##### 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 June 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
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)One Neshaminy Interplex, Suite 201, Trevose, Pennsylvania
    
    19053(Address of principal executive offices)
    
    (Zip Code)
 (215) 639-8755  (Registrants telephone number, including area code)
 N/A  (Former name, former address and former fiscal year, if changed since last report)
 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
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



PURE EARTH, INC.
 QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2008
 TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    32Item 4T. Controls and Procedures
    
    
    79PART II  OTHER INFORMATION
    
    
    80Item 1. Legal Proceedings
    
    
    80Item 1A. Risk Factors
    
    
    80Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    80Item 4. Submission of Matters to a Vote of Security Holders
    
    
    81Item 6. Exhibits.
    
    
    82SIGNATURES
    
    
    85Exhibit 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
 June 30, 2008
    
    
    December 31, 2007(Unaudited)CURRENT ASSETSCash and cash equivalents
    
    $
    4,652,277
    
    
    $
    1,885,014Accounts receivable, less allowance for doubtful
accounts of $473,311 and $431,664
    
    
    12,000,691
    
    
    
    12,622,714Inventories
    
    
    431,444
    
    
    
    269,585Prepaid expenses
    
    
    590,629
    
    
    
    987,378Other current assets
    
    
    1,047,189
    
    
    
    918,185Deferred income tax asset
    
    
    223,912
    
    
    
    223,912Total Current Assets
    
    
    18,946,142
    
    
    
    16,906,788PROPERTY AND EQUIPMENTLand
    
    
    745,500
    
    
    
    745,500Buildings and improvements
    
    
    7,306,850
    
    
    
    6,789,683Leasehold improvements
    
    
    183,512
    
    
    
    148,482Machinery and equipment
    
    
    8,739,777
    
    
    
    8,612,385Trucks and automobiles
    
    
    1,936,483
    
    
    
    2,230,598Office furniture and fixtures
    
    
    255,384
    
    
    
    221,293Computer software
    
    
    65,330
    
    
    
    50,000Construction-in-process
    
    
    1,500
    
    
    
    13,02319,234,336
    
    
    
    18,810,964Less: accumulated depreciation and amortization
    
    
    (3,586,578
    )
    
    
    (2,623,352
    )Property and Equipment, Net
    
    
    15,647,758
    
    
    
    16,187,612OTHER ASSETSDeposits and other assets
    
    
    1,143,719
    
    
    
    1,333,990Deferred financing costs, net of accumulated
amortization of $130,291 and $79,014
    
    
    583,089
    
    
    
    127,787Goodwill
    
    
    759,694
    
    
    
    759,694Permits
    
    
    2,200,000
    
    
    
    2,200,000Other intangible assets, net of accumulated amortization
    
    
    5,429,428
    
    
    
    2,388,753Idle machinery
    
    
    8,037,500
    
    
    
    8,450,000Pending acquisitions
    
    
    610,197
    
    
    
    161,302Total Other Assets
    
    
    18,763,627
    
    
    
    15,421,526TOTAL ASSETS
    
    $
    53,357,527
    
    
    $
    48,515,926
   3




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##### Table of Contents



PURE EARTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 LIABILITIES AND STOCKHOLDERS EQUITY
 June 30, 2008
    
    
    December 31, 2007(Unaudited)CURRENT LIABILITIESLine of credit
    
    $
    2,389,493
    
    
    $
    2,389,493Notes payable
    
    
    192,804
    
    
    
    708,006Current portion of long-term debt
    
    
    1,348,030
    
    
    
    1,240,547Accounts payable
    
    
    6,417,678
    
    
    
    5,807,026Accrued expenses
    
    
    1,479,894
    
    
    
    1,274,004Accrued payroll and payroll taxes
    
    
    403,699
    
    
    
    619,906Other current liabilities
    
    
    1,115,192
    
    
    
    2,116,828Accrued disposal costs
    
    
    304,046
    
    
    
    278,432Contingent consideration
    
    
    176,435
    
    
    
    176,435Income taxes payable
    
    
    
    
    
    
    1,024,603Total Current Liabilities
    
    
    13,827,271
    
    
    
    15,635,280LONG-TERM LIABILITIESLong-term debt, net of current portion
    
    
    4,121,140
    
    
    
    4,513,526Line of credit
    
    
    3,363,272
    
    
    
    4,011,104Mandatorily redeemable Series B preferred
stock, $.001 par value; authorized 20,000
shares; issued and outstanding 6,300 and 0
shares
    
    
    4,193,637
    
    
    
    Note payable  related party
    
    
    950,641
    
    
    
    1,008,463Accrued disposal costs
Accrued disposal costs
    
    
    53,246
    
    
    
    1,093,796Contingent consideration
    
    
    4,201,510
    
    
    
    1,176,235Warrants with contingent redemption provisions
    
    
    2,263,223
    
    
    
    Deferred income taxes
    
    
    5,108,840
    
    
    
    5,273,840Deferred income taxes  permits
    
    
    880,000
    
    
    
    880,000Total Long-Term Liabilities
    
    
    25,135,509
    
    
    
    17,956,964TOTAL LIABILITIES
    
    
    38,962,780
    
    
    
    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
    
    
    588,396
    
    
    
    1,652,427TOTAL STOCKHOLDERS EQUITY
    
    
    14,394,747
    
    
    
    13,993,492TOTAL LIABILITIES, REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS EQUITY
    
    $
    53,357,527
    
    
    $
    48,515,926
   4




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PURE EARTH INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)REVENUES
    
    $
    17,891,087
    
    
    $
    18,499,256
    
    
    $
    32,507,643
    
    
    $
    28,822,904COST OF
REVENUES (including depreciation and amortization expense of
$1,272,379 and $907,688 for the six months ended June 30, 2008
and 2007 and $644,696 and $623,889 for the three months ended
June 30, 2008 and 2007)
    
    
    14,061,359
    
    
    
    14,123,452
    
    
    
    26,420,679
    
    
    
    22,597,783GROSS PROFIT
    
    
    3,829,728
    
    
    
    4,375,804
    
    
    
    6,086,964
    
    
    
    6,225,121OPERATING EXPENSESSalaries and related expenses
    
    
    1,778,757
    
    
    
    1,406,964
    
    
    
    3,026,434
    
    
    
    1,971,388Occupancy and other office expenses
    
    
    273,183
    
    
    
    304,623
    
    
    
    565,153
    
    
    
    485,932Professional fees
    
    
    559,305
    
    
    
    436,150
    
    
    
    1,065,502
    
    
    
    675,459Other operating expenses
    
    
    229,214
    
    
    
    302,448
    
    
    
    731,497
    
    
    
    514,483Insurance
    
    
    356,615
    
    
    
    363,249
    
    
    
    599,190
    
    
    
    471,831Depreciation and amortization
    
    
    137,785
    
    
    
    29,535
    
    
    
    254,219
    
    
    
    82,257Impairment of idle machinery
    
    
    412,500
    
    
    
    
    
    
    
    412,500
    
    
    
    Gain on sale of equipment
    
    
    (3,403
    )
    
    
    (327
    )
    
    
    (256,345
    )
    
    
    (327
    )TOTAL OPERATING EXPENSES
    
    
    3,743,956
    
    
    
    2,842,642
    
    
    
    6,398,150
    
    
    
    4,201,023INCOME (LOSS) FROM OPERATIONS
    
    
    85,772
    
    
    
    1,533,162
    
    
    
    (311,186
    )
    
    
    2,024,098OTHER INCOME (EXPENSES)Interest income
    
    
    48,246
    
    
    
    25,920
    
    
    
    62,810
    
    
    
    62,474Interest expense
    
    
    (535,077
    )
    
    
    (369,643
    )
    
    
    (866,405
    )
    
    
    (497,669
    )Other income
    
    
    97,580
    
    
    
    
    
    
    
    112,753
    
    
    
    TOTAL OTHER INCOME (EXPENSES)
    
    
    (389,251
    )
    
    
    (343,723
    )
    
    
    (690,842
    )
    
    
    (435,195
    )INCOME (LOSS) BEFORE INCOME TAXES
    
    
    (303,479
    )
    
    
    1,189,439
    
    
    
    (1,002,028
    )
    
    
    1,588,903PROVISION FOR (BENEFIT FROM) INCOME TAXES
    
    
    (126,034
    )
    
    
    517,441
    
    
    
    (415,842
    )
    
    
    691,173NET INCOME (LOSS)
    
    
    (177,445
    )
    
    
    671,998
    
    
    
    (586,186
    )
    
    
    897,730Less: preferred stock dividends
    
    
    452,845
    
    
    
    
    
    
    
    477,845
    
    
    
    INCOME (LOSS) AVAILABLE FOR
COMMON STOCKHOLDERS
    
    $
    (630,290
    )
    
    $
    671,998
    
    
    $
    (1,064,031
    )
    
    $
    897,730NET INCOME (LOSS) PER SHAREBasic
    
    $
    (0.04
    )
    
    $
    0.04
    
    
    $
    (0.06
    )
    
    $
    0.06Diluted
    
    $
    (0.04
    )
    
    $
    0.04
    
    
    $
    (0.06
    )
    
    $
    0.05WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDINGBasic
    
    
    17,233,917
    
    
    
    16,714,499
    
    
    
    17,228,499
    
    
    
    16,028,452Diluted
    
    
    17,233,917
    
    
    
    17,093,498
    
    
    
    17,228,499
    
    
    
    16,351,596
   5




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PURE EARTH INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 For the Six Months Ended June 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (586,186
    )
    
    
    (586,186
    )BALANCE  June 30, 2008
    
    
    17,621,799
    
    
    $
    17,622
    
    
    $
    13,788,729
    
    
    $
    588,396
    
    
    $
    14,394,747
   6




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##### Table of Contents



PURE EARTH INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedJune 30,2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    (586,186
    )
    
    $
    897,730Adjustments to reconcile net income (loss) to net cash used in operating activitiesDepreciation and amortization
    
    
    1,287,159
    
    
    
    890,639Other intangible assets amortization
    
    
    239,439
    
    
    
    70,877Deferred financing cost amortization
    
    
    51,277
    
    
    
    28,429Interest expense for accretion of warrant and debt discount
    
    
    74,771
    
    
    
    Interest
expense for Series B preferred stock payment-in-kind
    
    
    82,089
    
    
    
    Impairment of idle equipment
    
    
    412,500
    
    
    
    Provision for doubtful accounts
    
    
    41,647
    
    
    
    75,623Gain on sale of property and equipment
    
    
    (256,345
    )
    
    
    (327
    )Restricted stock grant
    
    
    74,000
    
    
    
    Deferred income taxes
    
    
    (165,000
    )
    
    
    Changes in operating assets and liabilitiesAccounts receivable
    
    
    661,558
    
    
    
    (6,637,810
    )Inventories
    
    
    (12,107
    )
    
    
    (122,261
    )Prepaid expenses and other current assets
    
    
    275,188
    
    
    
    (680,771
    )Deposits and other assets
    
    
    190,271
    
    
    
    (69,124
    )Accounts payable
    
    
    435,513
    
    
    
    768,416Accrued expenses and other current liabilities
    
    
    (1,411,892
    )
    
    
    560,566Accrued disposal costs
    
    
    (1,014,936
    )
    
    
    (1,494,734
    )Income taxes payable
    
    
    (1,024,603
    )
    
    
    690,573TOTAL ADJUSTMENTS
    
    
    (59,471
    )
    
    
    (5,919,904
    )NET CASH USED IN OPERATING ACTIVITIES
    
    
    (645,657
    )
    
    
    (5,022,174
    )CASH FLOWS FROM INVESTING ACTIVITIESAcquisitions
of business and assets  net of cash of $911,405 for the six
months ended June 30, 2007
    
    
    (44,803
    )
    
    
    (3,054,508
    )Payments for pending acquisitions
    
    
    (448,895
    )
    
