Document:

AMERITRANS CAPITAL CORP (Form: 8-K, Received: 10/26/2009 11:51:05)

Exhibit 10.1 

THIS PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT FOR DISTRIBUTION AND MAY BE TRANSFERRED OR OTHERWISE DISPOSED OF ONLY IN COMPLIANCE WITH THE SECURITIES ACT OF l933, AS AMENDED (THE “ACT”). 

AMERITRANS CAPITAL CORPORATION

December 15, 2009

PROMISSORY NOTE

AMERITRANS CAPITAL CORPORATION, a Delaware corporation (the “Company”), for value received, hereby promises to pay to                                                                             or order (the “Holder”) on December 14, 2011 (the “Maturity Date”) at the offices of the Company, the principal sum of                                                                            ($                    ) DOLLARS in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts and to pay interest on the outstanding principal sum at the rate of eight and three quarters percent (8.75%) per annum through the Maturity Date.  Interest on the principal balance of this Promissory Note (“Note”) from the date hereof (the “Issue Date”) shall be payable quarterly on March 14, 2010, June 14, 2010, September 14, 2010 and December 14, 2010 and on each March 14,  June 14, September 14  and December 14, thereafter until all principal amounts hereunder have been satisfied; provided, however, that the Company may elect, in its discretion, by notice to the Holder at least 30 days before the Maturity Date to extend the Maturity Date to the third anniversary of the Issue Date, in which event the term “Maturity Date” shall refer to such date following such election.  If the Company exercises such  election, the Company shall pay interest on the outstanding principal sum quarterly as set forth above at the rate of the sum of (a) 5.50% plus (b) the rate announced by Citibank N.A. from time to time as its “prime rate”.

	1.

Series of Notes.  This Note is one of a series of Promissory Notes, identical in form (the “Notes”), issued on or about the date hereof, in the aggregate principal amount of up to $3,000,000.  All Notes in such series shall rank equally and ratably without preference or priority of any said Notes over any others thereof.

	2.

Registered Owner.  The Company may consider and treat the person in whose name this Note shall be registered as the absolute owner thereof for all purposes whatsoever (whether or not this Note shall be overdue) and the Company shall not be affected by any notice to the contrary.  Subject to the provisions hereof, the registered owner of this Note shall have the right to transfer it by assignment and the transferee thereof, upon its registration as owner of this Note, shall become vested with all the powers and rights of the transferor.  Registration of any new owner shall take place upon presentation of this Note to the Company at its offices together with the Note Assignment Form attached hereto duly executed.  In case of transfers by operation of law, the transferee shall notify the Company of such transfer and of its address, and shall submit appropriate evidence regarding the transfer so that this Note may be registered in the name of the transferee.  This Note is transferable only on the books of the Company by the Holder on the surrender hereof, duly endorsed. Communications sent to any registered owner shall be effective as against all holders or transferees of this Note not registered at the time of sending the communication. 

	3.

Consent Required.  Except with the prior written consent of the Holder, the Company shall not grant a security interest in any of its assets to secure the repayment of any indebtedness incurred by it for borrowed funds.

	4.

Redemption.

	4.1

Redemption Right. The Holder, by its acceptance of this Note, hereby acknowledges that, at any time, and from time to time, prior to the Maturity Date, the Company may, at its option, by written notice given to the Holder, elect to redeem and prepay all or any portion of the outstanding principal indebtedness evidenced by this Note, without premium or penalty.  Any such notice of the Company’s election to redeem and prepay as provided for hereinabove shall indicate the principal amount to be redeemed and prepaid (the “Redemption Amount”) and shall be given not less than thirty (30) days prior to the date fixed in such notice as the date for the redemption of this Note (the “Redemption Date”).

	4.2

Interest.  In the event the Company so elects to redeem and prepay this Note, in whole or in part, pursuant to Section 4.1 hereof, it shall pay to the Holder, in addition to the Redemption Amount being prepaid, accrued interest thereon through the Redemption Date; provided, however, that, if the Redemption Date is prior to the six (6) month anniversary of the Issue Date, additional interest shall be payable hereunder such that the Holder receives an amount of interest on the Redemption Date equal to six (6) months interest on the Redemption Amount less any interest theretofore paid thereon.

	4.3

Obligations.  On the Redemption Date, this Note shall be due and payable to the extent provided for in Sections 4.1 and 4.2 hereof and, if the remaining balance of the principal amount of this Note is payable on the Redemption Date, the Holder shall tender to the  Company this Note for cancellation.  Effective with the Redemption Date, with respect to the Redemption Amount, interest will cease to accrue, and the only right of the Holder shall be to receive the amount payable upon redemption.

