UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2009

¨	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 000-53287

Pure Earth, Inc.

(Exact name of registrant as specified in its charter)

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)

Registrant’s telephone number, including area code: (215) 639-8755

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered

None.		None.

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date file required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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

Large accelerated filer ¨	Accelerated filer ¨

Non-accelerated filer ¨	Smaller reporting company x
(Do not check if a smaller reporting company)

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

As of June 30, 2009, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $6,207,703, based on the closing sale price of a share of such common stock as reported on the OTC Bulletin Board. Solely for the purpose of calculating this aggregate market value (and for no other purpose), the registrant has defined its affiliates to include (i) those persons who were, as of June 30, 2009, its executive officers, directors and beneficial owners of more than 10% of its common stock, and (ii) such other persons who were, as of June 30, 2009, controlled by, or under common control with, the persons described in clause (i) above.

The number of shares outstanding of the registrant’s common stock as of April 10, 2010, was 17,587,899.

Documents Incorporated by Reference:

Selected portions of the Proxy Statement for the 2010 Annual Meeting of Stockholders have been incorporated by reference into Part III of this Form 10-K.

PURE EARTH, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009

TABLE OF CONTENTS

		Page
PART I		1
Item 1.	Business.	1
Item 1A.	Risk Factors.	22
Item 1B.	Unresolved Staff Comments.	47
Item 2.	Properties.	47
Item 3.	Legal Proceedings.	49
Item 4.	Submission of Matters to a Vote of Security Holders.	54
PART II		54
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
	Purchases of Equity Securities.	54
Item 6.	Selected Financial Data.	56
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	56
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	99
Item 8.	Financial Statements and Supplementary Data.	99
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	99
Item 9A(T).	Controls and Procedures.	99
Item 9B.	Other Information.	100
PART III		101
Item 10.	Directors, Executive Officers and Corporate Governance.	101
Item 11.	Executive Compensation.	101
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	101
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	102
Item 14.	Principal Accounting Fees and Services.	102
PART IV		103
Item 15.	Exhibits and Financial Statement Schedules.	103
SIGNATURES		108

* * *

Pursuant to Item 10(f) of Regulation S-K promulgated under the Securities Act of 1933, except as otherwise indicated, we have elected to comply throughout this Annual Report on Form 10-K with the scaled disclosure requirements applicable to “smaller reporting companies.” In this Annual Report on Form 10-K, unless otherwise stated or the context otherwise requires, the terms “we” “us,” “our,” and the “Company” refer to Pure Earth, Inc. and our consolidated subsidiaries taken together as a whole.

PART I

Item 1. Business.

Forward-Looking Statements

Except for the historical information presented herein, the matters discussed in this Annual Report on Form 10-K and the information incorporated herein contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that relate to future events or future financial performance. These statements can be identified by the use of forward-looking terminology such as “believes,” “plans,” “will,” “intends,” “seek,” “scheduled,” “future,” “projects,” “potential,” “continue,” “estimates,” “hopes,” “goal,” “objective,” “expects,” “may,” “should,” “could” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties.

We caution you that no statements contained in this annual report should be construed as a guarantee or assurance of future performance or results. You should not place undue reliance upon any forward-looking statements. Forward-looking statements involve risks and uncertainties, including those discussed in “Item 1A. Risk Factors” and elsewhere throughout this annual report and in other reports we file with the Securities and Exchange Commission. The actual results that we achieve may differ materially from any forward-looking statements due to the effect of such risks and uncertainties. These forward-looking statements are based on current expectations, and, except as required by law, we assume no obligation to update this information whether as a result of new information, future events or otherwise. Readers are urged to carefully review and consider the various disclosures made by us in this annual report and in our other reports filed with the SEC that attempt to advise interested parties of the risks that may affect our business, financial condition and results of operations.

Company Overview

We are a diversified environmental company that specializes in delivering innovative, unique and sustainable solutions to alternate energy and recovery services in the United States. Our corporate objective is the management of complex projects to maximize the beneficial energy, land resource reuse and recycling potential of various materials throughout the United States. .We are a provider of integrated environmental transportation, disposal, recycling, consulting, engineering and related services, enabling the beneficial reuse of soils and industrial waste streams into approved disposal facilities or Brownfield sites. We operate in the following four reportable business segments, which serve as strategic business units through which our environmental products and services are generally organized:

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.

Environmental Services – We provide a wide range of environmental consulting and related specialty services, including:

environmental investigation and engineering services to commercial and residential customers; and

locating and acquiring Brownfield sites for subsequent development, restoration and potential resale with 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.

Prior to December 2009, we also maintained a Concrete Fibers operating segment. The Concrete Fibers business was acquired on April 1, 2008 and served to recycle used carpet fibers into environmentally sustainable, or “green,” fiber material used to reinforce concrete. In this segment, we also repackaged and distributed various other fibers as additives to concrete products. In December 2009, we decided to seek a buyer for this business segment. For this reason, the operating results and assets and liabilities previously presented within this segment have been reclassified as discontinued operations in our audited financial statements as of and for the years ended December 31, 2009 and 2008. We sold substantially all of the assets of our Concrete Fibers operating segment on March 31, 2010. See “Acquisitions Related to Discontinued Operations.”

Organizational Summary

Pure Earth, Inc., a Delaware corporation, is a holding company headquartered in Trevose, Pennsylvania that conducts substantially all of its business through its wholly-owned operating subsidiaries and a 50%-owned joint venture. The following table summarizes the operations conducted through our wholly-owned subsidiaries and 50%-owned joint venture.

Subsidiary/Joint Venture	Immediate Parent Entity	Business Segment	Headquarters	Primary Operations	Primary Target Markets
Pure Earth Transportation & Disposal, Inc. (“PE Disposal”)	Pure Earth Materials, Inc.	Transportation and Disposal	Lyndhurst, New Jersey	Transportation and disposal of contaminated and clean soils	New York City metropolitan area and northern New Jersey

Juda Construction, Ltd. (“Juda”)	Pure Earth Materials, Inc.	Transportation and Disposal	Lyndhurst, New Jersey	Owner and sublessor of trucks.	New York City metropolitan area and northern New Jersey

PEI 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 Island

Pure Earth Treatment (NJ), Inc., formerly Casie Ecology Oil Salvage, Inc. (“Casie”)1	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 States

Pure Earth Recycling (NJ), Inc., formerly MidAtlantic Recycling Technologies, Inc. (“MART”) 1	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 States

Subsidiary/Joint Venture	Immediate Parent Entity	Business Segment	Headquarters	Primary Operations	Primary Target Markets
Rezultz, Incorporated (“Rezultz”)	Pure Earth, Inc.	Treatment and Recycling	Vineland and Millville, New Jersey	Owns 32 acres of real property on which Pure Earth Treatment (NJ), Inc., Pure Earth Recycling (NJ), Inc. and New Nycon operations are conducted, as well as recycling equipment to process and recycle waste products	Northeastern United States

Advanced Catalyst Recycling, LLC (50%-owned joint venture) (“ACR”)	Pure Earth Treatment (NJ), Inc.	Treatment and Recycling	Hudson, New York	Identify, develop and market recycling solutions for generators of spent metal catalysts	United States

Pure 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 States

Pure Earth Environmental, Inc. (“PE Environmental”)2	Pure Earth, Inc.	Environmental Services	Waterbury, Connecticut	Environmental engineering and consulting services for commercial and residential customers	Connecticut and New York

Subsidiary/Joint Venture	Immediate Parent Entity	Business Segment	Headquarters	Primary Operations	Primary Target Markets
Bio Methods LLC (“Bio Methods”)	Pure Earth, Inc.	Environmental Services	Waterbury, Connecticut	Disposal of regulated medical waste from doctors’ offices, hospitals and nursing homes	Connecticut

Geo Methods LLC (“Geo Methods”) 2	Pure Earth, Inc.	Environmental Services	Waterbury, Connecticut	Environmental well drilling for commercial customers	Connecticut

Echo Lake Brownfield, LLC (“Echo Lake”)	PE Environmental	Environmental Services	Waterbury, Connecticut	Owns Brownfield site	Central Connecticut

HFH Acquisition Corp. (“HFH Acquisition”) 2	Pure Earth, Inc.	Environmental Services	Trevose, Pennsylvania	Formed for the purpose of purchasing an interest in a Brownfield site	New Jersey and New York

Pure Earth Materials, Inc. (“PE Materials”)	Pure Earth, Inc.	Materials	Lyndhurst, New Jersey	Rock crushing and material recycling operation	New York City metropolitan area and northern New Jersey

Pure Earth Materials (NJ) Inc. (“PE Materials (NJ)”)	Pure Earth, Inc.	Materials	Trevose, Pennsylvania	Holding company for material recycling operation	None

New Nycon, Inc. (“New Nycon”)	Pure Earth, Inc.	As of March 31, 2010, discontinued operations (formerly the Concrete Fibers segment)	Westerly, Rhode Island	Formerly a distributor of fiber products and related accessories to the concrete industry	None presently

1 Effective January 1, 2010, Pure Earth Treatment (NJ), Inc. was merged into Pure Earth Recycling, (NJ), Inc. and the newly combined entity will conduct its operations under the name Pure Earth Recycling (NJ), Inc. from January 1, 2010 going forward.

2Effective January 1, 2010, Geo Methods LLC was merged into Pure Earth Environmental Inc. The combined entity was then merged into HFH Acquisition Corp., and was renamed Pure Earth Environmental, Inc.

Pure Earth, Inc.’s principal executive offices are located at One Neshaminy Interplex, Suite 201, Trevose, Pennsylvania 19053, and its telephone number is (215) 639-8755.

Formation of Our Business

We were originally formed as a Delaware corporation on February 13, 1997 under the name Info Investors, Inc. with the original purpose of engaging in infomercial marketing, but this business never actively developed and was abandoned in 2006. On January 17, 2006, in connection with our acquisition of South Jersey Development, Inc., we changed our name to Pure Earth, Inc. and began to focus our efforts on the acquisition and operation of companies that provide services related to the transportation and disposal of clean and contaminated soils, while developing Brownfield sites for disposal purposes.

Development of Our Business and Significant Acquisitions

Acquisition of South Jersey Development, Inc.

Effective January 20, 2006, we acquired all of the outstanding stock of South Jersey Development, Inc. in exchange for 9,300,000 shares of our common stock. As a result of this acquisition, the shareholders of South Jersey Development, Inc. owned approximately 76% of our outstanding common stock and controlled our board of directors, and the former director and officer of Info Investors resigned, resulting in a change in control. We also repurchased and retired 1,894,528 shares of our common stock from certain of our existing stockholders at a cost of $150,500. The name South Jersey Development, Inc. was subsequently changed to Pure Earth Materials, Inc. on February 26, 2007.

Pure Earth Materials, Inc., or PE Materials, was originally formed in November 2005 by Mark Alsentzer, our President and Chief Executive Officer, to provide alternative disposal services for lightly contaminated soils and construction debris instead of disposing of it in a landfill. In addition, PE Materials was formed to identify alternative quarry sites in Pennsylvania in an effort to provide lower-cost waste disposal alternatives to customers in the northern New Jersey and New York markets. By planning to dispose of wastes in quarry sites approved to accept such wastes instead of in landfills, PE Materials originally sought to provide disposal services to its customers at a reduced cost and with less negative environmental impact as compared to landfill disposal options.

Acquisitions Related to Transportation and Disposal Segment

Effective January 20, 2006, PE Materials completed the acquisition of all of the issued and outstanding common stock of American Transportation & Disposal Systems, Ltd. (now known as Pure Earth Transportation & Disposal, Inc., or PE Disposal). PE Disposal, a wholly owned subsidiary of PE Materials, is in the environmental disposal and transportation business within the New York City metropolitan area. PE Disposal hauls and disposes of soils and helps customers beneficially reuse those soils. At that time, we also acquired certain assets of Whitney Contracting, Inc., a company that also operated in the transportation and disposal business. We acquired the shares of American Transportation & Disposal Systems, Ltd. and the Whitney assets in exchange for an aggregate of 1,250,000 shares of our common stock, valued at $1.00 per share for accounting purposes. As a condition to closing this transaction, we completed a private placement of 1,700,000 shares of our common stock at a price of $1.00 per share, raising approximately $1.7 million in proceeds.

Effective January 20, 2006, PE Materials also acquired all of the issued and outstanding stock of Juda Construction, Ltd., a trucking and equipment company that at the time had 34 company-owned trucks and the ability to subcontract up to 100 additional trucks as needed to meet any increase in customer demand. In connection with the acquisition, the sole shareholder of Juda received 300,000 shares of our common stock, valued for accounting purposes at $1.00 per share.

On November 19, 2007, we formed a new wholly owned subsidiary, PEI Disposal Group, Inc., whose business includes the purchase, sale, treatment, processing, transport and disposal of contaminated and clean soils. On November 20, 2007, PEI Disposal Group acquired certain intangible assets in the form of a five-year sales representative agreement and a covenant not to compete from Soil Disposal Group, Inc., a company operating in the soil disposal and transportation business primarily in the New York City metropolitan area and on Long Island. In connection with this asset acquisition, we entered into a five-year sales representative agreement and a five-year non-competition agreement with Soil Disposal and four of its sales representatives. Under these agreements, Soil Disposal and these sales representatives will market and promote our soil disposal and transportation services.. As consideration for this acquisition, we issued to Soil Disposal a non-interest bearing promissory note in the principal amount of $640,000 and 100,000 shares of our common stock valued at $3.00 per share. Soil Disposal is also entitled to receive a maximum of 300,000 additional shares of our common stock contingent upon the PEI Disposal Group’s net sales meeting specified thresholds during the three years after the closing date.

Acquisitions Related to Treatment and Recycling Segment

Acquisition of PE Recycling

On March 30, 2007, we purchased all of the outstanding shares of common stock from the shareholders of the following three entities located in Vineland, New Jersey: Pure Earth Recycling (NJ), Inc., Pure Earth Treatment (NJ), Inc. (which has since been merged into Pure Earth Recycling (NJ), Inc., and Rezultz, Incorporated, collectively referred to as “PE Recycling”. Under the terms of the stock purchase agreement, as amended, as consideration for the acquisition of the shares of the PE Recycling companies, we issued to the PE Recycling selling stockholders an aggregate of 338,494 shares of our common stock, net of certain post-closing adjustments settled through November 2007. These shares of common stock were valued at $3.00 per share. Until March 30, 2010, the PE Recycling selling stockholders could sell no more than 10,000 of these shares during any calendar month in open-market transactions.

Under the amended stock purchase agreement, if PE Recycling and the former owners obtained certain additional environmental permits and installed certain equipment, then within 90 days thereafter we would be obligated to issue to certain of the PE Recycling selling stockholders an aggregate of 400,000 additional shares of our common stock. The recipients of these additional shares would not be permitted to sell, assign or otherwise transfer the additional shares for a period of one year from the date of issuance. In addition, under the stock purchase agreement, certain of the PE Recycling former owners may be entitled to receive up to in the aggregate 435,044 additional shares of our common stock, based upon an evaluation of specified closing date accrued liabilities and the potential settlement of an insurance claim. As of December 31, 2009, 102,288 additional shares of our common stock were deemed to have been earned under the terms of the stock purchase agreement, however, we have not issued any shares of additional stock relating to these contingencies as a result of ongoing post-closing claim litigation and negotiations.

At closing, we paid to Gregory Call , the former President of each of the PE Recycling entities, the sum of $1.0 million in cash, in partial satisfaction of an existing $4.2 million loan previously made by Mr. Call to PE Recycling. After closing, the amount payable to Mr. Call under this stockholder loan was reduced by approximately $973,000 in consideration of post-closing adjustments under the stock purchase agreement and the acquisition by Mr. Call from PE Recycling of certain PE Recycling loans receivable. Furthermore, as of November 15, 2007, Mr. Call converted approximately $1.2 million of the amount payable to Mr. Call under this stockholder loan into 373,615 shares of our common stock. The remaining $1.0 million outstanding under these obligations was evidenced by a subordinated promissory note dated as of November 15, 2007 payable and guaranteed by PE Recycling. This subordinated promissory note bears interest at a rate of 6.77% per year. An initial payment of $333,333 was due on December 31, 2009, with the remaining principal and accrued but unpaid interest due on December 31, 2010. As of December 31, 2009, the $1.0 million note payable, plus accrued interest, remains outstanding.

On June 17, 2009, we issued a notice of setoff to Mr. Call notifying him of the our intent to set-off post-closing claims in the amount of approximately $1.1million against this note payable and shares of Pure Earth common stock that may otherwise be due to the former owner as permitted under the stock purchase agreement. In September 2009, we filed a complaint in the United States District Court for the Eastern District of Pennsylvania against the former owner, alleging in excess of $4.0 million in damages resulting from Mr. Call’s alleged breach of contract, and seeking from the Court a declaratory judgment as to our right of setoff as to these post-closing claims. See “Part I, Item 3 – Legal Proceedings – Litigation – PE Recycling Litigation.”

Formation of Catalyst Recycling Joint Venture

On April 30, 2007, PE Recycling entered into an agreement to form Advanced Catalyst Recycling, LLC, or ACR. ACR is a joint venture between a third party, Advanced Recycling Technology, Inc., or ARTI, and Pure Earth Treatment (NJ), Inc.. Each of Pure Earth Treatment (NJ), Inc. and ARTI contributed $1,000 in start-up capital to this joint venture. Each of Pure Earth Treatment (NJ), Inc. and ARTI owns a 50% voting and profit interest in ACR and possesses equal decision making power. We have entered into this joint venture with ARTI to identify and enter into recycling opportunities in the market for spent metal catalysts and to develop and market recycling solutions to the generators of those catalysts. As a result of the economic downturn and generally unfavorable pricing in the marketplace for precious metals, our operations through ACR were minimal during the twelve months ended December 31, 2009, with the exception of processing and disposing of certain waste materials from existing inventory.

Formation of PE Energy

On March 20, 2008, we formed PE Energy as a start-up business to explore recycling of alternative wastes into fuels and other alternative energy initiatives. Since that date, PE Energy has been in the process of seeking to identify opportunities and sites to begin the treatment and recycling of alternative wastes. In September of 2008, we began brokering the disposal of certain industrial waste materials through the addition of a small sales force. The revenues derived from these operations have experienced steady growth in 2009, and have provided additional capital to help fund PE Energy during its start-up phase.

Acquisitions Related to Environmental Services Segment

On November 30, 2006, we acquired all of the issued and outstanding stock of Terrasyn Environmental Corporation, now known as Pure Earth Environmental, Inc., an environmental consulting and engineering firm offering a wide range of services to industrial, commercial and public clients. PE Environmental conducts environmental investigations and provides project management and information and data management services, as well as regulatory compliance support. In addition to providing these services to our customers, we utilize these services to support our Brownfield redevelopment efforts.

We acquired PE Environmental in exchange for 280,000 shares of our common stock, valued at $2.00 per share. In connection with the acquisition of PE Environmental, on November 30, 2006, we also acquired all of the outstanding membership units of three Delaware limited liability companies: Environmental Venture Partners, LLC, or EVP, Geo Methods, LLC (which has since been merged into PE Environmental]) and Bio Methods, for a combined purchase price of $250,000 in cash. Bio Methods is engaged in the disposal of regulated medical waste from doctors’ offices, hospitals, and nursing homes in Connecticut. Geo Methods, LLC was initially engaged in environmental well drilling for commercial customers that were primarily located in Connecticut and New York. EVP did not conduct any business since we acquired it and was subsequently dissolved on January 5, 2007.

On September 14, 2007, PE Environmental formed a wholly owned subsidiary, Echo Lake Brownfield, LLC. Echo Lake was formed for the purpose of owning and developing a Brownfield site in the state of Connecticut. On January 3, 2008, we completed the acquisition of this Brownfield site, located in central Connecticut, for a purchase price of $50,000, and assumed estimated environmental cleanup costs of approximately $233,000. We also spent approximately $57,000 on site evaluation costs prior to purchasing the Brownfield site. Since the date of acquisition in January of 2008, we have spent approximately $0.3 million in additional legal, permitting and engineering costs to prepare the site to accept incoming materials.

Acquisitions Related to Materials Segment

Our Materials segment was initially formed with the acquisition of South Jersey Development, Inc., which operates our Lyndhurst, New Jersey rock crushing facility and prior to October 2008, also operated a rock crushing facility in North Bergen, New Jersey. In October 2008, we terminated our lease agreement for the North Bergen facility and subsequently shifted the rock crushing operations previously conducted there to the facility in Lyndhurst, New Jersey.

Effective January 20, 2006, we acquired a customer list from Alchemy Development, LLC, the sole member of which was Philip Guenzer. Mr. Guenzer currently serves as the Vice President of Technical Services for PE Materials. In exchange for the customer list, we issued 75,000 shares of our common stock to Mr. Guenzer, valued at $1.00 per share for accounting purposes. However, due to the loss of these customers during 2007, we concluded that this asset had been impaired and we therefore wrote off the remaining value of the asset.

Acquisition Related to Discontinued Operations

Effective April 1, 2008, New Nycon, Inc., our wholly owned subsidiary, completed the purchase of specified assets from Nycon, Inc., a concrete reinforcing fiber company headquartered in Westerly, Rhode Island. New Nycon had a sales and distribution network that included 35 domestic and 20 international sales representatives with distribution centers located in California, Florida and Connecticut. Under the acquisition agreement, we acquired Nycon’s accounts receivable, equipment and all intangible assets and intellectual property. Prior to this acquisition, Nycon was engaged in the business of processing, packaging and selling reinforcing fibers used as a component of concrete materials. The purchase price for this acquisition included the assumption of obligations of the seller under $225,000 in bank notes payable, and our agreement to pay to Nycon 20% of the free cash flow derived from the operation of the Nycon assets in each of the next four years, up to a maximum cumulative amount of $900,000, not including $75,000 of debt that the former owner has agreed to repay out of such cash flow. In December 2008, the former owner of Nycon agreed to cancel $150,000 of our repayment obligations under the bank notes in exchange for the ability to earn an additional $120,000 of compensation in the form of contingent earn-out payments. We were also required to contribute a minimum of $300,000 to New Nycon on an as-needed basis for working capital purposes. As of December 31, 2009, we made net advances of approximately $0.7 million to Nycon, and an additional $0.1 million of net advances in the first quarter of 2010.

As a result of the additional capital contributions and performance of Nycon, we amended the asset purchase agreement in June of 2009, reducing the former owner’s earn-out from 20% to 10% and the maximum earn-out amount from $1,020,000 to $600,000. In December of 2009, we eliminated the earn-out and converted the $75,000 note payable to the former owner into shares of our Series C Convertible Preferred Stock valued at $37,500.

In connection with the original acquisition of Nycon, we entered into an exclusive licensing agreement with the holder of a patent covering the process for making and using reinforcing fiber from post-consumer carpet waste as a substitute for new fibers. During the term of the license agreement, we agreed to pay the licensor an annual royalty fee equal to 30% of New Nycon’s earnings before taxes, depreciation and amortization, and we also paid the patent holder 15,000 shares of our common stock, which shares were placed in escrow pending the satisfaction by New Nycon of certain financial objectives. The license agreement was to terminate upon the expiration of the last of the licensor’s patent rights covered by the agreement.

In December 2009, we decided to discontinue the operations of New Nycon and began to actively seek to sell the company or dispose of its assets and liabilities. The decision to discontinue the operations of New Nycon was precipitated by continuing working capital requirements at New Nycon, which limited our liquidity and capital resources available for the operations of our core business units. On March 31, 2010, we completed the sale of substantially all of the assets and liabilities of New Nycon and received at closing approximately $0.2 million in cash, and the right to receive an additional $50,000 in cash 90 days after the closing, subject to reduction for any accounts receivable purchased by the buyer and which receivables are ultimately not collected during such 90-day period. We have agreed to indemnify and hold the buyer harmless for certain liabilities, subject to a cap of $300,000 and a $10,000 deductible. We and New Nycon also entered into non-competition and non-solicitation agreements with the buyer respect to this business. In connection with the asset sale, we and the licensor terminated the license agreement for no additional consideration. As a result of doing so, we also have deemed the 15,000 shares in escrow forfeited because the financial objectives were not satisfied prior to the termination of the license agreement.

Our Business Strategy

Our overall business strategy consists of the following key elements:

Continue to Focus on Our Core Transportation and Disposal Business. We intend to expand and grow this segment, which involves the management, transportation and disposal of excavated clean and contaminated soils from urban construction projects throughout the mid-Atlantic and New England regions. Since beginning our operations in this marketplace in 2006, we have expanded our sales force and sought to broaden and diversify customer base in an attempt to penetrate further the transportation and disposal market. We seek to market our transportation and disposal services to Fortune 500 companies, which we believe will present a significant source of large customer accounts.

Develop and Grow Revenues from “Green” Construction Materials and Related Products. We will seek to sell a growing variety of construction materials produced by reusing materials transported from construction job sites. We seek to identify new construction sites strategically located in the New York City metropolitan area. These new sources of reusable material, when coupled with the operation of our higher-capacity rock crushing unit, will serve to generate additional revenues for our Materials segment.