    
    23,515Acquisitions of property and equipment
    
    
    (509,737
    )
    
    
    (274,764
    )Proceeds from sale of equipment
    
    
    573,670
    
    
    
    42,849NET CASH USED IN INVESTING ACTIVITIES
    
    $
    (429,765
    )
    
    $
    (3,262,908
    )CASH FLOWS FROM FINANCING ACTIVITIESRepayment of related party loans
    
    $
    (57,822
    )
    
    $
    57,339Net
borrowings (repayments) on line of credit
    
    
    (647,832
    )
    
    
    3,156,876Repayments of notes payable
    
    
    (515,202
    )
    
    
    Repayment of long-term debt
    
    
    (854,880
    )
    
    
    (536,058
    )Proceeds from equipment financing
    
    
    200,000
    
    
    
    Financing fees incurred
    
    
    (506,579
    )
    
    
    (42,675
    )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
    
    
    3,842,685
    
    
    
    6,635,482
  7




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##### Table of Contents



Six Months EndedJune 30,2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS2,767,263
    
    
    
    (1,649,600
    )CASH AND CASH EQUIVALENTS   BEGINNING OF PERIOD
    
    
    1,885,014
    
    
    
    2,516,722CASH AND CASH EQUIVALENTS  END OF PERIOD
    
    $
    4,652,277
    
    
    $
    867,122SUPPLEMENTARY INFORMATIONCash paid during the periods for:Interest
    
    $
    629,935
    
    
    $
    420,286Income taxes
    
    $
    941,439
    
    
    $
    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
    
    $
    428,049
    
    
    $
    264,843
   8




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##### Table of Contents



PURE EARTH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Business Operations
 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



Accounts Receivable and Allowance for Doubtful Accounts
   Inventories
 June 30,
    
    
    December 31,2008
    
    
    2007Recycled oil
    
    $
    198,328
    
    
    $
    248,483Crushed rock
    
    
    54,100
    
    
    
    21,102Concrete fiber
    
    
    179,016
    
    
    
    Totals
    
    $
    431,444
    
    
    $
    269,585
 Property and Equipment
  Range ofAsset Classification
    
    Estimated Useful LifeBuildings and improvements
    
    25 yearsMachinery and equipment
    
    3-10 yearsTrucks and automobiles
    
    4-7 yearsOffice furniture and fixtures
    
    2-4 yearsComputer software
    
    3 yearsLeasehold improvements
    
    Lesser of useful life of asset or life of lease
   10




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##### Table of Contents



Accrued Disposal Costs
  Earnings (Loss) Per Share
  Three months ended June 30,
    
    
    Six months ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)
    
    
    (unaudited)Weighted average common
shares outstanding used in
computing
basic EPS
    
    
    17,233,917
    
    
    
    16,714,499
    
    
    
    17,228,499
    
    
    
    16,028,452Effect of dilutive securities:Convertible notes
    
    
    
    
    
    
    378,899
    
    
    
    
    
    
    
    323,144Adjusted weighted average
common shares used in
computing
diluted EPS
    
    
    17,233,917
    
    
    
    17,093,498
    
    
    
    17,228,499
    
    
    
    16,351,596
  Income Taxes
    11




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##### Table of Contents



Preferred Stock
  Convertible Instruments
    12




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##### Table of Contents



Common Stock Purchase Warrants and Other Derivative Financial Instruments
 Recently Issued Accounting Pronouncements
 Business
Combinations.
 Noncontrolling Interests.
  13




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##### Table of Contents



Derivative Instruments.
 Fair Value.
  Hierarchy of GAAP.
 Intangible Assets.
  14




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##### Table of Contents



Convertible Debt Instruments.
 Instruments Indexed to Stock.
 Conforming
Changes to EITF 98-5.
 Share Based Payments.
   15




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##### Table of Contents



Nycon Acquisition
     New NyconAccounts Receivable
    
    $
    81,182Inventory
    
    
    149,752Other current assets
    
    
    7,443Property and equipment
    
    
    100,000Patents
    
    
    200,000Trademarks
    
    
    269,803Licensing Agreement
    
    
    2,170,275Customer List
    
    
    640,036Total assets acquired
    
    
    3,618,491Accounts payable and accrued expenses
    
    
    183,995Other current liabilities
    
    
    64,918Long-term debt
    
    
    225,000Other long-term liabilities(1)
    
    
    44,803Contingent Consideration
    
    
    3,025,275Total liabilities assumed
    
    
    3,543,991Net purchase price
    
    $
    74,500
 
 (1)
    
    Extinguished upon acquisition since it was payable to the Company.  16




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##### Table of Contents



Casie Group Acquisition
      17




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##### Table of Contents



Casie
    
    
    Rezultz
    
    
    MART
    
    
    Eliminations
    
    
    TotalCurrent assets(1)
    
    $
    14,847,846
    
    
    $
    2,788,413
    
    
    $
    8,078,974
    
    
    $
    (21,396,045
    )
    
    $
    4,319,188Deferred income tax
asset  current
    
    
    51,800
    
    
    
    
    
    
    
    726,400
    
    
    
    
    
    
    
    778,200Property and equipment
    
    
    2,674,225
    
    
    
    4,316,860
    
    
    
    6,347,084
    
    
    
    
    
    
    
    13,338,169Non-current assets
    
    
    1,834,742
    
    
    
    10,162
    
    
    
    9,900,000
    
    
    
    
    
    
    
    11,744,904Total assets acquired
    
    
    19,408,613
    
    
    
    7,115,435
    
    
    
    25,052,458
    
    
    
    (21,396,045
    )
    
    
    30,180,461
 Casie
    
    
    Rezultz
    
    
    MART
    
    
    Eliminations
    
    
    TotalCurrent liabilities
    
    $
    13,970,858
    
    
    $
    1,800,788
    
    
    $
    16,551,339
    
    
    $
    (21,396,045
    )
    
    $
    10,926,940Long-term liabilities
    
    
    4,056,889
    (2)
    
    
    4,316,197
    
    
    
    2,964,283
    
    
    
    
    
    
    
    11,337,369Contingent consideration
    
    
    
    
    
    
    
    
    
    
    1,352,670
    
    
    
    
    
    
    
    1,352,670Deferred income tax
liability
    
    
    1,373,600
    
    
    
    728,300
    
    
    
    3,446,100
    
    
    
    
    
    
    
    5,548,000Total liabilities
assumed
    
    
    19,401,347
    
    
    
    6,845,285
    
    
    
    24,314,392
    
    
    $
    (21,396,045
    )
    
    
    29,164,979Purchase price
    
    $
    7,266
    
    
    $
    270,150
    
    
    $
    738,066
    
    
    
    
    
    
    $
    1,015,482
 (1)
    
    Includes cash and cash equivalents of $911,405(2)
    
    Extinguished upon acquisition since it was payable to the Company Pro Forma Results
  For the Three Months
    
    
    For the Six Months
    
    
    For the Six Monthsended June 30,
    
    
    ended June 30,
    
    
    ended June 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
    
    $
    19,150,623
    
    
    $
    32,773,756
    
    
    $
    34,669,952Income (loss) from
operations
    
    $
    1,401,046
    
    
    $
    (530,301
    )
    
    $
    1,067,742Income (loss) before
income tax benefit
    
    $
    1,115,943
    
    
    $
    (1,128,190
    )
    
    $
    735,651Net income (loss)
    
    $
    629,003
    
    
    $
    (696,863
    )
    
    $
    293,421Per common share dataIncome (loss) from
operations  Basic
and diluted
    
    $
    0.04
    
    
    $
    (0.04
    )
    
    $
    0.02Weighted Average SharesBasic
    
    
    16,739,499
    
    
    
    17,249,521
    
    
    
    16,218,938Diluted
    
    
    17,118,498
    
    
    
    17,249,521
    
    
    
    16,542,082
 (a)
    
    Historical information includes the operating results of Pure Earth
(including Casie Group) for the three months ended June 30, 2007.(b)
    
    Pro forma information and the pro forma adjustments include the
operating results of Nycon for the three months ended June 30, 2007.(c)
    
    There were no pro forma adjustments to be presented for the three
months ended June 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 six months ended June 30, 2008, and the operating
results of Nycon for the three months ended June 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 six months ended June 30, 2007 and the operating results of Casie Group for the
three months ended June 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 six months ended June 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.
  18




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##### Table of Contents



Other Acquisitions, Assets Purchases and Joint Ventures
 Echo Lake
  HFH Acquisition Corp
  Stockholders Equity
 Common Stock
    Effect on the Calculation of Earnings per Share for the Redemption or Induced
Conversion of Preferred Stock Share-Based Payments
  19




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##### Table of Contents



Series B Preferred Stock and Warrants
      20




---



##### 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, June 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
    21




---



##### Table of Contents



Three Months
    
    
    
    
    
    
    Three Monthsended June 30,
    
    
    Percentage of
    
    
    ended June 30,
    
    
    Percentage of2008
    
    
    Revenue
    
    
    2007
    
    
    RevenueCustomer A
    
    $
    
    
    
    
    
    
    
    $
    2,026,749
    
    
    
    13.0
    %Customer B
    
    
    
    
    
    
    
    
    
    
    5,580,418
    
    
    
    35.7
    %Customer C
    
    
    
    
    
    
    
    
    
    
    2,610,301
    
    
    
    16.7
    %Customer D
    
    
    1,813,915
    
    
    
    18.7
    %
    
    
    
    
    
    
    Total
    
    $
    1,813,915
    
    
    
    18.7
    %
    
    $
    10,217,469
    
    
    
    65.3
    %
 Six Months
    
    
    
    
    
    
    Six Monthsended June 30,
    
    
    Percentage of
    
    
    ended June 30,
    
    
    Percentage of2008
    
    
    Revenue
    
    
    2007
    
    
    RevenueCustomer A
    
    $
    
    
    
    
    
    
    
    $
    3,325,965
    
    
    
    11.5
    %Customer B
    
    
    
    
    
    
    
    
    
    
    8,870,686
    
    
    
    30.8
    %Customer C
    
    
    
    
    
    
    
    
    
    
    5,705,409
    
    
    
    19.8
    %Customer D
    
    
    4,017,367
    
    
    
    12.4
    %
    
    
    
    
    
    
    Total
    
    $
    4,017,367
    
    
    
    12.4
    %
    
    $
    17,902,060
    
    
    
    62.1
    %
 Idle Machinery
   Intangible Assets
  Balance as of June 30, 2008
    
    
    Balance as of December 31, 2007Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedCost
    
    
    Amortization
    
    
    Net
    
    
    Cost
    
    
    Amortization
    
    
    NetFinite Lives:Customer lists
    
    $
    2,047,052
    
    
    $
    (364,804
    )
    
    $
    1,682,248
    
    
    $
    1,417,552
    
    
    $
    (278,926
    )
    
    $
    1,138,626Other intangible
assets
    
    
    3,933,615
    
    
    
    (186,435
    )
    
    
    3,747,180
    
    
    
    1,283,001
    
    
    
    (32,874
    )
    
    
    1,250,1275,980,667
    
    
    
    (551,239
    )
    
    
    5,429,428
    
    
    
    2,700,553
    
    
    
    (311,800
    )
    
    
    2,388,753Infinite Lives:Permits
    
    
    2,200,000
    
    
    
    
    
    
    
    2,200,000
    
    
    
    2,200,000
    
    
    
    
    
    
    
    2,200,000Total
    
    $
    8,180,667
    
    
    $
    (551,239
    )
    
    $
    7,629,428
    
    
    $
    4,900,553
    
    
    $
    (311,800
    )
    
    $
    4,588,753
  22




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##### Table of Contents



Twelve months ending June 30,2009
    
    $
    586,9772010
    
    
    586,9772011
    
    
    586,9772012
    
    
    586,9772013
    
    
    469,464Thereafter
    
    
    2,612,055$
    5,429,428
 Lines of Credit
    Notes Payable and Long-Term Debt
  June 30,
    
