (3,632,762
    )
    
    
    (6,347,625
    )Inventories
    
    
    (12,325
    )
    
    
    39,860Prepaid expenses and other current assets
    
    
    (259,703
    )
    
    
    (1,653,504
    )Deposits and other assets
    
    
    16,444
    
    
    
    (74,060
    )Accounts payable
    
    
    533,955
    
    
    
    (1,455,814
    )Accrued expenses and other current liabilities
    
    
    (634,681
    )
    
    
    2,077,950Accrued disposal costs
    
    
    (1,290,472
    )
    
    
    (2,719,961
    )Contingent consideration
    
    
    (176,345
    )
    
    
    Due to affiliates
    
    
    303,281
    
    
    
    Income taxes payable
    
    
    (1,024,603
    )
    
    
    1,237,132TOTAL ADJUSTMENTS
    
    
    (3,370,846
    )
    
    
    (7,058,639
    )NET CASH USED IN OPERATING ACTIVITIES
    
    
    (3,946,251
    )
    
    
    (5,369,567
    )CASH FLOWS FROM INVESTING ACTIVITIESAcquisitions of business and assets  net of cash of $911,405
for the nine months ended September 30, 2007
    
    
    (44,803
    )
    
    
    (3,054,508
    )Payments for pending acquisitions
    
    
    (149,016
    )
    
    
    21,870Acquisitions of property and equipment
    
    
    (732,298
    )
    
    
    (427,850
    )Proceeds from sale of equipment
    
    
    590,901
    
    
    
    83,000NET CASH USED IN INVESTING ACTIVITIES
    
    
    (335,216
    )
    
    
    (3,377,488
    )CASH FLOWS FROM FINANCING ACTIVITIESRepayment of (advances for) related party loans
    
    
    (41,641
    )
    
    
    147,977Net borrowings on line of credit
    
    
    1,908,611
    
    
    
    4,438,508Repayments of notes payable
    
    
    (632,804
    )
    
    
    Repayment of long-term debt
    
    
    (1,114,952
    )
    
    
    (1,225,115
    )Proceeds from equipment financing
    
    
    200,000
    
    
    
    104,945Financing fees incurred
    
    
    (506,580
    )
    
    
    (44,969
    )Private placements of common and preferred stock
    
    
    6,300,000
    
    
    
    4,000,000Dividends paid on Series A preferred stock
    
    
    (75,000
    )
    
    
    NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    6,037,634
    
    
    
    7,421,346
  7




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##### Table of Contents



Nine Months EndedSeptember 30,2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    1,756,167
    
    
    
    (1,325,709
    )CASH AND CASH EQUIVALENTS   BEGINNING OF PERIOD
    
    $
    1,885,014
    
    
    $
    2,516,722CASH AND CASH EQUIVALENTS  END OF PERIOD
    
    $
    3,641,181
    
    
    $
    1,191,053SUPPLEMENTARY INFORMATIONCash paid during the periods for:Interest
    
    $
    976,685
    
    
    
    693,905Income taxes
    
    $
    1,112,743
    
    
    $
    Non-cash investing and financing activities:Debt and other liabilities incurred in acquisition of
businesses and asset purchases
    
    $
    3,543,991
    
    
    $
    29,164,979Acquisition of businesses and assets in exchange for shares of
common stock
    
    $
    74,500
    
    
    $
    1,015,482Property and equipment financed with debt
    
    $
    472,900
    
    
    $
    264,843
   8




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##### Table of Contents



PURE EARTH, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 Business Operations and Consolidation
   Basis of Presentation and Summary of Significant Accounting Policies
 Basis of Presentation
   Use of Estimates
   9




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##### Table of Contents



Inventories
  September 30,
    
    
    December 31,2008
    
    
    2007(unaudited)Recycled oil
    
    $
    234,663
    
    
    $
    248,483Crushed rock
    
    
    9,900
    
    
    
    21,102Concrete fiber
    
    
    187,099
    
    
    
    Totals
    
    $
    431,662
    
    
    $
    269,585
 Earnings (Loss) Per Share
   Three
Months Ended September 30,
    
    

Nine
Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)
    
    
    (unaudited)Weighted average common
shares outstanding used in
computing
basic EPS
    
    
    17,621,799
    
    
    
    16,700,022
    
    
    
    17,360,519
    
    
    
    16,255,582Effect of dilutive securities:Warrants
    
    
    767,115
    
    
    
    
    
    
    
    
    
    
    
    Convertible notes
    
    
    
    
    
    
    488,889
    
    
    
    
    
    
    
    378,999Adjusted weighted average
common shares used in
computing
diluted EPS
    
    
    18,388,914
    
    
    
    17,188,911
    
    
    
    17,360,519
    
    
    
    16,634,581
  Recently Issued Accounting Pronouncements
 Business Combinations.
  10




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##### Table of Contents



Noncontrolling Interests.
 Derivative Instruments.
 Fair Value.
   11




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##### Table of Contents



Hierarchy of GAAP.
 Intangible Assets.
 Convertible Debt Instruments.
 Instruments Indexed to Stock.
  12




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##### Table of Contents



Conforming
Changes to EITF 98-5.
 Share Based Payments.
  Nycon Acquisition
   13




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##### Table of Contents



New NyconAccounts Receivable
    
    $
    81,182Inventory
    
    
    149,752Other current assets
    
    
    7,443Property and equipment
    
    
    52,352Patents
    
    
    10,000Trademarks
    
    
    180,000Licensing Agreement
    
    
    730,000Customer List
    
    
    700,000Non-compete agreement
    
    
    70,000Total assets acquired
    
    
    1,980,729Accounts payable and accrued expenses
    
    
    206,972Other current liabilities
    
    
    64,918Long-term debt
    
    
    225,000Other long-term liabilities(1)
    
    
    44,803Contingent Consideration
    
    
    1,364,536Total liabilities assumed
    
    
    1,906,229Net purchase price
    
    $
    74,500
 
 (1)
    
    Extinguished upon acquisition since it was payable to the Company.  14




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##### Table of Contents



Pro Forma Results
  For the Three Months
    
    
    For the Nine Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,
    
    
    Ended September 30,2007 (unaudited)
    
    
    2008 (unaudited)
    
    
    2007 (unaudited)Pro Forma
    
    
    Pro Forma
    
    
    Pro FormaCombined (a) (b) (h)
    
    
    Combined (c) (d) (e) (h)
    
    
    Combined (f) (g) (h)Revenue
    
    $
    15,796,194
    
    
    $
    51,904,803
    
    
    $
    50,466,146Income (loss) from operations
    
    $
    1,632,000
    
    
    $
    (100,066
    )
    
    $
    2,789,016Income (loss) before income tax benefit
    
    $
    1,251,653
    
    
    $
    (1,204,725
    )
    
    $
    1,960,254Net income (loss)
    
    $
    727,668
    
    
    $
    (672,747
    )
    
    $
    867,316Per common share dataNet income (loss) from operations  Basic
    
    $
    0.04
    
    
    $
    (0.07
    )
    
    $
    0.05Net income (loss from operations   Diluted
    
    $
    0.04
    
    
    $
    (0.07
    )
    
    $
    0.05Weighted Average SharesBasic
    
    
    16,725,022
    
    
    
    17,374,497
    
    
    
    16,390,095Diluted
    
    
    17,213,911
    
    
    
    17,374,497
    
    
    
    16,769,094
 (a)
    
    Historical information includes the operating results of Pure Earth
(including Casie Group) for the three months ended September 30, 2007.(b)
    
    Pro forma information and the pro forma adjustments include the operating
results of Nycon for the three months ended September 30, 2007.(c)
    
    There were no pro forma adjustments to be presented for the three months
ended September 30, 2008, as the historical information includes the operating
results of both Nycon and Casie Group for this period.(d)
    
    Historical information includes the operating results of Pure Earth
(including Casie Group) for the nine months ended September 30, 2008, and the
operating results of Nycon for the six months ended September 30, 2008.(e)
    
    Pro forma information and the pro forma adjustments include the operating
results of Nycon for the three months ended March 31, 2008.(f)
    
    Historical information includes the operating results of Pure Earth for
the nine months ended September 30, 2007 and the operating results of Casie Group
for the six months ended September 30, 2007.(g)
    
    Pro forma information and the pro forma adjustments include the operating
results of Casie Group for the three months ended March 31, 2007 and the operating
results of Nycon for the nine months ended September 30, 2007.(h)
    
    The pro forma adjustments consist of additional depreciation and
amortization expense in relation to the step-up in basis of the property and
equipment and intangible assets of Casie Group and Nycon and the corresponding
adjustments to the income tax provisions or benefits.  15




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##### Table of Contents



Other Acquisitions, Assets Purchases and Joint Ventures
 Echo Lake
  HFH Acquisition Corp
    16




---



##### Table of Contents



Stockholders Equity
 Series A Preferred Stock and Warrants
 Effect on the Calculation of
Earnings per Share for the Redemption or Induced Conversion of Preferred Stock Share-Based Payments
 Series B Preferred Stock and Warrants
     17




---



##### Table of Contents



Warrant
    
    
    
    
    
    
    Weighted AverageShares
    
    
    Amount
    
    
    Exercise PriceBalance, December 31, 2007
    
    
    324,443
    
    
    $
    277,226
    
    
    $
    4.50Issuance of common stock warrants
    
    
    767,375
    
    
    
    2,263,223
    
    
    $
    0.001Balance, September 30, 2008
    
    
    1,091,818
    
    
    $
    2,540,449
    
    
    $
    1.34
  Expected volatility
    
    
    75.00
    %Expected life
    
    IndefiniteExpected dividends
    
    
    0.00
    %Risk-free rate
    
    
    3.71
    %Weighted-average stock price
    
    $
    2.95Weighted-average exercise price
    
    $
    0.001
 Concentrations of Credit Risk
    18




---



##### Table of Contents



Three Months Ended
    
    
    
    
    
    
    Three Months EndedSeptember 30,
    
    
    Percentage of
    
    
    September 30,
    
    
    Percentage of2008
    
    
    Revenue
    
    
    2007
    
    
    RevenueCustomer A
    
    $
    2,779,479
    
    
    
    15%
    
    
    $
    3,510,664
    
    
    
    23%Customer B
    
    
    1,062,776
    
    
    

6%
    
    
    
    
    
    
    

Customer C
    
    
    
    
    
    


    
    
    
    4,050,826
    
    
    

27%Customer D
    
    
    1,016,648
    
    
    

5%
    
    
    
    1,093,235
    
    
    

7%Total
    
    $
    4,858,903
    
    
    
    26%
    
    
    $
    8,654,725
    
    
    
    57%
 Nine Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    Percentage of
    
    
    September 30,
    
    
    Percentage of2008
    
    
    Revenue
    
    
    2007
    
    
    RevenueCustomer A
    
    $
    4,223,241
    
    
    
    8%
    
    
    $
    12,381,350
    
    
    
    28%Customer B
    
    
    
    
    
    


    
    
    
    5,695,410
    
    
    
    13%Customer C
    
    
    2,912,794
    
    
    