Strive to Be a Leading Provider of Treatment and Recycling Services. Waste disposal and recycling can be a costly problem for owners and developers of various real estate projects and properties. Our Treatment and Recycling segment maintains a permitted facility to process hazardous and non-hazardous waste for beneficial reuse, which costs the customer on average 50% less than incineration. We also intend to leverage our geographic breadth and services portfolio to offer our customers a single source for treatment and recycling services, thereby simultaneously expanding the options available to our customers and reducing the cost of providing those services. We plan to expand our permits to accept higher levels of contaminated wastes as well as increased volumes of waste.

Recycle Waste Products into Alternate Fuels. We plan to develop and process high BTU waste products into a form of fuel that can be used in place of or together with fossil fuels such as coal, natural gas and oil. We are currently investigating potential sites in the northeastern United States to commence operations.

We are also exploring various initiatives to process selected energy materials and provide technical support for the use of alternative fuels in an effort to reduce costs, conserve fossil fuels and reduce the carbon footprint of the energy consumer. Specifically, we are seeking to provide alternative fuel and raw materials services and solutions to the cement industry and other industrial users of fossil fuels, produce alternative fuels from a variety of recyclable materials, including bio-solids, and to provide engineering and environmental support for our products and services.

We believe that these alternative fuels can serve, in part, as replacements for conventional fossil fuels and can be recycled from post-industrial and post-consumer byproducts. A significant degree of processing is typically required in order to use these materials as an alternative fuel source in the conventional combustion process. We seek to partner with the end users of these alternative fuels to provide the procurement of the raw materials, processing and engineering of the material into alternative fuels, and delivery of the alternative fuels to the end user.

Expand Geographic Reach and Capacity of Environmental Recycling Facilities. We will generate additional revenues through the growth and expansion of our existing PE Recycling soil treatment and processing facilities. We intend to seek opportunities to grow our existing refinery waste treatment and processing business through increased capacity and by providing the ability to treat or recycle additional waste streams.

Leverage Brownfield Sites to Drive Environmental Services Revenue. We intend to increase, over the long-term, the number of Brownfield sites that we own, control, operate or develop. We believe that, by obtaining access to new disposal sites closer to the markets for our transportation and disposal business, these properties will provide us with potential sources of revenue and lower operating costs, as well as promote additional opportunities for our environmental consulting and engineering services.

Our Integrated Environmental Services

We provide a wide array of integrated environmental services in our four reportable business segments: Transportation and Disposal, Treatment and Recycling, Environmental Services and Materials. Additional financial information regarding our reportable segments appears in Note 20 to our consolidated financial statements as of and for the years ended December 31, 2009 and 2008.

Transportation and Disposal Segment

Disposal of Urban Construction Site Materials

Our core business is the management of excavated clean and contaminated soils, liquids and other materials at urban construction projects in New York, New Jersey and Pennsylvania for beneficial reuse. We provide transportation services through subcontractors which we use to transport materials to various disposal facilities throughout these areas. Our disposal network handles the following types of facilities:

clean soil reuse

quarry reclamation

landfill cover

demolition debris

hazardous waste

residual waste

contaminated soils reuse and recycling

We have exclusive and preferred arrangements with several soil reuse facilities, landfills and other disposal outlets, allowing us to offer our customers competitive pricing on a variety of soils and waste types. These types of agreements allow us to manage the various types of waste and quantities from our customers into the most economical disposal outlets by providing fixed prices over varying periods of time. Our technical staff is knowledgeable in waste classification and the capabilities and limits of area soil reuse facilities, which gives us the ability to provide our customers with a greater number of disposal and cost options.

Landfill Services

Currently, New Jersey is burdened with over 300 abandoned landfills in need of governmentally mandated attention. With restrictions on suburban sprawl taking hold in New Jersey and increasing financial incentives available for cleanup of contaminated sites, former landfills — many of which were closed in the 1970s and 1980s for environmental reasons — and other contaminated lands are becoming increasingly popular as sites for industrial, retail and residential development. Recent legislation has extended the parameters within which closure can be completed privately using beneficial reuse of new materials through New Jersey’s Brownfield law. These landfill sites provide an outlet for recycled material from our Treatment and Recycling facilities and from our other customers, depending upon the level of contamination and type of waste material.

Treatment and Recycling Segment

Years of heavy concentrated industrial activity in the northeastern United States have created a large volume of residual waste that must be managed economically and in compliance with solid waste regulations. Although each jurisdiction may have a different definition of what may constitute residual waste, it is generally defined as unprocessed garbage, refuse or other discarded material. Typically, residual waste must either be beneficially reused or placed in a landfill.

We specialize in developing long-term beneficial reuses of residual waste in response to market needs. Our technical specialists have developed an expertise in beneficial reuse of wastes through years of experience in the area. We provide services to transport, process and dispose of a variety of residual waste streams, including:

metal processing slags and spent sands

inert filter cakes

refinery tank bottoms

biosolids

coal tar soils

demolition debris

high BTU, or heat value, materials for alternative energy sources

We have access to the following facilities available for residual waste reuse:

land application sites

cement kilns

asphalt plants

landfill cover projects

We also research and identify other residual waste reuse facilities for a particular waste stream that we do not process ourselves. To be able to provide our customers with cost- and time-efficient service, we seek to obtain and maintain strategic partnerships with other facilities that process a wide variety of residual wastes.

PE Recycling owns and operates a parallel-flow thermal desorption unit, or TDU. Thermal desorption is a process that uses heat to physically separate contaminants from the soil. This process is different from incineration, which uses extreme heat to destroy the contaminants in the soil. Thermal desorption systems work well at, among other things, separating organic components from refining wastes. These systems can separate solvents, pesticides, polychlorinated biphenyls, or PCBs, dioxins and fuel oils from contaminated soil. Thermal desorption generally does not work on most metals, which require higher temperatures to vaporize the metallic particles. Nevertheless, thermal desorption is the treatment method of choice at many Superfund sites.

Our TDU treats mainly petroleum and coal tar contaminated soils by heating them in a primary treatment unit, or PTU, to predetermined temperatures ranging from about 400 to 1,000 degrees Fahrenheit. The PTU consists of a rotary drum in which the contaminated materials enter at the burner end of the PTU and the gases and hot treated materials exit the opposite end. At the appropriate and predetermined temperature, the contaminants turn to vapor and separate from the soil. At the soil discharge end of the PTU, clean, treated soil exits, which after cooling is ready for re-use.

The vaporized airborne contaminants exit the PTU and are subjected to further heating in a secondary treatment unit, or STU. The STU thermally treats the exhausted airborne contaminants from the PTU to predetermined temperatures ranging from approximately 1,400 to 1,800 degrees Fahrenheit. The hydrocarbons that were separated from the previously contaminated soils are then converted into carbon dioxide and water vapor, which are then cooled and filtered through a device called a baghouse. The baghouse collects and filters the fine, treated soil dust that remains in the exhaust gases.

We believe that our parallel-flow TDU system is safer than the conventional counter-flow TDUs. The typical counter-flow system requires the baghouse to follow the PTU and filter the airborne particulate from the exhaust gases prior to the gases entering the STU. As a result, in a counter-flow system, the evaporated hydrocarbon contaminants from the PTU can condense on the baghouse bags, which can cause catastrophic fires in the baghouse.

Refinery Services

We believe the refinery industry is responding to increased demand for gasoline and other fuels by investing capital obtained through higher fuel prices into refinery expansion. Regulatory restrictions impact the handling and disposal of these hazardous wastes. For example, U.S. environmental regulations require incineration as the only method of disposal of these materials. Historically, an alternative was to transport these wastes to Canada to be placed in a landfill. The Province of Ontario has enacted the Land Disposal Restriction Program, or LDR, which, effective January 1, 2010, requires that these waste materials be treated prior to being disposed of into a landfill. We believe PE Recycling is currently one of three facilities in the United States, and the only facility in the Northeast, with the proper permits to process this hazardous waste into non-hazardous reusable material. We process this material through a centrifuge system to reclaim the oil, discharge the water, and treat the solids. As a result of this process, we can cause this material to be reclassified from a hazardous to a non-hazardous status. Recycled oil from tank bottoms and other sources is sold to local industrial furnaces as fuel blend stock or to cement kilns for use as fuel.

In March 2008, we formed PE Energy for the purpose of exploring the recycling of wastes into alternative fuels on a “green” basis. We have identified a process of recycling of waste that had originally been destined for landfills to be treated and transformed into a reusable, alternative fuel that can be sold back to various industries. A specific and targeted application can be used with cement kilns. This process has been successfully developed and utilized in Europe and we believe it can successfully bring this process to the US markets. We currently have one facility under agreement to begin installation of this process in 2010. Our business strategy to recycle high BTU waste streams into alternative fuels is driven by our efforts to provide lower cost recycling outlets and “green” recycling alternatives to customers seeking price differentiation or demanding 100% recycling of their waste products, as well as by the significantly higher cost of fossil fuels.

Many waste streams have high BTU value but yet are currently being disposed of in landfills. We believe that market demand exists for alternative commercial fuel products that can be recycled from these high BTU wastes. We are seeking to develop or acquire operations that will allow us to identify these wastes and process them into a readily accepted alternative fuel, which then can be sold to end users at a discounted price compared to fossil fuel prices. We believe that many customers will seek to have their waste streams recycled and converted into alternative energy fuels once they are educated as to the “green” and cost-effective characteristics of these processes and materials.

Environmental Services Segment

Engineering and Consulting Services

We offer environmental consulting and engineering services to industrial, commercial and other third party clients. We also have several well drilling rigs used exclusively in connection with providing consulting services to our customers. We have designed and implemented programs that have blended technical, business and compliance-related strategies on behalf of our clients. All of these services are required for Brownfield site redevelopment. The projects that we undertake range in size from simple one-time tasks, to multi-phase complex engineering programs.

Medical Waste Disposal

We have a small medical waste collection and disposal business that services customers in Connecticut and New York.

Brownfield Site Redevelopment

We seek to identify Brownfield sites that we can own, operate, control or develop to provide disposal outlets to customers and facilities in the northeastern United States, which in turn will place our services closer to their markets. We select these Brownfield sites based upon cost, capacity, permit considerations and proximity to these customers and facilities. At present, we currently own one Brownfield site in central Connecticut. Subject to the availability of resources, our goal is to identify and acquire additional Brownfield sites that will complement our existing integrated environmental services.

Where feasible, we intend to utilize our own Environmental Services, Transportation and Disposal and Treatment and Recycling business segments to assist in these efforts. By doing so, we will be able to perform the necessary work to revitalize these properties on a more cost-effective basis. Our integrated environmental services platform will allow us to conduct environmental consulting and engineering work efficiently and reduce the amount of time needed to rehabilitate the property. Further, our consulting and regulatory expertise will help us to navigate among the relevant and numerous environmental regulatory agencies, requirements and personnel without having to engage costly outside consultants or contractors to do so. Ultimately, we intend to sell our Brownfield sites as productive, usable land for industrial, commercial or residential development, depending on the particular property and location. By decreasing our costs of rehabilitation, we believe that our Brownfield site redevelopment program will become a successful part of our overall business strategy.

Materials Segment

We recognize the opportunity and value in recycling, reprocessing and reselling materials that we remove from jobsites, especially to support “green” construction efforts. We currently produce a variety of clean, recycled construction materials for customers throughout our service area. For example, we accept material such as large rock from construction sites. We then crush the stone and aggregate from those materials at our rock crushing and recycling facility in Lyndhurst, New Jersey and resell the recycled stone back to contractors, wholesalers and retail construction materials suppliers.

We recycle and resell crushed stone (11/2”, 3/4” and 3/8” stone and stone dust) and recycled aggregate, including dense grade aggregate. All materials offered for sale are intended to meet prevailing specifications for their proper use.

Discontinued Operations – Concrete Fibers

Effective April 1, 2008, New Nycon, our wholly owned subsidiary, acquired certain of the assets of Nycon, Inc. As part of our acquisition of Nycon, we entered into an exclusive, worldwide license agreement with the holder of certain patented technology for making and using a produce line of concrete fibers. Upon entering into this license agreement, we paid the licensor a fee of 15,000 shares of our common stock, which 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.

In December 2009, we decided to discontinue the operations of New Nycon and began to actively seek to sell the company or dispose of its assets and liabilities. See “— Development of Our Business and Significant Acquisitions — Acquisition Related to Discontinued Operations.” On March 31, 2010, we completed the sale of substantially all of the assets and liabilities of New Nycon. In connection with the asset sale, we and the licensor terminated the license agreement for no additional consideration. As a result of doing so, we also have deemed the 15,000 shares in escrow forfeited because the financial objectives were not satisfied prior to the termination of the license agreement.

Impact of 2009 Stimulus Plan

In February of 2009, President Barack Obama and Congress approved a $787 billion economic stimulus package that included among its list of priorities additional funding of $120 billion for infrastructure and science and $37.5 billion for energy. We believe that the earmarking of funding for infrastructure projects and renewable energy plans could have a positive impact on our future operating results. The most immediate effects of the stimulus plan have been and are expected to continue to be in our Transportation and Disposal segment, which benefits from the portion of the funding allocated to construction and development projects in the northeastern United States. We currently have a backlog of approximately $4.0 million relating to infrastructure and public works jobs in the northeastern United States, as well as additional infrastructure and public work on which we are currently bidding.

Other significant impacts of this stimulus plan are expected to be in relation to our Treatment and Recycling segment and the development of PE Energy, which is currently exploring various initiatives to process selected energy materials and provide technical support for the use of alternative fuels in an effort to reduce costs, conserve fossil fuels and reduce the carbon footprint of the energy consumer. We believe that the additional funding allocated to renewable energy and energy research should serve to assist us in the development of our PE Energy initiatives by providing for access to additional funding and incentives for companies to engage in increased renewable energy strategies.

Raw Materials

Our Materials segment requires us to obtain raw material in the form of uncrushed and unprocessed rock. We typically obtain this material from local construction and excavating job sites, whereby the supplier pays us to dispose of the rock taken away from the construction site. We believe that the current marketplace contains a sufficient amount of raw materials, not from any one particular supplier, to meet our supply needs for the Materials segment.

Sales and Distribution

Transportation and Disposal, and Materials Segments

Our Transportation and Disposal and our Materials segments share an independent sales force consisting of four representatives, as well as several other sales personnel and consultants, with significant experience in the soil transportation and disposal industry. This sales team utilizes publicly accessible sources to identify companies with potential excavation, transportation and disposal needs. These potential sales leads might include, among others, construction contractors, tank contractors, remediation contractors and environmental consultants. Once identified, members of our sales team introduce themselves to these companies by direct contact. Our sales team can assist potential customers in developing a cost-effective excavation, transportation and disposal plan, in part by identifying a suitable disposal matrix to various facilities for the materials. Factors that typically guide our facility selection include tonnage, type and level of contaminants present, jobsite location and geophysical characteristics of the site. Where appropriate, our Transportation and Disposal segment’s sales force may also generate internal leads for other of our segments, including Treatment and Recycling and Materials.

Treatment and Recycling Segment

Our Treatment and Recycling segment is staffed by an internal sales force that focuses on commercial, industry and refinery companies. This internal sales force also focuses on construction, tank and remedial contractors who have complex environmental projects requiring equipment and personnel on site to facilitate the removal of wastes.

Environmental Services Segment

Our Environmental Services segment has several project managers who call on engineers, consultants and contractors to market their services. They also receive leads from sales personnel working for our other segments. On large and complex projects, it may require several of our sales and marketing personnel working together with company managers to sell and perform the services necessary to complete the project on time and within cost parameters.

Customer Concentration

Our four largest customers comprised approximately 20% of our consolidated revenues for the year ended December 31, 2009 and three customers comprised 19% of our consolidated revenues for the year ended December 31, 2008.

With respect to our four current operating segments, our customer concentration was as follows:

Transportation and Disposal. Three customers accounted for approximately 22% of this segment’s revenues for the year ended December 31, 2009 and three customers accounted for 36% of its revenues for the year ended December 31, 2008.

Treatment and Recycling. Three customers accounted for approximately 34% of revenues in this segment for the year ended December 31, 2009. Five customers accounted for approximately 15% of revenues in this segment for the year ended December 31, 2008.

Environmental Services. One customer accounted for approximately 13% of revenues in this segment for the year ended December 31, 2009. Two customers accounted for approximately 49% of revenues in this segment for the year ended December 31, 2008.

Materials. Five customers accounted for approximately 31% of revenues in this segment for the year ended December 31, 2009. Two customers accounted for approximately 49% of such revenues for the year ended December 31, 2008.

With respect to our former Concrete Fibers segment that is now classified as discontinued operations, one customer accounted for 11% of revenues in this segment for the year ended December 31, 2009. Three customers accounted for 17% of revenues in this segment for the period from April 1, 2008, the date that this segment’s operations began, through December 31, 2008.

Competition

We operate in highly competitive markets and face substantial competition in all phases of operations from a variety of different competitors, depending on the industry and service area. Within the waste treatment and recycling industry generally, price, transportation logistics, processing capacity and liability management are key decision drivers for potential clients. The following is a description of key competitive factors for each of our reportable business segments.

Transportation and Disposal Segment

Our Transportation and Disposal segment bases its pricing on the cost to dispose of waste into landfills or other facilities and subcontractor costs, which are impacted by the cost of fuel and the distance from the job site to the disposal outlet. The Transportation and Disposal segment faces competition from other similar trucking and disposal operations in the Northeast region, including Andrews Trucking, Ltd., Impact Environmental, Clean Earth, Inc., Leticia, Inc. and other smaller independent brokerage operations. We believe that our Transportation and Disposal operations are competitive due to our long-standing and existing contacts and customer relationships within the construction industry, and particularly in the New York metropolitan area.

Treatment and Recycling Segment

We believe our Treatment and Recycling segment offers competitive pricing due to the competitive cost structure of our recycling facilities, our ability to match waste streams to the appropriate technology, and our ability to transform contaminated wastes into reclaimed material for beneficial use. In addition, our throughput capacity and source of cost-advantaged fill materials from our Treatment and Recycling segment have allowed us to be in a position to capture the larger recycling jobs in the Northeast region. Our current Treatment and Recycling operations compete with those of, among others, Clean Earth, Inc., Clean Harbors, Inc., EMSI Services, Inc., Pure Soil Technologies, Inc. and Soil Safe, Inc. We anticipate that our proposed operations to convert high-energy BTU waste into alternative fuels will compete with the similar operations of Synagro Technologies, Inc., New England Fertilizer Company, EnerTech Environmental, Inc., Veolia Environnement and N-Viro International Corporation.

Environmental Services Segment

Within the Environmental Services segment, we believe we differentiate our operations based on several key competitive factors, including the breadth of our service offerings, price and track record. Our rehabilitation of Brownfields within this segment is aided by the use of materials and soils from our other business segments, which we believe will contribute to the success of this segment in future periods. The Environmental Services segment faces competition from other mid-size environmental consulting firms and real estate development companies, some of which may also invest in and seek to rehabilitate Brownfield sites, including Langan Engineering & Environmental Services, Roux Associates, Inc. and Birdsall Engineering, Inc.

Materials Segment

Our Materials segment faces competition from construction and contracting companies that also operate in the market for recycling construction material. The pricing of our crushed rock products is dependent upon the supply and demand of the construction industry in the New York metropolitan area for our products. Our ability to compete in this segment is also dependent on our ability to obtain unprocessed rock material from construction projects and excavation sites. We believe that our Materials segment is well positioned to compete in this area given the synergies created between this segment and our Transportation and Disposal segment, which allow us to obtain and sell materials through the same customer contacts. Our Materials segment competes with Haines & Kibblehouse, Inc., Armored, Inc., Tilcon Connecticut Inc. and Tilcon New York Inc.

Government Regulation

Our business is subject to extensive and evolving federal, state and local environmental, health, safety and transportation laws and regulations. These laws and regulations are administered by the EPA and various other federal, state and local environmental, zoning, transportation, land use, health and safety agencies in the United States. Many of these agencies regularly examine our operations to monitor compliance with these laws and regulations and have the power to enforce compliance, obtain injunctions or impose civil or criminal penalties in case of violations.

Because the major component of our business is the collection, disposal and beneficial reuse of residual waste, we expect that a significant amount of our capital expenditures will be related, either directly or indirectly, to environmental protection measures, including compliance with federal, state and local laws. For the years ended December 31, 2009 and 2008, we spent approximately $0.5 million and $0.4 million, respectively, on costs associated with complying with federal, state and local environmental regulations.

Our facilities are also subject to local siting, zoning and land use restrictions. Although our facilities occasionally have been cited for regulatory violations, except as described in “Item 3. Legal Proceedings — Environmental Matters,” we believe that each of our facilities is in substantial compliance with the applicable requirements of federal, state and local laws regulating our business, the regulations thereunder, and the licenses which we have obtained pursuant thereto.

Federal Environmental Laws and Regulations

There are many federal laws and regulations that have been enacted to regulate the environment and human health and safety. The following section summarizes just a few of the key federal laws and regulations that may affect our operations and business.

RCRA

The Resource Conservation and Recovery Act of 1976, or RCRA, is the principal federal statute governing hazardous waste generation, treatment, storage and disposal. The EPA administers compliance with RCRA and has adopted regulations implementing RCRA. These regulations govern, among other things, the handling of wastes classified as “hazardous.” The 1984 amendments to RCRA substantially expanded its scope by, among other things, providing for the listing of additional wastes as “hazardous” and providing for the regulation of hazardous wastes generated in lower quantities than under previous law. Additionally, the amendments impose restrictions on land disposal of certain hazardous wastes, prescribe more stringent standards for hazardous waste land disposal sites, set standards for underground storage tanks and provide for “corrective” action at or near sites of waste management units. Under RCRA, liability and stringent operating requirements may be imposed on a person who is either a “generator” or a “transporter” of hazardous waste, or an “owner” or “operator” of a waste treatment, storage, or disposal facility.

CERCLA

The Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA, which is also known as “Superfund”, provides for federal authority to respond directly to releases or threatened releases of hazardous substances into the environment that have created actual or potential environmental hazards. CERCLA imposes strict liability for cleanup of disposal sites upon current and former site owners and operators, generators of the hazardous substances at the site, and transporters who selected the disposal site and transported hazardous substances thereto, and those who arranged for the disposal, treatment or transport of such substances. Liability under CERCLA is not dependent on the intentional disposal of hazardous substances; it can be based upon the release or threatened release of hazardous substances as defined by CERCLA and other applicable statutes and regulations, even as a result of lawful, unintentional and non-negligent action. Liability may exist for damage to publicly owned natural resources. We are subject to potential liability under CERCLA as an owner or operator of facilities at which hazardous substances have been disposed or as a generator, arranger or transporter of hazardous substances disposed of at other locations.

Hazardous Materials Transportation Act

The Hazardous Materials Transportation Act, or HMTA, aims to protect the public against the risks to life and property inherent in the transportation of hazardous materials in commerce. The HMTA empowers the Secretary of Transportation to designate as hazardous material any “particular quantity or form” of a material that “may pose an unreasonable risk to health and safety or property.” By regulation, the HMTA generally applies to persons, who, among other things, transport or cause to be transported hazardous materials in commerce. Under the HMTA, the transportation of hazardous materials in commerce requires a shipper to:

use Department of Transportation-approved containers;

properly mark and label those containers;

use specified shipping papers; and

properly placard vehicles carrying hazardous materials.

Penalties for violating the HMTA can include compliance orders, civil penalties, and injunctive relief. Civil penalties may range from $250 to $50,000 per violation, and each day of occurrence is considered to be a separate violation.

Clean Air Act

The Clean Air Act was initially passed by Congress in 1955 to control the emissions of pollutants into the air. This law requires permits to be obtained for certain sources of toxic air pollutants, such as vinyl chloride, or criteria pollutants, such as carbon monoxide. In 1990, Congress amended the Clean Air Act to require further reductions of air pollutants with specific targets for non-attainment areas in order to meet certain ambient air quality standards. These amendments also require the EPA to promulgate regulations that control emissions of 189 hazardous air pollutants, create uniform operating permits for major industrial facilities similar to RCRA operating permits, mandate the phase-out of ozone depleting chemicals, and provide for enhanced enforcement. The Clean Air Act requires the EPA, working with the states, to develop and implement regulations that result in the reduction of volatile organic compound emissions and emissions of nitrogen oxides in order to meet certain ozone air quality standards specified by the Clean Air Act.

Clean Water Act

The Clean Water Act establishes the basic structure for regulating discharges of pollutants into the waters of the United States and regulating quality standards for surface waters. The Clean Water Act prohibits discharges into the waters of the United States without governmental authorization and regulates the discharge of pollutants into surface waters and sewers from a variety of sources, including disposal sites and treatment facilities. Under the Clean Water Act, the EPA has implemented pollution control programs such as setting wastewater standards for industry and water quality standards for contaminants in surface waters. The EPA’s National Pollutant Discharge Elimination System permit program controls discharges. Industrial, municipal and other facilities must obtain permits if their discharges go directly to surface waters.