    
    December 31,2008
    
    
    2007Note payable to Soil Disposal
    
    $
    80,000
    
    
    $
    520,000Note payable for Casie Group for covenant not to compete
    
    
    112,804
    
    
    
    188,006Total
    
    $
    192,804
    
    
    $
    708,006
  23




---



##### Table of Contents



June 30,
    
    
    December 31,2008
    
    
    2007Equipment term loan
    
    $
    1,836,158
    
    
    $
    2,225,215Various equipment notes payable
    
    
    61,022
    
    
    
    70,208Casie Group notes payable (bank and equipment)
    
    
    3,346,990
    
    
    
    3,458,650Nycon assumed liabilities
    
    
    225,000
    
    
    
    Total
    
    
    5,469,170
    
    
    
    5,754,073Less current portion
    
    
    1,348,030
    
    
    
    1,240,547Long-term portion
    
    $
    4,121,140
    
    
    $
    4,513,526
 Equipment Term Loan and Various Equipment Notes Payable
  Nycon Assumed Liabilities
   Twelve months ending June 30,2009
    
    $
    1,348,0302010
    
    
    1,056,0012011
    
    
    1,040,8672012
    
    
    665,8692013
    
    
    200,296Thereafter
    
    
    1,158,107$
    5,469,170
  24




---



##### Table of Contents



Officer Loans
  Twelve Months Ending June 30,2009
    
    $
    2010
    
    
    333,0002011
    
    
    617,641$
    950,641
 Stock-Based Compensation
 2007 Stock Incentive Plan
  Restricted Stock Awards
  Commitments and Contingencies
 Collective Bargaining Agreements
   25




---



##### Table of Contents



Leases
  Twelve months ending June 30,2009
    
    $
    1,333,9442010
    
    
    835,2452011
    
    
    758,3552012
    
    
    445,3492013
    
    
    343,049Thereafter
    
    
    137,672$
    3,853,614
  Government Regulation, State and Local Compliance
  Sales and Use Tax
  Employment Agreements
   26




---



##### Table of Contents



Twelve
months ending June 30,2009
    
    
    2,124,8502010
    
    
    1,886,1102011
    
    
    1,414,7002012
    
    
    743,1602013
    
    
    583,443$
    6,752,263
 Litigation
       27




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##### Table of Contents



Other Legal Matters
  Segment Reporting
   Three months ended
    
    Transportation
    
    
    
    
    
    
    Environmental
    
    
    Treatment and
    
    
    Concrete
    
    
    Corporate andJune 30, 2008
    
    and Disposal
    
    
    Materials
    
    
    Services
    
    
    Recycling
    
    
    Fibers
    
    
    Other (a), (b)
    
    
    Total (d)Third Party Revenues
    
    $
    9,669,386
    
    
    $
    387,930
    
    
    $
    453,333
    
    
    $
    6,728,609
    
    
    $
    651,829
    
    
    $
    
    
    
    $
    17,891,087Intercompany Revenues (b)
    
    
    27,170
    
    
    
    312,823
    
    
    
    
    
    
    
    560,770
    
    
    
    
    
    
    
    (900,763
    )
    
    
    Total Revenues
    
    
    9,696,556
    
    
    
    700,753
    
    
    
    453,333
    
    
    
    7,289,379
    
    
    
    651,829
    
    
    
    (900,763
    )
    
    
    17,891,087Third Party Cost of
Revenues
    
    
    6,774,515
    
    
    
    950,271
    
    
    
    406,269
    
    
    
    5,369,551
    
    
    
    560,753
    
    
    
    
    
    
    
    14,061,359Intercompany Cost of
Revenues
    
    
    854,412
    
    
    
    
    
    
    
    (138
    )
    
    
    46,350
    
    
    
    
    
    
    
    (900,624
    )
    
    
    Total Cost of Revenues
    
    
    7,628,927
    
    
    
    950,271
    
    
    
    406,131
    
    
    
    5,415,901
    
    
    
    560,753
    
    
    
    (900,624
    )
    
    
    14,061,359Gross Profit Margin
    
    
    2,067,629
    
    
    
    (249,518
    )
    
    
    47,202
    
    
    
    1,873,478
    
    
    
    91,076
    
    
    
    (139
    )
    
    
    3,829,728Operating Expenses
    
    
    876,796
    
    
    
    159,292
    
    
    
    89,501
    
    
    
    1,431,061
    
    
    
    193,641
    
    
    
    993,665
    
    
    
    3,743,956Income from Operations
    
    
    1,190,834
    
    
    
    (408,810
    )
    
    
    (42,300
    )
    
    
    442,417
    
    
    
    (102,565
    )
    
    
    (993,804
    )
    
    
    85,772Adjusted EBITDA
    
    
    1,369,020
    
    
    
    (320,741
    )
    
    
    (24,064
    )
    
    
    984,746
    
    
    
    (40,185
    )
    
    
    (1,002,943
    )
    
    
    965,833Reconciliation to
Consolidated Statement
of Operations:Depreciation,
Amortization and
Impairment (c)
    
    
    178,186
    
    
    
    88,204
    
    
    
    18,235
    
    
    
    444,749
    
    
    
    62,382
    
    
    
    (9,275
    )
    
    
    782,481Interest Expense (Income)
    
    
    
    
    
    
    
    
    
    
    1,740
    
    
    
    94,068
    
    
    
    2,388
    
    
    
    388,635
    
    
    
    486,831Income before provision
for income taxes
    
    
    1,190,834
    
    
    
    (408,945
    )
    
    
    (44,039
    )
    
    
    445,929
    
    
    
    (104,955
    )
    
    
    (1,382,303
    )
    
    
    (303,479
    )
  28




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##### Table of Contents



Six months ended
    
    Transportation
    
    
    
    
    
    
    Environmental
    
    
    Treatment and
    
    
    Concrete
    
    
    Corporate andJune 30, 2008
    
    and Disposal
    
    
    Materials
    
    
    Services
    
    
    Recycling
    
    
    Fibers
    
    
    Other (a), (b)
    
    
    Total (d)Third Party Revenues
    
    $
    16,883,409
    
    
    $
    790,579
    
    
    $
    1,260,492
    
    
    $
    12,921,334
    
    
    $
    651,829
    
    
    $
    
    
    
    $
    32,507,643Intercompany Revenues (b)
    
    
    305,242
    
    
    
    801,042
    
    
    
    5,239
    
    
    
    883,106
    
    
    
    
    
    
    
    (1,994,629
    )
    
    
    Total Revenues
    
    
    17,188,651
    
    
    
    1,591,621
    
    
    
    1,265,731
    
    
    
    13,804,440
    
    
    
    651,829
    
    
    
    (1,994,629
    )
    
    
    32,507,643Third Party Cost of
Revenues
    
    
    11,364,066
    
    
    
    2,077,926
    
    
    
    1,004,875
    
    
    
    11,413,059
    
    
    
    560,753
    
    
    
    
    
    
    
    26,420,679Intercompany Cost of
Revenues
    
    
    1,825,129
    
    
    
    11,159
    
    
    
    104,852
    
    
    
    53,350
    
    
    
    
    
    
    
    (1,994,490
    )
    
    
    Total Cost of Revenues
    
    
    13,189,195
    
    
    
    2,089,085
    
    
    
    1,109,727
    
    
    
    11,466,409
    
    
    
    560,753
    
    
    
    (1,994,490
    )
    
    
    26,420,679Gross Profit Margin
    
    
    3,999,456
    
    
    
    (497,464
    )
    
    
    156,004
    
    
    
    2,338,031
    
    
    
    91,076
    
    
    
    (139
    )
    
    
    6,086,964Operating Expenses
    
    
    1,439,195
    
    
    
    338,885
    
    
    
    225,125
    
    
    
    2,322,459
    
    
    
    193,641
    
    
    
    1,878,846
    
    
    
    6,398,150Income from Operations
    
    
    2,560,261
    
    
    
    (836,349
    )
    
    
    (69,121
    )
    
    
    15,572
    
    
    
    (102,565
    )
    
    
    (1,878,984
    )
    
    
    (311,186
    )Adjusted EBITDA
    
    
    2,924,794
    
    
    
    (661,263
    )
    
    
    (34,045
    )
    
    
    996,095
    
    
    
    (40,185
    )
    
    
    (1,857,231
    )
    
    
    1,328,165Reconciliation to
Consolidated Statement
of Operations:Depreciation,
Amortization and
Impairment (c)
    
    
    364,533
    
    
    
    175,221
    
    
    
    35,076
    
    
    
    867,768
    
    
    
    62,382
    
    
    
    21,618
    
    
    
    1,526,598Interest Expense (Income)
    
    
    
    
    
    
    
    
    
    
    3,486
    
    
    
    215,858
    
    
    
    2,388
    
    
    
    581,863
    
    
    
    803,595Income before provision
for income taxes
    
    
    2,560,261
    
    
    
    (836,484
    )
    
    
    (72,607
    )
    
    
    (87,531
    )
    
    
    (104,955
    )
    
    
    (2,460,712
    )
    
    
    (1,002,028
    )Capital Expenditures (e)
    
    $
    847
    
    
    $
    94,649
    
    
    $
    349,123
    
    
    $
    441,804
    
    
    $
    100,000
    
    
    $
    51,360
    
    
    $
    1,037,783Total Assets (d)
    
    $
    11,200,675
    
    
    $
    1,263,934
    
    
    $
    1,945,766
    
    
    $
    29,577,766
    
    
    $
    3,921,786
    
    
    $
    5,447,600
    
    
    $
    53,357,527Goodwill
    
    $
    
    
    
    $
    
    
    
    $
    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.(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 $4,962,771 of the Parent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.  29




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##### Table of Contents



Three months ended
    
    Transportation
    
    
    
    
    
    
    Environmental
    
    
    Treatment and
    
    
    Concrete
    
    
    Corporate andJune 30, 2007
    
    and Disposal
    
    
    Materials
    
    
    Services
    
    
    Recycling
    
    
    Fibers
    
    
    Other (f), (g)
    
    
    Total (i)Third Party Revenues
    
    $
    12,578,230
    
    
    $
    715,164
    
    
    $
    705,102
    
    
    $
    4,500,760
    
    
    $
    
    
    
    $
    
    
    
    $
    18,499,256Intercompany Revenues (f)
    
    
    3,069,193
    
    
    
    77,666
    
    
    
    16,000
    
    
    
    1,237,733
    
    
    
    
    
    
    
    (4,400,592
    )
    
    
    Total Revenues
    
    
    15,647,423
    
    
    
    792,830
    
    
    
    721,102
    
    
    
    5,738,493
    
    
    
    
    
    
    
    (4,400,592
    )
    
    
    18,499,256Third Party Cost of
Revenues
    
    
    8,863,682
    
    
    
    669,158
    
    
    
    302,916
    
    
    
    4,287,696
    
    
    
    
    
    
    
    
    
    
    
    14,123,452Intercompany Cost of
Revenues
    
    
    4,122,486
    
    
    
    37,819
    
    
    
    239,987
    
    
    
    
    
    
    
    
    
    
    
    (4,400,292
    )
    
    
    Total Cost of Revenues
    
    
    12,986,168
    
    
    
    706,977
    
    
    
    542,903
    
    
    
    4,287,696
    
    
    
    
    
    
    
    (4,400,292
    )
    
    
    14,123,452Gross Profit Margin
    
    
    2,661,255
    
    
    
    85,853
    
    
    
    178,199
    
    
    
    1,450,797
    
    
    
    
    
    
    
    (300
    )
    
    
    4,375,804Operating Expenses
    
    
    1,037,391
    
    
    
    82,359
    
    
    
    155,262
    
    
    
    1,039,329
    
    
    
    
    
    
    
    528,301
    
    
    
    2,842,642Income from Operations
    
    
    1,623,864
    
    
    