	5.

Events of Default.  If the Company shall (i) fail to make any payment due hereunder and such failure shall continue unremedied for a period of fifteen (15) days following receipt of written notice thereof from the Holder; (ii) violate the provisions of Section 3 hereof; (iii) admit in writing its inability to pay its debts generally as they mature; (iv) make a general assignment for the benefit of creditors; (v) be adjudicated a bankrupt or insolvent; (vi) file a voluntary petition in bankruptcy or a petition or an answer seeking an arrangement with creditors; (vii) take advantage of any bankruptcy, insolvency or readjustment of debt law or statute or file an answer admitting the material allegations of a petition filed against it in any proceeding under any such law; (viii) apply for or consent to the appointment of a receiver, trustee or liquidator for all or substantially all of its assets; or (ix) have an involuntary case commenced against it under the Federal bankruptcy laws, which case is not dismissed or stayed within sixty (60) days (each an “Event of Default”), then, at any time thereafter and unless such Event of Default shall have been cured or shall have been waived in writing by the Holder, the Holder may, by written notice to the Company, declare the entire unpaid principal amount of this Note then outstanding, together with accrued interest thereon, to be forthwith due and payable, whereupon the same shall become forthwith due and payable.  

	6.

Investment Intent. The Holder, by its acceptance hereof, hereby represents and warrants that this Note is being acquired for investment purposes only and without a view to the distribution thereof, and may be transferred only in compliance with the Act.  

	7.

Transfer to Comply with the Securities Act of l933.  This Note may not be sold or otherwise disposed of except as follows: (a) to a person or entity to whom this Note may legally be transferred without registration and without the delivery of a current prospectus under the Act with respect thereto or (b) to any person or entity upon delivery of a prospectus then meeting the require­ments of the Act relating to such securities and the offering thereof for such sale or disposition, and thereafter to all successive assignees. 

	8.

Costs of Collection.  In  the event the Company shall default in the payment of this Note when due, then the Company shall pay, in addition to unpaid principal and interest, all the costs and expenses incurred in effecting collection hereunder, including reasonable attorneys’ fees.

	9.

Applicable Law.  This Note is issued under and shall for all purposes be governed by and construed in accordance with the laws of the State of New York, excluding choice of law rules thereof. 

	10.

Notices.  Any notice required or permitted to be given pursuant to this Note shall be deemed to have been duly given when delivered by hand or sent by certified or registered mail, return receipt requested and postage prepaid, overnight mail or telecopier as follows: 

If to the Holder, at address indicated on the last page of the Subscription Agreement between the Company and the Holder in respect of the purchase of this Note.

If to the Company:

747 Third Avenue

New York, NY  10017

Attention:  Michael Feinsod

or at such other address as the Holder or the Company shall designate by notice to the other given in accordance with this Section 10.

	11.

Miscellaneous.  This Note evidences the entire obligation of the Company with respect to the repayment of the principal amount hereof and the other matters provided for herein.  No provision of this Note may be modified except by an instrument in writing signed by the Company and the Holder.  Payment of interest due under this Note prior to the Maturity Date or Redemption Date, as the case may be, shall be made to the registered Holder of this Note.  Payment of principal and interest due upon redemption or maturity shall be made to the registered Holder of this Note on or after the Redemption Date or Maturity Date, as the case may be, contemporaneous with and upon presentation of this Note for payment.  No interest shall be due on this Note for such period of time that may elapse between the Redemption Date or Maturity Date, as the case may be, and its presentation for payment.  Notwithstanding the foregoing, it shall not be necessary for the Holder to present this Note for payment in the event of a partial redemption of this Note.

 [Remainder of page intentionally left blank.  Signature page follows.] 

IN WITNESS WHEREOF, the Company has caused this Note to be signed on its behalf, in its corporate name, by its duly authorized officer, all as of the day and year first above written. 

AMERITRANS CAPITAL CORPORATION

By:                                                     

Name:

Title:

AMERITRANS CAPITAL CORPORATION

PROMISSORY NOTE

DUE DECEMBER 14, 2011

NOTE ASSIGNMENT FORM 

FOR VALUE RECEIVED 

The undersigned                                                              (please print or typewrite name of assignor) hereby sells, assigns and transfers unto                                                                                                                                                           

(please print or typewrite name, address and social security or taxpayer identification number, if any, of assignee)  the within Promissory Note of Ameritrans Capital Corporation, dated December 15, 2009, in the original principal sum of $                       and hereby authorizes the Company  to transfer this Note on its books. 