Under the authority of the Clean Water Act, the EPA has also adopted the Oil Pollution Prevention regulations that set forth requirements for prevention of, preparedness for, and response to oil discharges at specific non-transportation-related facilities. To prevent oil from reaching navigable waters and adjoining shorelines, and to contain discharges of oil, the regulation requires these facilities to develop and implement spill prevention, control and countermeasure plans and establishes procedures, methods and equipment requirements. In 1990, the Clean Water Act was amended to require some oil storage facilities to prepare facility response plans that direct facility owners or operators to prepare and submit plans for responding to a worst-case discharge of oil. While our PE Recycling operations have had an oil spill plan in place for approximately 18 years with the New Jersey Department of Environmental Protection, or NJ DEP, we have recently been charged by the EPA with not having an EPA-approved facility response plan in place. We are currently working with the EPA to address this matter to the satisfaction of both parties. See “Item 3. Legal Proceedings — Environmental Matters.”

OSHA

The Occupational Safety and Health Act of 1970 establishes certain employer responsibilities, including maintenance of a workplace free of recognized hazards likely to cause death or serious injury, compliance with standards promulgated by the Occupational Safety and Health Administration, or OSHA, and various record keeping, disclosure and procedural requirements. Various standards for notices of hazards, safety in excavation and demolition work and the handling of asbestos, may apply to our operations. The Department of Transportation and OSHA, along with other federal agencies, have jurisdiction over certain aspects pertaining to safety, movement of hazardous materials, movement and disposal of hazardous waste and equipment standards. Various state and local agencies have jurisdiction over disposal of hazardous waste and may seek to regulate hazardous materials in areas not otherwise preempted by federal law.

State and Local Regulations

There are also various state and local regulations that affect our operations. State law and regulations can be stricter than comparable federal laws and regulations when they are not otherwise preempted by federal law. Currently primarily all of our business is conducted in the Northeastern region of the United States, specifically New York, New Jersey, Pennsylvania and Connecticut. Accordingly, we must comply with those states’ requirements for recycling, transporting, storing and disposing of regulated wastes and other substances, and, when necessary, obtain licenses for recycling, processing, treating and storing such wastes at our facilities.

Pennsylvania Surface Mining Conservation and Reclamation Act

Our mine reclamation activity in Pennsylvania is governed by Pennsylvania’s Surface Mining Conservation and Reclamation Act, or SMCRA. The SMCRA provides for the conservation and improvement of land affected by the surface mining of coals and metallic and nonmetallic minerals. Through the SMCRA, the Environmental Quality Board, or EQB, is authorized to propose regulations for the administration of the reclamation and mining program by the Pennsylvania Department of Environmental Protection, or the PA DEP. The EQB’s regulations include a comprehensive system for operators of mines to obtain a permit and post the required bond. The regulations describe the procedures for obtaining a permit, such as providing public notice and allowing for public objection, and the payment of permit and reclamation fees. The regulations also contain the criteria for permit approval or disapproval.

Permit applications must contain detailed information on the affected area’s environmental resources, its geology, hydrology, vegetation, fish and wildlife, land use and viability as farmland. The applicant must also describe in detail all proposed mining and reclamation activities, including the procedures to be used, a timetable of the operation broken into discrete phases, blasting and topsoil disposal plans, projected costs, and proposals for restoring vegetation. This explanation must include the applicant’s strategy for preserving the hydrologic balance, preventing soil erosion, controlling air pollution, and maintaining the region’s geology and wildlife. In addition, the applicant’s activities are regulated by environmental protection performance standards that give specific instructions for topsoil removal and redistribution, maintenance of the hydrologic balance, the use of explosives, revegetation, and the preservation of prime farmland. Additional rules apply to the remining of areas with pollutional discharges. These rules require enhanced monitoring of the region’s geology and hydrology, as well as the implementation of an abatement plan to eliminate further pollution.

Prior to obtaining a permit, the mine operator also must file with the PA DEP a bond for the land affected by each operation. The amount of the bond required is determined by the PA DEP based upon the total estimated cost to Pennsylvania of completing the approved reclamation plan. Liability under the bond will continue for a period of five years after reclamation is completed.

Voluntary Cleanup Programs

Where advantageous, we will seek to participate in voluntary cleanup programs in states that offer them. By allowing focused investigations and alternative cleanup standards, some of these programs may enable us to rehabilitate Brownfield sites in a more flexible and cost-effective manner than might otherwise be the case. Satisfying the requirements of such programs may not, however, insulate us from all liability for pre-existing contamination at these sites.

Licenses and Permits

In connection with our acquisition, development or expansion of a facility, we must spend considerable time, effort and money to obtain or maintain required permits and approvals. There cannot be any assurances that we will be able to obtain or maintain necessary governmental approvals. Once obtained, operating permits are subject to modification, suspension or revocation by the issuing agency. Compliance with these and any future regulatory requirements could require us to make significant capital and operating expenditures. However, most of these expenditures are made in the normal course of business and do not place us at any competitive disadvantage.

We hold a number of permits, licenses and approvals, which allow us to operate in certain states or jurisdictions and to perform certain activities that require governmental approval. These permits and licenses are primarily held by PE Recycling and consist of the following types of licenses, among others:

hazardous waste storage and transfer permits;

recycling center approvals;

pollution control and discharge permits and approvals; and

environmental laboratory permits.

We believe that we have acquired the necessary permits required by governmental authorities in order to conduct our current business operations. These permits were appraised and valued at $2.2 million on March 30, 2007 in connection with the acquisition of PE Recycling. Once issued, our licenses have maximum fixed terms of a given number of years, which differ from state to state, ranging generally from three to ten years, and are generally renewable for an additional term or terms. The issuing state agency may review, modify or revoke a license at any time during its term. We anticipate that once a license is issued with respect to a facility, the license will be renewed at the end of its term if the facility’s operations are in compliance with applicable requirements. However, there can be no assurance that regulations governing future licensing will remain static, or that we will be able to comply with such requirements.

PE Recycling has several permit modifications in process to significantly improve our ability to accept, manage and treat different types of waste. For example, we have applied to expand our hazardous material permit to allow us to treat and control certain government-regulated emissions that were not previously covered by this permit. We have also submitted numerous proposals to expand our existing New Jersey Class B recycling permit, which, if approved, would allow us to increase two-fold our daily volume, product storage and production capacity at PE Recycling.

We are also in the process of obtaining zoning permits for our Brownfield site located in central Connecticut. The property is currently zoned for general Brownfield redevelopment, but we are required to obtain approval for our specific activities on the property. We are also currently seeking a pollutant discharge permit from the EPA, which permit would specify the acceptable level of pollutants that may be present in the wastewater discharged from the site.

Product Liability and Warranties

Our operations involve providing crushed stone, crushed aggregate and recycled oil, which are all products that must meet, or be used in products that must meet, various codes or other regulatory requirements and contractual specifications. If we fail or are unable to provide products that meet these requirements and specifications, damage to life or property may occur, material claims may arise against us and our reputation could be damaged. We expect that in the future there may be claims of this kind asserted against us. If a significant product-related claim is resolved against us in the future, that resolution may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Insurance and Financial Assurance

Insurance

Our insurance programs cover the potential risks associated with our operations from two primary exposures: direct physical damage and third party liability. Our insurance programs are subject to customary exclusions.

We maintain a casualty insurance program providing automobile coverage and commercial general liability insurance in the amount of $1.0 million per occurrence and $2.0 million in the aggregate per year, subject to a $1,000 per occurrence deductible. As part of this liability insurance coverage, we have obtained pollution liability and professional liability insurance coverage to protect us from potential risks in three areas:

as a contractor performing services at customer sites;

as a transporter of waste; and

for waste processing and recycling at our facilities.

We maintain coverage of $1.0 million per occurrence and $1.0 million in the aggregate per year, covering third party bodily injury, property damage, remedial activities and associated liabilities for all operations performed by or on behalf of us. In addition to these coverages, we have obtained umbrella liability coverage of $10.0 million per occurrence and $10.0 million in the aggregate per year.

As part of our operations, we may be required to maintain designated levels of product liability insurance, which would generally apply to our Materials segment. We currently maintain product liability insurance in the amount of up to $2.0 million in the aggregate which, based on our experience and industry practice, we believe to be adequate for our present operations. No assurance can be given that our insurance coverage will be sufficient to fully insure against all claims that may be made against us. Any failure to maintain product liability insurance when we are required to do so could harm our business and operations.

Federal and state regulations require liability insurance coverage or other financial assurance mechanisms for facilities that treat, store or dispose of hazardous waste. For example, RCRA and comparable state hazardous waste laws typically require hazardous waste handling facilities to maintain pollution liability insurance in the amount of $1.0 million per occurrence and $2.0 million in the aggregate for both gradual and sudden occurrences. We have a policy insuring our treatment, storage and disposal activities that meets the regulatory requirements.

Under our insurance programs, coverage is obtained for catastrophic exposures, as well as those risks required to be insured by law or contract. It is our policy to retain a significant portion of certain expected losses related primarily to employee benefit, workers’ compensation, commercial general and vehicle liability. Provisions for losses expected under these programs are recorded based upon our estimates of the aggregate liability for claims. We believe that policy cancellation terms are similar to those of other companies in other industries.

Financial Assurance

We are required to have escrow accounts in which we deposit funds in the event of closure and post-closure events involving waste management facilities. As of December 31, 2009, we had an aggregate of $0.3 million in these escrow accounts. We do not maintain any letters of credit or bonds that specifically support these obligations.

Intellectual Property

We actively seek and in the future will continue to seek, when appropriate and available, protection for our products and proprietary information by means of U.S. and foreign patents, trademarks, trade names, trade secrets, copyrights and contractual arrangements. We believe that we hold adequate rights to all of our intellectual property used in our business and that we do not infringe upon any intellectual property rights held by other parties. We have invested significantly in the development of technology and have established an extensive knowledge of the leading technologies, which we incorporate into the products and services that we offer and provide to our customers. Specifically, we rely upon confidentiality and non-disclosure agreements with our joint venture partner, customers, employees, consultants and other third parties, where appropriate, to protect our confidential and proprietary information. To the extent that we rely on confidentiality and non-disclosure agreements and trade secret protections, there can be no assurance that our efforts to maintain the secrecy of our proprietary information will be successful or that third parties will not develop similar inventions, works or processes independently.

Employees

As of December 31, 2009, our consolidated operations had 125 full-time employees and one part-time employee. Of these employees, 10 represent executives and management and 22 are employed in administrative and accounting roles. The remaining individuals are employed in operational, sales and technical services roles. All of our subsidiaries’ employees are employed directly by each respective subsidiary.

As of December 31, 2008, Juda had a collective bargaining agreement with Teamsters Local 282, I.B.T., a local affiliate of the International Brotherhood of Teamsters, expiring in June 2009. As a result of our initiative to subcontract trucking operations for the Transportation and Disposal segment to third parties, only one employee previously located at our Bronx, New York facility was covered under this agreement as of December 31, 2008. At its expiration, in June of 2009, we did not renew this collective bargaining agreement and as of December 31, 2009, we do not believe this collective bargaining agreement is currently in force. We believe that we had and continue to have a good relationship with both our union and non-union employees.

Item 1A. Risk Factors.

This section sets forth the material risks we face in our business and the risks in investing in us and our securities. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of these risks or uncertainties actually occur, our business, financial condition and results of operations could be materially and adversely affected. In that case, the value of our securities could decline substantially.

You should carefully consider the risks described below in conjunction with the other information in this annual report on Form 10-K and our consolidated financial statements included in it. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in, or implied by, the forward-looking statements. See “Item 1. Business — Forward-Looking Statements.”

Risks Inherent in Our Business

Challenges posed by the current economic environment may materially and adversely affect us or our stock price.

The recent and current challenges in the U.S. and foreign credit markets have negatively impacted the business environment at large. Upheaval among investment banking firms, tightened lending standards and the actual, potential or perceived insolvency, bankruptcy or governmental seizure of financial institutions or their assets, may prevent us from being able to predict the terms, if any, under which we will be able to obtain new or refinance existing indebtedness or otherwise raise additional debt or equity capital, should we desire or need to do so.

Former President George W. Bush signed into law the Emergency Economic Stabilization Act of 2008, or EESA, on October 3, 2008. Pursuant to EESA, the Secretary of the U.S. Treasury established the Troubled Asset Relief Program, or TARP, to purchase from financial institutions up to $700 billion of residential or commercial mortgages and any securities, obligations or other instruments that are based on or related to such mortgages, which in each case was originated or issued on or before March 14, 2008. In addition, under TARP, the U.S. Treasury could purchase any other financial instrument deemed necessary to promote financial market stability. However, the U.S. Treasury is not obligated to do so, and has expressed both negative and positive views regarding the use of limited TARP program funds to purchase illiquid assets.

In response to the continued economic crisis, President Barack Obama signed the American Recovery and Reinvestment Act of 2009, or ARRA, into law on February 17, 2009. The ARRA is intended to create jobs and stabilize the economy by modernizing infrastructure, enhancing the United States’ energy independence, expanding educational opportunities, preserving and improving health care, and providing tax relief, among other things.

While some improvements in the condition of the credit and debt markets have been observed in the latter part of 2009 and into the first quarter of 2010, there can be no assurance that the ARRA or EESA will have a beneficial impact on the financial markets, real estate markets or the general economy. The ultimate effects of both laws on the financial markets and the economy in general could materially and adversely affect our business, financial condition and results of operations, or the trading price of our common stock.

Our customers and vendors may be faced with similar challenges, and they may also experience serious cash flow problems. Customers may modify, delay or cancel plans to use our environmental services or purchase our recycled construction materials or concrete fibers, and vendors, suppliers or others with whom we do business may significantly and quickly increase their prices or reduce their output. Any inability of current or potential customers to pay us for our services or products or any increases in the costs we incur to generate such revenues or to operate our business may materially and adversely affect our earnings and cash flow.

We may need additional financing and may not be able to raise funding on favorable terms or at all, which could increase our costs, limit our ability to operate or grow our business and dilute the ownership interests of existing stockholders.

We require substantial working capital to fund our business. We believe that our current working capital, including our existing cash balance, together with our future cash flows from operations and available borrowing capacity under our line of credit, will be adequate to support our current operating plans at least until December 31, 2009, based on several large committed jobs within the Transportation and Disposal segment which are scheduled to begin in April and May of 2010. If we experience significant delays associated with these jobs or are unable to begin this work as scheduled due to unforeseen circumstances, we may need to seek additional sources of financing. If necessary, we would seek such future financing from sources of public or private debt and equity. There can be no assurance such financings will be available on terms favorable to us or at all.

The negative conditions in the equity and debt markets, the tightening of the credit markets and the general economic slowdown in the United States has made it difficult for us to raise additional capital or obtain additional financing, and we expect these trends to continue to varying degrees in 2010. Our inability to raise additional financing when necessary or desired could adversely affect our ability to maintain, develop or enhance our services and operations, take advantage of future opportunities, respond to competitive pressures or continue operations. If additional financing is required but not available, we would have to implement further measures to conserve cash and reduce costs, including limiting or reducing our business operations and considering the sale or disposal of non-productive or under-productive assets or operations. However, there is no assurance that any such measures would ultimately be successful.

Although we believe that the lender under our current line of credit will be able to provide financing in accordance with its contractual obligations, the current economic environment may adversely impact our ability to access these funds on reasonable terms (or at all) in a timely manner. Continued disruptions in the credit markets also may negatively affect the ability of our customers and suppliers to conduct business on a normal basis. The deterioration of our future business performance, beyond our current expectations, could also result in our non-compliance with applicable covenants under our debt and Series B Preferred Stock.

To the extent any future financings involve the issuance of equity securities, existing stockholders could suffer significant dilution. If we raise additional financing through the issuance of equity, equity-related or debt securities, those securities may have rights, preferences or privileges senior to those of the rights of our common stock or may be convertible into or exchangeable for a significant amount of our common stock, and thus our existing stockholders may experience substantial dilution of their ownership interests as a result of such additional financing.

We have a relatively limited operating history on which to base an analysis of our future performance.

We had been a development stage company with no active business from our formation in 1997 until we acquired our wholly owned subsidiary, South Jersey Development, Inc. (now known as Pure Earth Materials, Inc.) in January 2006, at which time we began to operate our environmental services business. As a result, we have a relatively limited operating history upon which investors may base an evaluation of our potential future performance. As a result, there can be no assurance that we will be able to develop consistent revenue sources, or that our operations will be profitable. Our prospects must be considered in light of the risks, expense and difficulties frequently encountered by companies in a relatively early stage of development. Such risks include, but are not limited to:

operating under an evolving business model;

developing our business plan;

managing growth;

ensuring positive relationships with federal, state and local governmental authorities;

complying with federal, state and local environmental regulations;

operating in a competitive business market;

maintaining our properties, equipment and facilities;

staying abreast of, and being able to acquire and utilize, the latest technological advances in the environmental services industry; and

being able to locate suitable properties for redevelopment

We must, among other things, determine appropriate risks, rewards and level of investment in each project, respond to economic and market variables outside of our control, respond to competitive developments and continue to attract, retain and motivate qualified employees. There can be no assurance that we will be successful in meeting these challenges and addressing such risks and the failure to do so could have a materially adverse effect on our business, results of operations and financial condition.

To date, we have had fluctuating operating results, including net losses, and we cannot guarantee that we will be profitable in the future.

We incurred net losses available to common stockholders of approximately $6.9 million for the year ended December 31, 2009 and $3.0 million for the year ended December 31, 2008. We will need to, among other things, improve our gross margins and revenues to regain and maintain profitability, and we cannot give any assurances that we will be able to do so. If we are unable to raise sufficient capital to support our expenses, or if we cannot manage or control our cost of revenues or operating expenses where feasible or appropriate, we may not be able to operate profitably and our financial performance and results of operations would be adversely affected.

Our results of operations depend on new contract awards, and the selection process and timing for performing these contracts are not within our control.

A substantial portion of our revenues is directly or indirectly derived from new contract awards of domestic projects. It is difficult to predict whether and when we will receive such awards due to the lengthy and complex bidding and selection process, which is affected by a number of factors, such as market conditions, financing arrangements, governmental approvals and environmental matters. Because a significant portion of our revenues is generated from large projects, our results of operations and cash flows can fluctuate from quarter to quarter depending on the timing of our contract awards. In addition, many of these contracts are subject to client financing contingencies and environmental permits, and, as a result, we are subject to the risk that the customer will not be able to timely secure the necessary financing and approvals for the project, which could result in a significant delay or the cancellation of the proposed project. Finally, current market conditions and restrictions on capital available for construction may mean that there are materially fewer contracting opportunities available to us.

Demand for our products and services is cyclical and vulnerable to sudden economic downturns and reductions in private industry. If general economic conditions continue to weaken and current constraints on the availability of capital continue, then our revenues, profits and our financial condition may rapidly deteriorate.

The industries we serve historically have been, and will likely continue to be, cyclical in nature and vulnerable to general downturns in the domestic economy. Consequently, our results of operations have fluctuated, and may continue to fluctuate depending on the demand for products and services from these industries.

Due to the current economic downturn caused by the decline in the real estate and credit markets, many of our customers have faced, and will continue to face, considerable budget shortfalls or may delay capital spending that may decrease the overall demand for our services. In addition, our clients have experienced increasing difficulty to obtain cash to fund their operations or raise capital in the future due to substantial limitations on the availability of credit and other uncertainties in the municipal and general credit markets. Also, global demand for commodities has increased raw material costs, which increases the overall project cost and more rapidly depletes the funds already allocated to be spent on projects.

In addition, during 2009 our clients have demanded better pricing terms, and their ability to timely pay our invoices may be affected by a continuing weakened economy. We expect these trends to continue for much of 2010. Our business traditionally lags any recovery in the economy; therefore, our business may not recover immediately upon any economic improvement. If the economy were to weaken further, then our revenues, net income and overall financial condition may deteriorate.

We may be required to record material charges against our earnings due to any number of events that could cause impairments to our assets.

In accordance with generally accepted accounting principles, we capitalize certain expenditures and advances relating to disposal site development, expansion projects, acquisitions and other projects. Events that could, in some circumstances, lead to an impairment include, but are not limited to, shutting down a facility or operation, abandoning a development project, the denial of an expansion permit or the non-use of assets. If we determine a development or expansion project is impaired, we will charge against earnings any unamortized capitalized expenditures and advances relating to such facility or project reduced by any portion of the capitalized costs that we estimate will be recoverable, through sale or otherwise. We may be required to incur charges against earnings if we determine that events such as those described cause impairments. Any such charges could have a material adverse effect on our results of operations.

If we were required to write down all or part of our goodwill, our net earnings and net worth could be materially adversely affected.

We had $0.8 million of goodwill recorded on our consolidated balance sheet at December 31, 2009. Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations. If our market capitalization drops significantly below the amount of net equity recorded on our balance sheet, it might indicate a decline in our fair value and would require us to further evaluate whether our goodwill has been impaired. We also perform an annual review of our goodwill to determine if it has become impaired, in which case we would write down the impaired portion of our goodwill. If we were required to write down all or a significant part of our goodwill, our net earnings and net worth could be materially adversely affected.

We may seek to grow our business through the acquisition of other environmental services companies, which strategy may expose us to a variety of risks.

We have historically grown our business in part through a strategy of acquiring existing businesses and forming new ones. Competition for acquiring attractive facilities and businesses in our industry is substantial. When we seek to continue to grow further through acquiring other businesses, we may experience difficulty in identifying suitable acquisition candidates or in completing selected transactions. From time to time, we may be in discussions to acquire either the assets or stock of companies in the environmental services industry those companies. No assurances can be given that we will be successful in completing any acquisitions or integrating acquired companies into our business, and we may not derive a profitable rate of return from these acquisitions.

If we are able to identify acquisition candidates, such acquisitions may be financed with substantial debt or with potentially dilutive issuances of equity securities. Our ability to successfully complete acquisitions in the future may also depend on the continued availability of financing. We cannot assure you that financing for acquisitions will be available on terms acceptable to us, if at all. Additionally, with respect to some of our acquisitions, governmental, lender, investor or other third-party approvals may be required and there can be no assurance that we will receive such approvals.

We have grown quickly and if we fail to manage our growth, our business could suffer.

Since January 2006, we have rapidly expanded our operations and anticipate that further significant expansion, including the possible acquisition of third-party assets, technologies or businesses, will be required to address potential growth in our customer base and market opportunities. This expansion has placed, and is expected to continue to place, a significant strain on our management, operational and financial resources. If we are unable to manage our growth effectively or if we are unable to successfully integrate any assets, technologies or businesses that we may acquire, our business could be affected adversely.

If we fail to successfully integrate our recent and future acquired facilities and businesses, our financial performance may be adversely affected.

The implementation of new ownership, management teams and business strategies in a newly acquired business, including those we have recently acquired, frequently involves risks, expenses and uncertainties that may adversely affect our business, results of operations, financial condition and prospects. See “ Item 1. Business – Development of Our Business and Significant Acquisitions.” Since selectively pursuing strategic acquisitions remains a part of our overall business strategy, any acquisitions we make could result in:

difficulty integrating our operations, services, products, technologies, financial controls and information systems with those of the acquired business;

difficulty in managing and operating numerous businesses in different geographic locations;

diversion of capital and management’s attention away from other business issues;

an increase in expenses and working capital requirements;

failure to achieve potential revenue enhancements, cost savings and other expected benefits of the acquisition as rapidly or to the extent anticipated by us or others;

payment of acquisition consideration that exceeds the fair value of the acquired business for purposes of our financial statements, resulting in the recognition of goodwill that must be continually reviewed for impairment and may potentially be written down or written off altogether;

our inability to apply to the acquired business controls and procedures we are and will be required to establish as an SEC reporting company;

potential loss of management, key employees and customers of facilities or businesses we acquire; and

financial risks, such as:

potential liabilities of the facilities and businesses acquired, including employees;

ongoing cash or equity payment obligations, which may not directly relate to our economic or financial performance;

our assumption of debt, liabilities or other obligations of the acquired company, and other financial risks;

the impact of impairment charges that we may need to recognize, and other expenses that we may incur, with respect to tangible and intangible assets of the acquired business;

the need to incur additional indebtedness; and

dilution to existing security holders if we issue additional equity securities.

We may not successfully integrate any operations, technologies, systems, products or services that we acquire, and we cannot assure you that our recent or future acquisitions will be successful. If our recent or future acquisitions are not successful, it is likely that our financial performance will be adversely affected.

We have assumed liabilities associated with businesses and assets we have acquired, which may expose us to additional risks and uncertainties that we would not face if the acquisitions had not occurred.

As a result of many of our previous acquisitions, we have succeeded to liabilities associated with the businesses and assets we have acquired. As a result, we have assumed, among other things:

environmental risks and liabilities related to the operation of the acquired assets, properties and facilities;

existing litigation, claims and tax liabilities involving the acquired business;

existing debt, payables and other liabilities of the acquired business;

liens and mortgages on acquired assets; and

employee and employee benefit obligations and liabilities, and obligations pursuant to collective bargaining agreements.

In addition to the risks set forth above, we may discover additional information, risks or uncertainties about these businesses that may adversely affect us. Following an acquisition, we may have no recourse under applicable indemnification provisions for any of these risks or liabilities, and thus we may be responsible to pay unforeseen additional expenses and costs. Based on all of the foregoing liabilities, risks and uncertainties, there can be no assurance that these acquisitions will not, in fact, have a negative impact on our financial results.

The significant future liquidity and capital needs of our acquired companies, together with our current agreements, commitments and contingencies to fund those needs and to repay obligations we incurred or assumed in the acquisitions, may have a negative impact on our earnings and cash flow.