    3,494
    
    
    
    22,937
    
    
    
    411,468
    
    
    
    
    
    
    
    (528,601
    )
    
    
    1,533,162Adjusted EBITDA
    
    
    1,855,335
    
    
    
    68,924
    
    
    
    37,440
    
    
    
    762,615
    
    
    
    
    
    
    
    (537,728
    )
    
    
    2,186,586Reconciliation to
Consolidated Statement
of Operations:Depreciation, Amortization and Impairment (h)
    
    
    231,471
    
    
    
    65,429
    
    
    
    14,503
    
    
    
    351,146.64
    
    
    
    
    
    
    
    (9,125
    )
    
    
    653,425Interest Expense (Income)
    
    
    22,800
    
    
    
    316
    
    
    
    2,583
    
    
    
    165,440
    
    
    
    
    
    
    
    152,585
    
    
    
    343,723Income before provision
for income taxes
    
    
    1,601,064
    
    
    
    3,179
    
    
    
    20,354
    
    
    
    246,028
    
    
    
    
    
    
    
    (681,186
    )
    
    
    1,189,439
  30




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##### Table of Contents



Six months ended
    
    Transportation
    
    
    
    
    
    
    Environmental
    
    
    Treatment and
    
    
    Concrete
    
    
    Corporate andJune 30, 2007
    
    and Disposal
    
    
    Materials
    
    
    Services
    
    
    Recycling
    
    
    Fibers
    
    
    Other (f), (g)
    
    
    Total (i)Third Party Revenues
    
    $
    22,027,918
    
    
    $
    1,085,369
    
    
    $
    1,208,857
    
    
    $
    4,500,760
    
    
    $
    
    
    
    $
    
    
    
    $
    28,822,904Intercompany Revenues (g)
    
    
    5,034,426
    
    
    
    184,337
    
    
    
    16,000
    
    
    
    1,237,733
    
    
    
    
    
    
    
    (6,472,496
    )
    
    
    Total Revenues
    
    
    27,062,344
    
    
    
    1,269,706
    
    
    
    1,224,857
    
    
    
    5,738,493
    
    
    
    
    
    
    
    (6,472,496
    )
    
    
    28,822,904Third Party Cost of
Revenues
    
    
    16,560,028
    
    
    
    1,052,157
    
    
    
    697,902
    
    
    
    4,287,696
    
    
    
    
    
    
    
    
    
    
    
    22,597,783Intercompany Cost of
Revenues
    
    
    6,194,390
    
    
    
    37,819
    
    
    
    239,987
    
    
    
    
    
    
    
    
    
    
    
    (6,472,196
    )
    
    
    Total Cost of Revenues
    
    
    22,754,418
    
    
    
    1,089,976
    
    
    
    937,889
    
    
    
    4,287,696
    
    
    
    
    
    
    
    (6,472,196
    )
    
    
    22,597,783Gross Profit Margin
    
    
    4,307,926
    
    
    
    179,730
    
    
    
    286,968
    
    
    
    1,450,797
    
    
    
    
    
    
    
    (300
    )
    
    
    6,225,121Operating Expenses
    
    
    1,864,389
    
    
    
    177,335
    
    
    
    288,407
    
    
    
    1,039,329
    
    
    
    
    
    
    
    831,563
    
    
    
    4,201,023Income from Operations
    
    
    2,443,537
    
    
    
    2,395
    
    
    
    (1,439
    )
    
    
    411,468
    
    
    
    
    
    
    
    (831,863
    )
    
    
    2,024,098Adjusted EBITDA
    
    
    2,922,908
    
    
    
    126,579
    
    
    
    25,646
    
    
    
    762,615
    
    
    
    
    
    
    
    (823,405
    )
    
    
    3,014,343Reconciliation to
Consolidated Statement
of Operations:Depreciation,
Amortization and
Impairment (h)
    
    
    479,371
    
    
    
    124,184
    
    
    
    27,085
    
    
    
    351,146.64
    
    
    
    
    
    
    
    8,158
    
    
    
    989,945Interest Expense (Income)
    
    
    71,277
    
    
    
    316
    
    
    
    5,405
    
    
    
    165,440
    
    
    
    
    
    
    
    192,757
    
    
    
    435,195Income before provision
for income taxes
    
    
    2,372,260
    
    
    
    2,079
    
    
    
    (6,844
    )
    
    
    246,028
    
    
    
    
    
    
    
    (1,024,320
    )
    
    
    1,589,203Capital Expenditures (j)
    
    $
    151,503
    
    
    $
    93,734
    
    
    $
    44,694
    
    
    $
    13,587,743
    
    
    $
    
    
    
    $
    101
    
    
    $
    13,877,775Total Assets (i)
    
    $
    15,952,411
    
    
    $
    1,864,181
    
    
    $
    1,735,779
    
    
    $
    29,222,845
    
    
    $
    
    
    
    $
    558,657
    
    
    $
    49,333,873Goodwill
    
    $
    
    
    
    $
    
    
    
    $
    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 $3,372,834 of the Parent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.  Subsequent Events
 Lyndhurst Facility
   31




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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 October 8, 2008
(the Registration Statement), or in our other filings made with the SEC.
   32




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##### Table of Contents



Overview and Strategy
     Subsidiary/Joint
    
    
    
    Business
    
    
    
    Primary
    
    Primary TargetVenture
    
    Parent Entity
    
    Segment
    
    Headquarters
    
    Operations
    
    MarketsPure Earth
Materials, Inc.
(PE Materials)
    
    Pure Earth, Inc.
    
    Materials
    
    North Bergen, New
Jersey
    
    Rock crushing and
material recycling
operation
    
    New York City
metropolitan area
and northern New
JerseyPure Earth Environmental Inc.(PE Environmental)
    
    Pure Earth, Inc.
    
    Environmental
Services
    
    Waterbury,
Connecticut
    
    Environmental
engineering and
consulting services
for commercial and
residential
customers
    
    Connecticut and New
YorkCasie Ecology Oil
Salvage, Inc.
(Casie) and
MidAtlantic
Recycling
Technologies Inc.
(MART)
    
    Pure Earth, Inc.
    
    Treatment and
Recycling
    
    Vineland, New Jersey
    
    Processing and
recycling of oils,
solvents, refinery
wastes,
contaminated soils
and filter cakes in
solid and liquid
form
    
    Northeastern United
StatesRezultz,
Incorporated
(Rezultz)
    
    Pure Earth, Inc.
    
    Treatment and
Recycling
    
    Vineland and
Millville, New
Jersey
    
    Owns 32 acres of
real property on
which Casie and
MART operations are
conducted and
recycling equipment
to process and
recycle waste
products
    
    Northeastern United
States
  33




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##### Table of Contents



Subsidiary/Joint
    
    
    
    Business
    
    
    
    Primary
    
    Primary TargetVenture
    
    Parent Entity
    
    Segment
    
    Headquarters
    
    Operations
    
    MarketsBio Methods LLC
(Bio Methods)
    
    Pure Earth, Inc.
    
    Environmental
Services
    
    Waterbury,
Connecticut
    
    Disposal of
regulated medical
waste from doctors
offices, hospitals
and nursing homes
    
    ConnecticutGeo Methods, LLC
(Geo Methods)
    
    Pure Earth, Inc.
    
    Environmental
Services
    
    Waterbury,
Connecticut
    
    Environmental well
drilling for
commercial
customers
    
    Connecticut and New
YorkPure Earth
Materials (NJ) Inc.
(PE Materials
(NJ))
    
    Pure Earth, Inc.
    
    Materials
    
    Trevose,
Pennsylvania
    
    Holding company for
material recycling
operation
    
    NonePEI Disposal Group,
Inc. (PEI Disposal Group)
    
    Pure Earth, Inc.
    
    Transportation and
Disposal
    
    Long Island, New York
    
    Transportation and
disposal of
contaminated and
clean soils
    
    New York City
metropolitan area
and Long IslandJuda Construction,
Ltd. (Juda)
    
    PE Materials
    
    Transportation and
Disposal
    
    Bronx, New York
    
    Transportation of
contaminated and
clean soils,
primarily to serve
PE Disposal
    
    New York City
metropolitan area
and northern New
JerseyPure Earth
Transportation &
Disposal, Inc. (PE Disposal)
    
    PE Materials
    
    Transportation and
Disposal
    
    Bronx, New York
    
    Transportation and
disposal of
contaminated and
clean soils
    
    New York City
metropolitan area
and northern New
JerseyEcho Lake
Brownfield, LLC
(Echo Lake)
    
    PE Environmental
    
    Environmental
Services
    
    Waterbury,
Connecticut
    
    Owns Brownfield site
    
    Central ConnecticutNew Nycon, Inc.
(New Nycon)
    
    Pure Earth, Inc.
    
    Concrete Fibers
    
    Westerly, Rhode
Island
    
    Distributor of
fiber products and
related accessories
to the concrete
industry
    
    United StatesPure Earth Energy
Resources, Inc.
(PE Energy)
    
    Pure Earth, Inc.
    
    Treatment and
Recycling
    
    Trevose,
Pennsylvania
    
    Start up business
to explore
recycling of
alternative wastes
into fuels
    
    Northeastern United
StatesHFH Acquisition
Corp. (HFH Acquisition)
    
    Pure Earth, Inc.
    
    Environmental
Services
    
    Trevose,
Pennsylvania
    
    Formed for the
purpose of
purchasing an
interest in a
Brownfield site
    
    New Jersey and New
YorkAdvanced Catalyst
Recycling, LLC (50%-owned joint venture)
    
    Casie
    
    Treatment and
Recycling
    
    Hudson, New York
    
    Identify, develop
and market
recycling solutions
for generators of
spent metal
catalysts
    
    United States
  34




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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.
   35




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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 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.
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##### Table of Contents



Critical Accounting Policies and Estimates
  Revenue Recognition
  
    
    Transportation and Disposal revenues are recognized upon completion of the
disposal of the waste into a landfill or Brownfield, or when it is shipped to a
third party for processing and disposal. We bill our customers upon acceptance of
the waste. Because the disposal process typically occurs within one day of
acceptance, we do not generally defer revenue based on the minimal amount of time
between billing and completion of waste disposal. At June 30, 2008 and December
31, 2007, there was not any waste that had been accepted, but not yet disposed of,
into a landfill or other facility.
 
    
    Treatment and Recycling revenues are recognized upon the acceptance of the
waste into our facility and the completion of the treatment of hazardous or
non-hazardous soils and oil byproducts. Revenues from waste that is not yet
completely processed (and their associated costs) are deferred until the services
have been completed. Some of our customer contracts require a certificate of
disposal from a recycling outlet and for those specific contracts revenue is
deferred until the disposal process has been completed. Estimating the amount of
revenue and costs of revenue to be deferred for waste that has not yet been
completely processed requires significant judgments and assumptions to be made by
management, such as the estimated cost per ton for fuel and the costs of handling,
transportation and disposal. At June 30, 2008 and December 31, 2007, we recorded
net deferred revenues of approximately $22,000 and $200,000, respectively.
 
    
    Environmental Services revenues are recognized as services are rendered.
  37




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##### Table of Contents




    
    Materials:
 
    
    Revenue from incoming materials is recognized upon
acceptance of the materials into the facility at which time it is deemed
earned.
 
    
    Subsequent to the receipt of unprocessed materials, we
process the material into a finished product. The finished product is
resold to third parties and revenue is recognized upon delivery of the
finished product to the customer.
 