				
	If the Holder is an individual:

	 
	If the Holder is not an individual:

	 
	 
	 

	 
	 
	 

	Name(s) of Holder

	 
	Name of Holder

	 
	 
	 

	 
	 
	 

	 
	 
	By:

	 

	Signature of Holder

	 
	 
	Signature of Authorized Representative

	 
	 
	 

	 
	 
	 

	 
	 
	 

	Signature, if jointly held

	 
	Name and Title of Authorized Representative

	 
	 
	 

	 
	 
	 

	 
	 
	 

	Date

	 
	Date

	 
	 
	 

                                                          

(Signature(s) guaranteed)ex10-39.htm

    
      

      

    

    Exhibit
10.39

     

     

    
      ISLAND
ENVIRONMENTAL SERVICES, INC.

      FINANCIAL
STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2007

      AND
THE EIGHT MONTHS ENDED AUGUST 31, 2008 AND 2007 (UNAUDITED)

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      ISLAND
ENVIRONMENTAL SERVICES, INC.

       

       

      CONTENTS

       

      
        	
                PAGE

              	
                1

              	
                REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

              
	 
      	 
      	 
      
	
                PAGE

              	
                2

              	
                BALANCE
      SHEETS AS OF DECEMBER 31, 2007 AND AUGUST 31, 2008
    (UNAUDITED)

              
	 
      	 
      	 
      
	
                PAGE

              	
                3

              	
                STATEMENTS
      OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2007 AND FOR THE EIGHT
      MONTHS ENDED AUGUST 31, 2008 AND 2007 (UNAUDITED)

              
	 
      	 
      	 
      
	
                PAGE

              	
                4

              	
                STATEMENT
      OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEAR ENDED DECEMBER 31, 2007
      AND FOR THE EIGHT MONTHS ENDED AUGUST 31, 2008
  (UNAUDITED)

              
	 
      	 
      	 
      
	
                PAGE

              	
                5

              	
                STATEMENTS
      OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2007 AND FOR THE EIGHT
      MONTHS ENDED AUGUST 31, 2008 AND 2007 (UNAUDITED)

              
	 
      	 
      	 
      
	
                PAGES

              	
                6

              	
                NOTES
      TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2007 AND FOR THE
      EIGHT MONTHS ENDED AUGUST 31, 2008 AND 2007
  (UNAUDITED)

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      REPORT
OF INDEPENDENT REGISTERED PUBLIC ACOUNTING FIRM

      

      

      

      The Board
of Directors

      Island
Environmental Services, Inc.

      

      

            We
have audited the accompanying balance sheet of Island Environmental Services,
Inc. (the "Company") as of December 31, 2007, and the related statements of
operations, stockholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

      

            We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

      

            In
our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Island Environmental Services, Inc.
as of December 31, 2007, and the results of its operations and its cash flows
for the year then ended, in conformity with accounting principles generally
accepted in the United States of America.

      

           As
discussed in Note 8, on August 31, 2008, the Company entered into a stock
purchase agreement with General Environmental Management, Inc. (GEM) pursuant to
which GEM acquired all of the issued and outstanding common stock of the
Company.

      

      

      

      Weinberg
& Company, P.A.

      

      Los
Angeles, Ca.

      December
23, 2009

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

       ISLAND
ENVIRONMENTAL SERVICES, INC.

      BALANCE
SHEETS

       

       

      
        	 
      	 	
                August
      31,

                2008

              	 	 	
                December
      31,

                2007

              	 
	 
      	 	
                (Unaudited)

              	 	 	 	 
	
                ASSETS

              
	
                CURRENT
      ASSETS

              	 	 	 	 	 	 
	
                Cash

              	 	$	207,772	 	 	$	617,053	 
	
                Accounts
      receivable, net of allowance for doubtful accounts of

              	 	 	 	 	 	 	 	 
	
                     $14,596
      and $114,618 respectively

              	 	 	1,064,478	 	 	 	1,272,759	 
	
                Total
      Current Assets

              	 	 	1,272,250	 	 	 	1,889,812	 
	 
      	 	 	 	 	 	 	 	 
	
                PROPERTY
      AND EQUIPMENT – net of accumulated depreciation

              	 	 	 	 	 
	
                       of
      $3,571,085 and $3,227,386 respectively

              	 	 	1,231,359	 	 	 	1,575,149	 
	 
      	 	 	 	 	 	 	 	 
	
                TOTAL
      ASSETS

              	 	$	2,503,609	 	 	$	3,464,961	 
	 
      	 	 	 	 	 	 	 	 
	
                LIABILITIES
      AND STOCKHOLDERS’ EQUITY

              
	 
      	 	 	 	 	 	 	 	 
	