Many of the companies or assets we have acquired, such as PE Recycling and our current Brownfield site, have required us and will continue to require us to make substantial future contributions to support their needs for property, machinery, equipment and other capital expenditures and working capital needs. Some of these acquisitions require us to provide future capital infusions to them at stated times or from time to time, or to assume and repay indebtedness of the acquired company or their affiliates. We must continue to provide these companies with the necessary capital they need to develop and sustain their business and operations, and to pay any assumed obligations as and when they come due. Doing so, however, will drain precious financial and other resources from our other objectives and activities, and there is no assurance that our management will successfully allocate our resources among our product lines and potential products. Our failure to do so successfully may have a harmful effect on our financial condition, results of operations and ability to succeed as to our business strategy.

Certain investors may have significant influence over our capital raising efforts.

The holder of our Series B preferred stock has certain control over our ability to raise debt and equity capital in the future. For certain and varying periods of time, the terms of the Series B preferred stock and the related warrant and other agreements include limitations on our ability to:

issue common stock or common stock equivalents, by requiring us first to satisfy our investors’ preemptive rights;

incur secured or unsecured indebtedness;

dispose of our assets or enter into sale-leaseback transactions;

issue shares of preferred stock senior or equal in rank to our outstanding series of preferred stock; and

issue common stock or common stock equivalents to Mr. Alsentzer, our President and Chief Executive Officer, and Mr. Kopenhaver, our Executive Vice President and Chief Financial Officer, for less than fair market value.

These rights may inhibit or prevent us from entering into certain capital raising transactions that we may believe necessary or desirable for the growth of our business or our continued operations. Alternatively, the operation of these rights may increase the cost of entering into future capital raising transactions. The existence and enforcement of these rights may have a material adverse effect on us and our financial condition.

The holders of our Series B preferred stock and Series C convertible preferred stock also have registration rights that last as long as 10 years from the date of the agreement. These investors may require us to file registration statements under the Securities Act of 1933 with the SEC to register shares of common stock underlying the warrant sold as part of the Series B preferred stock offering and underlying the Series C convertible preferred stock. We must also seek to obtain the effectiveness of the registration statement, and to maintain such effectiveness for specified periods of time. These registration rights may make it more difficult for us to raise capital by depressing the market price of our stock and by providing a significant risk of future dilution in the market for our common stock. Further, we may enter into financing arrangements in the future that may contain similar or other limitations on our ability to raise capital or issue debt or equity securities should we ultimately decide that we need or want to do so.

Our substantial indebtedness, including our Series B preferred stock, could adversely affect our ability to complete future acquisitions, grow our business and obtain new capital.

We now have, and will continue to have for the foreseeable future, a significant amount of debt. As of December 31, 2009, we had approximately $14.0 million of total debt outstanding, including $5.4 million of obligations under our Series B preferred stock that we are required to classify as a liability for accounting purposes. The remaining portion of the $6.3 million received in the Series B preferred stock issuance was allocated to a warrant with a contingent redemption provision, which was issued in connection with this transaction. The fair value of this warrant as of December 31, 2009 was $0.4 million. The degree to which we are leveraged could have important adverse consequences to us, limiting management’s choices in responding to business, economic, regulatory and other competitive conditions. In addition, our ability to generate cash flow from operations sufficient to make scheduled payments on our debts as they become due will depend on our future performance, our ability to successfully implement our business strategy and our ability to obtain other financing. Our indebtedness could also adversely affect our financial position.

Our substantial indebtedness could have important consequences to us and our investors. For example, it could:

make it more difficult for us to acquire additional companies or assume debt in connection with such acquisitions;

make it more difficult for us to continue to satisfy our obligations under our existing and any future indebtedness;

increase our vulnerability to general adverse economic and industry conditions;

limit our ability to fund future working capital, capital expenditures, research and development and other general corporate requirements;

require us to dedicate a substantial portion of our cash flow from operations to service payments on our debt;

limit our flexibility to react to changes in our business and the industry in which we operate;

limit our ability to make certain changes to our management;

place us at a competitive disadvantage to any of our competitors that have less debt; and

limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds.

Upon the occurrence of various events, such as a change in control, some or all of our outstanding debt obligations may come due prior to their maturity date, which could serve to prevent the occurrence of a change in control or other transaction that may ultimately benefit our equity holders.

Our ability to pay principal and interest on our indebtedness, and to pay dividends upon our Series B preferred stock and Series C convertible preferred stock, may depend upon our receipt of dividends or other intercompany transfers from our subsidiaries, which we may be prohibited from making.

We are a holding company and substantially all of our properties and assets are owned by, and all our operations are conducted through, our subsidiaries. As a result, we may be dependent upon cash dividends and distributions or other transfers from our subsidiaries to meet certain of our debt service obligations, including payment of the interest on and principal of our indebtedness when due, and our other obligations. The ability of our subsidiaries to pay dividends and make other payments to us may be restricted by, among other things, the terms of our indebtedness, applicable corporate, tax and other laws and regulations in the United States and agreements made by us and our subsidiaries, including under the terms of future indebtedness or other obligations. These restrictions may make it more difficult or may prevent us from obtaining cash from a subsidiary necessary to repay the obligations of our holding company or those of our other subsidiaries to our creditors or investors, including the holders of our Series B preferred atock and Series C convertible preferred stock.

We may not be able to pay the redemption price pursuant to any required redemption of the Series B preferred stock.

We may not have sufficient cash to pay, or may not be permitted to pay, the redemption price upon any redemption of our Series B preferred stock. Upon certain events, we will be required to pay to the holder of Series B preferred stock a cash redemption payment of up to 103% of the liquidation value of the shares being redeemed. As a result, we may be required to pay significant amounts in cash to holders of the Series B preferred stock upon any redemption of those shares. If we do not have sufficient cash on hand at the time of any such redemption, we may have to borrow funds under our credit facilities or raise additional funds through other debt or equity financing. Our ability to borrow the necessary funds under our revolving line of credit will be subject to our ability to remain in compliance with the terms under the respective line of credit and loan agreements and to have borrowing availability thereunder. In addition, our ability to raise any additional financing, if necessary, will depend on prevailing market conditions. Further, we may not be able to raise such financing within the period required to satisfy our obligation to make timely payment upon any redemption. In addition, the terms of our revolving line of credit agreement or any future debt may prohibit us from making these redemption payments or may restrict our ability to make such payments by requiring that we satisfy certain covenants relating to the making of restricted payments.

Events of default have occurred under our former revolving line of credit and PE Recycling’s term loan, which may increase the likelihood that in the future our lenders may be permitted to accelerate repayment of our outstanding obligations under the line of credit and our other indebtedness and obligations.

During 2009, certain events of default occurred under our former revolving line of credit and PE Recycling’s current $8.0 million term loan. The occurrence of an event of default generally permits the lender to accelerate repayment of all amounts due and to terminate any commitments thereunder. The provisions of our PE Recycling term loan include as an event of default any failure to pay any amounts due under the term loan documents (a “nonpayment default”) or to comply with a covenant or obligation under other obligations of the borrower of over $500,000 (a “cross-default”). Once in default, the lender under our term loan may accelerate our obligations thereunder immediately upon the occurrence of a nonpayment default and, in the event of a cross-default, if such default has not been cured or waived after the expiration of any applicable cure period under the terms of the other obligation. We would not have sufficient cash resources to repay these obligations should the lender accelerate these obligations in the event of any default under the term loan. Acceleration of the amounts outstanding under the term loan would have a material adverse impact on our liquidity, financial condition and operations.

Nonpayment of dividends on our Series B preferred stock may trigger an event of noncompliance, which could require us to redeem the Series B preferred stock.

The nonpayment of dividends to the holder of our Series B preferred stock would constitute an event of noncompliance under Series B preferred stock investment agreement and related agreements if such nonpayment is not remedied prior to the expiration of certain notice and cure periods as set forth in the investment agreement. An event of noncompliance for nonpayment of dividends could permit the Series B preferred stockholder to cause us to redeem all of its Series B preferred stock and related warrants at stated repurchase prices. We would not have sufficient cash resources to redeem these securities should the Series B preferred stock holder require us to do so, and we would need to immediately seek additional liquidity or capital resources in order to meet such obligations. Such an occurrence would have a material adverse effect on us, our financial condition and our operations.

Dividends under our Series C convertible preferred stock may ultimately require us to issue to the holders thereof additional shares of Series C preferred stock, which would increase our ongoing obligations to those holders upon liquidation or any conversion of the Series C preferred stock.

Under the terms of our Series C convertible preferred stock, we are required to pay dividends to the holders thereof when, as and if declared by the board of directors. Beginning on March 31, 2010, unpaid dividends began to cumulate, or compound, quarterly. Dividends may be paid in cash, by issuing additional shares of Series C convertible preferred stock, or by adjusting the number of shares of common stock that may be received upon a conversion thereof. Presently, no dividends have been declared or paid on our Series C convertible preferred stock and in the future we may be restricted or prohibited under applicable law from doing so.

To the extent we choose to issue additional shares of Series C convertible preferred stock to satisfy these dividend obligations, the amount of such shares issued would increase, which in turn would substantially increase the amount of assets that would be distributable to such holders upon any redemption of the Series C convertible preferred stock or upon our liquidation (prior to any holders of common stock). Moreover, the number of shares of common stock we would ultimately be required to issue upon conversion would also increase substantially. If we choose instead to adjust the conversion price of the Series C preferred stock, these dividend provisions would require us to ultimately issue greater amounts of common stock upon a conversion in full of all outstanding Series C convertible preferred stock. Thus, the dividend provisions of our Series C convertible preferred stock may cause substantial dilution to the economic interests and voting power of the holders of our common stock.

To service our indebtedness and pay required dividends on our preferred stock, we may require a significant amount of cash, and our ability to generate cash depends on many factors beyond our control.

Our ability to make cash payments, if required, to service our indebtedness and pay required dividends under the terms of our Series B preferred stock will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We believe our cash flows from operating activities and our existing capital resources, including the liquidity provided by our existing indebtedness, will be sufficient to fund our operations and commitments at least until December 31, 2010, based on several large committed jobs within the Transportation and Disposal segment which are scheduled to begin in April and May of 2010. If we experience significant delays associated with these jobs or are unable to begin this work as scheduled due to unforeseen circumstances, we may need to seek additional sources of financing. We cannot assure you, however, that our business will continue to generate sufficient cash flows from operations or that future sources of funds will be available to us in an amount sufficient to enable us to pay our indebtedness, to make required dividend payments, or to fund our other liquidity needs. To do so, we may need to refinance all or a portion of our indebtedness or Series B preferred stock on or before maturity, sell assets, or seek additional equity financing. We cannot assure you that we will be able to refinance any of our indebtedness or Series B preferred stock on commercially reasonable terms or at all.

Failure to comply with covenants in our existing or future financing agreements could result in defaults, which could jeopardize our ability to operate our business successfully or at all.

Various risks, uncertainties and events beyond our control could affect our ability to comply with the covenants and financial tests required by our existing indebtedness and our Series B preferred stock. Failure to comply with any of the covenants in our existing or future financing agreements, including the terms of our term loans and our Series B preferred stock, could result in a default under our indebtedness, the Series B preferred stock, or other financing arrangements. An event of default would permit the lenders to accelerate the maturity of the debt under these agreements or declare an event of noncompliance under the Series B preferred stock. Under these circumstances, we might not have sufficient funds or other resources to repay or satisfy all of our obligations. In addition, the limitations imposed by our indebtedness and the Series B preferred stock on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing.

The agreements and instruments that govern our and our subsidiaries’ indebtedness and our Series B preferred stock contain various covenants that limit our discretion in the operation of our business.

Covenants related to our and our subsidiaries’ indebtedness and our Series B preferred stock require us to, among other things, comply with certain financial tests and restrictions, including:

requirements associated with the tendering of our accounts receivable to our lender under our revolving line of credit facility;

· maintenance of specific leverage ratios; and

· maintenance of a specified reserve account.

Furthermore, these instruments restrict our and our subsidiaries’ ability to:

· incur more debt;

· create liens;

· make certain investments and payments;

· enter into transactions with affiliates;

· merge or consolidate with, or acquire all or substantially all of the assets of, another company;

· amend our and their constituent governing documents;

· pay dividends or make other distributions on our or their common or preferred stock;

redeem or repurchase any preferred stock, common stock or common stock equivalents, even if we may be required under the terms of those securities to do so; and

· make any loans, advances or guarantees.

Our ability to comply with these covenants is subject to various risks and uncertainties. In addition, events beyond our control could affect our ability to comply with and satisfy the financial tests required by our and our subsidiaries’ indebtedness and our Series B preferred stock. Any failure by us to comply with all applicable covenants could result in an event of default with respect to, and the acceleration of the maturity of, a substantial portion of our debt, and would require us to redeem our Series B preferred stock. Even if we are able to comply with all applicable covenants, the restrictions on our ability to operate our business in our sole discretion could harm our business by, among other things, limiting our ability to take advantage of financing, mergers, acquisitions and other corporate opportunities.

Upon the occurrence of any event of default under our secured debt, the holders of our secured debt could acquire control of some or all of our and our subsidiaries’ assets.

We have incurred debt, the repayment of which has been secured by certain of our and our subsidiaries’ assets, including our real property, machinery, equipment, accounts receivable and other property. As a result of these liens and mortgages, a default upon our secured debt could permit the lenders to foreclose on the assets securing the debt, and to liquidate those assets. The loss of any of our assets arising from a default under our debt would hinder our ability to operate our business and may cause our security holders to lose some or all of the value of their investment in our securities.

Seasonality makes it harder for us to manage our business and for investors to evaluate our performance.

Our operations may be affected by seasonal fluctuations due to weather and budgetary cycles influencing the timing of customers’ spending for remedial activities. Typically, during the first quarter of each calendar year there is less demand for environmental remediation due to weather-related reasons, particularly in the Northeastern United States, and increased possibility of unplanned weather-related site shutdowns. Certain weather conditions may result in the temporary suspension of our operations, which can significantly affect our operating results. This seasonality in our business makes it harder for us to manage our business and for investors to evaluate our performance. Additionally, due to these and other factors, operating results in any interim period are not necessarily indicative of operating results for an entire year, and operating results for any historical period are not necessarily indicative of operating results for a future period. Specifically, PE Recycling’s TDU is more expensive to run during the first quarter of each fiscal year due to colder and wetter weather coupled with higher natural gas costs.

Illiquidity of our current and future Brownfield sites and other real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties.

Because real estate investments are relatively illiquid, our ability to promptly sell properties in our developing portfolio of Brownfield sites (or any interest therein) or any of our other real estate in response to changing economic, financial and investment conditions may be limited. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. We cannot predict whether we will be able to sell any real property for the price or on the terms set by us or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a property.

A significant portion of our business depends upon the robustness of the real estate construction industry and the demand for customers to engage in major environmental remedial projects, and thus our ability to generate revenues may be subject to a wide array of events over which we have no control.

Our ability to generate revenues from our operations is and will be significantly dependent upon the continued strength of the real estate construction and environmental services industries, especially in the northeastern United States. These events are subject to a number of risks and uncertainties, most of which are out of our control, including:

the imposition of building or development moratoria or changes in building codes;

the continued ability for project owners and developers to obtain financing for construction and environmental engineering and consulting projects, including risks imposed as a result of recent difficulties in the financial and lending sectors;

the continued health and strength of the local, regional, national and international economies; and

budgetary cycles influencing the timing of customers’ spending for remedial activities.

As a result, our success and results of operations may be materially dependent on these and other factors that we cannot control.

Our operations are also significantly affected by the decisions of our customers regarding the commencement and completion of construction and major site remedial projects and the cleanup of major spills or other events, as well as the timing of regulatory decisions relating to waste management projects and the propensity for delays in projects attributable to the remedial market. We do not control these and other material factors and, as a result, we anticipate our revenue and income may vary significantly from quarter to quarter, and past financial performance for certain quarters may not be a reliable indicator of future performance for comparable quarters in subsequent years.

Our investments in Brownfield properties will require us to accept and incur significant costs to return the property to beneficial use, which costs may be greater than we anticipate.

We will be required to expend significant funds to make improvements in our Brownfield properties to redevelop them for commercial, residential or other use before we may resell them. We cannot assure you that we will have funds available to complete these efforts or to make those improvements, and the costs may be significantly more than we anticipate, even after conducting a careful evaluation of the specific environmental problems. In acquiring a property, transfer restrictions or other limitations may materially restrict us from selling that property before we complete any improvements, or even thereafter. These transfer restrictions would impede our ability to sell a property even if we deem it necessary or appropriate.

Rehabilitating Brownfield properties may take more time to complete than we anticipate, which could delay our ability to sell these properties or preclude us from doing so.

We envision that the time necessary to locate, acquire, rehabilitate, market and sell our current and any future Brownfield site will be substantial. It is often difficult to predict the time necessary to acquire or obtain appropriate environmental permits and approvals. Furthermore, if we acquire a direct or indirect interest in a Brownfield through a joint venture or other structure, our ability to recognize revenue from the sale of the Brownfield may be delayed by the investor’s inability to remediate the Brownfield, its lack of funding or other difficulties. We cannot assure you that these and other delays will not be greater than we anticipate, even after conducting a careful evaluation of the property and any potential investing partner.

Our ability to profitably rehabilitate Brownfield sites may be adversely affected by economic and regulatory changes pertaining to the ownership and development of real estate, which may prevent us from realizing growth in the value of Brownfield properties.

Our operating results will be subject to risks generally incident to the ownership and development of real estate, including:

changes in general economic or local conditions;

our ability to borrow or obtain funds for the costs of development;

periods of high interest rates and tight money supply;

changes in supply of or demand for similar or competing properties in an area;

changes in interest rates and availability of permanent mortgage funds that may render the sale of a property difficult or unattractive;

the illiquidity of real estate investments generally;

changes in tax, real estate, environmental and zoning laws;

perceptions of the safety, convenience and attractiveness of our properties and the areas in which they are located; and

our ability to provide adequate management, maintenance and insurance.

In addition, local conditions in the markets in which we own or intend to own and develop Brownfield sites or in which the collateral securing our loans is located may significantly affect our ability to successfully convert these properties for beneficial residential, commercial or industrial use. For these and other reasons, we cannot assure you that our Brownfield redevelopment strategy will be profitable or that we will realize growth in the value of the Brownfield properties we acquire.

The environmental services industry is highly competitive, and if we cannot successfully compete in the marketplace, our business, financial condition and operating results may be materially adversely affected.

We encounter intense competition in all phases of operations from a variety of different competitors, depending on the service area. In the United States, the industry consists of large national environmental companies, and local and regional companies of varying sizes and financial resources. Competitors may reduce their prices to expand their sales volume or to win bids on contracts. As an example, we believe that, as a result of the expansion of our Transportation and Disposal segment, our competitors are currently decreasing established market rates to retain customers. When this happens, we may reduce prices or offer lower pricing to attract or retain our customers, resulting in a negative impact to our revenue growth from business operations. There can be no assurance that we will be able to offset the effects of price reductions with an increase in the number of customers, higher sales, cost reductions, or otherwise. Such pricing pressures could result in an erosion of our market share, revenues and operating margins, any of which could have a material adverse effect on our business.

We must keep up with technological and market changes to succeed.

The markets in which we compete are characterized by new product and service introductions, evolving industry standards, and the changing needs of customers. There can be no assurance that our existing services will continue to be properly positioned in the market or that we will be able to introduce new or enhanced products into the market on a timely basis, or at all. There can be no assurance that enhancements to existing services or new services will receive customer acceptance.

A central part of our business plan is to develop or acquire new recycling technologies for the beneficial reuse of different waste streams. For example, we are presently exploring the acquisition or development of technologies to recycle wastes into alternative fuels, instead of incinerating these waste streams or disposing them into landfills. Our ability to achieve profitability and future growth is dependant on our ability to improve our knowledge and implementation of these waste processing and recycling technologies. Our inability to successfully implement or acquire these technologies, as a result of insufficient capital or otherwise, would have a material adverse effect on our business and results of operations.

Our business may be affected by catastrophic or other unforeseen events, which could cause us to incur substantial liabilities and increased operating costs.

Our operations are subject to the many hazards inherent in the storage and transportation of hazardous materials, including extreme weather conditions, such as hurricanes and rough seas, which are common along the East Coast, explosions, fires, accidents, mechanical malfunctions, faulty measurement and other operating errors, and acts of war, terrorism or vandalism. If any of these events were to occur, we could suffer substantial losses because of personal injury or loss of life, severe damage to and destruction of property and equipment, and pollution or other environmental damage resulting in curtailment or suspension of our related operations and potentially substantial unanticipated costs for the repair or replacement of property and environmental cleanup. Furthermore, events such as hurricanes can affect large geographical areas, which can cause us to suffer additional costs and delays in connection with subsequent repairs and operations because contractors and other resources are not available, or are only available at substantially increased costs following widespread catastrophes.

Our business is geographically concentrated and is therefore subject to local and regional economic downturns.

While we plan to expand the geographic scope of our business, our operations and customers are currently located primarily in the northeastern United States and in the mid-Atlantic region. Therefore, our entire business, financial condition and results of operations are especially susceptible to local and regional economic downturns in these areas. We do not have the benefit of geographic or regional diversity, which could lessen the impact of local or regional downturn in financial or economic conditions. In addition, as we expand in our existing markets, opportunities for growth within these regions will become more limited and the geographic concentration of our business will increase. The costs and time involved in permitting and the scarcity of available landfills, transfer stations and other disposal facilities could make it difficult for us to expand in these markets. We may not be able to lessen our regional geographic concentration through acquisitions or internal expansion of our business.

If we do not successfully manage our costs, our income from operations could be lower than expected.

We are working on several profit improvement initiatives aimed at lowering our costs and enhancing our revenues, and we continue to seek ways to reduce our operating expenses. While generally we may be successful in managing our selling, general and administrative costs, disposal costs, transportation costs, direct labor and subcontractor costs, our initiatives may not be sufficient. Even as our revenues increase, if we are unable to control variable costs or increases to our fixed costs in the future, we will be unable to maintain or expand our margins.

Significant shortages in fuel supply or increases in fuel prices will increase our operating expenses and therefore adversely affect our results of operations.

The price and supply of fuel are unpredictable, and can fluctuate significantly based on international, political and economic circumstances, as well as other factors outside our control, such as actions by OPEC and other oil and gas producers, regional production patterns, weather conditions and environmental concerns. During 2008, the cost of gasoline, diesel fuel and other petroleum-based or other fuel products was at record high levels. The cost of natural gas, which we use in our TDU, has also fluctuated significantly in the past, especially during the colder months, and we believe that this trend will continue in the future.

We purchase fuel to run our trucks and equipment used in our operations and as fuel prices increase, our direct operating expenses increase. We do not currently engage in fuel hedging transactions or purchase gasoline or fuel future contracts in an effort to mitigate the risk of future fuel price increases. While we may in the future initiate programs or means to guard against the rising costs of fuel, there can be no assurances that we will be able to do so or that any of such programs will be successful. Regardless of any hedging transactions or offsetting surcharge programs, the increased operating costs will decrease our operating margins.

We are subject to strict regulations regarding employee safety at many of our facilities, and failure to comply with these regulations could adversely affect us.

Many of our facilities are subject to the requirements of OSHA and comparable state statutes that regulate the protection of the health and safety of workers. In addition, the OSHA hazard communication standard requires that we maintain information about hazardous materials used or produced in our operations and that we provide this information to our employees, state and local government authorities, and local residents. Failure to comply with OSHA’s requirements, including general industry standards, record keeping requirements and monitoring of occupational exposure to regulated substances, could adversely affect our results of operations if we are subjected to fines or significant additional compliance costs.

Environmental and transportation regulations and litigation could subject us to fines, penalties and judgments, and may limit our ability to expand our business.

We are subject to significant potential liability and restrictions under environmental and transportation laws, including those relating to handling, transportation, disposal, processing, recycling, treatment and storage of waste materials, discharges into the ground, air and water, and the remediation of contaminated soils, surface water and groundwater. The environmental services and waste management industry has been, and will continue to be, subject to significant regulation, including permitting and related financial assurance requirements, as well as to attempts to further regulate the industry through new legislation.

The U.S. Congress has been actively considering legislation, and more than one-third of the states have already taken legal measures to reduce emissions of carbon dioxide and other “greenhouse gases” believed to be contributing to warming of the Earth’s atmosphere. On September 22, 2209, the EPA released issued a final rule requiring the monitoring and reporting of greenhouse gas emissions from certain large emission sources. On October 30, 2009, the EPA published a final rule requiring the monitoring and reporting of greenhouse gas emissions from all sectors of the economy. On December 15, 2009, the EPA published its final “Endangerment and Cause or Contribute Findings” in which it determined that the current and projected concentrations of six greenhouse gases in the atmosphere, including carbon dioxide and methane, threatens the public health and welfare of current and future generations. This finding will allow EPA to adopt and implement regulations to restrict greenhouse gas emissions under existing provisions of the Clean Air Act. The adoption and implementation of laws and regulations restricting the emission of greenhouse gases such as carbon dioxide in areas of the United States that we conduct business could result in increased compliance costs or additional operating restrictions, and could have a significant effect on our business.