6%
    
    
    
    7,376,791
    
    
    
    17%Customer D
    
    
    4,465,826
    
    
    

9%
    
    
    
    
    
    
    

Total
    
    $
    11,601,861
    
    
    
    23%
    
    
    $
    25,453,551
    
    
    
    58%
 Intangible Assets
  Balance as of September 30, 2008
    
    
    Balance as of December 31, 2007Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedCost
    
    
    Amortization
    
    
    Net
    
    
    Cost
    
    
    Amortization
    
    
    NetFinite Lives:Customer lists
    
    $
    2,117,552
    
    
    $
    (437,910
    )
    
    $
    1,679,642
    
    
    $
    1,417,552
    
    
    $
    (278,926
    )
    
    $
    1,138,626Other intangible
assets
    
    
    2,273,001
    
    
    
    (244,261
    )
    
    
    2,028,740
    
    
    
    1,283,001
    
    
    
    (32,874
    )
    
    
    1,250,1274,390,553
    
    
    
    (682,171
    )
    
    
    3,708,382
    
    
    
    2,700,553
    
    
    
    (311,800
    )
    
    
    2,388,753Infinite Lives:Permits
    
    
    2,200,000
    
    
    
    
    
    
    
    2,200,000
    
    
    
    2,200,000
    
    
    
    
    
    
    
    2,200,000Total
    
    $
    6,590,553
    
    
    $
    (682,171
    )
    
    $
    5,908,382
    
    
    $
    4,900,553
    
    
    $
    (311,800
    )
    
    $
    4,588,753
  19




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##### Table of Contents



Twelve months ending September 30,2009
    
    $
    520,0192010
    
    
    531,7972011
    
    
    531,7972012
    
    
    531,7972013
    
    
    363,921Thereafter
    
    
    1,229,051$
    3,708,382
 Lines of Credit
    Notes Payable and Long-Term Debt
  September 30,
    
    
    December 31,2008
    
    
    2007Note payable to Soil Disposal
    
    $
    
    
    
    $
    520,000Note payable for Casie Group for covenant not to compete
    
    
    75,202
    
    
    
    188,006Total
    
    $
    75,202
    
    
    $
    708,006
  20




---



##### Table of Contents



September 30,
    
    
    December 31,2008
    
    
    2007Equipment term loan
    
    $
    1,720,914
    
    
    $
    2,225,215Various equipment notes payable
    
    
    56,285
    
    
    
    70,208Casie Group
notes payable (bank and equipment) (a)
    
    
    3,206,899
    
    
    
    3,458,650Nycon assumed liabilities
    
    
    225,000
    
    
    
    Total
    
    
    5,209,098
    
    
    
    5,754,073Less current portion
    
    
    (1,345,373
    )
    
    
    (1,240,547
    )Long-term portion
    
    $
    3,863,725
    
    
    $
    4,513,526
 (a)
    
    On November 12, 2008, the Company refinanced the Casie Group notes payable
along with the Casie Group revolving line of credit into a consolidated term loan
(described in Note 16  Subsequent Events). Equipment Term Loan and Various Equipment Notes Payable
  Nycon Assumed Liabilities
   Twelve months ending September 30,2009
    
    $
    1,345,3732010
    
    
    1,063,5042011
    
    
    1,040,8232012
    
    
    470,2412013
    
    
    172,955Thereafter
    
    
    1,116,202$
    5,209,098
  21




---



##### Table of Contents



Officer Loans and Related Party Transactions
  Twelve Months Ending September 30,2009
    
    $
    2010
    
    
    333,0002011
    
    
    633,822$
    966,822
  Income Taxes
  Commitments and Contingencies
 Collective Bargaining Agreements
  Leases
   Twelve months ending September 30,2009
    
    $
    1,324,0052010
    
    
    1,181,4582011
    
    
    590,1702012
    
    
    422,2582013
    
    
    337,219Thereafter
    
    
    55,069$
    3,910,179
  22




---



##### Table of Contents



Government Regulation, State and Local Compliance
  Employment Agreements
   Twelve Months Ending September 30,2009
    
    
    2,060,3252010
    
    
    1,871,3002011
    
    
    1,212,4202012
    
    
    687,6732013
    
    
    437,582$
    6,269,300
 Litigation
    23




---



##### Table of Contents



Other Legal Matters
  Segment Reporting
   24




---



##### Table of Contents



Three months ended
    
    Transportation
    
    
    
    
    
    
    Environmental
    
    
    Treatment and
    
    
    Concrete
    
    
    Corporate andSeptember 30, 2008
    
    and Disposal
    
    
    Materials
    
    
    Services
    
    
    Recycling
    
    
    Fibers
    
    
    Other (a), (b)
    
    

Total (d)Third Party Revenues
    
    $
    11,124,348
    
    
    $
    424,462
    
    
    $
    538,157
    
    
    $
    6,504,446
    
    
    $
    539,634
    
    
    $
    
    
    
    $
    19,131,047Intercompany Revenues (b)
    
    
    
    
    
    
    228,414
    
    
    
    
    
    
    
    461,206
    
    
    
    
    
    
    
    (689,620
    )
    
    
    Total Revenues
    
    
    11,124,348
    
    
    
    652,876
    
    
    
    538,157
    
    
    
    6,965,652
    
    
    
    539,634
    
    
    
    (689,620
    )
    
    
    19,131,047Third Party Cost of Revenues
    
    
    8,003,636
    
    
    
    966,404
    
    
    
    478,474
    
    
    
    5,659,401
    
    
    
    373,164
    
    
    
    
    
    
    
    15,481,079Intercompany Cost of Revenues
    
    
    664,178
    
    
    
    
    
    
    
    25,581
    
    
    
    0
    
    
    
    
    
    
    
    (689,759
    )
    
    
    Total Cost of Revenues
    
    
    8,667,814
    
    
    
    966,404
    
    
    
    504,055
    
    
    
    5,659,401
    
    
    
    373,164
    
    
    
    (689,759
    )
    
    
    15,481,079Gross Profit (Loss) Margin
    
    
    2,456,534
    
    
    
    (313,528
    )
    
    
    34,102
    
    
    
    1,306,251
    
    
    
    166,470
    
    
    
    (139
    )
    
    
    3,649,968Operating Expenses
    
    
    1,012,326
    
    
    
    149,364
    
    
    
    116,661
    
    
    
    1,018,052
    
    
    
    200,653
    
    
    
    745,471
    
    
    
    3,242,527Income (Loss) from Operations
    
    
    1,444,208
    
    
    
    (462,892
    )
    
    
    (82,559
    )
    
    
    288,199
    
    
    
    (34,183
    )
    
    
    (745,332
    )
    
    
    407,441Adjusted EBITDA
    
    
    1,614,056
    
    
    
    (375,531
    )
    
    
    (63,741
    )
    
    
    777,624
    
    
    
    3,821
    
    
    
    (733,819
    )
    
    
    1,222,410Reconciliation to
Consolidated Statement of
Operations:Depreciation and
Amortization (c)
    
    
    169,848
    
    
    
    87,226
    
    
    
    18,818
    
    
    
    440,517
    
    
    
    38,004
    
    
    
    11,648
    
    
    
    766,061Interest Expense (Income)
    
    
    
    
    
    
    
    
    
    
    1,074
    
    
    
    98,565
    
    
    
    3,328
    
    
    
    389,682
    
    
    
    492,649Income (Loss) before
provision for income taxes
    
    
    1,444,208
    
    
    
    (462,757
    )
    
    
    (83,633
    )
    
    
    238,542
    
    
    
    (37,511
    )
    
    
    (1,135,149
    )
    
    
    (36,300
    )
 Nine months ended
    
    Transportation
    
    
    
    
    
    
    Environmental
    
    
    Treatment and
    
    
    Concrete
    
    
    Corporate andSeptember 30, 2008
    
    and Disposal
    
    
    Materials
    
    
    Services
    
    
    Recycling
    
    
    Fibers
    
    
    Other (a), (b)
    
    
    Total (d)Third Party Revenues
    
    $
    28,007,758
    
    
    $
    1,215,041
    
    
    $
    1,798,650
    
    
    $
    19,425,781
    
    
    $
    1,191,461
    
    
    $
    
    
    
    $
    51,638,690Intercompany Revenues (b)
    
    
    305,242
    
    
    
    1,029,456
    
    
    
    5,239
    
    
    
    1,344,312
    
    
    
    
    
    
    
    (2,684,249
    )
    
    
    Total Revenues
    
    
    28,313,000
    
    
    
    2,244,497
    
    
    
    1,803,888
    
    
    
    20,770,093
    
    
    
    1,191,461
    
    
    
    (2,684,249
    )
    
    
    51,638,690Third Party Cost of Revenues
    
    
    19,367,703
    
    
    
    3,044,330
    
    
    
    1,483,349
    
    
    
    17,072,459
    
    
    
    933,917
    
    
    
    
    
    
    
    41,901,758Intercompany Cost of Revenues
    
    
    2,489,307
    
    
    
    11,159
    
    
    
    130,433
    
    
    
    53,350
    
    
    
    
    
    
    
    (2,684,249
    )
    
    
    Total Cost of Revenues
    
    
    21,857,010
    
    
    
    3,055,489
    
    
    
    1,613,782
    
    
    
    17,125,809
    
    
    
    933,917
    
    
    
    (2,684,249
    )
    
    
    41,901,758Gross Profit (Loss) Margin
    
    
    6,455,990
    
    
    
    (810,992
    )
    
    
    190,107
    
    
    
    3,644,283
    
    
    
    257,544
    
    
    
    
    
    
    
    9,736,932Operating Expenses
    
    
    2,451,521
    
    
    
    488,249
    
    
    
    341,787
    
    
    
    3,340,510
    
    
    
    394,294
    
    
    
    2,624,316
    
    
    
    9,640,677Income (Loss) from Operations
    
    
    4,004,469
    
    
    
    (1,299,241
    )
    
    
    (151,680
    )
    
    
    303,773
    
    
    
    (136,750
    )
    
    
    (2,624,316
    )
    
    
    96,255Adjusted EBITDA
    
    
    4,538,850
    
    
    
    (1,036,794
    )
    
    
    (97,786
    )
    
    
    1,773,720
    
    
    
    (36,364
    )
    
    
    (2,591,051
    )
    
    
    2,550,575Reconciliation to
Consolidated Statement of
Operations:Depreciation and
Amortization (c)
    
    
    534,381
    
    
    
    262,447
    
    
    
    53,894
    
    
    
    1,308,286
    
    
    
    100,386
    
    
    
    33,265
    
    
    
    2,292,659Interest Expense (Income)
    
    
    
    
    
    
    
    
    
    
    4,560
    
    
    
    314,423
    
    
    
    5,716
    
    
    
    971,545
    
    
    
    1,296,244Income (Loss) before
provision for income taxes
    
    
    4,004,469
    
    
    
    (1,299,241
    )
    
    
    (156,240
    )
    
    
    151,011
    
    
    
    (142,466
    )
    