                CURRENT
      LIABILITIES

              	 	 	 	 	 	 	 	 
	
                Bank
      Overdraft

              	 	$	400,215	 	 	$	514,002	 
	
                Accrued
      Expenses

              	 	 	81,865	 	 	 	62,133	 
	
                Current
      portion of notes payable

              	 	 	-	 	 	 	53,860	 
	
                Total
      Current Liabilities

              	 	 	482,080	 	 	 	629,995	 
	 
      	 	 	 	 	 	 	 	 
	
                LONG-TERM
      LIABILITIES

              	 	 	 	 	 	 	 	 
	
                Notes
      payable, net of current portion

              	 	 	-	 	 	 	40,792	 
	 
      	 	 	 	 	 	 	 	 
	
                COMMITMENTS
      & CONTINGENCIES

              	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 
	
                STOCKHOLDERS’
      EQUITY

              	 	 	 	 	 	 	 	 
	Common
      stock, no par value, 100,000 shares authorized, 	 	 	 	 	 	 	 	 
	
                10,000
      shares issued and outstanding,

              	 	 	 35,439	 	 	 	35,439	 
	
                Retained
      Earnings

              	 	 	1,986,090	 	 	 	2,758,735	 
	
                Total
      Stockholders' Equity

              	 	 	2,021,529	 	 	 	2,794,174	 
	 
      	 	 	 	 	 	 	 	 
	
                TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY

              	 	$	2,503,609	 	 	$	3,464,961	 

      

       

       

      
        See
accompanying notes to financial statements.

         

        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

           

        

      

      ISLAND
ENVIRONMENTAL SERVICES, INC.

      STATEMENTS
OF OPERATIONS

      FOR
THE YEAR ENDED DECEMBER 31, 2007 AND

      FOR
THE EIGHT MONTHS ENDED AUGUST 31, 2008 AND 2007 (UNAUDITED)

       

       

      
        	 
      	 	
                Eight
      Months Ended

              	 	 	
                Year
      ended

              	 
	 
      	 	
                August
      31,

              	 	 	
                August
      31,

              	 	 	
                December
      31,

              	 
	 
      	 	
                2008

              	 	 	
                2007

              	 	 	
                2007

              	 
	 
      	 	
                (Unaudited)

              	 	 	
                (Unaudited)

              	 	 	 	 
	
                REVENUES

              	 	$	4,014,940	 	 	$	5,128,830	 	 	$	7,697,167	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                COST
      OF REVENUES

              	 	 	2,356,037	 	 	 	2,903,254	 	 	 	4,623,766	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                GROSS
      PROFIT

              	 	 	1,658,903	 	 	 	2,225,576	 	 	 	3,073,401	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                OPERATING
      EXPENSES

              	 	 	2,413,922	 	 	 	2,026,105	 	 	 	3,591,588	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                OPERATING
      INCOME (LOSS)

              	 	 	(755,019	)	 	 	199,471	 	 	 	(518,187	)
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                OTHER
      INCOME (EXPENSE):

              	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Interest
      income

              	 	 	 	 	 	 	27,396	 	 	 	57,606	 
	
                Interest
      and financing costs

              	 	 	(21,030	)	 	 	(3,943	)	 	 	(34,214	)
	
                Loss
      on Disposal of Fixed Assets

              	 	 	-	 	 	 	-	 	 	 	(8,003	)
	
                Other
      non-operating income

              	 	 	3,404	 	 	 	16,661	 	 	 	20,134	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                Net
      income ( loss )

              	 	$	(772,645	)	 	$	239,585	 	 	$	(482,664	)

      

       

       

       See
accompanying notes to the financial statements

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      ISLAND
ENVIRONMENTAL SERVICES, INC.

      STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY

      FOR
THE YEAR ENDED DECEMBER 31, 2007

      AND FOR THE EIGHT MONTHS ENDED
AUGUST 31, 2008 (UNAUDITED)

       

       

      
        	 
      	 	
                Common
      Stock

              	 	 	
                
                  Retained

                

              	 	 	 	 
	 
      	 	
                Shares

              	 	 	
                Amount

              	 	 	
                Earnings

              	 	 	
                Total

              	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                Balance,
      January 1, 2006

              	 	 	10,000	 	 	$	35,439	 	 	$	4,216,255	 	 	$	4,251,694	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Distributions	 	 	-	 	 	 	 -	 	 	 	(974,856	)	 	 	(974,856	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Net
      loss for the year ended December 31, 2007

              	 	 	 	 	 	 	 	 	 	 	(482,664	)	 	 	(482,664	)
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Balance,
      December 31, 2007