    
    Concrete Fibers revenues are recognized upon the shipment of finished goods
to our customers. Generally, title to the finished goods and risk of loss pass to
the customer when the goods are shipped. Therefore, we recognize revenue for this
segment at that point.
 Accrued Disposal Costs
 Accounts Receivable and Allowance for Doubtful Accounts
 Goodwill and Intangible Assets with Indefinite Lives.
  Intangible Assets with Finite Lives.
  38




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##### Table of Contents



Long-Lived Assets
 Business Combinations.
  Stock-Based Compensation
    39




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##### Table of Contents



Warrants and Derivative Instruments
 
    
    the holders of convertible debentures repaid in November 2007 and a placement
agent in connection with this transaction;
 
    
    the holders of our Series A preferred stock, which shares were originally issued
in May 2007 and were automatically converted into common stock on June 30, 2008;
and
 
    
    the holders of our Series B preferred stock issued in March 2008.
  Preferred Stock
 Income Taxes
   40




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##### Table of Contents



Results of Operations  Three Months Ended June 30, 2008 Compared to Three Months Ended June 30,
2007
  Three Months Ended June 30,(in thousands, except share and per share data)
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)Revenues
    
    $
    17,891
    
    
    $
    18,499Cost of revenues
    
    
    14,061
    
    
    
    14,123Gross profit
    
    
    3,830
    
    
    
    4,376Operating expenses:Salaries and related expenses
    
    
    1,779
    
    
    
    1,407Occupancy and other office expenses
    
    
    273
    
    
    
    305Professional fees
    
    
    559
    
    
    
    436Other operating expenses
    
    
    229
    
    
    
    303Insurance
    
    
    357
    
    
    
    363Depreciation and amortization
    
    
    138
    
    
    
    30Impairment of idle machinery
    
    
    412
    
    
    
    (Gain) on sale of equipment
    
    
    (3
    )
    
    
    (1
    )Total operating expenses
    
    
    3,744
    
    
    
    2,843Income from operations
    
    
    86
    
    
    
    1,533Interest expense, net
    
    
    (487
    )
    
    
    (344
    )Other income
    
    
    98
    
    
    
    Income (loss) before provision for (benefit from) income taxes
    
    
    (303
    )
    
    
    1,189Provision for (benefit from) income taxes
    
    
    (126
    )
    
    
    517Net income (loss)
    
    
    (177
    )
    
    
    672Less preferred stock dividends
    
    
    (453
    )
    
    
    Income (loss) available for common stockholders
    
    $
    (630
    )
    
    $
    672Income (loss) available for common stockholders
per share (basic)
    
    $
    (0.04
    )
    
    $
    0.04Income (loss) available for common stockholders
per share (diluted)
    
    $
    (0.04
    )
    
    $
    0.04Weighted average shares of common stock outstanding during the period (basic)
    
    
    17,233,917
    
    
    
    16,714,499Weighted average shares of common stock outstanding during the period (diluted)
    
    
    17,233,917
    
    
    
    17,093,498Earnings before interest, taxes, depreciation, and amortization (EBITDA)
    
    $
    966
    
    
    $
    2,187
  
    
    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.
  41




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##### Table of Contents




    
    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;
 
    
    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.
   42




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Three Months Ended June 30,(in thousands)
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)EBITDA
    
    $
    966
    
    
    $
    2,187Depreciation and amortization, including
$644 and $624 of depreciation and
amortization classified as a component of
cost of revenues
    
    
    782
    
    
    
    654Interest expense, net
    
    
    487
    
    
    
    344Provision for (benefit from) income taxes
    
    
    (126
    )
    
    
    517Net income (loss)
    
    $
    (177
    )
    
    $
    672
 Revenues
  Three Months Ended June 30,2008
    
    
    2007(unaudited)
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of(in thousands, except percentages)
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesTransportation and Disposal
    
    $
    9,669
    
    
    
    54.1
    %
    
    $
    12,578
    
    
    
    68.0
    %Treatment and Recycling
    
    
    6,729
    
    
    
    37.6
    %
    
    
    4,501
    
    
    
    24.3
    %Environmental Services
    
    
    453
    
    
    
    2.5
    %
    
    
    705
    
    
    
    3.8
    %Materials
    
    
    388
    
    
    
    2.2
    %
    
    
    715
    
    
    
    3.9
    %Concrete Fibers
    
    
    652
    
    
    
    3.6
    %
    
    
    
    
    
    
    Total
    
    $
    17,891
    
    
    
    100.0
    %
    
    $
    18,499
    
    
    
    100.0
    %
    43




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44




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Intercompany RevenuesThree Months Ended June 30,2008
    
    
    2007% of
    
    
    
    
    
    
    % of(unaudited)
    
    
    
    
    
    Intercompany
    
    
    
    
    
    
    Intercompany(in thousands, except percentages)
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesTransportation and Disposal
    
    $
    27
    
    
    
    3.0
    %
    
    $
    3,069
    
    
    
    69.7
    %Treatment and Recycling
    
    
    561
    
    
    
    62.3
    %
    
    
    1,238
    
    
    
    28.1
    %Environmental Services
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    0.4
    %Materials
    
    
    313
    
    
    
    34.7
    %
    
    
    78
    
    
    
    1.8
    %Concrete Fibers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    901
    
    
    
    100.0
    %
    
    $
    4,401
    
    
    
    100.0
    %
  Cost of Revenues
  Cost of Revenues  By SegmentThree Months Ended June 30,2008
    
    
    2007(unaudited)
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of(in thousands)
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesTransportation and Disposal
    
    $
    6,775
    
    
    
    37.9
    %
    
    $
    8,864
    
    
    
    47.9
    %Treatment and Recycling
    
    
    5,369
    
    
    
    30.0
    %
    
    
    4,288
    
    
    
    23.2
    %Environmental Services
    
    
    406
    
    
    
    2.3
    %
    
    
    303
    
    
    
    1.6
    %Materials
    
    
    950
    
    
    
    5.3
    %
    
    
    669
    
    
    
    3.6
    %Concrete Fibers
    
    
    561
    
    
    
    3.1
    %
    
    
    
    
    
    
    Total
    
    $
    14,061
    
    
    
    78.6
    %
    
    $
    14,124
    
    
    
    76.3
    %
  45




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##### Table of Contents




    
    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 in 2008, 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;
 
    
    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.
   Cost of Revenues  By Cost ItemThree Months Ended June 30,2008
    
    
    2007(unaudited)
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of(in thousands, except percentages)
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesTransportation and disposal
    
    $
    3,605
    
    
    
    20.1
    %
    
    $
    3,600
    
    
    
    19.5
    %Subcontractors
    
    
    4,873
    
    
    
    27.2
    %
    
    
    4,415
    
    
    
    23.9
    %Direct labor
    
    
    2,476
    
    
    
    13.8
    %
    
    
    2,982
    
    
    
    16.1
    %Repairs and maintenance
    
    
    395
    
    
    
    2.2
    %
    
    
    614
    
    
    
    3.3
    %Fuel
    
    
    811
    
    
    
    4.5
    %
    
    
    658
    
    
    
    3.6
    %Depreciation and amortization
    
    
    666
    
    
    
    3.7
    %
    
    
    617
    
    
    
    3.3
    %Insurance
    
    
    44
    
    
    
    0.2
    %
    
    
    212
    
    
    
    1.1
    %Analytics and testing
    
    
    175
    
    
    
    1.0
    %
    
    
    263
    
    
    
    1.4
    %Plant costs
    
    
    583
    
    
    
    3.3
    %
    
    
    233
    
    
    
    1.3
    %Raw materials
    
    
    389
    
    
    
    2.2
    %
    
    
    
    
    
    
    Other
    
    
    44
    
    
    
    0.2
    %
    
    
    530
    
    
    
    2.9
    %Total
    
    $
    14,061
    
    
    
    78.6
    %
    
    $
    14,124
    
    
    
    76.4
    %
 Transportation and disposal
  46




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##### Table of Contents



Subcontractors
 Direct labor and union benefits
 Repairs and maintenance
 Fuel
 Depreciation and amortization
  47




---



##### Table of Contents



Insurance .
 Analytics and testing
 Plant costs
 Raw
materials 
 Other 
 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.
  48




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##### Table of Contents



(unaudited)
    
    Three Months Ended June 30,
    
    
    Period to Period Change(in thousands, except percentages)
    
    2008
    
    
    2007
    
    
    Amount
    
    
    PercentageSalaries and related expenses
    
    $
    1,779
    
    
    $
    1,407
    
    
    $
    372
    
    
    
    26.4
    %Occupancy and other office expenses
    
    
    273
    
    
    
    305
    
    
    
    (32
    )
    
    
    (10.5
    )%Professional fees
    
    
    559
    
    
    
    436
    
    
    
    123
    
    
    
    28.2
    %Other operating expenses
    
    
    229
    
    
    
    303
    
    
    
    (74
    )
    
    
    (24.4
    )%Insurance
    
    
    357
    
    
    
    363
    
    
    
    (6
    )
    
    
    (1.7
    )%Depreciation and amortization
    
    
    138
    
    
    
    30
    
    
    
    108
    
    
    
    360.0
    %Impairment of idle machinery
    
    
    412
    
    
    
    
    
    
    
    412
    
    
    
    Gain on sale of equipment
    
    
    (3
    )
    
    
    (1
    )
    
    
    (2
    )
    
    
    200.0
    %Total operating expenses
    
    $
    3,744
    
    
    $
    2,843
    
    
    $
    901
    
    
    
    31.7
    %
     
    
    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;
 
    
    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.
  49




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Income from Operations
  (unaudited)
    
    Three Months Ended June 30,
    
    
    Period to Period Change(in thousands, except percentages)
    
    2008
    
    
    2007
    
    
    Amount
    
    
    PercentageTransportation and Disposal
    
    $
    1,191
    
    
    $
    1,624
    
    
    $
    (433
    )
    
    
    (26.7
    )%Treatment and Recycling
    
    
    442
    
    
    
    411
    
    
    
    31
    
    
    
    7.5
    %Environmental Services
    
    
    (42
    )
    
    
    23
    
    
    
    (65
    )
    
    
    (282.6
    %)Materials
    
    
    (409
    )
    
    
    4
    
    
    
    (413
    )
    
    
    *Concrete Fibers
    
    
    (102
    )
    
    
    
    
    
    
    (102
    )
    
    
    *Corporate and Other
    
    
    (994
    )
    
    
    (529
    )
    
    
    (465
    )
    
    
    (87.9
    %)Total
    
    $
    86
    
    
    $
    1,533
    
    
    $
    (1,447
    )
    
    
    (94.4
    %)
 
 *
    
    Not meaningful.  50




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51




---



##### 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.
 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 second quarter of 2008, coupled with a
decline in the interest rate under that line of credit from 8.25% at June 30, 2007
to 4.75% at June 30, 2008.
  Other Income
  Provision for (Benefit From) Income Taxes
   52




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Results of Operations  Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
  Six Months Ended June 30,(in thousands, except share and per share data)
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)Revenues
    
    $
    32,508
    
    
    $
    28,823Cost of revenues
    
    
    26,421
    
    
    
    22,598Gross profit
    
    
    6,087
    
    
    
    6,225Operating expenses:Salaries and related expenses
    
    
    3,026
    
    
    
    1,971Occupancy and other office expenses
    
    
    565
    
    
    
    486Professional fees
    
    
    1,066
    
    
    
    675Other operating expenses
    
    
    732
    
    
    
    514Insurance
    
    
    599
    
    
    
    472Depreciation and amortization
    
    
    254
    
    
    
    82Impairment of idle machinery
    
    
    412
    
    
    
    Gain on sale of equipment
    
    
    (256
    )
    
    
    (1
    )Total operating expenses
    
    
    6,398
    
    
    
    4,201Income (loss) from operations
    
    
    (311
    )
    
    
    2,024Interest expense, net
    
    
    (804
    )
    
    
    (435
    )Other income (expenses)
    
    
    113
    
    
    
    (Loss) before provision for (benefit from) income taxes
    
    
    (1,002
    )
    
    
    1,589Provision for (benefit from) income taxes
    
    
    (416
    )
    
    
    691Net income (loss)
    
    
    (586
    )
    
    
    898Less preferred stock dividends
    
    
    (478
    )
    