    
    (3,595,861
    )
    
    
    (1,038,244
    )Capital Expenditures (e)
    
    $
    3,294
    
    
    $
    94,649
    
    
    $
    349,123
    
    
    $
    654,422
    
    
    $
    52,353
    
    
    $
    51,360
    
    
    $
    1,205,200Total Assets (d)
    
    $
    15,194,920
    
    
    $
    1,166,896
    
    
    $
    2,032,549
    
    
    $
    29,604,224
    
    
    $
    2,431,013
    
    
    $
    4,455,103
    
    
    $
    54,884,705Goodwill
    
    $
    
    
    
    $
    
    
    
    $
    759,964
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    759,964
 
 (a)
    
    Corporate operating results reflect the costs incurred for various support services that are
not allocated to our four operating Groups. These support services include, among other
things, treasury, legal, information technology, tax, insurance, and other administrative
functions. It also includes eliminations of intersegment revenues and costs of sales.(b)
    
    Intercompany operating revenues reflect each segments total intercompany sales, including
intercompany sales within a segment and between segments. Transactions within and between
segments are generally made on a basis intended to reflect the market value of the service.  25




---



##### Table of Contents



(c)
    
    Includes depreciation and amortization expense classified above as a component of cost of
sales and operating expenses.(d)
    
    The Consolidated Total Assets above reflects the elimination of $5,185,376 of the Companys
investment in subsidiaries and intersegment receivables.(e)
    
    Includes non-cash items and assets acquired through acquisition. Capital expenditures are
reported in the Companys operating segments at the time they are recorded within the
segments property, plant and equipment balances and, therefore, may include amounts that have
been accrued but not yet paid.  Three months ended
    
    Transportation
    
    
    
    
    
    
    Environmental
    
    
    Treatment and
    
    
    Concrete
    
    
    Corporate andSeptember 30, 2007
    
    and Disposal
    
    
    Materials
    
    
    Services
    
    
    Recycling
    
    
    Fibers
    
    
    Other (f), (g)
    
    
    Total (i)Third Party Revenues
    
    $
    9,296,318
    
    
    $
    365,684
    
    
    $
    329,430
    
    
    $
    5,153,395
    
    
    $
    
    
    
    $
    
    
    
    $
    15,144,827Intercompany Revenues (f)
    
    
    2,660,463
    
    
    
    188,513
    
    
    
    
    
    
    
    1,605,844
    
    
    
    
    
    
    
    (4,454,820
    )
    
    
    Total Revenues
    
    
    11,956,781
    
    
    
    554,197
    
    
    
    329,430
    
    
    
    6,759,239
    
    
    
    
    
    
    
    (4,454,820
    )
    
    
    15,144,827Third Party Cost of Revenues
    
    
    5,644,312
    
    
    
    655,729
    
    
    
    329,380
    
    
    
    4,562,075
    
    
    
    
    
    
    
    
    
    
    
    11,191,496Intercompany Cost of Revenues
    
    
    4,446,770
    
    
    
    8,350
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,455,120
    )
    
    
    Total Cost of Revenues
    
    
    10,091,082
    
    
    
    664,079
    
    
    
    329,380
    
    
    
    4,562,075
    
    
    
    
    
    
    
    (4,455,120
    )
    
    
    11,191,496Gross Profit (Loss) Margin
    
    
    1,865,699
    
    
    
    (109,882
    )
    
    
    50
    
    
    
    2,197,164
    
    
    
    
    
    
    
    (300
    )
    
    
    3,953,331Operating Expenses
    
    
    777,208
    
    
    
    71,569
    
    
    
    16,905
    
    
    
    883,529
    
    
    
    
    
    
    
    462,798
    
    
    
    2,212,009Income (Loss) from Operations
    
    
    1,088,491
    
    
    
    (181,451
    )
    
    
    (16,855
    )
    
    
    1,313,635
    
    
    
    
    
    
    
    (462,498
    )
    
    
    1,741,322Adjusted EBITDA
    
    
    1,353,798
    
    
    
    (112,318
    )
    
    
    (2,353
    )
    
    
    1,681,756
    
    
    
    
    
    
    
    (457,233
    )
    
    
    2,463,381Reconciliation to
Consolidated Statement of
Operations:Depreciation and
Amortization (h)
    
    
    265,308
    
    
    
    69,133
    
    
    
    14,502
    
    
    
    368,121
    
    
    
    
    
    
    
    5,264
    
    
    
    722,059Interest Expense (Income)
    
    
    26,542
    
    
    
    
    
    
    
    1,686
    
    
    
    159,744
    
    
    
    
    
    
    
    192,892
    
    
    
    380,864Income (Loss) before
provision for income taxes
    
    
    1,061,948
    
    
    
    (181,451
    )
    
    
    (18,451
    )
    
    
    1,153,891
    
    
    
    
    
    
    
    (655,479
    )
    
    
    1,360,458
  26




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##### Table of Contents



Nine months ended
    
    Transportation
    
    
    
    
    
    
    Environmental
    
    
    Treatment and
    
    
    Concrete
    
    
    Corporate andSeptember 30, 2007
    
    and Disposal
    
    
    Materials
    
    
    Services
    
    
    Recycling
    
    
    Fibers
    
    
    Other (f), (g)
    
    
    Total (i)Third Party Revenues
    
    $
    31,324,236
    
    
    $
    1,451,053
    
    
    $
    1,538,287
    
    
    $
    9,654,155
    
    
    $
    
    
    
    $
    
    
    
    $
    43,967,731Intercompany Revenues (g)
    
    
    7,694,889
    
    
    
    372,850
    
    
    
    16,000
    
    
    
    2,843,577
    
    
    
    
    
    
    
    (10,927,316
    )
    
    
    Total Revenues
    
    
    39,019,125
    
    
    
    1,823,903
    
    
    
    1,554,287
    
    
    
    12,497,732
    
    
    
    
    
    
    
    (10,927,316)
    
    
    
    43,967,731Third Party Cost of Revenues
    
    
    22,204,340
    
    
    
    1,707,887
    
    
    
    1,027,282
    
    
    
    8,849,771
    
    
    
    
    
    
    
    
    
    
    
    33,789,279Intercompany Cost of Revenues
    
    
    10,641,160
    
    
    
    46,189
    
    
    
    239,987
    
    
    
    
    
    
    
    
    
    
    
    (10,927,316
    )
    
    
    Total Cost of Revenues
    
    
    32,845,500
    
    
    
    1,754,056
    
    
    
    1,267,269
    
    
    
    8,849,771
    
    
    
    
    
    
    
    (10,927,316
    )
    
    
    33,789,279Gross Profit Margin
    
    
    6,173,625
    
    
    
    69,848
    
    
    
    287,018
    
    
    
    3,647,961
    
    
    
    
    
    
    
    
    
    
    
    10,178,452Operating Expenses
    
    
    2,641,597
    
    
    
    248,904
    
    
    
    305,312
    
    
    
    1,922,858
    
    
    
    
    
    
    
    1,294,361
    
    
    
    6,413,032Income (Loss) from Operations
    
    
    3,532,028
    
    
    
    (179,056
    )
    
    
    (18,294
    )
    
    
    1,725,103
    
    
    
    
    
    
    
    (1,294,361
    )
    
    
    3,765,420Adjusted EBITDA
    
    
    4,276,705
    
    
    
    14,621
    
    
    
    23,294
    
    
    
    2,444,371
    
    
    
    
    
    
    
    (1,280,937
    )
    
    
    5,477,694Reconciliation to
Consolidated Statement of
Operations:Depreciation and
Amortization (h)
    
    
    744,678
    
    
    
    193,318
    
    
    
    41,588
    
    
    
    719,268
    
    
    
    
    
    
    
    13,423
    
    
    
    1,712,274Interest Expense (Income)
    
    
    97,819
    
    
    
    316
    
    
    
    7,091
    
    
    
    325,184
    
    
    
    
    
    
    
    385,650
    
    
    
    816,059Income (Loss) before
provision for income taxes
    
    
    3,434,208
    
    
    
    (179,372
    )
    
    
    (25,385
    )
    
    
    1,399,920
    
    
    
    
    
    
    
    (1,680,010
    )
    
    
    2,949,361Capital Expenditures (j)
    
    $
    200,804
    
    
    $
    93,734
    
    
    $
    53,379
    
    
    $
    13,656,208
    
    
    $
    
    
    
    $
    42,758
    
    
    $
    14,046,163Total Assets (i)
    
    $
    15,086,838
    
    
    $
    1,530,427
    
    
    $
    1,761,842
    
    
    $
    29,406,504
    
    
    $
    
    
    
    $
    1,742,865
    
    
    $
    49,528,476Goodwill
    
    $
    
    
    
    $
    
    
    
    $
    759,964
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    759,964
 
 (f)
    
    Corporate operating results reflect the costs incurred for various support services that are
not allocated to our four operating Groups. These support services include, among other
things, treasury, legal, information technology, tax, insurance, and other administrative
functions. It also includes eliminations of intersegment revenues and costs of sales.(g)
    
    Intercompany revenues reflect each segments total intercompany sales, including intercompany
sales within a segment and between segments. Transactions within and between segments are
generally made on a basis intended to reflect the market value of the service.(h)
    
    Includes depreciation and amortization expense classified above as a component of cost of
revenues and operating expenses.(i)
    
    The Consolidated Total Assets above reflects the elimination of $3,612,819 of the Companys
investment in subsidiaries and intersegment receivables.(j)
    
    Includes non-cash items and assets acquired through acquisition. Capital expenditures are
reported in the Companys operating segments at the time they are recorded within the
segments property, plant and equipment balances and, therefore, may include amounts that have
been accrued but not yet paid.   27




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##### Table of Contents



Subsequent Events
 Lyndhurst Facility
  North Bergen Facility
  Casie Group Refinancing On November 12, 2008, Casie Group (as borrower) and Pure Earth, Inc. (as guarantor) closed on a new $8,000,000
term loan with Susquehanna Bank (Susquehanna), the proceeds of which are to be used for refinancing existing
debt at Casie Group with the previous lender and for reimbursing the Company for capital expenditures and
working capital advances made to or on behalf of Casie Group. The previous debt held by Casie Group consisted
of a $2.4 million revolving line of credit and $2.9 million in various bank and equipment notes payable which
carried interest rates ranging from 6.50% to 8.50% with varying maturities. The new consolidated term loan
matures on November 15, 2015, is payable in 84 monthly installments and bears interest at an adjustable rate
equal to 250 basis points above the one-month London interbank offered rate, which was approximately 3.91% as of
November 12, 2008. This interest rate will be adjusted on the 15th of every month beginning December 15, 2008.
Casie Group and the Company also entered into an $8.0 million interest rate swap agreement with Susquehanna by
which they are required to pay a fixed rate of interest at 6.10% to Susquehanna over a 7 year term corresponding
to the loan term, in exchange for the payment by Susquehanna to Casie Group and the Company of adjustable rate
payments based on 1 month LIBOR, plus 250 basis points. Entering into this swap agreement effectively converts
the adjustable rate loan into a fixed rate loan at 6.10%. The loan is collateralized by the mortgaged
properties and equipment held by Casie Group, excluding accounts receivable, inventory and three pieces of
excluded equipment. The consolidated term loan contains a financial covenant which requires Pure Earth, Inc. as the guarantor to
maintain a maximum leverage ratio of 4.0 to 1.0, measured annually at the end of each fiscal year commencing on
December 31, 2009. In addition, the Company is required to provide annual financial statement and other
financial information as requested by the lender, as well as quarterly environmental reports for compliance
purposes. The Company was also required to establish a reserve account from the loan proceeds in the amount of
$720,000 to be held by Susquehanna for the purposes of paying the first six months of principal and interest
payments.  28




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##### Table of Contents



Amendment of the Revolving Line of Credit Effective on October 21, 2008, and in connection with the Companys senior lender approval of the Casie Group
refinancing, the Company also entered into an amendment of Pure Earth, Inc.s $7.5 million revolving line of
credit with its senior lender. Following the closing of Casie Groups refinancing and pending satisfactory
audits by the senior lender, Casie Group along with certain of the Companys other subsidiaries will become
borrowers under this revolving line of credit, and the accounts receivable and inventory of these entities will
become collateral and, to the extent eligible, part of the available borrowing base. Other provisions of this
amendment include the following:  a.
    