              	 	 	10,000	 	 	 	35,439	 	 	 	2,758,735	 	 	 	2,794,174	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Net
      loss for the eight months ended August 31, 2008

              	 	 	 	 	 	 	 	 	 	 	(772,645	)	 	 	(772,645	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Balance,
      August  31, 2008  (Unaudited)

              	 	 	10,000	 	 	$	35,439	 	 	$	1,986,090	 	 	$	2,021,529	 

      

       

       

      See
accompanying notes to the financial statements

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      ISLAND
ENVIRONMENTAL SERVICES, INC

      STATEMENTS
OF CASHFLOWS

      FOR
THE YEAR ENDED DECEMBER 31, 2007

      AND
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2008 AND
2007  (UNAUDITED)

       

       

      
        	 
      	 	
                Eight
      Months Ended

              	 	 	
                Year
      Ended

              	 
	 
      	 	
                August
      31,

              	 	 	
                August
      31,

              	 	 	
                December
      31,

              	 
	 
      	 	
                2008

              	 	 	
                2007

              	 	 	
                2007

              	 
	 	 	(Unaudited)	 	 	(Unaudited)	 	 	 	 
	
                CASHFLOWS
      FROM OPERATING ACTIVITIES :

              	 	 	 	 	 	 	 	 	 
	
                Net
      income (loss)

              	 	$	(772,645	)	 	$	239,585	 	 	$	(482,664	)
	Adjustments
      to reconcile net income (loss) to net cash 	 	 	 	 	 	 	 	 	 	 	 	 
	
                provided
      by operating activities:

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                Depreciation
      and Amortization

              	 	 	343,790	 	 	 	394,572	 	 	 	588,780	 
	
                Changes
      in operating assets and liabilities:

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                (Increase)
      decrease in:

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                Accounts
      receivable

              	 	 	208,281	 	 	 	648,822	 	 	 	816,161	 
	
                Increase
      in:

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                Bank
      Overdraft

              	 	 	(113,787	)	 	 	 	 	 	 	514,002	 
	
                Accrued
      expenses and other liabilities

              	 	 	19,732	 	 	 	93,137	 	 	 	(8,987	)
	
                Net
      cash  provided by (used in) Operating Activities

              	 	 	(314,629	)	 	 	1,376,116	 	 	 	1,427,292	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                CASHFLOWS
      FROM INVESTING ACTIVITIES:

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                Purchase
      of property and equipment

              	 	 	-	 	 	 	(119,572	)	 	 	(318,432	)
	
                Net
      Cash Used In Investing Activities

              	 	 	-	 	 	 	(119,572	)	 	 	(318,432	)
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                CASHFLOWS
      FROM FINANCING ACTIVITIES:

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                Payments
      of notes payable

              	 	 	(94,652	)	 	 	(38,222	)	 	 	(55,795	)
	Distributions	 	 	 -	 	 	 	 (108,556	) 	 	 	(974,857	) 
	
                Net
      Cash used in Financing Activities

              	 	 	(94,652	)	 	 	(146,778	)	 	 	(1,030,652	)
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                NET
      INCREASE (DECREASE) IN CASH

              	 	 	(409,281	)	 	 	1,109,766	 	 	 	78,208	 
	
                CASH
      – BEGINNING OF YEAR

              	 	 	617,053	 	 	 	538,845	 	 	 	538,845	 
	
                CASH
      – END OF PERIOD

              	 	$	207,772	 	 	$	1,648,611	 	 	$	617,053	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                SUPPLEMENTAL
      DISCLOSURE OF CASHFLOW INFORMATION:

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                Cash
      paid for:

              	 	$	-	 	 	$	-	 	 	$	-	 
	
                Interest
      expense

              	 	$	2,025	 	 	$	4,068	 	 	$	34,215	 

      

       

       

      See
accompanying notes to the financial statements

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

         

      

      
        ISLAND
ENVIRONMENTAL SERVICES, INC.

        NOTES
TO THE FINANCIAL STATEMENTS

        FOR
THE YEAR ENDED DECEMBER 31, 2007

        AND
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2008 AND 2007 (UNAUDITED)

        

         

        
          	
                  NOTE
      1

                	
                  ORGANIZATION AND
      PRINCIPAL ACTIVITIES

                

        

         

        Island
Environmental Services, Inc. (the “Company”) was incorporated inCalifornia, on
February 20, 1992 for the purpose of providing transportation and hauling
services for non-hazardous and  hazardous waste
services.  The Company currently performs services in seven Western
states.

        

        
          	
                   NOTE
      2

                	
                  SUMMARY
      OF PRINCIPAL ACCOUNTING
POLICIES

                

        

        

        (a) Use of
Estimates

         

        The
preparation of financial statements in conformity with accounting principles
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and
disclosures.  Accordingly, actual results could differ from those
estimates.