The level of enforcement of these laws and regulations also affects the demand for many of our services, since greater or more vigorous enforcement of environmental requirements by governmental agencies creates greater demand for our environmental services. Any perception among our customers that enforcement of current environmental laws and regulations has been or will be reduced decreases the demand for some services. Future changes to environmental, health and safety laws and regulations or to enforcement of those laws and regulations could result in increased or decreased demand for certain of our services. The ultimate impact of the proposed changes will depend upon a number of factors, including the overall strength of the economy and clients’ views on the cost-effectiveness of remedies available under the changed laws and regulations. If proposed or enacted changes materially reduce demand for our environmental services, our results of operations could be adversely affected.

While increasing environmental regulation often presents new business opportunities for us, it often results in increased operating and compliance costs. Efforts to conduct our operations in compliance with all applicable laws and regulations, including environmental rules and regulations, require programs to promote compliance, such as training employees and customers, purchasing health and safety equipment, and in some cases hiring outside consultants and lawyers. Even with these programs, we and other companies in the environmental services industry are routinely faced with governmental enforcement proceedings, which can result in fines or other sanctions and require expenditures for remedial work on waste management facilities and contaminated sites. Certain of these laws impose strict and, under certain circumstances, joint and several liability for cleanup of releases of regulated materials, and also liability for related natural resource damages.

If we are not able to comply with the requirements that apply to a particular facility or if we operate without necessary approvals, we could be subject to civil, and possibly criminal, fines and penalties, and we may be required to spend substantial capital to bring an operation into compliance or to temporarily or permanently discontinue operations or take corrective actions. From time to time, we also have paid fines or penalties in governmental environmental and trucking enforcement proceedings, usually involving our waste treatment, storage and disposal facilities. Although none of these fines or penalties that we have paid in the past has had a material adverse effect on us, we might in the future be required to make substantial expenditures as a result of governmental proceedings, which would have a negative impact on our earnings.

In addition to the costs of complying with environmental laws and regulations, if governmental agencies or private parties brought environmental litigation against us, we would likely incur substantial costs in defending against such actions. We currently face claims by governmental agencies for environmental liabilities with respect to properties we own, operate or have acquired, and such claims and future claims may impose material financial and operating sanctions on us. See “Item 3. Legal Proceedings — Environmental Matters.”

We may also be, in the future, a defendant in lawsuits brought by parties alleging environmental damage, personal injury or property damage, particularly as a result of the contamination of drinking water sources or soils. Under current law, we could even be held liable for damage caused by conditions that existed before we owned, operated or acquired the assets or operations involved. We may not have sufficient insurance coverage for any environmental liabilities that may be covered by the terms of such insurance. Those costs or actions could be significant to us and significantly impact our results of operations, as well as our available capital. A judgment against us, or a settlement by us, even if covered in whole or in part by insurance, could harm our business, our prospects and our reputation and could have a material adverse effect on our financial condition, results of operations and cash flows.

We may be unable to obtain or retain environmental and other permits required to operate our business.

The facilities, properties, plants, vehicles and equipment that we own, operate or lease require a variety of environmental and other permits and licenses needed to operate them. For example, PE Recycling has several permit modifications in process to significantly improve our ability to accept, manage and treat different types of waste. Also, we are seeking permits so that we may prepare our existing Brownfield site for redevelopment, and ultimately, resale. There are no assurances that we will be successful in obtaining these permits on terms acceptable to us or at all.

Permits we may seek to obtain also restrict how the property, facility or equipment may be used. Permits to operate waste processing and recycling facilities have become increasingly difficult and expensive to obtain and retain as a result of many factors, including the need to have public hearings and to comply with stringent zoning, environmental and other regulatory measures. The granting of these permits is also often subject to resistance from citizens and environmental groups and other political pressures. Our failure to obtain or retain the required permits to operate our facilities could have a material negative effect on our future results of operations.

Regulators have the power to modify, suspend or revoke these permits or licenses, based on, among other factors, our compliance with applicable laws, rules, regulations and their interpretations thereof or our use of the properties, facilities or equipment and customers may decide not to use a particular disposal facility or do business with us because of concerns about our compliance record. Any modification, suspension or revocation of permits or licenses would impact our operations and could have a material adverse impact on our financial results. As to properties, facilities, plants, vehicles or equipment that we lease from third parties, a permit or license may face suspension or revocation based upon acts or omissions of the third party owner, which may not be within our control. We may not have any sufficient legal remedies to compensate us for any loss of a permit or license, and any legal remedies that we do have may require significant financial and other resources to pursue.

Potential liabilities involving customers and third parties may harm our reputation and financial condition.

In performing services for our customers, we potentially could be liable for breach of contract, personal injury, property damage (including environmental impairment), and negligence, including claims for lack of timely performance or for failure to deliver the service promised (including improper or negligent performance or design, failure to meet specifications, and breaches of express or implied warranties). The damages available to a customer, should it prevail in its claims, are potentially large and could include consequential damages.

Industrial waste recycling and environmental services companies, in connection with work performed for customers, also potentially face liabilities to third parties from various claims including claims for property damage or personal injury stemming from a release of hazardous substances or otherwise. Claims for damage to third parties could arise in a number of ways, including, among other things, through:

a release or discharge of contaminants or pollutants during transportation of wastes or the performance of services;

the inability, despite reasonable care, of a remedial plan to contain or correct an ongoing seepage or release of pollutants;

the inadvertent exacerbation of an existing contamination problem; or

a customer’s reliance on reports prepared by or consulting work performed by the environmental services company.

Personal injury claims could arise contemporaneously with performance of the work or long after completion of projects as a result of alleged exposure to toxic or hazardous substances. In addition, claimants may assert that companies performing environmental services should be adjudged strictly liable for damages even though their services were performed using reasonable care, on the grounds that such services involved “abnormally dangerous activities.”

Customers of industrial waste management companies frequently attempt to shift various liabilities arising out of the disposal of their wastes or remediation of their environmental problems to contractors through contractual indemnities. Such provisions seek to require the contractors to assume liabilities for damage or personal injury to third parties and property and for environmental fines and penalties (including potential liabilities for cleanup costs arising under federal and state environmental laws).

Although we attempt to investigate thoroughly each company that we acquire, there may be liabilities that we fail or are unable to discover, including liabilities arising from non-compliance with environmental laws by prior owners, and for which we, as a successor owner, might be responsible. We may seek to minimize the impact of these liabilities by obtaining indemnities and warranties from the sellers of companies, which may be supported by deferring payment of or by escrowing a portion of the purchase price. However, these indemnities and warranties, even if obtained, may not fully cover the liabilities we might be required to assume due to their limited scope, amounts, or duration, the financial limitations of the indemnitors or warrantors or other reasons.

We plan to generate significant revenue from the sale of our recycled materials, and the potential for product liability exposure from these products could be significant.

We plan to generate an increasing amount of our revenue from the sale of our recycled crushed stone, aggregate and oil. These materials are used in a diverse line of applications, including residential and commercial construction projects, highways, tunnels and airports. As a result, we may face exposure to product liability claims in the event that any failure of our materials results, or is alleged to result, in property damage, bodily injury or death. In addition, if any of our products are, or are alleged to be, defective, we may be required to make warranty payments or to participate in a recall involving those products.

The future costs associated with defending product liability claims or responding to product warranties could be material and we may experience significant losses in the future as a result. A successful product liability claim brought against us in excess of available insurance coverage or a requirement to participate in any product recall could substantially reduce our profitability and cash generated from operations.

We may be legally or contractually required to maintain specified levels of product liability insurance. Any failure to maintain product liability insurance at the required level or at all when we are required to do so could harm our business and operations.

We have a relatively new management team, which may make it difficult for you to evaluate its ability to work individually and together to successfully lead our operations.

Our executive management team has worked together for a relatively brief period, with two of our executive officers having joined us only since January 2006 and another having joined us in September 2007. Thus, the ability of current members of management to work individually and together successfully has not been tested to any significant degree. Our success is also dependent upon these executive officers’ ability to lead and direct our other officers and key personnel in charge of our various operations. We may not be able to hire and retain our executive officers, our other officers and key employees and other additional qualified executive, sales and other personnel.

The loss of one of our key personnel may adversely affect our business.

Our future performance will depend to a significant extent upon the efforts and abilities of Mark Alsentzer, our President and Chief Executive Officer, and Brent Kopenhaver, our Chairman, Executive Vice President, Chief Financial Officer and Treasurer. Under the terms of our Series B preferred stock, we would face a potential redemption of the Series B preferred stock should either of these individuals fail to continue to serve in these roles. We do not maintain “key person” life or other insurance that would pay us benefits in the event of the death or disability of Messrs. Alsentzer or Kopenhaver. Thus, the loss of service of either of them would have a material adverse effect on our business and financial condition.

Our success and plans for future growth will also depend on our ability to hire, train, and retain skilled personnel in all areas of our business. The competition for qualified management personnel in our industry is very intense. There can be no assurance that we will be able to attract, train, and retain sufficient qualified personnel to achieve our business objectives. Any failure to do so could have a material adverse effect on our business.

The loss of one or more of our significant customers could significantly reduce our revenues and profits.

In 2008 and to a lesser extent in 2009, a significant amount of our revenues were generated from a relatively small number of customers, and we anticipate that this will continue in 2010 and in the foreseeable future. For example, historically our two largest customers prior to 2009 were two major excavation and construction companies in the New York City metropolitan area. Revenues from these customers comprised 36% of our revenues in 2008. In 2009, we did not have as large a concentration with these customers due to the economic downturn; however, we anticipate a high concentration with these same customers again in 2010. Additionally, a large portion of the revenues and profitability expected to be derived within the Treatment and Recycling segment are dependent upon waste generated from three or four large refineries. We generally do not enter into long-term contracts or agreements with our customers, and any relationships we have with our customers can be cancelled or terminated by them at any time without penalty. The loss of revenues associated with any of our significant customers would, if not replaced, have a material adverse effect on our business, financial condition, cash flows and results of operations.

We are not subject to certain of the corporate governance provisions of the Sarbanes-Oxley Act of 2002.

Since our common stock is not listed for trading on a national securities exchange, we are not subject to certain of the corporate governance requirements established by the national securities exchanges pursuant to the Sarbanes-Oxley Act of 2002. These rules relate to, among other things, independent directors, director nominations, audit and compensation committees and the retention of an audit committee financial expert. Until we voluntarily elect to fully comply with those obligations, which we have not to date, the protections that these corporate governance provisions were enacted to provide do not and will not exist with respect to us.

We only have one independent director and may be unable to appoint any qualified independent directors.

We currently have one independent director on our board, out of a total of three directors. If and when we seek to list our common stock on a national securities exchange, we will need to have a majority of the members of our board of directors be independent, but we may not be able to identify independent directors qualified to be on our board who are willing to serve. We do not currently have an audit committee and have not established independent oversight over our management and internal controls. Therefore, we are exposed to the risk that material misstatements or omissions caused by errors or fraud with respect to our financial statements or other disclosures may occur and not be detected in a timely manner or at all. In the event there are deficiencies or weaknesses in our internal controls, we may misreport our financial results or lose significant amounts due to misstatements caused by errors or fraud. These misstatements or acts of fraud could also cause our company to lose value and investors to lose confidence in us.

If we fail to achieve and maintain adequate internal controls, we may not be able to produce reliable financial reports in a timely manner or prevent financial fraud.

As an SEC reporting company, we are required to document and test our internal control procedures on an ongoing basis. Commencing with this annual report on Form 10-K, regulations adopted by the SEC under Section 404 of the Sarbanes-Oxley Act of 2002, or SOX, require us to provide annual management assessments of the effectiveness of our internal control over financial reporting, and beginning with the year ended December 31, 2010, we will be required to provide an attestation report by our independent registered public accounting firm as to these assessments. We are also required to disclose any changes in our internal control over financial reporting in our quarterly and annual reports.

During the course of testing, we may, from time to time, identify deficiencies that we may not be able to remedy. In addition, if we fail to achieve or maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with applicable standards. Effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important in helping prevent financial fraud. If we cannot provide reliable financial reports on a timely basis or prevent financial fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could decrease significantly.

We are incurring increased costs as a result of becoming a reporting company, which may adversely affect our results of operations.

We are currently an SEC reporting company. SOX, as well as a variety of related rules implemented by the SEC, have required changes in corporate governance practices and generally increased the disclosure requirements of public companies. For example, as a result of becoming a reporting company in 2008, we have been required to file periodic and current reports, proxy statements and other information with the SEC. Further, we were required to establish disclosure controls and procedures and we are currently required to regularly evaluate those controls and procedures. As a reporting company, we incur significant additional legal, accounting and other expenses in connection with our public disclosure and other obligations. Management may also be engaged in assisting executive officers, directors and, to a lesser extent, stockholders, with matters related to insider trading and beneficial ownership reporting. Beginning with this annual report on Form 10-K, management is required to evaluate our internal control over financial reporting and to provide a report with respect to that evaluation. Beginning with the year ended December 31, 2010, we will also be required to have our registered independent public accounting firm provide an attestation report on this evaluation. We expect to incur increased operating expenses in 2010 as a result of complying with Section 404 of SOX and these evaluation and attestation requirements.

We have incurred, and expect to continue to incur, increased operating expenses in relation to becoming and remaining an SEC reporting company. We also believe that compliance with the full panoply of rules and regulations applicable to reporting companies and related compliance issues will divert time and attention of management away from operating and growing our business.

Being a public company also increases the risk of exposure to class action stockholder lawsuits and SEC enforcement actions and increases the expense to obtain appropriate director and officer liability insurance on acceptable or even reduced policy limits and coverage. As a result, we may find it difficult to attract and retain qualified persons to serve on our board of directors or as executive officers.

We rely on a combination of provisions and agreements to protect our own proprietary rights, which may not sufficiently shield these rights from use, devaluation or appropriation by others.

We rely on a combination of trade name and trade secret protections for our own proprietary rights. We may also in the future rely on additional patent, copyright, trademark, trade name and other similar protections as to these rights, and acquire other proprietary rights from others with similar protections in place. We also rely upon confidentiality agreements with our current and former employees, consultants and contractors. These agreements may be breached, and we may not have adequate remedies for any breaches. In addition, our trade secrets may become otherwise known or independently discovered by our competitors. Litigation may be required to defend against claims of infringement, to enforce our present or future intellectual property rights, to protect trade secrets and to protect us or our management or personnel against claims that our products or personnel have violated the intangible property rights of others, including trade secret rights and purported rights under non-competition, non-solicitation, confidentiality and non-disparagement clauses. Litigation to protect these rights could result in substantial costs and diversion of management efforts regardless of the results of the litigation. An adverse result in litigation could subject us to significant liabilities with third parties, require disputed rights to be licensed or require us to cease using proprietary technologies or rights.

Risks Related to Our Common Stock

There is limited liquidity in the market for shares of our common stock, which may make it more difficult for you to sell your shares at times and prices that you feel are necessary or desirable.

Our shares of common stock currently are quoted on the OTC Bulletin Board. There is relatively limited trading of our common stock in this market, and this may impose significant practical limitations on any stockholder’s ability to achieve liquidity at any particular quoted price. Efforts to sell significant amounts of our common stock on the open market may precipitate significant declines in the prices quoted by market makers. A public trading market in our common stock having the desired characteristics of depth, liquidity and orderliness depends on the presence in the market of willing buyers and sellers of our common stock at any time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control. In the event an active market for the shares of our common stock does not develop, you may be unable to resell your shares of common stock at or above the price you paid for them or at any price.

In addition, offerings of our securities are subject to state securities laws. The National Securities Markets Improvement Act of 1996, or NSMIA, which is a federal statute, generally prevents or preempts states from regulating the sale of securities covered by NSMIA, subject to exceptions. Because our common stock is not listed on any national securities exchange, our securities may not be deemed to be covered securities under NSMIA in all circumstances and, as a result, persons offering or selling our securities may be subject to regulation in each state in which our securities are offered or sold. It is the individual investors desiring to sell our securities who must determine whether such compliance is required, maintain such compliance, if any, and bear the sole financial responsibility for doing so.

Failure to remain eligible for quotation on the OTC Bulletin Board may require us to transfer the quotation of our securities to the Pink Sheets®, which would adversely affect the trading market and price of our common stock and our ability to raise capital.

If our common stock fails to remain eligible for quotation on the OTC Bulletin Board, it will be removed from the OTC Bulletin Board following a certain grace period. Although we are currently eligible for quotation, there is no assurance that we will always satisfy the OTC Bulletin Board’s quotation requirements.

If our securities are removed from the OTC Bulletin Board and we fail to meet the listing standards of a national securities exchange, we would try to have our securities quoted on the Pink Sheets® operated by Pink OTC Markets Inc. The quotation of our common stock on the Pink Sheets® may reduce the price of our common stock. In addition, the quotation of our common stock on the Pink Sheets® may materially adversely affect our ability to raise capital on terms acceptable to us or at all.

Our stock price is, and we expect it to remain, volatile, which could limit your ability to sell our stock at a profit.

The volatile price of our stock will make it difficult for investors to predict the value of their investment, to sell shares at a profit at any given time, or to plan purchases and sales in advance. A variety of factors may affect the market price and volatility of our common stock. These include, but are not limited to:

announcements of pending or completed acquisitions by our competitors or us;

announcements of new operations or businesses by our competitors or us;

industry and general economic conditions;

economic or other crises and other external factors;

period-to-period fluctuations in our actual or anticipated sales, earnings and other quantitative or qualitative measures of our financial performance;

changes in financial estimates by securities analysts;

future sales of our common stock; and

a variety of other factors discussed elsewhere in this annual report on Form 10-K and in “Risk Factors.”

We will not be able to control many of these factors, and we believe that period-to-period comparisons of our financial results will not necessarily be indicative of our future performance. In addition, the stock market in general, and for smaller companies in particular, has experienced extreme price and volume fluctuations that may have been unrelated or disproportionate to the operating performance of individual companies. These broad industry and market factors may materially and adversely affect our stock price, regardless of our operating performance.

We may engage in strategic transactions that may fail to enhance stockholder value.

We may investigate potential strategic transactions, including the acquisitions of products, technologies and companies, and other alternatives within and outside of our industry with the goal of maximizing stockholder value. We may never complete any such strategic transaction, and in the event that we do complete such a transaction, it may not be consummated on terms favorable to us. Further, such transactions may impair stockholder value or otherwise adversely affect our business. Any such transaction may require us to incur non-recurring or other charges and may pose significant integration challenges or management and business disruptions, any of which could harm our results of operation and business prospects.

Restrictions on the transfer of shares of our capital stock may prohibit or restrict stockholders from liquidating their investment in our shares.

Many of our outstanding shares of common and preferred stock were issued pursuant to exemptions from registration under the Securities Act of 1933. As such, these shares of common stock are “restricted securities” as defined under the Securities Act. Restricted securities cannot be resold or transferred, except in a transaction that is exempt under applicable federal and state securities laws or that has been registered thereunder. For many reporting companies, Rule 144 under the Securities Act provides an exemption from registration for certain public resales of restricted securities by persons who are not our affiliates, if at least six months have elapsed since the securities were acquired and paid for in full by the non-affiliate, and assuming that we are current in filing our quarterly and annual reports with the SEC at the time of the sale.

However, under Rule 144 as currently in effect, our former status as a shell company generally prohibits holders of our common stock from relying on Rule 144 as to any resale of our securities if, among other requirements, we are no longer a reporting company or if we have not filed all required periodic reports during the past 12 months, even if the six-month period referred to above has elapsed. Moreover, our affiliates may be subject to additional restrictions on the resale or transfer of restricted securities or other shares that we may issue to them in a transaction registered under the Securities Act, by virtue of their status as affiliates. These and other securities law limitations on the transfer of our common stock may prevent many of our stockholders from obtaining immediate liquidity for their shares should they desire or need to do so.

We have not paid dividends on our common stock in the past, and we do not anticipate doing so in the foreseeable future.

The terms of our existing Series B preferred stock require us to pay dividends to the holder thereof quarterly. The terms of our Series C convertible preferred stock require us to pay specified dividends, when, as and if declared by our board of directors. As a result, we do not currently anticipate paying cash dividends on our common stock in the foreseeable future. Any such future dividend would be declared and paid at the discretion of our board of directors and would depend on our financial condition, results of operations, capital requirements, contractual obligations, the terms of our financing agreements at the time such a dividend is considered and other relevant factors. The terms of our Series B preferred stock currently prohibit us from paying a dividend on our common stock without satisfying certain conditions or obtaining the consent of the Series B investor. The terms of our Series C convertible preferred stock currently prohibit us from paying a dividend on our common stock unless we have paid all dividends required to be paid on our preferred stock, and such dividend is permitted under the terms thereof.

We have a classified board of directors, which may make it more difficult to change our management or effect a change in control.

Our board of directors is divided into three classes of directors in accordance with our amended and restated certificate of incorporation. The board of directors is presently made up of Mark Alsentzer, our Class I director, Charles M. Hallinan, our Class II director, and Brent Kopenhaver, our Class III director. This structure is intended to provide us with a greater likelihood of continuity of management, which may be necessary for us to realize the full value of our investments. A classified board of directors may also serve to deter hostile takeovers or proxy contests because a person could only seek to change no more than one-third of the members of the board of directors in any given year. These provisions or measures also may limit the ability of our stockholders to sell their shares at a premium over the then current market price by discouraging a third party from seeking to obtain control of us.

Our chief executive officer and other directors and executive officers, as a group, will be able to exercise substantial influence over matters submitted to our stockholders for approval.

As of April 10, 2010, Mr. Alsentzer, our President and Chief Executive Officer, Mr. Kopenhaver, our Chairman, Executive Vice President, Chief Financial Officer and Treasurer, and our other directors and executive officers beneficially own in the aggregate approximately 34.7% of our outstanding common stock. As a result, members of management will likely be able to exercise substantial influence over matters submitted to our stockholders for approval, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets, or any other significant corporate transactions. These stockholders may also delay or prevent a change in control, even if such a change in control would benefit our other stockholders. The significant concentration of stock ownership might cause the trading price of our common stock to decline if investors were to perceive that conflicts of interest may exist or arise over any such potential transactions.

Future sales, or the availability for future sales, of substantial amounts of our common stock could adversely affect the market price of our common stock.

As of April 10, 2010, we had 17,587,899 shares of common stock outstanding. As of that date, approximately 6,845,023 shares of our common stock are freely tradable without restriction (including non-restricted securities owned by certain of our affiliates). We have also entered into registration rights agreements covering the potential registration under the Securities Act of up to 3,621,024 shares of our common stock, including up to approximately 1.0 million shares of common stock underlying certain warrants. These registration rights last for up to a maximum of 10 years from the date of the registration rights agreement.

As a result, holders of a substantial amount of our existing shares and shares underlying outstanding warrants and other convertible securities have or will have the ability to sell, individually or in the aggregate, significant amounts of our common stock in the public market now and in the future. We may also register for resale or grant new registration rights to investors with respect to our common stock or common stock underlying other securities, which would increase the number of shares of common stock that may be subsequently sold in the public market.

Generally, increased numbers of freely tradable shares in the market reduce the market price of such shares. As stock prices decline, it becomes more difficult to raise additional capital through the sale of equity securities on acceptable terms, because the dilutive effect on the existing stockholders becomes more significant in these circumstances. Accordingly, substantial sales of our common stock in reliance upon Rule 144 and otherwise may significantly reduce the market price of our stock, which would, among other things, hinder our ability to raise funds through sales of equity or equity-related securities in the future at a time and price that our management deems acceptable.

The rights of our preferred stockholders are superior to the rights of our common stockholders.

The holders of our outstanding shares of preferred stock have certain rights that are superior to the rights of holders of our common stock, including dividend and liquidation preferences over our common stock. For example, the holders of our preferred stock are entitled, subject to certain limitations and exceptions, to receive dividends on their shares of preferred stock. We are currently prohibited from paying dividends on our common stock without the consent of the Series B preferred stockholder so long as any shares of Series B preferred stock remain outstanding or without the consent of the Series C convertible preferred stockholders if any accrued dividends under our preferred stock have not been paid or if such payment is not permitted by the terms of the preferred stock. Also, we are required to pay a preferential liquidating distribution to the holders of our preferred stock, approximately equal to the amount the holder originally paid for its preferred stock, subject to adjustment, plus all accrued but unpaid dividends thereupon and other amounts owed to the holder (amounting to an aggregate of approximately $7.1 million as of December 31, 2009) before any distributions can be made to the holders of our common stock or other future junior ranking classes of preferred stock in the case of our liquidation, dissolution or winding up. Under the terms of the Series B preferred stock, a liquidation may be deemed to occur upon other circumstances.

We may issue additional series of preferred stock without stockholder approval, which could be used to deter a takeover attempt and have a material adverse effect on the market value of the common stock.

As of April 10, 2010, we had two series of preferred stock outstanding — our Series B preferred stock and Series C convertible preferred stock. Subject to limitations contained in our existing series of preferred stock and other agreements, as of April 10, 2010, our board of directors had the authority to issue a total of up to 388,350 additional shares of preferred stock and to fix the rights, preferences, privileges, and restrictions, including voting rights, of any additional series of such stock, without any further vote or action by our common stockholders. As preferred stock typically has rights that are senior to the rights of the common stockholders, the rights of our common stockholders will be subject to, and may be adversely affected by, the rights of the holders of the preferred stock that we have issued, or that we might issue in the future. As a result, the existence and issuance of additional shares or series of preferred stock could have a material adverse effect on the market value of the common stock. Preferred stock also could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock. This could delay, defer or prevent a change in control. We have in the past issued, and may from time to time in the future issue, preferred stock for financing or other purposes with rights, preferences or privileges senior to the common stock.