    The net proceeds totaling approximately $1.8 million from the Casie Group
refinancing, after the repayment of the existing Casie Group debt, the establishment of the
$720,000 reserve (described above) and the payment of transaction fees, shall be applied to the
outstanding indebtedness under the revolving line of credit (described above).  b.
    
    The rate of interest under a floating rate borrowing has been changed to mean the
greater of 5.0% or the senior lenders prime rate, plus 2.75%, and or the rate of interest to be
charged under a LIBOR Advance shall be equal to the LIBOR rate, as specified in the credit
agreement, plus 3.00%.  c.
    
    The Company shall issue to its senior lender a warrant to purchase up to 50,000
shares of its unregistered common stock of at an exercise price of $1.50 per share, upon other
terms subject to negotiation.  d.
    
    The Company shall pay to its senior lender a fee of $125,000 as compensation for
this amendment and past amendments of the revolving line of credit agreement.  e.
    
    The capping of loan availability on two of the Companys concentration accounts
along with additional and revised financial covenants will be determined after future negotiations
between the Company and its senior lender.  29




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations.
     
    
    industry competition, conditions, performance and consolidation;
    
    our ability to grow our business through the formation and acquisition of
complementary businesses;
    
    our ability to integrate the companies, assets and operations we have previously
acquired;
    
    legislative and regulatory developments;
    
    weather conditions, including extremely harsh weather or natural disasters which
may cause us to temporarily cease some or all of operations;
    
    the effects of adverse general economic conditions, both within the United
States and globally; and
    
    other factors described in Item 1A. Risk Factors of our Registration
Statement on Form 10/A (File No. 0-53287), as filed with the SEC on November 4,
2008 (the Registration Statement), or in our other filings made with the SEC.
  Overview and Strategy
   30




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##### Table of Contents




    
    Transportation and Disposal We provide transportation and disposal services
for excavated clean and contaminated soils from urban construction projects in the
mid-Atlantic region and the New York metropolitan area.
    
    Treatment and Recycling We remove, process, treat, recycle and dispose of
residual waste from a variety of different industrial and commercial sources,
targeting customers along the U.S. eastern seaboard. We also plan to recycle waste
products with high BTU value into alternative fuels for consumers and other end
users.
    
    Environmental Services We provide a wide range of environmental consulting and
related specialty services, including:
 
    
    environmental investigation, consulting and engineering
services to commercial and residential customers;
    
    environmental well drilling for commercial customers
located primarily in Connecticut and New York;
    
    disposal of regulated medical waste for hospitals,
nursing homes and doctors offices; and
    
    locating and acquiring Brownfield sites for subsequent
development, restoration and potential resale, using capping material from
our existing facilities or directly from our customer base.
 
    
    Materials We produce and sell recycled construction materials for a variety of
construction and other applications, including crushed stone and recycled
aggregate. Our construction materials are produced to meet all prevailing
specifications for their use.
    
    Concrete Fibers Concrete Fibers is our newest segment, which was created with
our acquisition of Nycon effective April 2008. We recycle used carpet fibers into
environmentally sustainable, or green, fiber material. We also repack and
distribute various other fibers as additives to concrete products.
  31




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##### Table of Contents




    
    Transportation and Disposal Revenues and cash are derived generally from fees
charged to our customers for the collection, transportation and disposal of
contaminated and clean soils from urban construction projects in the mid-Atlantic
region and the New York metropolitan area.
 
    
    Treatment and Recycling Our revenues and cash are earned primarily through the
following channels:
 
    
    fees earned as a disposal facility for treatment by
thermal desorption of contaminated soils; and
    
    performing environmental services, such as oil
salvaging, decontamination, wastewater cleanup, laboratory analysis and
environmental consulting.
 
    
    Environmental Services We generate revenues from fees charged for our
environmental consulting and related specialty services,including well-drilling
and the disposal of medical waste.We have recently acquired our first Brownfield
site and plan to take steps to cap this property with soils from our Transportation
and Disposal segment. We estimate that we will begin generating revenues from our
Brownfield operations in the second quarter or third of 2009.
    
    Materials Revenues and cash are generated by charging fees to customers for
the removal of construction materials, such as rock and aggregate, from jobsites.
These fees are based upon the quantity and weight of material removed and the
distance of the jobsite from one of our facilities. We then process the material
at our rock crushing facilities into various crushed stone products, which are then
resold to customers for use in other construction projects. We sell our crushed
stone products by weight and at a unit price that varies depending on the product
type. Our Materials revenues are primarily dependent upon the high level of
construction services in and around New York City and the New York-New
Jersey-Connecticut tri-state area, as well as the demand for crushed stone products
used in those construction projects.
    
    Concrete Fibers We generate revenues and cash through the sale of packaged
concrete fibers to construction companies, concrete manufacturers and wholesalers.
The price at which we sell these fibers is determined based upon the type of fiber,
the quantity of the order and the pricing of our competitors for similar products.
Our Concrete Fibers revenues are largely dependent upon the demand from the
commercial and residential construction industries and prices set by the large
companies that purchase our concrete fiber output. Also, this segments ability to
generate revenue depends upon our ability to negotiate favorable sales agreements
with these companies and our ability to manage the costs of obtaining raw materials
and selling our concrete fiber products.
    32




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##### Table of Contents



Critical Accounting Policies and Estimates
  Results of Operations  Three Months Ended September 30, 2008 Compared to Three Months Ended
September 30, 2007
  Three Months Ended September 30,(in thousands, except share and per share data)
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)Revenues
    
    $
    19,131
    
    
    $
    15,145Cost of revenues
    
    
    15,481
    
    
    
    11,192Gross profit
    
    
    3,650
    
    
    
    3,953Operating expenses:Salaries and related expenses
    
    
    1,591
    
    
    
    1,044Occupancy and other office expenses
    
    
    226
    
    
    
    187Professional fees
    
    
    359
    
    
    
    291Other operating expenses
    
    
    566
    
    
    
    408Insurance
    
    
    357
    
    
    
    259Depreciation and amortization
    
    
    145
    
    
    
    48(Gain) on sale of equipment
    
    
    (1
    )
    
    
    (25
    )Total operating expenses
    
    
    3,243
    
    
    
    2,212Income from operations
    
    
    407
    
    
    
    1,741Interest expense, net
    
    
    (492
    )
    
    
    (381
    )Other income
    
    
    49
    
    
    
    Income (loss) before provision for (benefit from) income taxes
    
    
    (36
    )
    
    
    1,360Provision for (benefit from) income taxes
    
    
    (47
    )
    
    
    569Net income (loss)
    
    
    11
    
    
    
    791Less preferred stock dividends
    
    
    
    
    
    
    Income (loss) available for common stockholders
    
    $
    11
    
    
    $
    791Income (loss) available for common stockholders
per share (basic)
    
    $
    0.00
    
    
    $
    0.05Income (loss) available for common stockholders
per share (diluted)
    
    $
    0.00
    
    
    $
    0.05Weighted average shares of common stock outstanding during
the period (basic)
    
    
    17,621,799
    
    
    
    16,700,022Weighted average shares of common stock outstanding during
the period (diluted)
    
    
    18,388,914
    
    
    
    17,188,911Earnings before interest, taxes, depreciation and
amortization (EBITDA)
    
    $
    1,223
    
    
    $
    2,463
  33




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##### Table of Contents




    
    to review and assess the operating performance of our company and our reporting
segments, as permitted by SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information;
    
    to compare our current operating results with corresponding periods and with the
operating results of other companies in our industry;
    
    as a basis for allocating resources to various segments or projects;
    
    as a measure to evaluate potential economic outcomes of acquisitions,
operational alternatives and strategic decisions; and
    
    to evaluate internally the performance of our personnel.
   
    
    we believe EBITDA is a useful tool for investors to assess the operating
performance of our business without the effect of interest and income taxes, which
are non-operating expenses, and depreciation and amortization, which are non-cash
expenses;
    
    we believe that it is useful to provide to investors with a standard operating
metric used by management to evaluate our operating performance;
    
    we believe that the use of EBITDA is helpful to compare our results to other
companies by eliminating non-cash depreciation and amortization charges and the
effects of differences in intangible asset valuation, which are often incurred with
significant acquisitions of operations; and
    
    EBITDA is commonly used by companies in the waste management and environmental
industries as a performance measure, and we believe that providing this information
allows investors to compare our operating performance to that of our competitors in
these industries.
  