        

        (b) Revenue
Recognition

        

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

        

        The
Company is a fully integrated service firm structured to provide field services,
technical services and transportation. Through our services, we assist
clients in meeting regulatory requirements from the designing stage to the waste
disposition stage. These services are billed and revenue recognized when the
service is performed and completed.  When the service is billed,
client costs are accumulated and accrued.

        

        (c) Concentrations of Credit
Risks

        

        The
Company’s financial instruments that are exposed to concentrations of credit
risk consist principally of cash and trade receivables.  The Company
places its cash in what it believes to be credit-worthy financial
institutions.  However, cash balances may have exceeded FDIC insured
levels at various times during the year.  The Company has not
experienced any losses in such accounts and believes it is not exposed to any
significant risk in cash.

        

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

        

        The
Company had one customer that accounted for 12% and 17% of revenue for the eight
months ended August 31, 2008 and 2007 and 29% for the year ended December 31,
2007.

         

        
          
            
            

          

          
            6

            
              

            

          

          
            
            

          

        

        
           

          ISLAND
ENVIRONMENTAL SERVICES, INC.

          NOTES
TO THE FINANCIAL STATEMENTS

          FOR
THE YEAR ENDED DECEMBER 31, 2007

          AND
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2008 AND 2007
(UNAUDITED)

        

        

         

        (d) Fair Value of Financial
Instruments

        

        The
Company believes that the carrying value of its cash, accounts receivable, note
payable, bank draft, accounts payable, and  accrued liabilities, as of
August 31, 2008 and December 31, 2007 approximates their respective fair values
due to the demand or short-term nature of those instruments.

        

        (e)
Cash

        

        Cash in
bank and short term investments with maturities fewer than thirty days are
recorded as cash balances.

        

        (f)Trade
Receivables

        

        Trade
receivables are recorded at net realizable value, consisting of the carrying
amount less an allowance for uncollectible accounts, as needed.

        

        The
Company uses the allowance method to account for uncollectible trade receivable
balances. Under the allowance method, if needed, an estimate of uncollectible
customer balances is made based upon historical loss trends and specific account
balances that are considered uncollectible. Factors used to establish an
allowance include the credit quality of the customer and whether the balance is
significant. Accounts are considered past due once the unpaid balance is 90 days
or more outstanding, unless payment terms are extended by
contract.  When an account balance is past due and attempts have been
made by legal or other means, the amount is considered uncollectible and is
written off against the allowance balance. At August 31, 2008 and December 31,
2007 trade receivables had a net balance in the amount of $1,064,478 and
$1,272,759 net of allowances of $14,596 and $114,618, respectively.

        

        (g) Property and
Equipment

        

        Property
and equipment is stated at cost.  Depreciation is computed using
straight line methods based on the estimated useful lives of the assets,
generally as follows:

        

        
          	
                  Vehicles

                	
                  5  Years

                
	
                  Equipment

                	
                  5  Years

                
	
                  Furniture
      and fixtures

                	
                  5  Years

                

        

         

        (h) Impairment of Long-Lived
Assets

        

        Statement
of Financial Accounting Standards No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets”, established guidelines regarding when impairment
losses on long-lived assets, which includes property and equipment, should be
recognized and how impairment losses should be measured.  This
statement also provides a single accounting model for long-lived assets to be
disposed of and significantly changes the criteria that would have to be met to
classify and asset as held-for-sale.  The Company periodically reviews
such assets for possible impairment and expected losses, if any, are recorded in
the period when such impairment is determined.

         

        
          
            
            

          

          
            7

            
              

            

          

          
            
            

          

        

        

        (i) Income
Taxes

        

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

        

        
          	
                  NOTE
      3

                	
                  NEW ACCOUNTING
      PRONOUNCEMENTS

                

        

        

        In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51”.  SFAS
No. 160 establishes accounting and reporting standards that require that the
ownership interests in subsidiaries held by parties other than the parent be
clearly identified, labeled, and presented in the consolidated statement of
financial position within equity, but separate from the parent’s equity; the
amount of consolidated net income attributable to the parent and to the
noncontrolling interest be clearly identified and presented on the face of the
consolidated statement of income; and changes in a parent’s ownership interest
while the parent retains its controlling financial interest in its subsidiary be
accounted for consistently.  SFAS No. 160 also requires that any
retained noncontrolling equity investment in the former subsidiary be initially
measured at fair value when a subsidiary is deconsolidated.  SFAS No.
160 also sets forth the disclosure requirements to identify and distinguish
between the interests of the parent and the interests of the noncontrolling
owners.  SFAS No. 160 applies to all entities that prepare
consolidated financial statements, except not-for-profit organizations, but will
affect only those entities that have an outstanding noncontrolling interest in
one or more subsidiaries or that deconsolidate a subsidiary.  SFAS No.
160 is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008.  Earlier adoption is
prohibited.  SFAS No. 160 must be applied prospectively as of the
beginning of the fiscal year in which it is initially applied, except for the
presentation and disclosure requirements.  The presentation and
disclosure requirements are applied retrospectively for all periods
presented.