Our issuance of additional shares of common stock, preferred stock, options or other rights to purchase those shares would dilute the proportionate ownership and voting rights of existing stockholders.

We are authorized under our amended and restated certificate of incorporation to issue up to 25,000,000 shares of common stock and 500,000 shares of preferred stock. As of April 10, 2010, the following securities were issued and outstanding:

17,587,899 shares of our common stock;

6,300 shares of our Series B preferred stock;

105,350 shares of our Series C convertible preferred stock; and

warrants to purchase in the aggregate 1,091,818 shares of common stock.

Thus, our amended and restated certificate of incorporation currently permits us to issue substantial amounts of additional shares. We have also entered into contingent obligations to issue up to 1,135,044 shares of common stock in connection with certain of our acquisitions and other transactions, which are dependent upon specific performance and earn-out criteria. Substantial sales of our common stock in the public market, including shares that may be issued in the future pursuant to these warrants and other rights, or the perception that these sales could occur, may have a depressive effect on the market price of our common stock. Such sales or the perception of such sales could also impair our ability to raise capital or make acquisitions through the issuance of our common stock.

Our board of directors may generally approve the issuance of shares of our common stock, preferred stock, options, warrants or other rights to purchase shares without stockholder consent based upon such factors as it may deem relevant at that time. Our growth and strategy has been and will continue to be driven by acquisitions, and we have historically used our common stock and other securities to fund the purchase price for these acquisitions. We have sought to raise capital from time to time through the issuance of our securities, and we may in the future continue to do so. Furthermore, we intend to issue additional securities to directors, officers, employees, vendors, consultants, advisors and others in compensation for their services. As a result, existing stockholders could face substantial dilution of their investment in us by future issuances of our securities.

Item 1B. Unresolved Staff Comments.

Not applicable to smaller reporting companies.

Item 2. Properties.

We own or lease the following properties, which are used by each of our four reporting segments as described below. We believe that all of the facilities described below are adequate and suitable for our current and future use.

Transportation and Disposal Segment

We lease approximately 5,000 square feet of warehouse space and a small two-story office building in Bronx, New York for approximately $23,622 per month, which rent increases by 4% annually. This lease expires on December 31, 2010. In June of 2009, we consolidated the office and administrative functions for the Transportation and Disposal segment previously done out of this location into our existing office space in Lyndhurst, NJ. We have subleased a portion of this space, which sublease generates income of $12,800 per month through December 2009. On October 15, 2009, we obtained a six month reduction in the lease payments from October 1, 2009 through March 31, 2010, during which time we were required to make monthly payments of $12,800 per month. The remaining portion of the monthly payment amount was deferred until the final nine months of the lease agreement beginning on April 1, 2010 through December 31, 2010, during which time the deferred amounts are to be repaid in nine equal payments, plus 10% interest. Subsequent to December 31, 2009, we continue to sublease this space at a rate of $12,000 per month, on a month to month basis, and we have also subleased the remaining portion of this space at a rate of $8,500 per month through December 31, 2010.

We lease an apartment located in Lyndhurst, New Jersey at a monthly rate of $1,700 per month. This property is used by corporate employees when working and traveling in the New York City metropolitan area for our sales and marketing operations. Our lease began on April 1, 2008 and expired on March 31, 2009, after which we have continued to lease this apartment on a month-to-month basis at the same rental rate.

We lease property of 1,500 square feet located in East Meadow, New York at a monthly rate of $3,922 per month. The monthly rent increases to $4,157 per month in 2010. This lease expires November 15, 2010. We use this office space to conduct the operations of PEI Disposal Group.

Treatment and Recycling Segment

We own approximately 1.83 acres of land located in Millville, New Jersey. This property includes oil tanks and approximately 6,400 square feet of warehouse space. We use this facility to store oil inventory and idle equipment. This property serves as collateral for PE Recycling’s $8.0 million term loan.

We own approximately 20.27 acres of land in Vineland, New Jersey, which includes various warehouse and office buildings in a commercial industrial park totaling approximately 59,647 square feet. We maintain our TDU unit and our soil and oil recycling operations on this property. The buildings are used as offices for administrative, operational, maintenance and technical employees. This property serves as collateral for PE Recycling’s $8.0 million term loan.

Environmental Services Segment

During 2009, we leased approximately 4,300 square feet of office space in Waterbury, Connecticut for the main offices of PE Environmental. On December 1, 2009 we vacated this office space and leased a smaller office space consisting of 1,320 square feet in Waterbury, Connecticut for $950 per month with a 3% increase each year. This lease expires on November 30, 2012 and automatically renews for an additional three-year term unless written notification is provided at least 180 days in advance of the term expiration.

We own a 24 acre Brownfield site located in an industrial park in central Connecticut. Our plan is to seek the necessary permits and approvals to allow us to transport soils over the next two to three years needed to cap this site.

Materials Segment

We operate a rock crushing facility on approximately five acres located in Lyndhurst, New Jersey, which includes office space of approximately 5,100 square feet. Under the lease, we pay base rent of up to $35,000 per month, plus taxes and specified utilities and other charges. The lease term expires October 1, 2010 and may be extended for up to five two-year periods.

Corporate Headquarters

In addition to the foregoing, we lease approximately 2,500 square feet for our principal executive offices in Trevose, Pennsylvania under a lease that began on June 1, 2008 and expires on May 31, 2010. We pay monthly rent of $4,100 under this lease.

Item 3. Legal Proceedings.

We may be involved in litigation and other legal proceedings from time to time in the ordinary course of our business. Except as otherwise set forth in this annual report, we believe the ultimate resolution of these matters will not have a material effect on our financial position, results of operations or cash flows.

Litigation

Local 282 Benefit Fund Litigation

On March 8, 2010, we and Juda, PE Materials, PE Disposal and PEI Disposal Group were sued in the U.S. District Court for the Southern District of New York. The plaintiffs are the trustees of several boards of trustees of employee benefit funds which are associated with the Teamsters Local Union 282, or Local 282. The funds are the Local 282 Welfare Fund, the Local 282 Pension Fund, the Local 282 Annuity Fund, the Local 282 Job Training Fund, and the Local 282 Vacation and Sick Leave Trust Fund. All of these Local 282 funds are multi-employer benefit funds governed by the Taft-Hartley Act and by ERISA. Other named defendants are Whitney Trucking, Inc., and three individuals who are alleged to have owned and/or controlled Whitney Trucking and Juda and caused an under-reporting and failure to make payments of contributions to the Local 282 funds.

The plaintiffs are seeking collection of moneys allegedly due for delinquent contributions to them in accordance with the terms of various collective bargaining agreements which existed between Local 282 and either Whitney Trucking or Juda. The plaintiffs allege that these companies owe contributions to the Local 282 funds for the period from 2000 to 2004 and from January 19, 2006 to the present.

The Local 282 funds have calculated that the amounts due from 2000 to 2004 consist of $1,355,378 in unpaid contributions, $1,483,933 in interest calculated through the dates of the audits conducted by those funds’ auditors and $97,535 in audit fees. In the aggregate the amount sought for the period 2000 to 2004 is $2,936,847.

The plaintiffs have also asserted pursuant to our January 19, 2006 acquisition of certain assets of Whitney Contracting, Inc. and the January 19, 2006 purchase of 100% of the stock of Juda that we and the subsidiaries named as defendants became liable for the obligations of Juda which included the delinquent contributions owed to the Local 282 funds for the period from 2000 to 2004. The Local 282 funds acknowledge that they have not conducted audits nor have reviewed the books and records of us and the defendant subsidiaries to determine the amount of delinquent contributions being sought for the period from January 19, 2006 to present. Rather, plaintiffs assert until such audit is completed that the Local 282 funds are permitted in accordance with the language of the respective trust agreements to “estimate” the amount of contributions due in their sole discretion. In this regard, the plaintiffs have noted that they are seeking $6,000,000 for allegedly unpaid contributions for the period from December 1, 2007 to September 30, 2009, plus any additional contributions which the auditors might determine are owing for the periods from January 20, 2006 through November 2007 and from October 1, 2009 to the present. Notably, the Local 282 funds have failed to disclose any information about the methodology or basis used in their “estimation” exercise for the period from December 1, 2007 to September 30, 2009, and have otherwise failed to justify the $6,000,000 “estimate”.

Additionally, the Local 282 funds are claiming that we and the defendant subsidiaries became bound to the terms of the collective bargaining agreements which had been executed between Juda and Local 282 for the period from 2004 to 2012 and to the terms of the 2006-2009 Metropolitan Truckers’ Association and Independent Trucker’s Agreement, or MTA. Moreover, the plaintiffs assert that we and those subsidiaries have failed to comply with the terms of the collective bargaining agreements with Local 282 and with the MTA agreement for the period commencing on January 20, 2006. As a result the Local 282 funds are seeking to conduct an audit of those companies’ books and records by the Local 282 funds’ auditors to determine the amount of contributions due to the Local 282 funds from that date. The Local 282 funds are seeking the remedies permitted by ERISA which include payments of contributions, interest, liquidated damages, costs and disbursements and reimbursement of reasonable counsel fees.

The litigation was only filed very recently. As a result, we are still evaluating the merits of the lawsuit as well as the potential impact of the allegations in the complaint, and we are in the early stage of preparing defenses and responses to those allegations. However, we and the defendant subsidiaries intend to contest plaintiffs’ claims in this lawsuit and to vigorously assert their defenses.

Soil Disposal Litigation

On December 12, 2007, subsequent to our asset purchase of Soil Disposal in November of 2007, Clean Earth, Inc., which was the former employer of the Soil Disposal sales representatives and certain of its affiliates filed a complaint against us, PEI Disposal Group, Soil Disposal, the Soil Disposal sales representatives individually, one of our officers and other named parties. The complaint alleges, among other things, that the defendants breached certain covenants not to compete and a non-solicitation covenant with respect to customers and employees of the plaintiff. The complaint also claims that we interfered with contractual relations of the plaintiff and aided and abetted the Soil Disposal sales representatives’ breach of certain fiduciary duties to the plaintiff, unfair competition by the defendants, and misappropriation of trade secrets and confidential information. The plaintiffs are seeking injunctive relief, unspecified compensatory, consequential and punitive damages and attorneys’ fees against all defendants.

With the filing of this complaint, the plaintiffs applied for a temporary restraining order, a preliminary injunction and expedited discovery against all defendants, which were denied by the court on December 20, 2007. In September 2008, the plaintiff amended its claim and also moved to compel us and the other defendants to produce additional documents. The defendants opposed these motions and cross-moved for summary judgment dismissing the case. On April 15, 2009, the court referred the case to an alternative dispute resolution program for a 45-day period during which time the parties were unable to resolve the case. In the meantime the court, at the defendants’ request, ordered a stay of all further discovery. On July 6, 2009, the court initially denied the defendants’ motion for summary judgment, but on October 22, 2009 granted re-argument on the motion, ordered a stay of all further discovery and ordered the plaintiff to produce proof of damages. The defendants have also sought dismissal of the case on the grounds that the plaintiff has failed to produce documents relevant to its claims. The motion for summary judgment presently remains undecided and no hearings are scheduled while the parties await the court’s decision on reargument of the summary judgment motion. The defendants have denied all material claims, believe the plaintiffs’ claims are without merit and intend to continue to contest this lawsuit vigorously.

Defamation Litigation

On January 14, 2008, a lawsuit was filed in the Superior Court of New Jersey, Camden County, by James Sanford, Corsan Technologies, Inc., Elite Management, Inc. and Donna Pantaleo alleging that we, one of our consultants and one of our officers defamed the plaintiffs by sending a letter to the Pennsylvania Office of the Attorney General. The complaint alleges that the letter included numerous false and defamatory statements and assertions about the plaintiffs arising out of their business. The plaintiffs are seeking unspecified compensatory and punitive damages against all defendants. On May 29, 2009, we issued 30,000 shares of Pure Earth common stock to settle this lawsuit and entered into an agreement with the plaintiff whereby PE Recycling will accept a specified quantity of soils from the plaintiff at a stated price.

Juda Litigation

On April 17, 2006, a lawsuit was filed in the U.S. District Court for the District of New Jersey by Duraport Realty Two, LLC against Whitney Contracting, Juda and certain of their affiliates. This lawsuit involved an alleged breach of a lease agreement between Duraport and Whitney Contracting, and personal guarantees made by certain of the defendants. The complaint named Juda, our wholly owned subsidiary, as a defendant and claimed that in 2005, Juda misrepresented Whitney Contracting’s creditworthiness, which fraudulently induced Duraport to enter into the lease agreement, that Juda was unjustly enriched by its use of the leased premises, and that Juda was liable for property damage. Duraport had sought aggregate damages in excess of $1.0 million. In March 2009, without defendants admitting any liability or wrongdoing or acknowledging the validity of any of the plaintiff’s allegations, the parties settled this lawsuit for $350,000, of which Juda paid $50,000 and all other defendants but one paid the remaining $300,000.

During the year ended December 31, 2007, we, Juda and the former owners of Juda were named as co-defendants in a lawsuit filed in the U.S. District Court for the Southern District of New York relating to the withdrawal liability owed to the Local 282 pension trust fund. On January 10, 2008, this case was settled for $650,000, plus 10% annual interest, payable over a two-year period. Although all defendants agreed to be jointly and severally liable for payment of this settlement, the former owners of Juda have agreed to reimburse us for any costs and liabilities incurred as a result of this litigation and to indemnify and hold us harmless against any claims, suits, causes of action or losses. We and the former owners of Juda agreed to settle this liability as follows:

$250,000 was payable upon execution of the settlement agreement; and

two consecutive payments of $200,000 each, plus accrued interest, are to be made on or before December 10, 2008 and 2009, respectively.

To facilitate this settlement, we posted a $400,000 letter of credit to serve as a credit enhancement. Pursuant to a Reimbursement and Indemnity Agreement with the former owners of Juda, we have the right to offset any amounts owed by them against salary compensation or annual bonuses that they would otherwise be entitled to receive from us. We also required the former owners of Juda to pledge 150,000 shares of our common stock held by them as collateral for the letter of credit. The pledged shares were deposited into an escrow account that is jointly held by the parties. On December 10, 2008, we made a payment of $200,000, at which time the outstanding letter of credit was reduced to $200,000. At that time, we also required the former owners of Juda to post an additional 125,000 shares of our common stock as additional collateral. In May 2009 we retired 200,000 shares of these shares held in escrow as reimbursement for the December 2008 payment made on behalf of the former owners of Juda. On December 10, 2009, we permitted the Local 282 pension trust fund to draw down on the outstanding $200,000 letter of credit in order to satisfy the remaining portion of the outstanding liability. On December 14, 2009, at our request, the former owners of Juda posted an additional 150,000 shares of Pure Earth common stock as collateral for their obligation to repay the second $200,000 payment that we made in December 2009. In January of 2010, we notified the indemnitors of our intention to offset the $200,000 receivable due and owing to us against salaries and other compensation amounts due to these individuals over the remaining term of their employment agreements.

Accounts Receivable Litigation

In September of 2007, we began transportation and disposal work on a large construction job in New York City to redevelop several city blocks. Beginning in September 2007 and through September 30, 2008, we billed a total of $9.2 million to this customer for which it received payments totaling $7.3 million, leaving an outstanding receivable balance of $1.9 million. In addition, we also billed an additional $0.9 million in September of 2008 relating to this same job through another one of our major customers and for which we had a payment bond in the amount of $0.9 million in place. In August of 2008, the we were notified by the customers that they were stopping payment due to a dispute over the tonnage of material removed from the construction site. We promptly ceased work on the job and filed a mechanics’ lien on the properties in September of 2008. In December of 2008, we filed three lawsuits in the Supreme Court for the State of New York, County of New York, against these customers and other lien holders, alleging that approximately $2.8 million in amounts owed to us for transportation and disposal fees, plus applicable interest, have not been paid. We sought to foreclose on a mechanics’ lien and alleged breach of contract, unjust enrichment and account stated claims. Certain of the defendants have filed counterclaims against us for breach of contract, fraud and willful lien exaggeration, and seek at least $2.0 million in damages in each of the three cases, plus punitive damages and attorneys’ fees in an amount to be proven at trial. On May 29, 2009, we agreed to a settlement whereby we will receive a total of $2.0 million in satisfaction of the $2.8 million of outstanding accounts receivable and dismissal of the counterclaims. Of this settlement amount, $1.0 million was to be received within 15 days of the final settlement and the remaining $1.0 million is scheduled to be repaid in 18 monthly installments of $55,555 beginning on September 1, 2009. On July 1, 2009, we received the first installment of $1.0 million, and have received subsequent monthly payments totaling $222,220 for the months of September, October, November and December 2009. The remaining note receivable is secured by approximately $888,000 in payment bonds held by us in the event of nonpayment by the customers.

New Jersey Sales and Use Tax Audit

The State of New Jersey conducted a sales and use tax audit of PE Recycling. The audit covered the period from October 2002 through December 2006, prior to our acquisition of PE Recycling in March 2007. We estimated the total potential sales and use tax liability, including estimated interest and penalty, to be approximately $0.5 million, and we established a reserve in this amount. On June 16, 2008, New Jersey offered to settle this matter for the full five years at issue for approximately $265,000, if paid before July 20, 2008. We accepted this offer on June 28, 2008 and paid the proposed settlement amount in full.

As a result of the resolution of this liability, we would be obligated to issue additional shares to the former owner of PE Recycling for the reduction in the liability amount pursuant to the PE Recycling stock purchase agreement. As of December 31, 2008, we have recorded a liability of approximately $72,000 for the present estimated value of these shares. However, we have not issued these shares to the former owner, as the actual amount of shares to be issued, if any, remains subject to the resolution of the remaining PE Recycling post-closing liabilities, as provided for in the PE Recycling stock purchase agreement.

PE Recycling Litigation

On September 14, 2009, we filed a complaint in the United States District Court for the Eastern District of Pennsylvania against Gregory Call, a former owner of PE Recycling, claiming that Mr. Call breached the terms of a stock purchase agreement by which we acquired PE Recycling. Under the terms of the stock purchase agreement, Mr. Call is legally obligated to indemnify us and hold us harmless against all liabilities, losses, damages, costs and expenses arising from his breach of any representation or warranty in the stock purchase agreement. We have alleged that Mr. Call has breached numerous representations and warranties in the stock purchase agreement and thereby has triggered his obligation to indemnify us, which the former owner has disputed. In the complaint, we allege that Mr. Call’s failure to indemnify us has breached the terms of the stock purchase agreement. We are seeking to recover in excess of $4.0 million in monetary damages (as well as attorney’s fees and expenses) and a declaratory judgment as to our right to set off our damages under the stock purchase agreement against any amounts we may owe the former owner thereunder.

On November 5, 2009, Mr. Call filed an answer to this complaint, generally denying our claims and asserting a number of affirmative defenses. In his answer, Mr. Call also asserted counterclaims and third-party claims against us and our chief executive officer and chief financial officer for fraudulent inducement, violations of specified antifraud provisions of the federal securities laws, breach of contract, breach of fiduciary duty, unjust enrichment, civil conspiracy and breach of an implied covenant of good faith and fair dealing. Mr. Call seeks against the counterclaim defendants an unspecified amount of compensatory and punitive damages, as well as attorney’s fees and costs of suit, and any other relief deemed equitable and just. We deny any liability to Mr. Call, we believe that his defenses and counterclaims are without merit and we will seek to vigorously contest these counterclaims.

On February 12, 2010, Mr. Call commenced an action against PE Recycling, our chief executive officer, and our chief financial officer in the Superior Court of New Jersey in Cumberland County. Mr. Call alleges our chief executive officer and chief financial officer made material misrepresentations and omissions to induce him to enter into an employment agreement on March 30, 2007, and that the employment agreement was breached when he was terminated in July 2009. Mr. Call also asserts a claim under the New Jersey Conscientious Employee Protection Act, alleging that he was terminated in retaliation for disclosing to a governmental agency alleged acts of his employer that he reasonably believed violated the law. Mr. Call also seeks a declaratory judgment that the non-compete provisions contained in the employment agreement are void. PE Recycling, and our chief executive officer and chief financial officer have responded to this complaint denying any liability to the former owner and we believe that his claims are without merit and we will seek to vigorously contest these claims.

Environmental Matters

On February 15, 2007, the NJ DEP asserted multiple violations against PE Recycling of its Class B Recycling Facility Permit through the issuance of an Administrative Order and Notice of Civil Administrative Penalty Assessment. The NJ DEP fined PE Recycling approximately $0.6 million, which was accrued for at the date we purchased PE Recycling. In June 2009, PE Recycling and the NJ DEP agreed to settle the outstanding fines and penalties for approximately $228,000 to be paid in four equal quarterly installments of $56,988 on September 1, 2009, December 1, 2009, March 1, 2010 and December 31, 2010. In this settlement agreement the NJ DEP also determined that the asserted violations had been corrected. The most significant of these alleged violations, in terms of cost to remedy, was the storage of approximately 253,000 tons of processed and unprocessed soil in areas beyond the limits of PE Recycling’s permit, and the ongoing processing of soil in areas where this activity was not authorized. To address these violations, we installed our own supervisory team to oversee the processing and off-site disposal of this soil, requiring an investment in PE Recycling of approximately $3.7 million from June 30, 2007 through December 31, 2009. In addition, we have invested approximately $150,000 to install impermeable high-density polyethylene liners over an additional area of approximately one acre to expand the footprint of its soil processing operation. We believe PE Recycling’s unprocessed soil stockpile is currently in compliance with the requirements of the NJ DEP permit. PE Recycling has also recently submitted a permit amendment application to formalize its expanded soil processing operation over the newly-lined area.

On September 28, 2007, the EPA brought an administrative complaint against PE Recycling, alleging that it failed to submit a response plan under the Clean Water Act with respect to its facility in Millville, New Jersey. The complaint proposes to assess a civil penalty in the amount of $103,000. On or about December 11, 2009, PE Recycling submitted a detailed technical response to the EPA summarizing the reasons why it is not subject to the facility response plan requirements. That submission is under review by the EPA, which has advised PE Recycling that no further action is required until the EPA completes its review. PE Recycling intends to vigorously defend this matter, as the technical review confirms that it has not been and is not now subject to the facility response plan requirements.

In October 2007, PE Recycling received a notice of violation from the EPA under RCRA, asserting that our PE Recycling facility, since at least 2003, has been improperly processing used oil, alleged to be a hazardous waste, for distribution into commerce. The EPA has alleged that PE Recycling over a three year period from 2006 to 2009 processed and sold at least 2 million gallons of used oil for fuel that should have been processed as a hazardous waste. The EPA has requested under RCRA specific information with regard to this notice of violation. PE Recycling has been cooperating with the EPA’s information requests. We believe that we can assert valid defenses to the EPA’s allegations; however, in an effort to resolve this matter amicably, in August 2009 we initiated settlement discussions with the EPA. The EPA responded that it would need to receive additional information from us before it could properly consider a settlement offer. To support our settlement efforts, we intend to comply with the EPA’s requests for information. However, should these settlement efforts be unsuccessful, we intend to contest the EPA’s allegations in the notice of violation vigorously.

From time to time, we may pay fines or penalties in environmental proceedings relating our businesses. We do not believe that the fines or other penalties in any of these matters will, individually or in the aggregate, have a material adverse effect on our financial condition or results of operations.

Item 4. [RESERVED].

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market for Our Common Equity

The acquisition of South Jersey Development, Inc. took place on January 20, 2006. From February 6, 2006 to December 23, 2008, our common stock was quoted on the Pink SheetsÒ automated electronic quotation service under ticker symbol “PREA.PK.” Prior to February 6, 2006, our stock was quoted on the Pink SheetsÒ under ticker symbol “INFV.PK.” Beginning on December 24, 2008, our common stock has been quoted on the OTC Bulletin Board under ticker symbol “PREA.OB.”

The following table sets forth the range of the high and low trading prices for our common stock for each fiscal quarter of our last two fiscal years, as provided by Commodity Systems, Inc. through Yahoo! Inc.’s Yahoo!Ò Finance web site. These prices reflect actual transactions, without retail mark-up, mark-down or commission.

	High		Low
Fiscal Year Ended December 31, 2008
First Quarter	$	3.50	$	1.01
Second Quarter		2.50		1.45
Third Quarter		2.45		1.21
Fourth Quarter		1.79		1.26

Fiscal Year Ended December 31, 2009
First Quarter	$	1.45	$	0.71
Second Quarter		1.10		0.57
Third Quarter		0.94		0.40
Fourth Quarter		0.63		0.18

As of April 10, 2010, there were 17,587,899 shares of our common stock outstanding held by approximately 201 stockholders of record, solely based upon the count our transfer agent provided us as of that date. This number does not include any beneficial owners of common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries. It also does not include broker-dealers or other participants who hold or clear shares directly or indirectly through the Depository Trust Company, or its nominee, Cede & Co.