    
    EBITDA does not reflect our cash expenditures or future requirements for capital
expenditures or contractual commitments;
    
    EBITDA does not reflect changes in, or cash requirements for, our working
capital needs;
    
    EBITDA does not reflect the significant interest expense, or the cash
requirements necessary to service interest or principal payments, on our debt;
    
    although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized will often have to be replaced in the future, and EBITDA
does not reflect any cash requirements for such replacements;
  34




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##### Table of Contents




    
    EBITDA does not reflect income or other taxes or the cash requirements to make
any tax payments; and
    
    other companies in our industry may calculate EBITDA differently than we do,
thereby potentially limiting its usefulness as a comparative measure.
   Three Months EndedSeptember 30,(in thousands)
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)EBITDA
    
    $
    1,223
    
    
    $
    2,463Depreciation and amortization, including
$645 and $624 of depreciation and
amortization classified as a component of
cost of revenues
    
    
    766
    
    
    
    722Interest expense, net
    
    
    493
    
    
    
    381Provision for (benefit from) income taxes
    
    
    (47
    )
    
    
    569Net income
    
    $
    11
    
    
    $
    791
 Revenues
  Three Months Ended September 30,2008
    
    
    2007% of
    
    
    
    
    
    
    % of(unaudited) (in thousands, except percentages)
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesTransportation and Disposal
    
    $
    11,124
    
    
    
    58
    %
    
    $
    9,296
    
    
    
    61
    %Treatment and Recycling
    
    
    6,504
    
    
    
    34
    %
    
    
    5,153
    
    
    
    34
    %Environmental Services
    
    
    538
    
    
    
    3
    %
    
    
    330
    
    
    
    2
    %Materials
    
    
    425
    
    
    
    2
    %
    
    
    366
    
    
    
    3
    %Concrete Fibers
    
    
    540
    
    
    
    3
    %
    
    
    
    
    
    
    Total
    
    $
    19,131
    
    
    
    100
    %
    
    $
    15,145
    
    
    
    100
    %
   35




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36




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##### Table of Contents



Cost of Revenues
  Cost of Revenues   By SegmentThree Months Ended September 30,2008
    
    
    2007% of
    
    
    
    
    
    
    % of(unaudited) (in thousands)
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesTransportation and Disposal
    
    $
    8,004
    
    
    
    42
    %
    
    $
    5,645
    
    
    
    37
    %Treatment and Recycling
    
    
    5,659
    
    
    
    30
    %
    
    
    4,562
    
    
    
    30
    %Environmental Services
    
    
    479
    
    
    
    3
    %
    
    
    329
    
    
    
    2
    %Materials
    
    
    966
    
    
    
    5
    %
    
    
    656
    
    
    
    4
    %Concrete Fibers
    
    
    373
    
    
    
    2
    %
    
    
    
    
    
    
    Total
    
    $
    15,481
    
    
    
    82
    %
    
    $
    11,192
    
    
    
    73
    %
  
    
    growing our Transportation and Disposal segment and increasing the number of
disposal outlets accessible to us that are located closer to customer job sites,
which would decrease our transportation costs and provide alternative disposal
options to landfills;
    
    identifying a new transfer station, which we believe will reduce our
subcontractor costs by allowing us to use non-union subcontractors (instead of
using more expensive union subcontractors) to collect soils from this transfer
station to the final disposal outlet;
  37




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##### Table of Contents




    
    increasing the number of Brownfield properties that we own, operate or control,
which could reduce our disposal costs by allowing us to use clean and contaminated
soils from our Transportation and Disposal customers in our Brownfield projects,
instead of disposing them in a third party facility; and
    
    decreasing our direct costs within the Treatment and Recycling segment through
cost-cutting initiatives including decreasing personnel costs.
  Operating Expenses
  
    
    salaries and related expenses (other than direct labor costs and union benefits
described above);
    
    occupancy and other office expenses;
    
    professional fees;
    
    insurance;
    
    depreciation and amortization (other than amounts included as a component of
cost of revenues as described above);
    
    impairment of idle machinery;
    
    gain recognized on our sale of certain equipment; and
    
    other miscellaneous operating expenses.
  Three Months Ended September 30,
    
    
    Period to Period Change(unaudited) (in thousands, except percentages)
    
    2008
    
    
    2007
    
    
    Amount
    
    
    PercentageSalaries and related expenses
    
    $
    1,591
    
    
    $
    1,044
    
    
    $
    547
    
    
    
    52
    %Occupancy and other office expenses
    
    
    226
    
    
    
    187
    
    
    
    39
    
    
    
    20
    %Professional fees
    
    
    359
    
    
    
    291
    
    
    
    68
    
    
    
    23
    %Other operating expenses
    
    
    566
    
    
    
    408
    
    
    
    158
    
    
    
    39
    %Insurance
    
    
    357
    
    
    
    259
    
    
    
    98
    
    
    
    38
    %Depreciation and amortization
    
    
    145
    
    
    
    48
    
    
    
    97
    
    
    
    202
    %Gain on sale of equipment
    
    
    (1
    )
    
    
    (25
    )
    
    
    24
    
    
    
    96
    %Total operating expenses
    
    $
    3,243
    
    
    $
    2,212
    
    
    $
    1,031
    
    
    
    47
    %
   38




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##### Table of Contents




    
    consulting fees paid for sales, consulting and marketing assistance, which were
eliminated as of September 2007;
    
    audit and accounting fees related to the audit of our consolidated financial
statements;
    
    legal costs associated with litigation;
    
    legal and other related costs associated with the preparation and filing of the
Registration Statement with the SEC and becoming a reporting company on August 19,
2008;
    
    legal and other fees incurred in connection with our acquisitions; and
    
    fees paid to third parties and regulatory agencies to monitor safety and
compliance with respect to certain of our operations.
    39




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##### Table of Contents



Income (Loss) from Operations
  Three Months Ended September 30,
    
    
    Period to Period Change(unaudited) (in thousands, except percentages)
    
    2008
    
    
    2007
    
    
    Amount
    
    
    PercentageTransportation and Disposal
    
    $
    1,444
    
    
    $
    1,088
    
    
    $
    356
    
    
    
    33
    %Treatment and Recycling
    
    
    288
    
    
    
    1,314
    
    
    
    (1,026
    )
    
    
    (78
    )%Environmental Services
    
    
    (83
    )
    
    
    (17
    )
    
    
    (66
    )
    
    
    (388
    )%Materials
    
    
    (463
    )
    
    
    (181
    )
    
    
    (282
    )
    
    
    (156
    )%Concrete Fibers
    
    
    (34
    )
    
    
    
    
    
    
    (34
    )
    
    
    *Corporate and Other
    
    
    (745
    )
    
    
    (463
    )
    
    
    (282
    )
    
    
    (61
    %)Total
    
    $
    407
    
    
    $
    1,741
    
    
    $
    (1,334
    )
    
    
    (77
    %)
 
 *
    
    Not meaningful.     40




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##### Table of Contents




    
    additional salary costs of approximately $0.2 million for additional accounting
and administrative personnel, increase in officers salaries, and the hiring of
additional sales personnel and vice presidents in the latter half of 2007 and early
2008.
    
    increased legal and professional fees, and other associated costs, of
approximately $0.2 million related to the preparation and filing of the
Registration Statement and ongoing litigation; and
    
    incremental overhead costs associated with our overall growth.
  41




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##### Table of Contents



Interest Income and Expense
  
    
    approximately $0.3 million of additional interest expense incurred in relation
to our Series B preferred stock offering and related amortization of deferred
financing costs, offset by
    
    a decrease in interest expense incurred on our revolving line of credit as a
result of decreased borrowings during the third quarter of 2008, coupled with a
decline in the interest rate under that line of credit from 8.25% at September 30,
2007 to 4.75% at September 30, 2008.
   Other Income
  Provision for (Benefit From) Income Taxes
   42




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##### Table of Contents



Results of Operations  Nine Months Ended September 30, 2008 Compared to Nine Months Ended
September 30, 2007
  Nine Months Ended September 30,(in thousands, except share and per share data)
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)Revenues
    
    $
    51,639
    
    
    $
    43,968Cost of revenues
    
    
    41,902
    
    
    
    33,789Gross profit
    
    
    9,737
    
    
    
    10,178Operating expenses:Salaries and related expenses
    
    
    4,617
    
    
    
    3,015Occupancy and other office expenses
    
    
    791
    
    
    
    673Professional fees
    
    
    1,425
    
    
    
    966Other operating expenses
    
    
    1,297
    
    
    
    923Insurance
    
    
    956
    
    
    
    731Depreciation and amortization
    
    
    400
    
    
    
    131Impairment of idle machinery
    
    
    412
    
    
    
    Gain on sale of equipment
    
    
    (257
    )
    
    
    (26
    )Total operating expenses
    
    
    9,641
    
    
    
    6,413Income from operations
    
    
    96
    
    
    
    3,765Interest expense, net
    
    
    (1,296
    )
    
    
    (816
    )Other income
    
    
    162
    
    
    
    (Loss) before provision for (benefit from) income taxes
    
    
    (1,038
    )
    
    
    2,949Provision for (benefit from) income taxes
    
    
    (463
    )
    
    
    1,260Net income (loss)
    
    
    (575
    )
    
    
    1,689Less preferred stock dividends
    
    
    (478
    )
    
    
    Income (loss) available for common stockholders
    
    $
    (1,053
    )
    
    
    1,689Income (loss) available for common stockholders
per share (basic)
    
    $
    (0.06
    )
    
    $
    0.10Income (loss) available for common stockholders
per share (diluted)
    
    $
    (0.06
    )
    
    $
    0.10Weighted average shares of common stock outstanding
during the period (basic)
    
    
    17,360,519
    
    
    
    16,255,852Weighted average shares of common stock outstanding
during the period (diluted)
    
    
    17,360,519
    
    
    
    16,634,581Earnings before interest, taxes, depreciation and
amortization (EBITDA)
    
    $
    2,551
    
    
    $
    5,478
   43




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##### Table of Contents



Nine Months Ended September 30,(in thousands)
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)EBITDA
    
    $
    2,551
    
    
    $
    5,478Depreciation and amortization,
including $1,893 and $1,582 of
depreciation and amortization
classified as a component of cost of
revenues
    
    
    2,293
    
    
    
    1,713Interest expense, net
    
    
    1,296
    
    
    
    816Provision for (benefit from) income taxes
    
    
    (463
    )
    
    
    1,260Net income (loss)
    
    $
    (575
    )
    
    $
    1,689
 Revenues
  Nine Months Ended September 30,2008
    
    
    2007% of
    
    
    
    
    
    
    % of(unaudited) (in thousands, except percentages)
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesTransportation and Disposal
    
    $
    28,008
    
    
    
    54
    %
    
    $
    31,324
    
    
    
    71
    %Treatment and Recycling
    
    
    19,426
    
    
    
    38
    %
    
    
    9,654
    
    
    
    22
    %Environmental Services
    
    
    1,799
    
    
    
    3
    %
    
    
    1,539
    
    
    
    4
    %Materials
    
    
    1,215
    
    
    
    2
    %
    
    
    1,451
    
    
    
    3
    %Concrete Fibers
    
    
    1,191
    
    
    
    2
    %
    
    
    
    
    
    
    Total
    
    $
    51,639
    
    
    
    100.0
    %
    
    $
    43,968
    
    
    
    100.0
    %
     44




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45




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##### Table of Contents



Cost of Revenues
  Cost
of Revenues  By SegmentNine Months Ended September 30,2008
    
    
    2007% of
    
    
    
    
    
    
    % of(in thousands)
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesTransportation and Disposal
    
    $
    19,368
    
    
    
    38
    %
    
    $
    22,204
    
    
    
    51
    %Treatment and Recycling
    
    
    17,073
    
    
    
    33
    %
    
    
    8,850
    
    
    
    20
    %Environmental Services
    
    
    1,483
    
    
    
    3
    %
    
    
    1,027
    
    
    
    2
    %Materials
    
    
    3,044
    
    
    
    6
    %
    
    
    1,708
    
    
    
    4
    %Concrete Fibers
    
    
    934
    
    
    
    2
    %
    
    
    
    
    
    
    Total
    
    
    41,902
    
    
    
    82
    %
    
    $
    33,789
    
    
    