        

        In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities an amendment of FASB Statement No. 133” (SFAS 161). This
Statement requires enhanced disclosures about an entity’s derivative and hedging
activities, including (a) how and why an entity uses derivative instruments, (b)
how derivative instruments and related hedged items are accounted for under SFAS
No. 133,  “Accounting for Derivative Instruments and Hedging
Activities” (SFAS 133), and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows. SFAS 161 is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008.

        

        In June
2009, the FASB issued authoritative guidance on accounting standards
codification and the hierarchy of generally accepted accounting principles.” The
FASB Accounting Standards CodificationTM (“Codification”) has become the source
of authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
accordance with GAAP. All existing accounting standard documents are superseded
by the Codification and any accounting literature not included in the
Codification will not be authoritative. However, rules and interpretive releases
of the Securities Exchange Commission (“SEC”) issued under the authority of
federal securities laws will continue to be sources of authoritative GAAP for
SEC registrants. The FASB authoritative guidance is effective for interim and
annual reporting periods ending after September 15, 2009. Therefore, beginning
with our quarter ending September 30, 2009, all references made by it to GAAP in
its consolidated financial statements now use the new Codification numbering
system. The Codification does not change or alter existing GAAP and, therefore,
it does not have an impact on our financial position, results of operations and
cash flows.

        

        On July
1, 2009, the Company adopted authoritative guidance issued by the FASB on
business combinations. The guidance retains the fundamental requirements that
the acquisition method of accounting (previously referred to as the purchase
method of accounting) be used for all business combinations, but requires a
number of changes, including changes in the way assets and liabilities are
recognized and measured as a result of business combinations. It also requires
the capitalization of in-process research and development at fair value and
requires the expensing of acquisition-related costs as incurred. We will apply
this guidance to business combinations completed after July 1,
2009.  Adoption of the new guidance did not have a material impact on
our financial statements.

         

        
          
            
            

          

          
            8

            
              

            

          

          
            
            

          

        

        

        In
October 2009, the FASB issued authoritative guidance on revenue recognition that
will become effective for the Company beginning July 1, 2010, with earlier
adoption permitted.  Under the new guidance on arrangements that
include software elements, tangible products that have software components that
are essential to the functionality of the tangible product will no longer be
within the scope of the software revenue recognition guidance, and
software-enabled products will now be subject to other relevant revenue
recognition guidance.  We believe adoption of this new guidance will
not have a material impact on our financial statements.

         

        In May
2009, the FASB issued new requirements for reporting subsequent events. These
requirements set forth the period after the balance sheet date during which
management of a reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure in the financial statements, the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements, and
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. Disclosure of the date through which an
entity has evaluated subsequent events and the basis for that date is also
required.

        

        The
Company does not believe that the adoption of the above recent pronouncements
will have a material effect on the Company’s consolidated results of operations,
financial position, or cash flows.

        

        
          	
                  NOTE
      4

                	
                  PROPERTY
      AND EQUIPMENT

                

        

        

        Property
and Equipment consists of the following as of:

        

        
          	 
      	 	
                  August
      31,

                  2008

                	 	 	
                  December
      31,

                  2007

                	 
	
                  Vehicles

                	 	$	84,484	 	 	$	84,710	 
	
                  Furniture
      & Fixtures

                	 	 	43,101	 	 	 	43,091	 
	
                  Machinery
      & Equipment

                	 	 	3,203,927	 	 	 	3,203,702	 
	
                  Roll
      Off Bins

                	 	 	1,110,291	 	 	 	1,110,291	 
	
                  Office
      Equipment

                	 	 	91,701	 	 	 	91,701	 
	
                  Leasehold
      Improvements

                	 	 	268,940	 	 	 	269,040	 
	 
      	 	 	4,802,444	 	 	 	4,802,535	 
	
                  Less
      accumulated depreciation

                	 	 	3,571,085	 	 	 	3,227,386	 
	
                  Property
      and equipment net of accumulated depreciation

                	 	$	1,231,359	 	 	$	1,575,149	 

        

        

        Depreciation
expense was $343,790 and $394,572 for the eight months ended August 31, 2008 and
2007, respectively and $588,780 for the year ended December 31, 2007.