We have not paid dividends on our common stock in the past and do not anticipate paying dividends on our common stock in the foreseeable future. We anticipate that we will retain future earnings, if any, to fund the development and growth of our business. While outstanding, the terms of our Series B preferred stock do not permit us to pay any cash dividends on our common stock. The terms of our Series C convertible preferred stock do not permit us to pay dividends on our common stock unless all dividends with respect to our preferred stock have been paid in full and such payment is not prohibited by the terms of our preferred stock. In the future, we may be a party to other agreements that limit or restrict our ability to pay dividends. In addition, the General Corporation Law of the State of Delaware prohibits us from declaring and paying a dividend on our capital stock at a time when we do not have (as defined under that law):

a surplus, or, if we do not have a surplus,

net profit for the year in which the dividend is declared and for the immediately preceding year.

Recent Sales of Unregistered Securities

We have listed below sales and issuances of our unregistered securities made during 2009 that were not otherwise reported in a Form 10-Q or Form 8-K.

On October 22, 2009, we issued 25,000 shares of common stock valued at $0.50 per share and on December 17, 2009 we issued 25,000 additional shares of common stock valued at $0.50 per share to a marketing firm for services received. These shares were issued under an exemption from Securities Act registration in reliance upon Section 4(2) of the Securities Act.

On December 10, 2009, we issued 3,750 shares of our Series C convertible preferred stock valued at $10.00 per share to the former owner of Nycon, in exchange for a release from our obligation to repay $75,000 of the former owner’s notes payable. These shares were issued under an exemption from Securities Act registration in reliance upon Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder.

We believe that the offers and sales indicated as being exempt from Securities Act registration under Section 4(2) of the Securities Act were so exempt for, among other things, the following reasons:

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 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.

We believe that the offers and sales indicated as being exempt from Securities Act registration under Rule 506 under the Securities Act were so exempt for, among other things, the following reasons:

We complied with the applicable information requirements of Rule 502(b) under the Securities Act at a reasonable time prior to sale with respect to all purchasers who were not accredited investors.

We made available to each purchaser a reasonable time prior to his or her purchase the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and to obtain any additional information that we possessed or were able to acquire without unreasonable effort or expense that was necessary to verify the accuracy of information furnished under Rule 502(b)(2)(ii) under the Securities Act.

Neither we nor any person acting on our behalf offered or sold the securities by any form of general solicitation or general advertising.

We exercised reasonable care to assure that the purchasers of the securities were not underwriters within the meaning of Section 2(a)(11) of the Securities Act.

There were no more than 35 purchasers of the securities, as determined in accordance with Rule 501(e) under the Securities Act.

If any purchaser was not an accredited investor, we had reason to believe that each such purchaser either alone or with his or her purchaser representative(s) had such knowledge and experience in financial and business matters that he or she was capable of evaluating the merits and risks of an investment in the securities.

We filed a notice on Form D no later than 15 calendar days after the first sale of the securities in the offering.

Item 6. Selected Financial Data.

Not applicable to smaller reporting companies.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our results of operations and financial condition should be read together with our consolidated financial statements and the notes thereto, which are included elsewhere in this annual report on Form 10-K.

This section contains forward-looking statements. These forward-looking statements are subject to various factors, risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Further, as a result of these factors, risks and uncertainties, the forward-looking events may not occur. Relevant factors, risks and uncertainties include, but are not limited to, those discussed in “Item 1. Business,” “Item 1A. Risk Factors” and elsewhere in this annual report. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management’s beliefs and opinions as of the date of this annual report. We are not obligated to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. See “Item 1. Business — Forward-Looking Statements.”

Information contained in this section and expressed in dollars has generally been presented in round numbers. Percentages contained in this section have been calculated, where possible, using the information from our consolidated financial statements, and not the rounded information provided in this section. As a result, these percentages may differ slightly from calculations obtained based upon the rounded figures provided in this section and totals contained in this section may be affected by rounding.

Overview and Strategy

As we are a relatively new company, a key element of our formation and growth to date has been our ability to identify potential complementary environmental services and beneficial reuse companies or specific assets of such companies as acquisition targets, to negotiate and successfully close those acquisitions, and to integrate the acquired businesses and assets into our operations. By combining these existing and new technologies into a single organization, we believe we can be the leading provider of a wide array of soil reclamation, waste recycling, alternative fuels and other environmental services. We also intend to utilize these services internally to develop and rehabilitate Brownfield properties that we own for development, and, ultimately, sale, as commercial real estate opportunities.

We operate in the following four reportable business segments, which serve as strategic business units through which our operations are generally organized:

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; 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.

The operating results from activities previously classified as the Concrete Fibers segment are now reflected as discontinued operations as of and for the years ended December 31, 2009 and 2008. This segment had originally been created with our acquisition of Nycon effective April 2008. In this segment, we had recycled used carpet fibers into environmentally sustainable, or “green,” fiber material and repacked and distributed various other fibers as additives to concrete products. In December of 2009, we decided to discontinue the operation of New Nycon and the Concrete Fibers segment, at which time we began to engage in negotiating the sale of this business, which was completed on March 31, 2010. See “— Development of Our Business and Significant Acquisitions — Acquisition Related to Discontinued Operations.”

We generate revenues and cash in each of our segments as follows:

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 recycling services, such as oil recycling, decontamination, wastewater cleanup, and laboratory analysis.

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 fourth 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 our rock crushing facility. We then process the material at our rock crushing facility 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.

Our discontinued operations (the former Concrete Fibers segment) generated cash revenues and cash through the sale of packaged concrete fibers to construction companies, concrete manufacturers and wholesalers in the domestic and foreign marketplace. The price at which we sell these fibers was 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 were 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 largely depended 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.

Overall, we generally enter into customer and materials contracts on a purchase order or similar basis. We do not generally enter into long-term supply or service contracts or arrangements with our customers. As a result, our revenues tend to be less regular than if we provided services or materials under long-term or requirements contracts, and thus our revenues may fluctuate significantly from period to period and between the same periods in different fiscal years. Thus, it may be hard for an investor to project our results of operations for any given future period.

We believe that the environmental services industry, especially in the eastern United States, is generally poised to expand in the near future for several reasons. First, support for environmentally sustainable construction methods and materials has increased over the past few years, and we predict that this trend will continue in light of growing concerns regarding fuel availability and consumption, and the environmental impacts of industry and development.

Second, the operation of commercial and industrial concerns in the northeastern United States over the last 50 to 100 years has created a large number of properties with environmental evaluation and waste disposal needs. Cost-effective restoration of these properties will be viewed as a solution to the limited availability and high value of real estate in the northeastern United States. Since 1995, federal and state support of Brownfield programs have served to promote and fund activities designed to efficiently clean up these properties and restore them to productive and revenue-generating use. Finally, the increasing cost and declining capacity of landfills support the development of alternative technologies for the beneficial recycling and reuse of hazardous and other wastes, including soils, fuels, metals and wastewater.

We believe that we are well-positioned to capitalize upon these industry opportunities. First, we have commenced operations in strategically selected geographic locations near major cities and industrial centers, such as the New York-New Jersey-Connecticut tri-state area and the mid-Atlantic region. Despite a recent market downturn due to challenges posed by the current economic environment, these regions have historically supported strong construction growth and have driven the need for the recycling and reuse of a variety of waste streams, which we believe will continue to be true in the long-term. We seek to improve and expand our existing operations to take advantage of these opportunities while also improving our overall operating efficiency to enhance profitability.

Second, we are focusing on integrating a wide array of related environmental services operations into a single platform to offer our customers a single source for customizable transportation, disposal and treatment and recycling services, all at a lower cost. Our Materials segment also produces beneficially reused construction materials at a significant discount to the cost of original materials, which supports sales to construction sites. Our services integration strategy is being developed for us to capitalize on the Brownfield redevelopment industry through the management of a diverse range of contaminated materials and environmental services which we believe will allows us to seek Brownfield sites for efficient and cost-sensitive development of these properties.

Critical Accounting Policies and Estimates

In preparing our consolidated financial statements in conformity with accounting principles generally accepted in the United States, we make estimates and assumptions that affect the accounting, recognition and disclosure of our assets, liabilities, stockholders’ equity, revenues and expenses. We make these estimates and assumptions because certain information that we use is dependent upon future events, cannot be calculated with a high degree of precision from data available or cannot be readily calculated based upon generally accepted methodologies. In some cases, these estimates are particularly difficult and therefore require a significant amount of judgment. Actual results could differ from the estimates and assumptions that we use in the preparation of our consolidated financial statements. Below is a summary of our most important accounting policies that may affect our consolidated financial statements.

Revenue Recognition: We apply the revenue recognition principles set forth under Accounting Standards Codification (“ASC”) Topic 605 — Revenue Recognition (“ASC 605”) and the SEC’s Staff Accounting Bulletin No. 104, “Revenue Recognition,” with respect to all of our revenue. Accordingly, revenue is recognized when persuasive evidence of an agreement exists, delivery has occurred or services have been rendered, the price is fixed and determinable and collection is reasonably assured. Revenue is recognized net of estimated allowances, which are determined based upon historical analysis, recent market trends and in some cases specific evaluation.

We recognize revenues associated with each of our four reportable segments as follows:

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 December 31, 2009 and December 31, 2008, 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 December 31, 2009 and December 31, 2008, we recorded deferred revenues of approximately $0.1 million and $0.1 million, respectively.

Environmental Services – revenues are recognized as services are rendered.

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.

Revenues with respect to our discontinued operations 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 recognized revenue for the former Concrete Fibers segment at that point.

Accrued Disposal Costs. We record accrued disposal costs representing the expected costs of processing and disposing of clean and contaminated soils that have been received into the treatment facility. Disposal costs include the costs associated with handling and treating the waste, and the cost of disposing the processed materials. Any soil that is unprocessed is expected to be treated within the next 12 months and, therefore, this obligation is classified as a current liability on our consolidated balance sheets. Except as required by certain specific customer contracts, we generally are not obligated to dispose of processed soil within a specific time period. As a result, disposal costs for processed soil not subject to those specific customer contracts are classified as a long-term liability on our consolidated balance sheets.

Accounts Receivable and Allowance for Doubtful Accounts. Our accounts receivable are due from a variety of customers. We extend credit based on continuing evaluations of the customer’s financial condition, and in certain instances may require additional collateral or insurance bonds from our customers. We review accounts receivable on a monthly basis to determine if any receivables will be potentially uncollectible. We include any accounts receivable balances that are determined to be uncollectible, along with a general reserve based on historical experience, in our overall allowance for doubtful accounts. We assess the need for specific reserves based upon factors specific to the individual receivables and customers, including our past experience in dealing with the customer, length of time outstanding, condition of the overall economy and industry as a whole and whether or not the contract is bonded or insured. For many of our larger contracts, we may require the customer to obtain an insurance bond to provide for additional collateral in the event that we are unable to collect from the customer directly. Accounts receivable written off in subsequent periods can differ materially from the allowance for doubtful accounts provided, but historically our provision has been adequate.

Goodwill and Intangible Assets with Indefinite Lives. We assess goodwill and intangible assets with indefinite lives on at least an annual basis or if a triggering event has occurred to determine whether any impairment exists. We assess whether impairment exists by comparing the carrying value of each reporting unit’s goodwill to its implied fair value. The implied fair value of goodwill is determined by deducting the fair value of each reporting unit’s identifiable assets and liabilities from the fair value of the reporting unit as a whole. We rely on discounted cash flow analyses, which require significant judgments and estimates about the future operations of each reporting unit, to develop our estimates of fair value. Additional impairment assessments may be performed on an interim basis if we encounter events or changes in circumstances that would indicate that, more likely than not, the carrying value of goodwill has been impaired.

We also have valuable state and local permits that allow our companies within the Treatment and Recycling segment to operate their recycling and soil remediation operations. The permits do not have any legal, regulatory (other than perfunctory renewal requirements of up to five years on certain permits), contractual, competitive, economic or other factors that would limit the useful lives of the assets, and therefore are deemed to have indefinite lives and are not subject to amortization. Permits with finite lives were immaterial at December 31, 2009 and December 31, 2008, and any such permits would be amortized on a straight-line basis over their estimated useful lives.

Intangible Assets with Finite Lives. Our amortizable intangible assets include customer relationships and covenants not to compete. These assets are being amortized using the straight-line method over their estimated useful lives. The customer lists are stated at cost or allocated cost based upon purchase price allocations, which were estimated based upon the fair value of the consideration given up to obtain the assets. Customer lists are amortized on a straight-line basis over 10 years, which was determined by consideration of the expected period of benefit to be derived from these customers, as well as the length of the historical relationship. Our non-compete agreements are amortized on a straight-line basis over the term of the non-compete agreement.

Long-Lived Assets. We periodically evaluate the net realizable value of all of our long-lived assets, including property, plant and equipment and amortizable intangible assets, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. We will evaluate events or changes in circumstances based mostly on actual historical operating results, but business plans, forecasts, general and industry trends, and anticipated cash flows are also considered. When indicators of potential impairment are present, the carrying values of the assets are evaluated in relation to the operating performance and estimated future undiscounted cash flows of the underlying business. An impairment in the carrying value of an asset is recognized whenever anticipated future cash flows from an asset are estimated to be less than the carrying value. The amount of the impairment recognized is the difference between the carrying value of the asset and its fair value. Fair values are based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk. We will also continually evaluate the estimated useful lives of all long-lived assets and, when warranted, revise such estimates based on current events. For the year ended December 31, 2009, we recorded $0.7 million in losses related to equipment that was removed from service within our Treatment and Recycling segment operations.

Business Combinations. Acquisitions we enter into are accounted for using the purchase method of accounting. The purchase method requires our management to make significant estimates. The accounting principles governing the accounting of business combinations were substantially revised, effective January 1, 2009, by the adoption of ASC Topic 805 – Business Combinations (“ASC 805”). The adoption of ASC 805 will impact our consolidated financial statements prospectively in the event of any business combination we may enter into after the effective date in which we are deemed to be the acquirer for accounting purposes. We did not enter into any business combinations subject to this new accounting guidance during the year ended December 31, 2009.

Stock-Based Compensation. We adopted SFAS No. 123 (revised 2004), “Share-Based Payment,” on July 24, 2007, concurrent with our board of directors approving the 2007 Stock Incentive Plan. The guidance under SFAS 123(R) was subsequently included in ASC Topic 718 – Compensation - Stock Compensation” (“ASC 718”). Prior to July 24, 2007, we had not granted any stock-based compensation to our employees, and thus the change in accounting policy represented by the adoption of ASC 718 did not have any effect on our results of operations for periods ending on or before June 30, 2007.

As a result of the adoption of ASC 718, we are required to recognize compensation cost relating to stock-based payment transactions with employees in our consolidated financial statements. That cost is measured based upon the fair value of the equity or liability instrument issued as of the grant date and is recognized over the requisite service period.

We did not grant any stock-based compensation in the form of options during the years ended December 31, 2009 and December 31, 2008. When and if we do decide to grant options to our employees or directors, we will be required to determine the grant date fair value of the option using an appropriate option valuation method, such as the Black-Scholes-Merton closed-form option valuation model. To calculate the grant-date fair value of options, we will be required to make certain estimates or assumptions in accordance with the guidance provided in ASC 718 and ASC Topic 820 – Fair Value Measurements and Disclosures (“ASC 820”) including, among other things, the expected term of the option, the expected volatility of our common stock, the expected dividend yield, the requisite service period of the option and the risk-free interest rate. Any assumptions we make may need to be adjusted in accordance with ASC 718 or ASC 820 and generally accepted accounting principles.

Warrants and Derivative Instruments. We have issued warrants to purchase our common stock to the following parties:

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.

We account for the issuance of common stock purchase warrants and other free standing derivative financial instruments in accordance with the provisions of ASC Topic 825 – Financial Instruments (“ASC 825”) and ASC Topic 815 – Derivatives and Hedging (“ASC 815”). Based on the provisions of ASC 815, we classify as equity any contracts that require physical settlement or net-share settlement, or give us a choice of net-cash settlement or settlement in our own shares (either physical settlement or net-share settlement). We classify as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement or settlement in shares (either physical settlement or net-share settlement). As a result, we classify the warrants associated with the convertible debentures and our Series A preferred stock as equity and the warrant issued in connection with the Series B preferred stock as a liability. We assess the classification of our common stock purchase warrants and other free standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required.

Derivative Financial Instruments. We use derivative financial instruments primarily for the purpose of hedging our exposure to fluctuations in interest rates. All such instruments are entered into for other than trading purposes. All derivatives are recognized on the balance sheet at fair value and changes in the fair value of derivatives are recorded in earnings. Our only outstanding derivative financial instrument at December 31, 2009 was an interest-rate swap entered into in connection with the PE Recycling term loan. See “ – Debt Obligations – Long-Term Debt.” This derivative financial instrument is not currently designated as part of a hedge transaction and, therefore, it is accounted for as a freestanding derivative financial instrument.

Fair Value Measurements. We adopted the provisions of ASC 820 for assets and liabilities that are measured at fair value on a recurring basis effective January 1, 2008. ASC 820 defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820 also prioritizes the use of market-based assumptions, or observable inputs, over entity-specific assumptions or unobservable inputs when measuring fair value and establishes a three-level hierarchy based upon the relative reliability and availability of the inputs to market participants for the valuation of an asset or liability as of the measurement date. The fair value hierarchy designates quoted prices in active markets for identical assets or liabilities at the highest level and unobservable inputs at the lowest level. Pursuant to ASC 820, when the fair value of an asset or liability contains inputs from different levels of the hierarchy, the level within which the fair value measurement in its entirety is categorized is based upon the lowest level input that is significant to the fair value measurement in its entirety.

In classifying assets and liabilities recorded at fair value on a recurring basis within the valuation hierarchy, we consider the volume and pricing levels of trading activity observed in the market as well as the age and availability of other market-based assumptions. When utilizing bids observed on instruments recorded at fair value, we assess whether the bid is executable given current market conditions relative to other information observed in the market. Assets and liabilities recorded at fair value are classified in Level Two of the valuation hierarchy when current market-based information is observable in an active market. Assets and liabilities recorded at fair value are classified in Level Three of the valuation hierarchy when current, market-based assumptions are not observable in the market or when such information is not indicative of a fair value transaction between market participants.

We determine fair value based on quoted market prices, where available. If quoted prices are not available, fair value is estimated based upon other observable inputs, and may include valuation techniques such as present value cash flow models, option-pricing models or other conventional valuation methods. We use unobservable inputs when observable inputs are not available. These inputs are based upon our judgments and assumptions, which are our assessment of the assumptions market participants would use in pricing the asset or liability, including assumptions about risk, and are developed based on the best information available. Adjustments may be made to reflect the assumptions that market participants would use in pricing the asset or liability. These adjustments may include amounts to reflect counterparty credit quality, our creditworthiness and liquidity. The incorporation of counterparty credit risk did not have a significant impact on the valuation of our assets and liabilities recorded at fair value on a recurring basis as of December 31, 2009 and 2008. The use of different assumptions may have a material effect on the estimated fair value amounts recorded in our financial statements.

As of December 31, 2009 and 2008, 26% and 24%, respectively, of our total liabilities were measured at fair value on a recurring basis, which liabilities were related to the Susquehanna term loan and interest rate swap. Approximately 5% of our liabilities measured at fair value were valued using primarily observable inputs and were categorized within Level Two of the valuation hierarchy. Our liabilities categorized within Level Two of the valuation hierarchy are comprised of the interest rate swap entered into in relation to the Susquehanna term loan. Approximately 94% of our liabilities measured at fair value were valued using significant unobservable inputs and were categorized within Level Three of the valuation hierarchy. Our liabilities categorized within Level Three of the valuation hierarchy consist solely of the Susquehanna term loan, which we elected to carry at fair value pursuant to ASC 825. See Note 15 in the notes to our consolidated financial statements in this annual report for additional information regarding the fair value hierarchy, our assets and liabilities carried at fair value and activity related to our Level Three financial instruments.

Preferred Stock. We classify and measure our preferred stock according to the provisions of ASC Topic 480 – Distinguishing Liabilities from Equity (“ASC 480”). Preferred stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value in accordance with ASC 480. We classify conditionally redeemable preferred shares, which includes preferred stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control, as temporary equity. The Series A preferred stock, which was outstanding until June 30, 2008, contained a put option that was not solely within our control and therefore, was classified as temporary equity. The Series B preferred stock issued in March 2008 is mandatorily redeemable in March 2013 and is therefore classified as a liability. On November 30, 2009, we issued Series C convertible preferred stock, which is convertible into shares of the Company’s common stock at the option of the holder. The Series C convertible preferred stock does not contain any redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control. Therefore, the shares of Series C convertible preferred stock have been classified as a component of equity as of December 31, 2009.

Income Taxes. Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any necessary valuation allowance recorded against net deferred tax assets. The process involves summarizing temporary differences resulting from the different treatment of items; for example, differences arising as a result of applying the purchase method of accounting to acquisitions. Our management must then assess the likelihood that deferred tax assets will be recovered from future taxable income or tax carry-back availability and, to the extent that we believe recovery is not likely, a valuation allowance must be established.

ASC Topic 740 – Income Taxes (“ASC 740”) prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on our evaluation of tax positions taken or expected to be taken in our tax returns, we concluded that there are no significant uncertain tax positions requiring recognition in our consolidated financial statements. We file U.S. federal income tax returns, as well as tax returns in various state and local jurisdictions. These returns are subject to audits by the respective tax authorities. We record penalties and accrued interest related to uncertain tax positions in income tax expense. Such adjustments have historically been minimal and immaterial to our financial results.

Results of Operations – Year Ended December 31, 2009 Compared to Year Ended December 31, 2008

The following table presents, for the periods indicated, a summary of our consolidated statement of operations information.

	For the Years Ended December 31,
(in thousands, except share and per share data)	2009			2008
Revenues	$	43,312		$	61,167
Cost of revenues		38,705			50,374
Gross profit		4,607			10,793
Operating expenses:
Salaries and related expenses		4,762			5,929
Occupancy and other office expenses		862			1,101
Professional fees		2,020			1,986
Other operating expenses		1,371			2,081
Insurance		1,101			1,036
Depreciation and amortization		475			441
Impairment of idle machinery and write off of fixed assets		733			1,618
Gain on sale of equipment		(24	)		(245	)
Total operating expenses		11,300			13,947
Loss from continuing operations		(6,693	)		(3,154	)
Interest expense, net		(2,445	)		(1,889	)
Loss from equity investment		(143	)		(311	)
Expenses for unrealized acquisitions		(30	)		(271	)
Change in fair value of warrants with contingent redemption provisions		729			1,150
Other income		471			189
Loss from continuing operations before benefit from income taxes		(8,111	)		(4,286	)
Benefit from income taxes		(1,600	)		(2,058	)
Net loss from continuing operations		(6,511	)		(2,228	)
Discontinued operations:
Loss from discontinued operations		(358	)		(312	)
Benefit from income taxes		—			—
Net loss from discontinued operations		(358	)		(312	)
Net loss		(6,869	)		(2,540	)
Less preferred stock dividends		272			478
Net loss available for common stockholders	$	(7,141	)	$	(3,018	)
Net loss per share from continuing operations (basic and diluted)	$	(0.39	)	$	(0.16	)
Net loss per share from discontinued operations (basic and diluted)	$	(0.02	)	$	(0.02	)
Net loss per share	$	(0.41	)	$	(0.18	)
Weighted average shares of common stock outstanding during the period (basic and diluted)		17,550,350			17,427,847
Earnings (loss) from continuing operations before interest, taxes, depreciation, and amortization (EBITDA)	$	(2,630	)	$	498

We define EBITDA (from continuing operations), as used in the table above, to mean our net earnings (loss) from continuing operations before interest, benefit from income taxes, depreciation and amortization. We rely on EBITDA, which is a non-GAAP financial measure:

to review and assess the operating performance of our company and our reporting segments, as permitted by ASC Topic 280 – Segment Reporting;

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.

In addition, we also utilize EBITDA as a measure of our liquidity and our ability to meet our debt service obligations and satisfy our debt covenants, which are partially based on EBITDA. See “ – Liquidity and Capital Resources – Summary of Cash Flows – Net Cash Used in Operating Activities.”

We have presented EBITDA above because we believe it conveys useful information to investors regarding our operating results. We believe it provides an additional way for investors to view our operations, when considered with both our GAAP results and the reconciliation to net loss, and that by including this information we can provide investors with a more complete understanding of our business. Specifically, we present EBITDA as supplemental disclosure because:

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.

Even though we believe EBITDA is useful for investors, it does have limitations as an analytical tool. Thus, we strongly urge investors not to consider this metric in isolation or as a substitute for net loss and the other consolidated statement of operations data prepared in accordance with GAAP. Some of these limitations include the fact that:

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.

Because of these limitations, EBITDA should not be considered a measure of discretionary cash available to us to invest in the growth of our business or as a measure of performance in compliance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and providing EBITDA only supplementally.

The following table presents a reconciliation of net loss from continuing operations, which is our most directly comparable GAAP operating performance measure, to EBITDA for the years ended December 31, 2009 and December 31, 2008:

	For the Years Ended December 31,
	2009			2008
EBITDA	$	(2,630	)	$	498
Depreciation and amortization, including $2,561 and $2,454 of depreciation and amortization classified as a component of cost of revenues		3,036			2,895
Interest expense, net		2,445			1,889
Benefit from income taxes		(1,600	)		(2,058	)
Net loss from continuing operations	$	(6,511	)	$	(2,228	)

(1) Included on our statement of operations as a component of other income.