    77
    %
   
    
    growing our Transportation and Disposal segment and increasing the number of
disposal outlets accessible to us, which allows us to decrease the distance between
the outlets and our sources of soils and wastes and thereby lessen our cost
structure;
    
    identifying and utilizing a new transfer station, which we believe will reduce
our subcontracting costs as we can eliminate higher costs related to non-union
drivers to collect soils from this transfer station to the final disposal outlet;
and
    
    decreasing our direct costs within the Treatment and Recycling segment through
cost-cutting initiatives, including by decreasing our headcount and related
expenses.
   46




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##### Table of Contents



Operating Expenses
  
    
    salaries and related expenses (other than direct labor costs and union benefits
described above);
    
    occupancy and other office expenses;
    
    professional fees;
    
    insurance;
    
    gain or loss on the sale of fixed assets;
    
    impairment of idle machinery;
    
    depreciation and amortization (other than amounts included as a component of
cost of revenues as described above); and
    
    other miscellaneous operating expenses.
  Operating
Expenses  By Cost ItemNine Months Ended September 30,
    
    
    Period to Period Change(unaudited) (in thousands, except percentages)
    
    2008
    
    
    2007
    
    
    Amount
    
    
    PercentageSalaries and related expenses
    
    $
    4,617
    
    
    $
    3,015
    
    
    $
    1,602
    
    
    
    53
    %Occupancy and other office expenses
    
    
    791
    
    
    
    673
    
    
    
    118
    
    
    
    18
    %Professional fees
    
    
    1,425
    
    
    
    966
    
    
    
    459
    
    
    
    48
    %Other operating expenses
    
    
    1,297
    
    
    
    923
    
    
    
    374
    
    
    
    41
    %Insurance
    
    
    956
    
    
    
    731
    
    
    
    225
    
    
    
    31
    %Loss (gain) on sale of fixed assets
    
    
    (257
    )
    
    
    (26
    )
    
    
    (231
    )
    
    
    *Depreciation and amortization
    
    
    400
    
    
    
    131
    
    
    
    269
    
    
    
    205
    %Impairment of idle machinery
    
    
    412
    
    
    
    
    
    
    
    412
    
    
    
    *Total operating expenses
    
    $
    9,641
    
    
    $
    6,413
    
    
    $
    3,228
    
    
    
    50
    %
 
 *
    
    Not meaningful.   47




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##### Table of Contents




    
    consulting fees paid for sales, consulting and marketing assistance, which were
eliminated as of September 2007;
    
    audit and accounting fees related to the audit of our consolidated financial
statements;
    
    legal costs associated with litigation;
    
    legal and other professional fees incurred in connection with our financings,
acquisitions and the preparation and filing of the Registration Statement; and
    
    fees paid to third parties to monitor safety and compliance with respect to
certain of our operations.
     48




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##### Table of Contents



Income (Loss) from Operations
  Nine Months Ended September 30,
    
    
    Period to Period Change(in thousands)
    
    2008
    
    
    2007
    
    
    Amount
    
    
    PercentageTransportation and Disposal
    
    $
    4,004
    
    
    $
    3,532
    
    
    $
    472
    
    
    
    13
    %Treatment and Recycling
    
    
    304
    
    
    
    1,725
    
    
    
    (1,421
    )
    
    
    (82
    )%Environmental Services
    
    
    (152
    )
    
    
    (18
    )
    
    
    (134
    )
    
    
    *Materials
    
    
    (1,299
    )
    
    
    (179
    )
    
    
    (1,120
    )
    
    
    *Concrete Fibers
    
    
    (137
    )
    
    
    
    
    
    
    (137
    )
    
    
    Corporate and Other
    
    
    (2,624
    )
    
    
    (1,295
    )
    
    
    (1,329
    )
    
    
    (103
    )%Total
    
    $
    96
    
    
    $
    3,765
    
    
    $
    (3,669
    )
    
    
    (97
    )%
 
 *
    
    Not meaningful.    49




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##### Table of Contents



50




---



##### Table of Contents



Interest Income and Expense
   Other Income
  Provision for (Benefit From) Income Taxes
   51




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##### Table of Contents



Liquidity and Capital Resources
 Cash and Cash Equivalents
  Summary of Cash Flows
  For the Nine Months EndedSeptember 30,(in thousands)
    
    2008
    
    
    2007Net cash used in operating activities
    
    $
    (3,371
    )
    
    $
    (5,370
    )Net cash used in investing activities
    
    $
    (335
    )
    
    $
    (3,377
    )Net cash provided by financing activities
    
    $
    6,038
    
    
    $
    7,421
 Net Cash Used in Operating Activities
  
    
    Decrease in income from operations  Our income from operations, excluding
depreciation and amortization, decreased by $3.1 million, or 55%, on a
period-to-period basis, which negatively impacted our cash flows from operations
for the nine months ended September 30, 2008.
    
    Increase in accounts receivable  Uses of cash from changes in accounts
receivable were approximately $(3.6) million and $(6.3) million for the nine months
ended September 30, 2008 and 2007, respectively. The increase in accounts
receivable at September 30, 2008 is the result of the timing in collections of cash
from our larger customers within the Transportation and Disposal segment, for which
our average days outstanding has increased in 2008, although closely
being monitored. The increase in our average
days outstanding in 2008 is a result of the overall economic environment and
current trends in the construction industry which we expect will continue in the
near term, or at least into the first quarter of 2009. The increase in accounts
receivable as of September 30, 2007, is the result of two large Transportation and
Disposal projects that began in the first quarter of 2007, which increased revenues
from period to period.
    
    Increase in prepaid expenses and other current assets  Uses of cash from
prepaid expenses and other current assets were $(0.3) million and $(1.7) million
for the nine months ended September 30, 2008 and 2007. This use of cash in the
nine months ended September 30, 2008, was primarily attributed to prepaid insurance
policies which were renewed in August of 2008.
  52




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##### Table of Contents




    
    Increase in accounts payable  Sources and (uses) of cash for accounts payable
were $0.5 million and $(1.5) million for the nine months ended September 30, 2008
and 2007 respectively. The increase in accounts payable during the nine months
ending September 30, 2008 is the result of additional payables relating to New
Nycon and increase in payables at PEI Disposal Group resulting from increased
production offset by decreased in accounts payable within the Treatment and
Recycling segment. The decrease in accounts payable during the nine months ended
September 30, 2007 is the result of large payments made in relation to a large
Transportation and Disposal segment job in the New York metropolitan area and the
timing of cash payments.
    
    Decrease in accrued expenses and other current liabilities  (Uses) and sources
of cash for accrued expenses and other current liabilities were $(0.6) million and
$2.1 million for the nine months ended September 30, 2008 and 2007, respectively.
The decrease in accrued expenses and other liabilities during the nine months ended
September 30, 2008, is primarily the result of the
timing of the payment for corporate insurance, settlement of the New Jersey sales
and use tax audit at Casie Group and a decrease in accrued liabilities at Juda as a
result of having only one union employee. The increase in accrued expenses and
other current liabilities during the nine months ended September 30, 2007 is the
result of an increase in our accrued expenses for insurance and consultant fees as
well as an increase in accrued payroll and payroll taxes within the Transportation
and Disposal segment due to higher salaries and compensation paid during this
period.
    
    Decrease in accrued disposal costs  During the nine months ended September 30,
2008 and 2007, we spent $1.3 million and $2.7 million on reducing our accrued
disposal costs, which resulted from transporting processed material from our
Treatment and Recycling operations.
    
    Increase in income taxes payable  (Uses) and sources of cash relating to income
taxes payable were $(1.0) million and approximately $1.2 million for the nine
months ended September 30, 2008 and 2007, respectively. The increase in cash used
to pay income taxes was the result of having earned taxable income for the year
ended December 31, 2007, as compared to being in a net loss position for the year
ended December 31, 2006.
    53




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##### Table of Contents



Nine Months EndedSeptember 30,(in thousands)
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)EBITDA
    
    $
    2,551
    
    
    $
    5,478Adjustments to reconcile EBITDA to net cash
used in operating activities:Interest expense, net
    
    
    (1,214
    )
    
    
    (768
    )(Provision for) benefit from income taxes
    
    
    463
    
    
    
    (1,260
    )Interest expense for accretion of warrant
discount and Series B paid-in-kind interest
    
    
    281
    
    
    
    Impairment of idle equipment
    
    
    412
    
    
    
    Provision for doubtful accounts
    
    
    (30
    )
    
    
    114(Gain) loss on sale of property and equipment
    
    
    (257
    )
    
    
    (26
    )Restricted stock grant
    
    
    74
    
    
    
    Deferred income taxes
    
    
    (54
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (3,633
    )
    
    
    (6,348
    )Inventories
    
    
    (12
    )
    
    
    40Prepaid expenses and other current assets
    
    
    (259
    )
    
    
    (1,654
    )Deposits and other assets
    
    
    16
    
    
    
    (74
    )Accounts payable
    
    
    534
    
    
    
    (1,456
    )Accrued expenses and other current liabilities
    
    
    (630
    )
    
    
    2,066Accrued disposal costs
    
    
    (1,290
    )
    
    
    (2,719
    )Contingent consideration
    
    
    (176
    )
    
    
    Due to affiliates
    
    
    303
    
    
    
    Income taxes payable
    
    
    (1,025
    )
    
    
    1,237Total adjustments
    
    
    (6,497
    )
    
    
    (10,848
    )Net cash used in operating activities
    
    $
    (3,946
    )
    
    $
    (5,370
    )
 Net Cash Used in Investing Activities
    54




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##### Table of Contents




    
    refinancing Casie Groups existing debt into a consolidated term loan;
    
    cash flows from the Treatment and Recycling segments operations; and
    
    additional borrowings under our revolving credit facilities.
  Net Cash Provided by Financing Activities
  
    
    Private placements of securities For the nine months ended September 30, 2007:
 
    
    We received $3.0 million from an offering of 1,000,000
shares of common stock in March 2007 at a purchase price of $3.00 per
share.
    
    In March 2007, we received $1.0 million from an
offering of 20,000 shares of our Series A preferred stock and related
warrants, at a purchase price of $50.00 per share.
 For the nine months ended September 30, 2008:
 
    
    In March 2008, we received approximately $5.8 million
in proceeds, net of financing fees and offering expenses of approximately
$0.5 million, from the private placement of 6,300 shares of our Series B
preferred stock and a related warrant, at a purchase price of $1,000 per
share.
    
    We paid $75,000 in dividends relating to our then
outstanding Series A preferred stock.
 
    
    Other indebtedness  During the nine months ended September 30, 2007, we had net
borrowings of approximately $4.4 million under our revolving lines of credit as
compared to net borrowings of $1.9 million for the nine months ended September 30,
2008. These borrowings were offset by the repayment of approximately $1.2 million
and $1.7 million of long-term debt and notes payable during the nine months ended
September 30, 2007 and 2008, respectively. In June 2008, we also received an
additional $200,000 in financing provided for by the lender of an existing term
loan following the review of our December 31, 2007 financial statements.
  55




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##### Table of Contents



Capital Resources
  On November 12, 2008, we completed the refinancing of the existing line of credit and various bank and equipment
notes payable at Casie Group into a consolidated $8.0 million term loan (see Item 5. Other Information for complete
description). The existing line of credit and debt at Casie Group prior to the refinancing totaled approximately $5.3
million, providing for net proceeds of approximately $2.6 million, net of fees. The $2.6 million in net proceeds was
used in the following manner:  a.
    