    
    Income (loss) available for common stockholders
    
    $
    (1,064
    )
    
    
    898Income (loss) available for common stockholders
per share (basic)
    
    $
    (0.06
    )
    
    $
    0.06Income (loss) available for common stockholders
per share (diluted)
    
    $
    (0.06
    )
    
    $
    0.05Weighted average shares of common stock outstanding
during the period (basic)
    
    
    17,228,499
    
    
    
    16,028,452Weighted average shares of common stock outstanding
during the period (diluted)
    
    
    17,228,499
    
    
    
    16,351,596Earnings before interest, taxes, depreciation and
amortization (EBITDA)
    
    $
    1,328
    
    
    $
    3,014
  Six Months Ended June 30,(in thousands)
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)EBITDA
    
    $
    1,328
    
    
    $
    3,014Depreciation and amortization,
including $1,273 and $908 of
depreciation and amortization
classified as a component of cost of
revenues
    
    
    1,526
    
    
    
    990Interest expense, net
    
    
    804
    
    
    
    435Provision for (benefit from) income taxes
    
    
    (416
    )
    
    
    691Net income (loss)
    
    $
    (586
    )
    
    $
    898
  53




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Revenues
  Six Months Ended June 30,2008
    
    
    2007(unaudited)
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of(in thousands, except percentages)
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesTransportation and Disposal
    
    $
    16,883
    
    
    
    52.0
    %
    
    $
    22,028
    
    
    
    76.4
    %Treatment and Recycling
    
    
    12,921
    
    
    
    39.7
    %
    
    
    4,501
    
    
    
    15.6
    %Environmental Services
    
    
    1,261
    
    
    
    3.9
    %
    
    
    1,209
    
    
    
    4.2
    %Materials
    
    
    791
    
    
    
    2.4
    %
    
    
    1,085
    
    
    
    3.8
    %Concrete Fibers
    
    
    652
    
    
    
    2.0
    %
    
    
    
    
    
    
    Total
    
    $
    32,508
    
    
    
    100.0
    %
    
    $
    28,823
    
    
    
    100.0
    %
      54




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Intercompany RevenuesSix Months Ended June 30,2008
    
    
    2007% of
    
    
    
    
    
    
    % of(unaudited)
    
    
    
    
    
    Intercompany
    
    
    
    
    
    
    Intercompany(in thousands, except percentages)
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesTransportation and Disposal
    
    $
    305
    
    
    
    15.3
    %
    
    $
    5,034
    
    
    
    77.8
    %Treatment and Recycling
    
    
    883
    
    
    
    44.3
    %
    
    
    1,238
    
    
    
    19.1
    %Environmental Services
    
    
    5
    
    
    
    0.2
    %
    
    
    16
    
    
    
    0.3
    %Materials
    
    
    801
    
    
    
    40.2
    %
    
    
    184
    
    
    
    2.8
    %Concrete Fibers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    1,994
    
    
    
    100.0
    %
    
    $
    6,472
    
    
    
    100.0
    %
   55




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##### Table of Contents



Cost of Revenues
  Cost of Revenues  By SegmentSix Months Ended June 30,2008
    
    
    2007% of
    
    
    
    
    
    
    % of(in thousands)
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesTransportation and Disposal
    
    $
    11,364
    
    
    
    35.0
    %
    
    $
    16,560
    
    
    
    57.5
    %Treatment and Recycling
    
    
    11,413
    
    
    
    35.1
    %
    
    
    4,288
    
    
    
    14.9
    %Environmental Services
    
    
    1,005
    
    
    
    3.1
    %
    
    
    698
    
    
    
    2.4
    %Materials
    
    
    2,078
    
    
    
    6.4
    %
    
    
    1,052
    
    
    
    3.6
    %Concrete Fibers
    
    
    561
    
    
    
    1.7
    %
    
    
    
    
    
    
    Total
    
    
    26,421
    
    
    
    81.3
    %
    
    $
    22,598
    
    
    
    78.4
    %
   
    
    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 in 2008, 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.
   56




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Cost of Revenues  By Cost ItemSix Months Ended June 30,2008
    
    
    2007(unaudited)
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of(in thousands, except percentages)
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesTransportation and disposal
    
    $
    7,025
    
    
    
    21.6
    %
    
    $
    5,603
    
    
    
    19.4
    %Subcontractors
    
    
    8,666
    
    
    
    26.7
    %
    
    
    8,059
    
    
    
    28.0
    %Direct labor
    
    
    4,298
    
    
    
    13.2
    %
    
    
    3,467
    
    
    
    12.0
    %Union benefits
    
    
    47
    
    
    
    0.1
    %
    
    
    820
    
    
    
    2.8
    %Repairs and maintenance
    
    
    1,085
    
    
    
    3.3
    %
    
    
    866
    
    
    
    3.0
    %Fuel
    
    
    1,334
    
    
    
    4.1
    %
    
    
    900
    
    
    
    3.1
    %Depreciation and amortization
    
    
    1,278
    
    
    
    3.9
    %
    
    
    882
    
    
    
    3.1
    %Insurance
    
    
    91
    
    
    
    0.3
    %
    
    
    404
    
    
    
    1.4
    %Analytics and testing
    
    
    519
    
    
    
    1.6
    %
    
    
    365
    
    
    
    1.3
    %Plant costs
    
    
    1,264
    
    
    
    3.9
    %
    
    
    271
    
    
    
    0.9
    %Raw materials
    
    
    389
    
    
    
    1.2
    %
    
    
    
    
    
    
    Other
    
    
    425
    
    
    
    1.3
    %
    
    
    961
    
    
    
    3.3
    %Total
    
    $
    26,421
    
    
    
    81.3
    %
    
    $
    22,598
    
    
    
    78.4
    %
 Transportation and disposal
  Subcontractors
 Direct labor and union benefits
  57




---



##### Table of Contents



Repairs and maintenance
 Fuel
 Depreciation and amortization
 Insurance .
  58




---



##### Table of Contents



Analytics and testing
 Plant costs
 Raw Materials
 Other 
 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.
  59




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##### Table of Contents



Operating Expenses  By Cost Item(unaudited)
    
    Six Months Ended June 30,
    
    
    Period to Period Change(in thousands, except percentages)
    
    2008
    
    
    2007
    
    
    Amount
    
    
    PercentageSalaries and related expenses
    
    $
    3,026
    
    
    $
    1,971
    
    
    $
    1,055
    
    
    
    53.5
    %Occupancy and other office expenses
    
    
    565
    
    
    
    486
    
    
    
    79
    
    
    
    16.3
    %Professional fees
    
    
    1,066
    
    
    
    676
    
    
    
    390
    
    
    
    57.7
    %Other operating expenses
    
    
    732
    
    
    
    514
    
    
    
    218
    
    
    
    42.4
    %Insurance
    
    
    599
    
    
    
    472
    
    
    
    127
    
    
    
    26.9
    %Loss (gain) on sale of fixed assets
    
    
    (256
    )
    
    
    
    
    
    
    (256
    )
    
    
    *Depreciation and amortization
    
    
    254
    
    
    
    82
    
    
    
    172
    
    
    
    209.8
    %Impairment of idle machinery
    
    
    412
    
    
    
    
    
    
    
    412
    
    
    
    *Total operating expenses
    
    $
    6,398
    
    
    $
    4,201
    
    
    $
    2,197
    
    
    
    52.3
    %
 
 *
    
    Not meaningful.     60




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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.
       61




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Income (Loss) from Operations
  Six Months Ended June 30,
    
    
    Period to Period Change(in thousands)
    
    2008
    
    
    2007
    
    
    Amount
    
    
    PercentageTransportation and Disposal
    
    $
    2,560
    
    
    $
    2,444
    
    
    $
    116
    
    
    
    4.7
    %Treatment and Recycling
    
    
    15
    
    
    
    411
    
    
    
    (396
    )
    
    
    (96.4
    )%Environmental Services
    
    
    (69
    )
    
    
    (1
    )
    
    
    (68
    )
    
    
    *Materials
    
    
    (836
    )
    
    
    2
    
    
    
    (838
    )
    
    
    *Concrete Fibers
    
    
    (103
    )
    
    
    
    
    
    
    (103
    )
    
    
    *Corporate and Other
    
    
    (1,878
    )
    
    
    (832
    )
    
    
    (1,046
    )
    
    
    (125.7
    )%Total
    
    $
    (311
    )
    
    $
    2,024
    
    
    $
    (2,335
    )
    
    
    (115.4
    )%
 
 *
    
    Not meaningful.      62




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##### Table of Contents



Interest Income and Expense
  Other Income
  Provision for (Benefit From) Income Taxes
   63




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Liquidity and Capital Resources
 Cash and Cash Equivalents
  Summary of Cash Flows
  For the Six Months EndedJune 30,(in thousands)
    
    2008
    
    
    2007Net cash used in operating activities
    
    $
    (646
    )
    
    $
    (5,022
    )Net cash used in investing activities
    
    $
    (430
    )
    
    $
    (3,263
    )Net cash provided by financing activities
    
    $
    3,843
    
    
    $
    6,635
 Net Cash Used in Operating Activities
  
    
    Decrease in income from operations Our income from operations, excluding
depreciation and amortization, decreased by $0.8 million, or 30.2%, on a
period-to-period basis, which negatively impacted our cash flows from operations
for the six months ended June 30, 2008.
    
    Decrease in accounts receivable Sources and (uses) of cash from changes in
accounts receivable were approximately $0.7 million and $(6.6) million for the six
months ended June 30, 2008 and 2007, respectively. The decrease in accounts
receivable at June 30, 2008 is the result of the timing in collections of cash from
our larger customers within the Transportation and Disposal segment. The increase
in accounts receivable as of June 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.
    
    Decrease in prepaid expenses and other current assets Sources and (uses) of
cash from prepaid expenses and other current assets were $0.3 million and $(0.7)
million for the six months ended June 30, 2008 and 2007. This use of cash in the
six months ended June 30, 2007, was primarily attributed to prepaid insurance
policies in connection with our operations in the Transportation and Disposal
segment.
    
    Increase in accounts payable Sources of cash for accounts payable were $0.4
million and $0.8 million for the six months ended June 30, 2008 and 2007
respectively. The increase in accounts payable during the six months ending June
30, 2008 is the result of additional payables relating to New Nycon and increase in
payables at PEI Disposal Group resulting from increased production. The increase
in accounts payable during the six months ended June 30, 2007 is the result of payables relating to a large Transportation and Disposal segment job in the New York
metropolitan area.
  64




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
    
    Decrease in accrued expenses and other current liabilities (Uses) and sources
of cash for accrued expenses and other current liabilities were $(1.4) million and
$0.6 million for the six months ended June 30, 2008 and 2007, respectively. The
decrease in accrued expenses and other liabilities during the six months ended June
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 six months ended June 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 six months ended June 30, 2008
and 2007, we spent $1.0 million and $1.5 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 $0.6 million for the six
months ended June 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.
    65




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Six Months EndedJune 30,2008
    
    
    2007(in thousands)
    
    (unaudited)
    
    
    (unaudited)EBITDA
    
    $
    1,328
    
    
    $
    3,014Adjustments to reconcile EBITDA to net cash
used in operating activities:Interest expense, net
    
    
    (753
    )
    
    
    (435
    )(Provision for) benefit from income taxes
    
    
    416
    
    
    
    (552
    )Interest expense for accretion of warrant
discount and Series B paid-in-kind interest
    
    
    157
    
    
    
    Impairment of idle equipment
    
    
    412
    
    
    
    Provision for doubtful accounts
    
    
    42
    
    
    
    76(Gain) loss on sale of property and equipment
    
    
    (256
    )
    
    
    Restricted stock grant
    
    
    74
    
    
    
    Deferred income taxes
    
    
    (165
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    662
    
    
    
    (6,638
    )Inventories
    
    
    (12
    )
    
    
    (122
    )Prepaid expenses and other current assets
    
    
    275
    
    
    
    (681
    )Deposits and other assets
    
    
    190
    
    
    
    (69
    )Accounts payable
    
    
    436
    
    
    
    768Accrued expenses and other current liabilities
    
    
    (1,412
    )
    
    
    561Accrued disposal costs
    
    
    (1,015
    )
    
    
    (1,495
    )Income taxes payable
    
    
    (1,025
    )
    
    
    551Total adjustments
    
    
    (1,973
    )
    
    
    (8,036
    )Net cash used in operating activities
    
    $
    (646
    )
    
    $
    (5,022
    )
 Net Cash Used in Investing Activities
     66




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
    
    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 six months ended June 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.
  