         

        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

        

        
          	
                  NOTE
      5

                	
                  NOTES
      PAYABLE

                

        

        

        Notes
payable consist of the following :

        

        
          	 
      	 	
                  August
      31,

                	 	 	
                  December
      31,

                	 
	 
      	 	
                  2008

                	 	 	
                  2007

                	 
	
                  (a)
      Note payable, Ed Butts Ford

                	 	$	-	 	 	$	53,860	 
	
                  (b)
      Note payable, Ed Butts Ford

                	 	 	-	 	 	 	4,661	 
	
                  (c)
      Note payable, Ed Butts Ford

                	 	 	-	 	 	 	9,500	 
	
                  (d)
      Note payable, Center Capital Corp

                	 	 	-	 	 	 	26,631	 
	
                  Total
      notes payable

                	 	 	-	 	 	 	94,652	 
	
                  Less
      current portion

                	 	 	-	 	 	 	53,860	 
	
                  Notes
      payable, net of current portion

                	 	$	-	 	 	$	40,792	 

        

        

        (a)
Equipment note, payable in monthly installments of $434.05 beginning in May 2005
including interest of 0.00% per annum through April 2010.  The note
was paid off during the eight months ended August 31, 2008.

        

        (b)
Equipment note, payable in monthly installments of $423.72 including interest of
0.00% per annum through November 2008.  The note was paid off during
the eight months ended August 31, 2008.

        

        (c)
Equipment note, payable in monthly installments of $654.48 including interest of
3.90% per annum through March 2009.  The note was paid off during the
eight months ended August 31, 2008.

        

        (d)
Equipment note, payable in monthly installments of $3,281.74 including interest
of 5.79% per annum through October 2009. The note was paid off during the eight
months ended August 31, 2008.

        

        
          	
                  NOTE
      6

                	
                  COMMITMENTS AND
      CONTINGENCIES

                

        

        

        OPERATING
LEASES

        

        The
Company leases its warehouse and office facility under separate five year, and
month-to-month operating lease agreements.  Under terms of each of the
leases, the company pays the cost of repairs and maintenance.

        

        Future
minimum lease commitments under these leases at December 31, 2007 are as
follows:

        

        
          	
                  Year
      Ended December 31,

                	 	 	 
	
                  2007

                	 	$	462,000	 
	
                  2008

                	 	 	492,000	 
	
                  2009

                	 	 	667,500	 
	
                  2010

                	 	 	667,500	 
	
                  2011

                	 	 	667,500	 
	 
      	 	 	 	 
	 
      	 	$	2,956,500	 

        

         

        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        

         

        Rent
expense for the eight months ending August 31, 2008 and 2007 was $308,000 and
$308,000 and $ 462,000 for the year ending December 31, 2007 .

        

        LEGAL
PROCEEDINGS

        

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

        

        
          	
                  NOTE
      7

                	
                  INCOME
      TAXES

                

        

        

        The
Company's net deferred tax assets consisted of the following at August 31, 2008
and December 31, 2007:

         

        
          	
                   

                	 	
                  August
      31,

                  2008

                	 	 	
                  December
      31,

                  2007

                	 
	 
      	 	
                  (Unaudited)

                	 	 	 	 
	
                  Deferred
      tax asset, net operating loss

                	 	$	1,255,308	 	 	$	482,664	 
	
                  Less
      valuation allowance

                	 	 	(1,255,308	)	 	 	(482,664	)
	
                  Net
      deferred tax asset

                	 	$	-	 	 	$	-	 

        

         

        As of
August 31, 2008, the Company had federal net operating loss carry forwards of
approximately $1,255,308 expiring in various years through 2024, which can be
used to offset future taxable income, if any. No deferred asset benefit for
these operating losses has been recognized in the financial statements due to
the uncertainty as to their realizability in future periods.

        
          

          
            	
                    NOTE
      8

                  	
                    SUBSEQUENT
      EVENT

                  

          

           

        

        On August
31, 2008, the Company entered into a stock purchase agreement with General
Environmental Management, Inc. (GEM), a publicly held company, pursuant to which
GEM acquired all of the issued and outstanding common stock of the
Company.  In consideration of the acquisition of the issued and
outstanding common stock of the Company GEM paid $2.25 million in cash to the
stockholders of Island Environmental Services, Inc. (IES) and issued $1.25
million in three year promissory notes.  As a result of the agreement,
Island Environmental Services, Inc. (IES) becomes a wholly-owned subsidiary of
GEM.

         

         

        11

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