    $0.7 million was used to establish an interest reserve with the new lender in order to cover
the first six months of principal and interest payments.  b.
    
    Approximately $1.9 million was used to pay down the outstanding balance under the Pure Earth
revolving line of credit with our senior lender. The completion of the refinancing of Casie Groups debt resulted in a $4.6 million improvement in our consolidated
working capital position. In addition, this refinancing will allow Casie Group and certain of our other subsidiaries
to become borrowers under our revolving line of credit (pending our senior lenders approval) thereby increasing our
available borrowing collateral by an estimated $3.0 million.     56




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##### Table of Contents




    
    approximately $0.2 million in dividend payments relating to the outstanding
Series B preferred stock;
    
    approximately $0.4 million in principal and interest payments relating to our
outstanding debt and notes payable;
    
    approximately $0.6 million of uncommitted but planned capital expenditures at
Casie Group for laboratory construction and liner installation costs;
    
    approximately $0.1 million for working capital at New Nycon; and
    
    approximately $0.1 million for quarterly dividend payments due to the former
holders of our Series A preferred stock.
   
    
    delayed payment or non-payment of receivables on certain material accounts;
    
    the loss of any of our major customers;
    
    our inability to comply with any of the covenants or restrictions on our
indebtedness or the Series B preferred stock;
 
    
    the enactment of new regulatory or environmental laws;
    
    our inability to grow our business as we anticipate by acquisition or joint
ventures or by forming new subsidiaries;
    
    any other changes in the cost structure of our underlying business model; and
    
    any of the other risks and uncertainties described in Item 1A. Risk Factors
contained in the Registration Statement, as it may be amended from time to time, or
our other filings with the SEC.
  57




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##### Table of Contents



Debt Obligations
  September 30,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Revolving lines of credit
    
    $
    8,309
    
    
    $
    6,401Notes payable
    
    
    75
    
    
    
    1,717Long-term debt
    
    
    5,209
    
    
    
    5,754Mandatorily redeemable preferred stock
    
    
    4,318
    
    
    
    Total debt
    
    $
    17,911
    
    
    $
    13,872
 Revolving Lines of Credit
  Maximum
    
    
    Balance
    
    
    Interest
    
    
    Maturity/Revolving Line of Credit
    
    Outstanding
    
    
    Outstanding
    
    
    Rate
    
    
    Termination Date(in thousands)Pure Earth, Inc.
    
    $
    7,500
    (1)
    
    $
    5,920
    
    
    
    4.75
    %(2)
    
    October 23, 2009Casie Group
    
    $
    2,500
    
    
    $
    2,389
    
    
    
    5.50
    %(3)
    
    November 12, 2008
 
 (1)
    
    Subject to reduction for (i) a borrowing base limitation; (ii) outstanding letters of
credit; and (iii) a loan reserve. As of September 30, 2008, the borrowing base limitation
was approximately $6.6million, and we had aggregate required loan reserves and outstanding
letters of credit of $0.9 million.(2)
    
    As of September 30, 2008, this line of credit bore interest at the lenders prime rate,
minus 0.25%. Effective October 21, 2008, and pursuant to an amendment of this line of
credit agreement, the interest rate charged on borrowings under this line of credit was
changed to the lenders prime rate (not to be less than 5%),
plus 2.75% (see Item 5. Other Information for more details).(3)
    
    As of September 30, 2008, this line of credit bore interest at the lenders prime rate,
plus 0.50%. This line was refinanced on November 12, 2008 (see
Item 5. Other Information for more details).  58




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Notes Payable
    59




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##### Table of Contents



Long-Term Debt
      Maturity
    
    Amount Due(in thousands)Within one year
    
    $
    1,345Between one and two years
    
    
    1,064Between two and three years
    
    
    1,041Between three and four years
    
    
    470Between four and five years
    
    
    173Thereafter
    
    
    1,116Total
    
    $
    5,209
   60




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Mandatorily Redeemable Preferred Stock
   Other Contractual Obligations
  Operating Leases
 MinimumAggregate LeasePeriod Beginning After September 30, 2008
    
    Payments Due(in thousands)For the next 12 months
    
    $
    1,324For months 13 through 24
    
    
    1,182For months 25 through 36
    
    
    590For months 37 through 48
    
    
    422For months 49 through 60
    
    
    337Thereafter
    
    
    55Total
    
    $
    3,910
 Collective Bargaining Agreements
  61




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Contingent Consideration from Acquisitions.
 
    
    Casie Group
 
    
    The amended stock purchase agreement for Casie Group
obligates us to issue an additional 400,000 shares of common stock if the
former owner is successful in obtaining additional permits, implementing
certain equipment by March 2009 to increase facility capacity, and
resolving specified insurance claims.
    
    The amended stock purchase agreement also requires us
to issue up to 435,044 additional shares of our common stock to the former
Casie Group owners based upon the resolution of certain liabilities that
existed as of March 30, 2007. The measurement dates for these
contingencies range from June 30, 2008 to September 30, 2008. We expect to
issue any shares relating to these contingencies in the fourth quarter of
2008.
 
    
    Soil Disposal Group
 
    
    The owners of Soil Disposal Group are entitled to
receive a maximum of 300,000 additional shares of our common stock
contingent upon the net sales of PEI Disposal Group attaining certain
thresholds during the 36-month period ending November 20, 2010.
  
    
    We must pay to the former owner of Nycon 20% of the free cash flow derived from
the operation of the Nycon assets during each of the next four years, up to a
maximum cumulative amount of $900,000, not including up to a maximum of $105,000 of
debt that the former owner of Nycon has agreed to repay out of such cash flow. The
$105,000 of debt consists of $75,000 that the former owner of Nycon has agreed to
repay, and 20% of the principal amount of a new $150,000 note to be issued by New
Nycon, Inc. See -Debt Obligations  Long-Term Debt.
    
    We paid the licensor of certain patents and other technology acquired in the
acquisition a fee of 15,000 shares of our common stock, which shares were placed in
escrow pending the satisfaction by New Nycon of certain financial objectives.
    
    We agreed to pay the licensor a consulting fee of $7,740 per month for the first
12 months of the license agreement and an annual royalty fee of 30% of the earnings
before taxes, depreciation and amortization generated by New Nycons fiber and
fiber-related products, equipment, technology and services.
    
    We also agreed to contribute up to $300,000 to New Nycon on an as-needed basis
for working capital purposes. As of October 29, 2008, we have provided
approximately $288,000 in net advances to New Nycon pursuant to this obligation.
  62




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Employment and Consulting Agreements
 MinimumAggregateTwelve months ending September 30,
    
    Payments Due(in thousands)2009
    
    
    2,0602010
    
    
    1,8712011
    
    
    1,2122012
    
    
    6882013
    
    
    438Total
    
    $
    6,269
 Warrant Issued with Series B Preferred Stock.
 Idle Machinery
    63




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##### Table of Contents



Off-Balance Sheet Arrangements
   Related Party Transactions
   Seasonality and Inflation
   Recently Issued Accounting Pronouncements
 Business Combinations
  64




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Fair Value
     65




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Income Taxes
 Derivatives
 Hierarchy of GAAP
 Intangible Assets
 Convertible Debt Instruments 14-1, 14-1
  66




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Instruments Indexed to Stock
 Conforming Changes to EITF 98-5
 Share Based Payments .
 
 Item 4T. Controls and Procedures.
    67




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5.
Other Information.
 Casie
Group Refinancing
 th
   68




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Amendment
of the Revolving Line of Credit
   a.
    
    The net proceeds totaling approximately $1.8 million from the Casie Group refinancing, after the
repayment of the existing Casie Group debt, the establishment of the $720,000 reserve (described above) and
the payment of transaction fees, shall be applied to the outstanding indebtedness under the revolving line of
credit (described above).  b.
    
    The rate of interest under a floating rate borrowing has been changed to mean the greater of 5.0% or
the lenders prime rate, plus 2.75%, and or the rate of interest to be charged under a LIBOR Advance shall be
equal to the LIBOR rate, as specified in the credit agreement, plus 3.00%.  c.
    
    We shall issue to our senior lender a warrant to purchase up to 50,000 shares of our unregistered common
stock of at an exercise price of $1.50 per share, upon other terms
subject to negotiation.  d.
    
    We shall pay to our senior lender a fee of $125,000 as compensation for this amendment and past amendments of
the revolving line of credit agreement.  e.
    
    The capping of loan availability on two of our concentration accounts along with additional and revised
financial covenants will be determined after future negotiations between us and the senior lender.  69




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Item 6.
Exhibits.
  ExhibitNo.
    
    Description2.1
    *
    
    Stock Purchase Agreement, dated as of January 19, 2006, by and between South Jersey Development,
Inc., and its shareholders, and Info Investors, Inc. (1)2.2
    *
    
    Asset Purchase Agreement, dated as of January 19, 2006, by and between Whitney Contracting, Inc.
and South Jersey Development, Inc. (1)2.3
    *
    
    Stock Purchase Agreement, dated as of January 19, 2006, by and between American Transport and
Disposal Services Ltd. and South Jersey Development, Inc. (1)2.4
    *
    
    Stock Purchase Agreement, dated as of January 19, 2006, by and between Juda Construction, Ltd. and
South Jersey Development, Inc. (1)2.5
    *
    
    Asset Purchase Agreement, dated as of January 5, 2006, by and between Alchemy Development, LLC and
South Jersey Development, Inc. (1)2.6
    *
    
    Stock Acquisition Agreement, dated as of November 30, 2006, by and among Shari L. Mahan, as sole
shareholder of Terrasyn Environmental Corp., and Pure Earth, Inc. (1)2.7
    *
    
    Membership Interests Purchase Agreement, dated as of November 30, 2006, by and among Shari L.
Mahan, as sole member of Environmental Venture Partners, LLC, Bio Methods LLC and Geo Methods,
LLC, and Pure Earth, Inc. (1)2.8
    *
    
    Stock Purchase Agreement, dated as of February 13, 2007, by and among Pure Earth, Inc., Gregory W.
Call, Casie Ecology Oil Salvage, inc., MidAtlantic Recycling Technologies Inc. and Rezultz,
Incorporated (1)2.8.1
    
    
    First Amendment to Stock Purchase Agreement, dated as of February 28, 2007, by and among Pure
Earth, Inc. and Casie Ecology Oil Salvage, Inc., Rezultz, Incorporated, MidAtlantic Recycling
Technologies Inc. and Gregory W. Call (1)2.8.2
    *
    
    Second Amendment to Stock Purchase Agreement, dated as of March 26, 2007, by and among Pure Earth,
Inc. and Casie Ecology Oil Salvage, Inc., Rezultz, Incorporated, MidAtlantic Recycling
Technologies Inc., Rex Mouser and Gregory W. Call (1)2.8.3
    
    
    Third Amendment to Stock Purchase Agreement, dated as of May 7, 2007, by and among Pure Earth Inc.
and Casie Ecology Oil Salvage, Inc., Rezultz, Incorporated, MidAtlantic Recycling Technologies
Inc., Rex Mouser and Gregory W. Call (1)2.8.4
    
    
    Fourth Amendment to Stock Purchase Agreement, dated as of August 6, 2007, by and among Pure Earth
Inc. and Casie Ecology Oil Salvage, Inc., Rezultz, Incorporated, MidAtlantic Recycling
Technologies Inc., Rex Mouser, Brian Horne and Gregory W. Call (1)2.8.5
    *
    
    Letter, dated December 21, 2007, from Pure Earth, Inc. to Gregory W. Call regarding Final Purchase
Price with respect to the Stock Purchase Agreement, dated as of February 13, 2007, among Pure
Earth, Inc., Casie Ecology Oil Salvage, Inc., MidAtlantic Recycling Technologies Inc., Rezultz,
Incorporated, Rex Mouser, Brian Horne and Gregory W. Call, as amended (1)2.8.5
    (a)
    
    Letter, dated January 7, 2008, from Pure Earth, Inc. to Gregory W. Call regarding calculation
errors in the Fifth Amendment to Stock Purchase Agreement, dated December 21, 2007 (1)
  70




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ExhibitNo.
    