    
    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 six months ended June 30, 2007, we had net
borrowings of approximately $3.2 million under our revolving lines of credit as
compared to net repayments of $649,000 for the six months ended June 30, 2008.
These borrowings were offset by the repayment of approximately $0.5 million and
$1.4 million of long-term debt and notes payable during the six months ended June
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.
 Capital Resources
    67




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
    
    approximately $0.5 million in dividend payments relating to the outstanding
Series B preferred stock;
    
    approximately $1.0 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; and
    
    approximately $0.1 million for working capital at New Nycon.
   
    
    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;
  68




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
    
    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.
  Debt Obligations
  June 30,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Revolving lines of credit
    
    $
    5,753
    
    
    $
    6,401Notes payable
    
    
    1,143
    
    
    
    1,717Long-term debt
    
    
    5,469
    
    
    
    5,754Convertible debt, net of discounts
    
    
    
    
    
    
    Mandatorily redeemable preferred stock
    
    
    4,194
    
    
    
    Total debt
    
    $
    16,559
    
    
    $
    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)
    
    $
    3,363
    
    
    
    4.75%
    (2)
    
    October 23, 2009Casie Group
    
    $
    2,500
    
    
    $
    2,389
    
    
    
    5.50%
    (3)
    
    November 5, 2008
 
 (1)
    
    Subject to reduction for (i) a borrowing base limitation; (ii) outstanding letters of
credit; and (iii) a loan reserve. As of June 30, 2008, the borrowing base limitation was
approximately $5.6 million, and we had aggregate required loan reserves and outstanding
letters of credit of $0.9 million.(2)
    
    As of June 30, 2008, this line of credit bore interest at the lenders prime rate,
minus 0.25%.(3)
    
    As of June 30, 2008, this line of credit bore interest at the lenders prime rate, plus
0.50%.  69




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
    
    incurring indebtedness;
 
    
    creating or assuming any liens or security interests with respect to our assets;
 
    
    assuming, guaranteeing or otherwise becoming liable for the obligation of any other person;
 
    
    selling, leasing, assigning, transferring or otherwise disposing of:
 
    
    stock in any subsidiary;
 
    
    all or a substantial part of our assets; or
 
    
    any collateral securing the indebtedness under this
revolving line of credit, or any interest in such collateral;
 
    
    making any loans or advances to, or making any investment or acquiring any
interest in, any other person;
 
    
    paying cash dividends on, or making any payment on account of the purchase,
redemption or other retirement of any shares of such stock, or other securities or
evidences of indebtedness, or making any distribution in respect thereof;
 
    
    merging or consolidating with any person, or permitting any person to merge or
consolidate with us, or otherwise acquiring all or substantially all of the assets
of another person;
 
    
    amending our certificate of incorporation or bylaws; or
 
    
    effecting any redemption or repurchase right under our preferred stock.
  
    
    default in the payment of any indebtedness under the revolving line of credit as
it becomes due and payable;
 
    
    default in the performance, or breach, of any covenant or agreement in the
revolving line of credit agreement;
 
    
    an overadvance that arises as a result of any reduction in the borrowing base or
otherwise on terms not otherwise approved of in advance by the lender in writing;
 
    
    the occurrence of a change of control, which includes:
 
    
    the acquisition by any person or group acquiring more
than 51% of the voting power of all classes of equity interests of any
borrower;
 
    
    incumbent directors (as described in the revolving line
of credit agreement) fail to constitute a majority of the board of
directors of any borrower; or
 
    
    Mr. Alsentzer or Mr. Kopenhaver ceasing to actively
manage our day-to-day business activities;
  70




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
    
    a borrower being or becoming insolvent, admitting in writing that it is unable
to pay its debts as they mature, making an assignment for the benefit of creditors,
applying for receivership or having a receiver appointed, or instituting or having
instituted any bankruptcy, insolvency or liquidation proceeding relating to the
borrower, or a judgment, writ, warrant of attachment or execution or similar
process issued or levied against a substantial part of the borrowers property;
 
    
    the rendering against us of an arbitration award, final judgment, decree or
order for the payment of money the uninsured portion of which is in excess of
$150,000 and the continuance of such arbitration award, judgment, decree or order
unsatisfied and in effect for any period of 30 consecutive days without a stay of
execution;
 
    
    a default under any material indebtedness (excluding trade indebtedness) owed to
any person other than the lender, or under any material lease or other contract,
and the expiration of the applicable period of grace, if any, specified therein;
 
    
    a breach of the subordination agreement or the making of any payment with
respect to indebtedness that has been subordinated pursuant to the subordination
agreement;
 
    
    the indictment of any of our officers for a felony offense relating to us under
state or federal law, or the indictment of any of our officers for a felony offense
unrelated to us, unless that officer has ceased to be an officer or employee of us
within five days of such indictment;
 
    
    any event that has a material adverse effect on:
 
    
    the business, operations, results of operations,
prospects, assets, liabilities or financial condition of a borrower, taken
as a whole;
 
    
    a material adverse effect on a borrowers ability to
perform its obligations under the loan documents; or
 
    
    a material adverse effect upon the ability of the
lender to enforce the indebtedness or realize the intended benefits of its
security interest; and
 
    
    any uninsured claim against a borrower or uninsured threat of litigation which
if determined adversely to a borrower would be reasonably likely to cause a
borrower to be liable to pay an amount greater than $150,000 or would result in the
occurrence of an event described above.
  
    
    incurring debt or creating liens;
 
    
    assuming, guaranteeing or otherwise becoming liable for the obligation of any
other person;
 
    
    purchasing or holding beneficially any stock, other securities or evidences of
indebtedness of any person;
 
    
    making any loans or advances to, or making any investment or acquiring any
interest in, any other person;
 
    
    merging or consolidating with any person, or leasing, selling, transferring or
otherwise disposing of all, or substantially all, of its property, assets and
business;
 
    
    making any material change to the nature of its business;
 
    
    materially changing the composition of its executive management or equity
ownership;
 
    
    paying dividends on, or making distributions with respect to, our capital stock,
or purchasing, redeeming, retiring or otherwise acquiring any of its capital stock;
or
 
    
    terminating the employment of the current President of the Casie Group entities
during the term of his five-year employment agreement.
  71




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Notes Payable
   Long-Term Debt
      72




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##### Table of Contents



Maturity
    

Amount Due(in thousands)Within one year
    
    $
    1,348Between one and two years
    
    
    1,056Between two and three years
    
    
    1,041Between three and four years
    
    
    666Between four and five years
    
    
    200Thereafter
    
    
    1,158Total
    
    $
    5,469
  Convertible Debt
   Mandatorily Redeemable Preferred Stock
    73




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Other Contractual Obligations
  Operating Leases
 MinimumAggregate LeasePeriod Beginning After June 30, 2008
    
    Payments Due(in thousands)For the next 12 months
    
    $
    1,334For months 13 through 24
    
    
    835For months 25 through 36
    
    
    758For months 37 through 48
    
    
    445For months 49 through 60
    
    
    343Thereafter
    
    
    139Total
    
    $
    3,854
 Collective Bargaining Agreements
 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.
  74




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##### Table of Contents




    
    We must pay to 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. 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 a minimum of $300,000 to New Nycon on an as-needed basis
for working capital purposes. As of September 15, 2008, we have provided
approximately $321,000 of working capital contributions to New Nycon pursuant to
this obligation.
 Employment and Consulting Agreements
 MinimumAggregateTwelve Months Ending June 30,
    
    Payments Due(in thousands)2009
    
    
    2,1252010
    
    
    1,8862011
    
    
    1,4152012
    
    
    7432013
    
    
    583Total
    
    $
    6,752
 Warrant Issued with Series B Preferred Stock.
 Idle Machinery
    75




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Off-Balance Sheet Arrangements
   Related Party Transactions
  Seasonality and Inflation
   Recently Issued Accounting Pronouncements
 Business Combinations
  76




---



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Fair Value
   Income Taxes
  77




---



##### Table of Contents



Derivatives
 Hierarchy of GAAP
 Intangible Assets
 Convertible Debt Instruments
 Instruments Indexed to Stock
  78




---



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Conforming Changes to EITF 98-5
 Share Based Payments .
 
 Item 4T. Controls and Procedures.
     79




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
    
    Effective in April 2008, in connection with the execution of the Nycon license agreement, we
issued 15,000 shares of our common stock to the licensor of the process patent with
respect to our Nycon-GÔ product. The shares are being held in escrow
pending the satisfaction by New Nycon of certain operating objectives. We
reasonably believed that the licensor was an accredited investor at the time of
issuance. These shares were valued at $45,000 at the time we issued them. We
believe that such issuance was exempt from Securities Act registration under
Section 4(2) of the Securities Act.
 
    
    Effective in April 2008, we issued 10,000 shares of our common stock to a broker, whom
we reasonably believed to be an accredited investor at the time of issuance. These
 shares were issued as payment for the brokers services in identifying and
assisting in the acquisition of Nycon, Inc. These shares were valued at $29,500 at
the time we issued them. We believe that such issuance was exempt from Securities
Act registration under Section 4(2) of the Securities Act.
 
    
    On June 27, 2008, we issued 20,000 shares to a bona fideconsultant. These
 shares were issued as payment for the consultants services under a written
consulting agreement in connection with the filing of a patent application related
to certain waste conversion technology intended to be used by us or for our benefit
via a licensing agreement. These shares were valued at $59,000 at the time we
issued them. We believe that the issuance of securities described above was exempt
from Securities Act registration under Rule 701.
 
    
    On June 27, 2008, we issued 20,000 shares to a new sales and marketing executive
pursuant to that individuals written employment agreement. These shares were
valued at $59,000 at the time we issued them. We believe that the issuance of
securities described above was exempt from Securities Act registration under Rule
701.
 
    
    Pursuant to the terms of an investment agreement entered into effective June 29,
2008, we issued to holders of our Series A preferred stock, each of whom we
believed to be an accredited investor at the time the agreement was signed, an
aggregate of 111,134 shares of our common stock. These shares were valued at
approximately $328,000 at the time we issued them. We also agreed to pay each
investor $50,000 in cash in four quarterly payments. We believe that such issuance
was exempt from Securities Act registration under Section 4(2) of the Securities
Act.
 