    Description2.8.6
    
    
    Joinder Agreement, dated March 21, 2007, of Rex Mouser to the Stock Purchase Agreement by and
among Pure Earth, Inc., Casie Ecology Oil Salvage, Inc., MidAtlantic Recycling Technologies Inc.,
Rezultz, Incorporated, Rex Mouser, Brian Horne and Gregory W. Call (1)2.8.7
    
    
    Joinder Agreement, dated May 30, 2007, of Brian Horne to the Stock Purchase Agreement by and among
Pure Earth, Inc., Casie Ecology Oil Salvage, Inc., MidAtlantic Recycling Technologies Inc.,
Rezultz, Incorporated, Rex Mouser and Gregory W. Call (1)2.9
    *
    
    Asset Purchase Agreement, dated November 20, 2007, by and among PEI Disposal Group, Inc., Richard
Rivkin, Soil Disposal Group, Inc., Aaron Environmental Group, Inc., Stephen F. Shapiro, Jeffrey
Berger and James Case (1)2.10
    *
    
    Asset Purchase Agreement, dated April 1, 2008, by and among Nycon, Inc., Robert Cruso, Frank
Gencarelli, New Nycon, Inc. and Paul Bracegirdle (1)3.1.1
    
    
    Second Amended and Restated Certificate of Incorporation of Pure Earth, Inc. (2)3.1.2
    
    
    Pure Earth, Inc. Certificate of Designation, Preferences, Rights, and Limitations of Series A
Preferred Stock, 10% Coupon (1)3.1.3
    
    
    Pure Earth, Inc. Certificate of Designation, Preferences and Rights of Series B Preferred Stock (1)3.2
    
    
    Second Amended and Restated Bylaws of Pure Earth, Inc. (2)10.1
    
    
    Commercial Lease, dated October 26, 2007, between Red Rock Land Development, LLC and Pure Earth
Materials (NJ) Inc.(1)10.1.1
    
    
    Memorandum of Understanding, dated September 25, 2008, between Red Rock Land Development, LLC and
Pure Earth Materials (NJ) Inc. (3)31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange
Act of 193431.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange
Act of 193432.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    The schedules to this agreement have been omitted in accordance with the rules of the SEC. A
list of omitted schedules has been included in this exhibit and will be provided
supplementally to the SEC upon request.(1)
    
    Incorporated by reference from the Companys registration statement on Form 10 (File No.
0-53287), as filed with the SEC on June 20, 2008.(2)
    
    Incorporated by reference from Pre-Effective Amendment No. 1 to the Companys registration
statement on Form 10/A (File No. 0-53287), as filed with the SEC on August 8, 2008.(3)
    
    Incorporated by reference from Post-Effective Amendment No. 2 to the Companys registration
statement on Form 10/A (File No. 0-53287), as filed with the SEC on November 4, 2008.  71




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SIGNATURES
  PURE EARTH, INC.Date: November 14, 2008
    By:
    /s/   Mark AlsentzerMark AlsentzerPresident and Chief Executive OfficerDate: November 14, 2008
    By:
    /s/  Brent KopenhaverBrent KopenhaverChairman, Executive Vice President,
Chief Financial Officer and Treasurer  72




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EXHIBIT INDEX
 ExhibitNo.
    
    Description2.1
    *
    
    Stock Purchase Agreement, dated as of January 19, 2006, by and between South Jersey Development,
Inc., and its shareholders, and Info Investors, Inc. (1)2.2
    *
    
    Asset Purchase Agreement, dated as of January 19, 2006, by and between Whitney Contracting, Inc.
and South Jersey Development, Inc. (1)2.3
    *
    
    Stock Purchase Agreement, dated as of January 19, 2006, by and between American Transport and
Disposal Services Ltd. and South Jersey Development, Inc. (1)2.4
    *
    
    Stock Purchase Agreement, dated as of January 19, 2006, by and between Juda Construction, Ltd. and
South Jersey Development, Inc. (1)2.5
    *
    
    Asset Purchase Agreement, dated as of January 5, 2006, by and between Alchemy Development, LLC and
South Jersey Development, Inc. (1)2.6
    *
    
    Stock Acquisition Agreement, dated as of November 30, 2006, by and among Shari L. Mahan, as sole
shareholder of Terrasyn Environmental Corp., and Pure Earth, Inc. (1)2.7
    *
    
    Membership Interests Purchase Agreement, dated as of November 30, 2006, by and among Shari L.
Mahan, as sole member of Environmental Venture Partners, LLC, Bio Methods LLC and Geo Methods,
LLC, and Pure Earth, Inc. (1)2.8
    *
    
    Stock Purchase Agreement, dated as of February 13, 2007, by and among Pure Earth, Inc., Gregory W.
Call, Casie Ecology Oil Salvage, inc., MidAtlantic Recycling Technologies Inc. and Rezultz,
Incorporated (1)2.8.1
    
    
    First Amendment to Stock Purchase Agreement, dated as of February 28, 2007, by and among Pure
Earth, Inc. and Casie Ecology Oil Salvage, Inc., Rezultz, Incorporated, MidAtlantic Recycling
Technologies Inc. and Gregory W. Call (1)2.8.2
    *
    
    Second Amendment to Stock Purchase Agreement, dated as of March 26, 2007, by and among Pure Earth,
Inc. and Casie Ecology Oil Salvage, Inc., Rezultz, Incorporated, MidAtlantic Recycling
Technologies Inc., Rex Mouser and Gregory W. Call (1)2.8.3
    
    
    Third Amendment to Stock Purchase Agreement, dated as of May 7, 2007, by and among Pure Earth Inc.
and Casie Ecology Oil Salvage, Inc., Rezultz, Incorporated, MidAtlantic Recycling Technologies
Inc., Rex Mouser and Gregory W. Call (1)2.8.4
    
    
    Fourth Amendment to Stock Purchase Agreement, dated as of August 6, 2007, by and among Pure Earth
Inc. and Casie Ecology Oil Salvage, Inc., Rezultz, Incorporated, MidAtlantic Recycling
Technologies Inc., Rex Mouser, Brian Horne and Gregory W. Call (1)2.8.5
    *
    
    Letter, dated December 21, 2007, from Pure Earth, Inc. to Gregory W. Call regarding Final Purchase
Price with respect to the Stock Purchase Agreement, dated as of February 13, 2007, among Pure
Earth, Inc., Casie Ecology Oil Salvage, Inc., MidAtlantic Recycling Technologies Inc., Rezultz,
Incorporated, Rex Mouser, Brian Horne and Gregory W. Call, as amended (1)2.8.5
    (a)
    
    Letter, dated January 7, 2008, from Pure Earth, Inc. to Gregory W. Call regarding calculation
errors in the Fifth Amendment to Stock Purchase Agreement, dated December 21, 2007 (1)
  73




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ExhibitNo.
    
    Description2.8.6
    
    
    Joinder Agreement, dated March 21, 2007, of Rex Mouser to the Stock Purchase Agreement by and
among Pure Earth, Inc., Casie Ecology Oil Salvage, Inc., MidAtlantic Recycling Technologies Inc.,
Rezultz, Incorporated, Rex Mouser, Brian Horne and Gregory W. Call (1)2.8.7
    
    
    Joinder Agreement, dated May 30, 2007, of Brian Horne to the Stock Purchase Agreement by and among
Pure Earth, Inc., Casie Ecology Oil Salvage, Inc., MidAtlantic Recycling Technologies Inc.,
Rezultz, Incorporated, Rex Mouser and Gregory W. Call (1)2.9
    *
    
    Asset Purchase Agreement, dated November 20, 2007, by and among PEI Disposal Group, Inc., Richard
Rivkin, Soil Disposal Group, Inc., Aaron Environmental Group, Inc., Stephen F. Shapiro, Jeffrey
Berger and James Case (1)2.10
    *
    
    Asset Purchase Agreement, dated April 1, 2008, by and among Nycon, Inc., Robert Cruso, Frank
Gencarelli, New Nycon, Inc. and Paul Bracegirdle (1)3.1.1
    
    
    Second Amended and Restated Certificate of Incorporation of Pure Earth, Inc. (2)3.1.2
    
    
    Pure Earth, Inc. Certificate of Designation, Preferences, Rights, and Limitations of Series A
Preferred Stock, 10% Coupon (1)3.1.3
    
    
    Pure Earth, Inc. Certificate of Designation, Preferences and Rights of Series B Preferred Stock (1)3.2
    
    
    Second Amended and Restated Bylaws of Pure Earth, Inc. (2)10.1
    
    
    Commercial Lease, dated October 26, 2007, between Red Rock Land Development, LLC and Pure Earth
Materials (NJ) Inc.(1)10.1.1
    
    
    Memorandum of Understanding, dated September 25, 2008, between Red Rock Land Development, LLC and
Pure Earth Materials (NJ) Inc. (3)31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange
Act of 193431.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange
Act of 193432.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    The schedules to this agreement have been omitted in accordance with the rules of the SEC. A
list of omitted schedules has been included in this exhibit and will be provided
supplementally to the SEC upon request.(1)
    
    Incorporated by reference from the Companys registration statement on Form 10 (File No.
0-53287), as filed with the SEC on June 20, 2008.(2)
    
    Incorporated by reference from Pre-Effective Amendment No. 1 to the Companys registration
statement on Form 10/A (File No. 0-53287), as filed with the SEC on August 8, 2008.(3)
    
    Incorporated by reference from Post-Effective Amendment No. 2 to the Companys registration
statement on Form 10/A (File No. 0-53287), as filed with the SEC on November 4, 2008.  74