    
    As of June 30, 2008, the two holders of our Series A preferred stock had the
right to receive in the aggregate 222,220 shares of our common stock in connection
with the automatic conversion of the Series A preferred stock into common stock. We
issued these shares in July 2008. We believe that
such issuances were exempt from Securities Act registration under Section 3(a)(9) of
the Securities Act, or, in the alternative, Section 4(2) of the Securities Act.
  80




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
    
    the subject securities were sold to a limited group of persons;
 
    
    we reasonably believed that each investor was purchasing our securities for
investment without a view to resale or further distribution, except in compliance
with the Securities Act;
 
    
    each investor was reasonably believed to possess one or more of the following
characteristics:
 
    
    the investor was an accredited investor or a
sophisticated investor at the time of the sale;
 
    
    the investor had a pre-existing business or personal
relationship with us, our management or a placement agent engaged by us; or
 
    
    the investor received all material information about us
and our business, or was given reasonable access to such information a
reasonable period of time prior to any sale of our securities;
 
    
    restrictive legends stating that the securities may not be offered and sold in
the United States absent registration under the Securities Act or an applicable
exemption therefrom were placed on certificates evidencing the securities or
agreements relating thereto; and
 
    
    no form of general solicitation or general advertising was made by us in
connection with the offer or sale of these securities.
  
    
    at the time we issued the securities, we were not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act;
 
    
    the securities were issued pursuant to a written compensatory benefit plan or
written compensation contract established by us or our subsidiaries for the
participation of our or their employees, directors, officers, permitted consultants
and advisors, and their family members who acquire securities from them through
gifts or domestic relations orders;
 
    
    employees, consultants and advisors who were offered and sold securities were
natural persons providing bona fide services to us or our subsidiaries other than
in connection with a capital raising transaction or the promotion of a market for
our securities;
 
    
    restrictive legends stating that the securities may not be offered and sold in
the United States absent registration under the Securities Act or an applicable
exemption therefrom were placed on certificates evidencing the securities or
agreements relating thereto; and
 
    
    each such person received a copy of the written compensatory benefit plan or
contract at or prior to the time of sale.
 
 Item 4. Submission of Matters to a Vote of Security Holders.
   81




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##### Table of Contents



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)2.8.6
    
    
    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)
  82




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##### Table of Contents



ExhibitNo.
    
    Description3.1.1
    
    
    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)4.1
    
    
    Specimen Common Stock Certificate (1)4.2
    
    
    Specimen Series A Preferred Stock Certificate (1)4.3
    
    
    Specimen Series B Preferred Stock Certificate (1)4.4
    
    
    Securities Purchase Agreement, dated as of June 30, 2006, among Pure Earth, Inc. and each
purchaser signatory thereto (1)4.5
    
    
    Form of Common Stock Purchase Warrant issued to DD Growth Premium pursuant to the Securities
Purchase Agreement, dated as of June 30, 2006 (1)4.6
    
    
    Form of 9% Convertible Debenture issued by Pure Earth, Inc., as maker, in favor of DD Growth
Premium pursuant to the Securities Purchase Agreement, dated as of June 30, 2006 (1)4.7
    
    
    Form of Registration Rights Agreement, dated June 30, 2006, by and between Pure Earth, Inc. and DD
Growth Premium (1)4.8
    
    
    Form of Subscription Agreement for Series A Preferred Stock, dated May 22, 2007, by and between
Pure Earth, Inc. and Charles Hallinan and Black Creek Capital Corp. (1)4.9
    
    
    Form of Common Stock Purchase Warrant issued to Charles Hallinan and Black Creek Capital Corp.
pursuant to the Subscription Agreement, dated as of May 22, 2007 (1)4.10
    
    
    Debenture Redemption Agreement, dated as of August 17, 2007, by and among Pure Earth, Inc. and
Dynamic Decisions Strategic Opportunities (1)4.10.1
    
    
    First Amendment to Debenture Redemption Agreement, dated as of October 2, 2007, by and among Pure
Earth, Inc. and Dynamic Decisions Strategic Opportunities (1)4.11
    
    
    Stock Purchase Agreement, dated August 17, 2007, by and among Dynamic Decisions Strategic
Opportunities and Pure Earth, Inc. (1)4.11.1
    
    
    Joinder Agreement to the Stock Purchase Agreement by and among Dynamic Decisions Strategic
Opportunities and Pure Earth, Inc., dated as of September 18, 2007, by Kim C. Tucker Living Trust
(1)4.11.2
    
    
    Joinder Agreement to the Stock Purchase Agreement by and among Dynamic Decisions Strategic
Opportunities and Pure Earth, Inc., dated as of August 30, 2007, by Brent Kopenhaver and Emilie
Kopenhaver (1)4.11.3
    
    
    Joinder Agreement to the Stock Purchase Agreement by and among Dynamic Decisions Strategic
Opportunities and Pure Earth, Inc., dated as of August 30, 2007, by Mark Alsentzer (1)4.11.4
    
    
    Joinder Agreement to the Stock Purchase Agreement by and among Dynamic Decisions Strategic
Opportunities and Pure Earth, Inc., dated as of September 20, 2007, by Charles Hallinan (1)4.12
    
    
    Investment Agreement, dated as of March 4, 2008, among Pure Earth, Inc. and Fidus Mezzanine
Capital, L.P. (1)4.13
    
    
    Warrant, dated March 4, 2008, to purchase Common Stock of Pure Earth, Inc. issued to Fidus
Mezzanine Capital, L.P. (1)4.14
    
    
    Registration Rights Agreement, dated as of March 4, 2008, between Pure Earth, Inc. and certain
holders (1)4.15
    
    
    Securityholders Agreement, dated as of March 4, 2008, by and among Pure Earth, Inc., Brent
Kopenhaver, Mark Alsentzer, Fidus Mezzanine Capital, L.P. and holders of the Warrants and Warrant
Shares, as defined therein (1)4.16
    
    
    Guaranty Agreement, dated as of March 4, 2008, by certain subsidiaries of Pure Earth, Inc. in
favor of Fidus Mezzanine Capital, L.P. and any other Investors party thereto (1)4.17
    
    
    Investment Agreement, effective June 29, 2008, by and among Pure Earth, Inc., Black Creek Capital
Corp. and Charles M. Hallinan (2)
  83




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##### Table of Contents



ExhibitNo.
    
    Description10.1
    
    
    Employment Agreement, dated as of June 1, 2008, by and between Pure Earth, Inc. and Mark Alsentzer
(1)10.2
    
    
    Employment Agreement, dated as of June 1, 2008, by and between Pure Earth, Inc. and Brent
Kopenhaver (1)10.3
    
    
    Fourth Amendment to Credit and Security Agreement, effective April 28, 2008, by and between Pure
Earth, Inc., Pure Earth Transportation & Disposal, Inc., Pure Earth Materials, Inc., Juda
Construction, Ltd. and Wells Fargo Bank, National Association (2)10.4
    
    
    Exclusive License, dated April 30, 2008, by and between New Nycon, Inc. and Paul E. Bracegirdle (1)10.5
    
    
    Commercial Lease, dated October 26, 2007, between Red Rock Land Development, LLC and Pure Earth
Materials (NJ) Inc.(1)10.5.1
    
    
    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. 1 to the Companys registration
statement on Form 10/A (File No. 0-53287), as filed with the SEC on October 8, 2008.  84




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##### Table of Contents



SIGNATURES
  PURE EARTH, INC.Date: October 8, 2008
    By:
    /s/   Mark AlsentzerMark AlsentzerPresident and Chief Executive OfficerDate: October 8, 2008
    By:
    /s/  Brent KopenhaverBrent KopenhaverChairman, Executive Vice President, 
Chief Financial Officer and Treasurer  85




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##### Table of Contents



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)2.8.6
    
    
    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)
  86




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##### Table of Contents



ExhibitNo.
    
    Description3.1.1
    
    
    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)4.1
    
    
    Specimen Common Stock Certificate (1)4.2
    
    
    Specimen Series A Preferred Stock Certificate (1)4.3
    
    
    Specimen Series B Preferred Stock Certificate (1)4.4
    
    
    Securities Purchase Agreement, dated as of June 30, 2006, among Pure Earth, Inc. and each
purchaser signatory thereto (1)4.5
    
    
    Form of Common Stock Purchase Warrant issued to DD Growth Premium pursuant to the Securities
Purchase Agreement, dated as of June 30, 2006 (1)4.6
    
    
    Form of 9% Convertible Debenture issued by Pure Earth, Inc., as maker, in favor of DD Growth
Premium pursuant to the Securities Purchase Agreement, dated as of June 30, 2006 (1)4.7
    
    
    Form of Registration Rights Agreement, dated June 30, 2006, by and between Pure Earth, Inc. and DD
Growth Premium (1)4.8
    
    
    Form of Subscription Agreement for Series A Preferred Stock, dated May 22, 2007, by and between
Pure Earth, Inc. and Charles Hallinan and Black Creek Capital Corp. (1)4.9
    
    
    Form of Common Stock Purchase Warrant issued to Charles Hallinan and Black Creek Capital Corp.
pursuant to the Subscription Agreement, dated as of May 22, 2007 (1)4.10
    
    
    Debenture Redemption Agreement, dated as of August 17, 2007, by and among Pure Earth, Inc. and
Dynamic Decisions Strategic Opportunities (1)4.10.1
    
    
    First Amendment to Debenture Redemption Agreement, dated as of October 2, 2007, by and among Pure
Earth, Inc. and Dynamic Decisions Strategic Opportunities (1)4.11
    
    
    Stock Purchase Agreement, dated August 17, 2007, by and among Dynamic Decisions Strategic
Opportunities and Pure Earth, Inc. (1)4.11.1
    
    
    Joinder Agreement to the Stock Purchase Agreement by and among Dynamic Decisions Strategic
Opportunities and Pure Earth, Inc., dated as of September 18, 2007, by Kim C. Tucker Living Trust
(1)4.11.2
    
    
    Joinder Agreement to the Stock Purchase Agreement by and among Dynamic Decisions Strategic
Opportunities and Pure Earth, Inc., dated as of August 30, 2007, by Brent Kopenhaver and Emilie
Kopenhaver (1)4.11.3
    
    
    Joinder Agreement to the Stock Purchase Agreement by and among Dynamic Decisions Strategic
Opportunities and Pure Earth, Inc., dated as of August 30, 2007, by Mark Alsentzer (1)4.11.4
    
    
    Joinder Agreement to the Stock Purchase Agreement by and among Dynamic Decisions Strategic
Opportunities and Pure Earth, Inc., dated as of September 20, 2007, by Charles Hallinan (1)4.12
    
    
    Investment Agreement, dated as of March 4, 2008, among Pure Earth, Inc. and Fidus Mezzanine
Capital, L.P. (1)4.13
    
    
    Warrant, dated March 4, 2008, to purchase Common Stock of Pure Earth, Inc. issued to Fidus
Mezzanine Capital, L.P. (1)4.14
    
    
    Registration Rights Agreement, dated as of March 4, 2008, between Pure Earth, Inc. and certain
holders (1)4.15
    
    
    Securityholders Agreement, dated as of March 4, 2008, by and among Pure Earth, Inc., Brent
Kopenhaver, Mark Alsentzer, Fidus Mezzanine Capital, L.P. and holders of the Warrants and Warrant
Shares, as defined therein (1)4.16
    
    
    Guaranty Agreement, dated as of March 4, 2008, by certain subsidiaries of Pure Earth, Inc. in
favor of Fidus Mezzanine Capital, L.P. and any other Investors party thereto (1)4.17
    
    
    Investment Agreement, effective June 29, 2008, by and among Pure Earth, Inc., Black Creek Capital
Corp. and Charles M. Hallinan (2)
  87




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##### Table of Contents



ExhibitNo.
    
    Description10.1
    
    
    Employment Agreement, dated as of June 1, 2008, by and between Pure Earth, Inc. and Mark Alsentzer
(1)10.2
    
    
    Employment Agreement, dated as of June 1, 2008, by and between Pure Earth, Inc. and Brent
Kopenhaver (1)10.3
    
    
    Fourth Amendment to Credit and Security Agreement, effective April 28, 2008, by and between Pure
Earth, Inc., Pure Earth Transportation & Disposal, Inc., Pure Earth Materials, Inc., Juda
Construction, Ltd. and Wells Fargo Bank, National Association (2)10.4
    
    
    Exclusive License, dated April 30, 2008, by and between New Nycon, Inc. and Paul E. Bracegirdle (1)10.5
    
    
    Commercial Lease, dated October 26, 2007, between Red Rock Land Development, LLC and Pure Earth
Materials (NJ) Inc.(1)10.5.1
    
    
    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. 1 to the Companys registration
statement on Form 10/A (File No. 0-53287), as filed with the SEC on October 8, 2008.  88