Revenues

The following table sets forth information regarding our revenues, excluding intercompany revenues, by segment (excluding discontinued operations) for the years ended December 31, 2009 and 2008.

	For the Years Ended December 31,
	2009					2008
(in thousands)	Amount		% of Revenues			Amount		% of Revenues
Transportation and Disposal	$	19,542		45	%	$	32,454		53	%
Treatment and Recycling		20,388		47	%		24,878		41	%
Environmental Services		571		1	%		2,008		3	%
Materials		2,812		7	%		1,827		3	%
Total	$	43,313		100	%	$	61,167		100	%

Revenues decreased by $17.9 million, or 29%, from $61.2 million for the year ended December 31, 2008 to $43.3 million for the year ended December 31, 2009. The overall revenue decrease in 2009 is primarily attributable to a $12.9 million decrease in revenues from the Transportation and Disposal segment, and a $4.5 million decrease in revenues from the Treatment and Recycling segment. Our revenues from the Environmental Services segment also decreased by $1.4 million for the year ended December 31, 2009 over the prior year period. Our revenues derived from the Materials segment increased by $1.0 million from the year ended December 31, 2008 to the year ended December 31, 2009. The overall decrease in the revenues on a company-wide basis and within our two largest segments, Transportation and Disposal and Treatment and Recycling, were caused primarily by the economic downturn which continued to negatively impact our industry throughout 2009, leading to fewer overall jobs in the marketplace, particularly large construction based projects upon which our revenues have historically been dependent.

Revenues from our Transportation and Disposal segment decreased by $12.9 million, or 40%, from the year ended December 31, 2008 as compared to the year ended December 31, 2009. Revenues in both periods were driven largely by the demand for our Transportation and Disposal services in the New York metropolitan area, which decreased significantly during the fourth quarter of 2008 and throughout all of 2009 as a result of the general downturn in the overall economy and particularly in the construction industry in the New York metropolitan area. We derived 22% and 36% of our Transportation and Disposal revenues from three large customers for the years ended December 31, 2009 and 2008. Revenues from the Transportation and Disposal segment are highly dependent upon the market for construction and rehabilitation projects in the New York City metropolitan area, which experienced a significant downturn during the year ended December 31, 2009 as compared to 2008 and prior years. Based upon our current existing backlog for 2010 and continued bidding in the marketplace, we believe that in 2010 the Transportation and Disposal segment should begin to recover from the downturn and return towards historical sales levels experienced during 2007 and the first half of 2008.

Revenues from the Treatment and Recycling segment for the year ended December 31, 2009, decreased by $4.5 million, or 18%, as compared to the year ended December 31, 2008. The decrease in revenues is largely attributable to a decrease in the volume of incoming clean and contaminated soils for processing in 2009, resulting from the lack of marketplace activity for projects of this nature. The revenues for the year ended December 31, 2009 reflect a market in which we are competing with other recycling and disposal service companies for fewer overall jobs, resulting in lower pricing on a per ton basis. During the year ended December 31, 2009, we had three customers which contributed approximately $6.7 million in revenues, or 34% of the segment’s revenues. As of December 31, 2009, we have made net advancements of approximately $5.7 million to PE Recycling for equipment, capital improvements and working capital needs, which we expect will enhance efficiency of this segment’s operations and thereby translate into increased revenues. During the year ended December 31, 2009, we also continued to grow our business of brokering alternative waste streams through PE Energy, which contributed $1.7 million of this segment’s revenues for the year ended December 31, 2009 compared to $0.2 million in 2008.

Revenues from the Environmental Services segment decreased by approximately $1.4 million, or 72%, from $2.0 million for the year ended December 31, 2008 to $0.6 million for the year ended December 31, 2009. This decrease is the result of an overall lack of revenues derived from consulting services and disposal revenues which we had successfully expanded in 2008. In January of 2008, we purchased a Brownfield location in central Connecticut which we anticipate will provide a disposal site for excavated soils from the Connecticut and New England marketplace over the next three to four years. We have experienced significant delays in obtaining the necessary permits and approvals from both state and local authorities, which are required for us to begin accepting materials to this site. As a result of these unexpected delays, we presently anticipate that this site will begin generating revenues in the fourth quarter of 2010.

Revenues from the Materials segment increased by approximately $1.0 million, or 54%, for the year ended December 31, 2009 as compared to the year ended December 31, 2008. The Materials segment results overall were positively affected by our consolidation of two rock crushing facilities into one facility during the fourth quarter of 2008. In October of 2008, we terminated our lease and operating agreement for the North Bergen rock crushing facility, and as a result we are no longer required to first offer the owner of this facility a fixed price for our rock and aggregate products. We believe that we will be able to continue to sell these products at higher prices to other customers, which will result in higher revenues on a per ton basis. The loss of production stemming from the closure of this rock crushing facility has been offset by increased production at our Lyndhurst site, which can now process higher quantities of material using $1.8 million of equipment that we began to lease in 2008.

The table above excludes intercompany revenues of approximately $2.7 million and $3.3 million for the years ended December 31, 2009 and 2008, respectively, which revenues were eliminated from our consolidated statements of operations. Our intercompany revenues largely reflect our use of Transportation and Disposal services internally for our Materials processing activities and the shipment of wastes to our Treatment and Recycling segment facilities. We generally reflect these services at their current market value when rendered. An important part of the strategic alignment of our segments is the synergies and cost savings that these segments can provide to each other, which benefits us as a whole.

Cost of Revenues

The following table sets forth information regarding our cost of revenues, excluding intercompany costs, by segment for the years ended December 31, 2009 and 2008.

	Cost of Revenues – By Segment
	For the Years Ended December 31,
	2009					2008
(in thousands)	Amount		% of Revenues			Amount		% of Revenues
Transportation and Disposal	$	15,604		36	%	$	22,628		37	%
Treatment and Recycling		19,328		45	%		22,234		36	%
Environmental Services		543		1	%		1,685		3	%
Materials		3,230		7	%		3,827		6	%
Total	$	38,705		89	%	$	50,374		82	%

	Gross Profit – By Segment
	For the Years Ended December 31,
	2009						2008
(in thousands)	Amount			% of Revenues			Amount			% of Revenues
Transportation and Disposal	$	3,938			20	%	$	9,826			30	%
Treatment and Recycling		1,060			5	%		2,644			11	%
Environmental Services		28			5	%		323			16	%
Materials		(419	)		(15	)%		(2,000	)		(110	)%
Total	$	4,607			11	%	$	10,793			18	%

Cost of revenues decreased by approximately $11.7 million, or 23%, from $50.4 million for the year ended December 31, 2008 to $38.7 million for the year ended December 31, 2009. Our cost of revenues as a percentage of revenues increased to 89% for year ended December 31, 2009 from 82% for the year ended December 31, 2008. The decline in our gross margin is primarily attributable to decreased margins within the Treatment and Recycling segment, which in turn is due to a decrease in the revenue per ton of material processed in 2009 compared to 2008. This decrease is the result of increased competition in the marketplace due to lower overall sources of incoming material to be processed. The gross profit margin in the Materials segment improved by $1.6 million as a result of consolidating the North Bergen operations into our Lyndhurst site and the termination of the North Bergen lease and operating agreement. The decreased margins in the Environmental Services segment are the result of lower overall revenue amounts as compared to the costs of employing our environmental consulting professionals. The gross margins for our Transportation and Disposal segment decreased from 30% to 20% for the year ended December 31, 2009, as compared to the year ended December 31, 2008. This decrease is primarily attributable to an overall lack of large construction projects in the New York metropolitan area, which have historically provided for higher margins as compared to smaller projects, as well as downward pricing pressure resulting from increased competition.

We plan to decrease our cost of revenues to improve our gross margins by 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. Additionally, we plan to decrease transportation and disposal costs by adding new transportation providers, negotiating long-term contracts at more favorable prices, and using Brownfield properties that we own or operate as additional disposal outlets.

For 2010, we expect to operate at gross margins ranging from 15% to 20% on a consolidated basis. We anticipate an increase in gross margins from 2009 due in large part to several large Transportation and Disposal jobs which we expect to provide increased gross margins and the treatment of higher priced materials within the Treatment and Recycling segment coupled with decreased operating costs. These estimates are based on our current expectation of costs of labor and transportation. Our ability to achieve our estimated gross margins in future periods may be impacted by, among other things, overall economic conditions, fuel prices that rise faster than anticipated, increases in disposal costs arising from a reduction in the disposal facilities’ capacity or additional restrictions that may be placed on the types or amounts of waste they may be able to accept, and our ability to successfully implement initiatives to reduce operating expenses.

Operating Expenses

Our operating expenses include:

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 and write off of fixed assets;

gain recognized on our sale of certain equipment; and

other miscellaneous operating expenses.

The following table summarizes the primary components of our operating expenses for the years ended December 31, 2009 and 2008.

	For the Years Ended December 31,						Period to Period Change
(in thousands, except percentages)	2009			2008			Amount			Percentage
Salaries and related expenses	$	4,762		$	5,929		$	(1,167	)		(20	)%
Occupancy and other office expenses		862			1,101			(239	)		(22	)%
Professional fees		2,020			1,986			34			2	%
Other operating expenses		1,371			2,081			(710	)		(34	)%
Insurance		1,101			1,036			65			6	%
Depreciation and amortization		475			441			34			8	%
Impairment of idle machinery and write off of fixed assets		733			1,618			(885	)		(55	)%
Gain on sale of equipment		(24	)		(245	)		221	)		(90	)%
Total operating expenses	$	11,300		$	13,947		$	(2,647	)		(19	)%

Salaries and related expenses represented approximately 42% of our total operating expenses for the year ended December 31, 2009 and were driven primarily by our overall headcount and compensation structure. Our costs associated with salaries and other related expenses decreased by $1.2 million, or 20%, which is due to reductions in headcount which took place during the first and second quarters of 2009 and voluntary reductions in management’s salaries which went into effect on June 1, 2009. We also did not award bonuses to our employees during 2009, reflecting overall company-wide performance during the year.

We maintain employment agreements with many of our officers and key employees, many of which provide for fixed salaries, annual increases in base salary, bonuses based upon performance and other forms of compensation. In June 2008, we entered into employment agreements with two of our executive officers, which provide them with increases in base salary and other benefits from year to year. A number of our employment arrangements include compensation tied to metrics of our operating performance, such as pre-tax income or EBITDA. Furthermore, in the second quarter of 2007, our board of directors adopted our incentive plan, which allows us to issue awards of options and shares of restricted stock to our employees, non-employee directors and certain consultants and advisors, for which we will be required to recognize as compensation expense the fair value of these awards over the associated service period. We also pay monthly commission expenses to our sales representatives operating in our Transportation and Disposal and Materials segments, based upon a percentage of overall sales volume and or gross profits, with additional incentives if certain sales thresholds are crossed. We anticipate that over time, our revenues and gross profits will return to and exceed the levels experienced in previous years and beyond. As a result, we expect that our salaries and related expenses will increase in terms of absolute dollars and, likely, as a percentage of total operating expenses.

Occupancy and other office expenses represent our costs associated with the rental of our office space and other facilities, temporary labor, dues and subscriptions, postage and other office expenses. Rent includes the cost of leasing our principal executive offices in Trevose, Pennsylvania and additional properties and facilities in New York, New Jersey and Connecticut to support our operations. Occupancy and other office expenses decreased by $0.2 million, or 22%, from the year ended December 31, 2008 as compared to the year ended December 31, 2009, which is primarily attributable to the consolidation of our Materials segment facilities into one operating location, consolidation of the Bronx, New York office into the Lyndhurst site, and the implementation of cost cutting initiatives and lower office expenses at Corporate and PE Recycling.

For the years ended December 31, 2009 and 2008, our professional fees consisted primarily of:

consulting fees paid for sales;

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 our quarterly, annual and periodic reports and other SEC filings;

legal and other fees incurred in connection with our acquisitions and other matters; and

fees paid to third parties and regulatory agencies to monitor safety and compliance with respect to certain of our operations.

Our professional fees increased by $0.1 million, or 2%, for the year ended December 31, 2009 as compared to the year ended December 31, 2008, which is result of additional legal fees associated with the ongoing PE Disposal litigation, legal fees relating to various amendments with our senior lender and litigation resulting from our termination of the former owner of PE Recycling. For 2010, we anticipate that our auditing, accounting and other professional fees will be consistent with our 2009 costs, except that we expect to incur additional accounting and professional fees in order to comply with the internal control over financial reporting auditor attestation requirements under the Sarbanes-Oxley Act of 2002, or SOX, beginning with our 2010 fiscal year. Also, as we grow, whether through internal growth or by acquisition, the amount of legal and other professional fees for any future transaction will increase as a result of our status as an SEC reporting company subject to SOX.

We maintain various policies for workers’ compensation, health, disability, umbrella, pollution, product liability, general commercial liability, title and director’s and officer’s liability insurance. Our insurance costs increased by approximately $0.1 million, or 6%, for the year ended December 31, 2009 as compared to the year ended December 31, 2008. We renegotiated our insurance coverage company-wide in August 2009, which resulted in an increase to our insurance premiums as a result of past accidents within the Transportation and Disposal segment.

For the year ended December 31, 2009, we incurred $0.7 million in charges relating to the write off of fixed assets held at PE Recycling. In December of 2009 we removed equipment from service with a net carrying value of $0.7 million and placed into service refurbished pieces with a value of $1.0 million. We determined that the pieces removed from service were impaired and of little value due to the worn-out condition of these pieces and the amount of money that would need to be spent to make them fully functional. These charges were accompanied by a corresponding reversal of approximately $0.2 million of the deferred tax liability associated with the idle machinery. For the year ended December 31, 2008, we incurred approximately $1.6 million in impairment charges relating to idle machinery held at PE Recycling due to the softening of the overall economy. These impairment charges were accompanied by a corresponding reversal of approximately $0.6 million of the deferred tax liability associated with the idle machinery. At December 31, 2009 and 2008, the idle machinery at PE Recycling had a carrying value of $3.8 million and $6.8 million, respectively, with approximately $1.3 million and $2.7 million of remaining deferred tax liabilities recorded in relation to this idle machinery. We plan to place additional pieces of this equipment into service during the upcoming year and will attempt to sell the remaining pieces that we are unable to use in our operations.

In November 2008, PE Materials shifted its rock crushing operations from the North Bergen, New Jersey facility to its other location in Lyndhurst, New Jersey. As a result of this move, approximately $345,000 of equipment was no longer needed for operations and was transferred into idle machinery. We intend to hold this equipment for sale and have recorded the equipment on our consolidated balance sheets at the lower of cost or market value.

Other operating expenses consist of general and administrative costs, such as travel and entertainment, bank service fees, advertising, bad debt expense and other office and miscellaneous expenses. Other operating expenses decreased by approximately $0.7 million, or 34%, for the year ended December 31, 2009, as compared to the year ended December 31, 2008. This decrease was primarily attributable to cost cutting initiatives, consolidation of offices, and a reduction in bad debt expense. During the year ended December 31, 2008, we had incurred approximately $0.6 million in additional bad debt expense as a result of an increase in our provision for doubtful accounts. During the year ended December 31, 2009, we recorded an additional $0.3 million of bad debt expense in connection with the settlement of an outstanding accounts receivable. We anticipate that in future periods, other operating expenses will continue to grow on a basis comparable to our increase in revenues.

Loss from Continuing Operations

The following table sets forth our loss from continuing operations by reportable segment for the years ended December 31, 2009 and 2008.

	For the Years Ended December 31,						Period to Period Change
(in thousands, except percentages)	2009			2008			Amount			Percentage
Transportation and Disposal	$	(355	)	$	3,343		$	(3,698	)		(111	)%
Treatment and Recycling		(2,604	)		(1,085	)		(1,519	)		(140	)%
Environmental Services		(445	)		(333	)		(112	)		(34	)%
Materials		(396	)		(1,603	)		1,207			75	%
Corporate and Other		(2,893	)		(3,476	)		583			17	%
Total	$	(6,693	)	$	(3,154	)	$	(3,539	)		(112	)%

The increase in loss from continuing operations within the Transportation and Disposal segment is due in large part to a decrease in the overall Transportation and Disposal revenues of approximately $12.9 million (excluding intercompany revenues) coupled with a decrease in the gross profit margin from 30% for the year ended December 31, 2008, to 20% for the year ended December 31, 2009. This decrease in gross profit margin is due primarily to the increased competition in the marketplace for fewer overall projects resulting in downward pricing pressure. The Transportation and Disposal segment in 2009 continued to be negatively impacted by the decline in the overall economy and the construction industry in the New York metropolitan area, which we experienced during the fourth quarter of 2008 and throughout 2009.

For the year ended December 31, 2009, the Treatment and Recycling segment had a loss from operations of approximately $2.6 million as compared to a loss from operations of approximately $1.1 million for the year ended December 31, 2008. The decrease in operating results for the year ended December 31, 2009 is primarily due to a decrease in revenues of $2.9 million and lower revenue per ton pricing, coupled with increased disposal and transportation costs and operating expenses. During the year ended December 31, 2009, we made significant efforts to decrease our operating costs through the elimination of approximately $1.7 million in salaries, the management of disposal costs, and improvements in our operating efficiencies. We expect that as the volume of incoming materials increases, our income from operations attributable to the Treatment and Recycling segment will also improve. During the years ended December 31, 2009 and 2008, PE Energy contributed an operating loss of approximately $0.2 million and $0.3 million, respectively, due in large part to being a startup operation with certain fixed overhead costs, such as salaries.

Loss from operations within the Environmental Services segment was approximately $0.4 million for the year ended December 31, 2009 as compared to a loss of approximately $0.3 million for the year ended December 31, 2008. The loss from operations during 2009 was primarily attributable to a lack of new business resulting from our environmental consulting services combined with additional legal and permitting costs for relating to our Brownfield property. We expect that our losses from operations in the Environmental Services segment will improve in 2010, as we have reduced personnel and shifted our focus primarily to the development of the Brownfield site. As a result of the permitting and licensing delays we experienced in 2009, we presently expect to commence revenue producing operations at our initial Brownfield property in the fourth quarter of 2010.

The loss from operations attributed to the Materials segment decreased from $1.6 million for the year ended December 31, 2008, to a loss from operations of $0.4 million for the year ended December 31, 2009. The improvement in this segment resulted primarily from the consolidation of our rock crushing facilities from two locations into one and the termination of the North Bergen lease and operating agreement. As a result, we are no longer required to first offer the owner of the North Bergen facility a fixed price for our rock and aggregate products. We have been able to sell these products at higher prices to other customers, which contributed to higher revenues and better margins on a per ton basis in 2009.

The loss from continuing operations attributed to the Corporate and Other segment decreased from $3.5 million for the year ended December 31, 2008 to $2.9 million year ended December 31, 2009. This reduction in our loss from operations is due to decreased operating expenses at our corporate headquarters resulting primarily from:

a decrease in salary costs of approximately $0.1 million from headcount reductions coupled with management’s voluntary salary reductions; and

a decrease in professional fees of approximately $0.4 million as a result of the non-recurrence in 2009 of, among other things, legal costs incurred during 2008 in connection with us becoming an SEC reporting company.

Interest Income and Expense

Interest expense, net of interest income earned on our short-term deposits of excess operating cash, was $2.5 million and approximately $1.9 million for the years ended December 31, 2009 and 2008, respectively. The increase in interest expense is due to

approximately $0.3 million of additional interest expense incurred in relation to our Series B preferred stock offering and related accretion of the debt discount and amortization of deferred financing costs, as the Series B preferred stock was outstanding for the full year in 2009 but only for approximately ten months in 2008;

$0.3 million increase in interest expense incurred on our revolving line of credit, resulting from increased interest rates under the terms of our former revolving line of credit; and

$0.2 million of additional interest expense resulting from the amortization of deferred financing fees arising from amendments to our former revolving line of credit agreement.

We anticipate that the annual interest cost associated with our Series B preferred stock will be approximately $1.3 million (including amortization of the deferred financing costs and accretion of the debt discount).

On February 11, 2010, we refinanced our existing revolving line of credit with a new lender. See “-Debt Obligations- Revolving Lines of Credit.” We will be required to pay the lender an invoice service fee equal to 0.95% charged monthly on the daily outstanding principal balance under the line of credit. Interest will be charged by the lender on the daily outstanding principal balance of the line of credit at the prime rate plus 2.5% on an annualized basis charged daily, collected at the end of each month. The prime rate is the greater of the prime rate as published in the Wall Street Journal as the “Prime Rate” (equal to the base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks) or 5% per year. The interest expense incurred in relation to this new revolving line of credit will fluctuate based upon our working capital requirements, as well as changes in the prevailing interest rates. As a result of this refinancing, we anticipate that our interest expense charged on the outstanding principal will increase by approximately $0.2 million, however this increase will be offset by a decrease in interest expense resulting from the amortization of deferred financing fees which were significantly higher under the previous senior lender.

On November 12, 2008, we refinanced our existing long-term debt and revolving line of credit at PE Recycling into a consolidated $8.0 million, seven-year term loan. In connection with this refinancing, we also entered into an interest rate swap agreement, which effectively converted this adjustable-rate loan into a fixed-rate loan with an annual interest rate of 6.10%. See “– Debt Obligations – Long-Term Debt.”

Expenses for Unrealized Acquisitions

For the year ended December 31, 2009, we incurred $30,000 for the write-off of previously capitalized acquisition costs relating to a prospective Brownfield project which, due to market conditions, we no longer plan to continue. For the year ended December 31, 2008, we incurred expenses for the write-off of previously capitalized acquisition costs of approximately $271,000. We incurred $243,000 in expenses for unrealized acquisitions relating to prospective Brownfield developments for which we ultimately were unable to obtain the necessary permits or desired regulatory status and we therefore disengaged from these projects. We also incurred an additional $28,000 of expenses in relation to start-up costs at PE Energy for potential project sites which were ultimately unsuccessful.

Loss from Equity Investment

On April 30, 2007, we acquired a 50% interest in a joint venture formed to identify and enter into recycling opportunities for spent metal catalysts. We account for this investment under the equity method of accounting. As a result, for the year ended December 31, 2009, we recognized a loss of $143,431, which represents 50% of the joint venture’s loss for the year. For the year ended December 31, 2008, we recognized a loss of $310,678, which represented 50% of the joint venture’s loss for the year. These losses relate primarily to the write-off of costs incurred on developmental projects, write-down of inventory values and significant downturn in the metals market.

Change in Fair Value of Warrants with Contingent Redemption Provisions

Change in fair value of warrants with contingent redemption provisions was $0.7 million and $1.2 million for the years ended December 31, 2009 and 2008, respectively. These amounts represent gains relating to the warrants issued with our Series B preferred stock, which occurred because these warrants were revalued as of December 31, 2009 and 2008, as required under ASC 815. The decrease in the estimated fair value of these warrants was the result of a decline in the fair value of our common stock underlying these warrants.

Other Income

Other income for the year ended December 31, 2009 was approximately $0.5 million as compared to $0.2 million for the year ended December 31, 2008. In June of 2009, PE Recycling settled outstanding fines and compliance issues with various state and local authorities for approximately $0.2 million and for which a $0.6 million liability was previously recorded as part of the opening balance sheet at the date of acquisition on March 30, 2007. The settlement of these compliance issues and fines at a reduced amount resulted in a gain of approximately $0.4 million, which was recorded as a component of other income for the year ended December 31, 2009.

In connection with the refinancing of PE Recycling’s revolving line of credit on November 12, 2008, we also entered into an interest rate swap agreement, which essentially converts our adjustable rate term loan to a fixed-rate loan bearing interest at an annual rate of 6.10%. We account for this interest rate swap as a derivative contract pursuant to ASC 815, and therefore we recorded a fair value adjustment increase of approximately $0.1 million for the year ended December 31, 2009. The fair value adjustment on the interest rate swap was offset in large part by a mark-to-market adjustment decrease of approximately $0.1 million for the year ended December 31, 2009 on Pure Earth Recycling’s term loan, for which we have elected to apply the fair value option under ASC 820.

During 2008, PE Recycling underwent a sales and use tax audit in the State of New Jersey, which was settled as of June 30, 2008 for approximately $0.3 million. We had previously recorded an accrued liability of $0.5 million as part of the opening balance sheet of PE Recycling on March 30, 2007. Pursuant to the PE Recycling purchase agreement and related amendments, a portion of the reduction in this liability from $0.5 million to $0.3 million is due back to the former owner in the form of shares of our common stock. Accordingly, we recorded a liability of approximately $166,000, and the settlement of this matter resulted the recognition of a gain of approximately $0.2 million for the year ended December 31, 2008.

In connection with the refinancing of the PE Recycling revolving line of credit on November 12, 2008, we also entered into an interest rate swap agreement, which essentially converts our adjustable rate term loan to a fixed-rate loan bearing interest at an annual rate of 6.10%. We account for this interest rate swap as a derivative contract pursuant to ASC 815, and therefore we recorded a fair value adjustment decrease of $0.5 million for the year ended December 31, 2008. The fair value adjustment on the interest rate swap was offset in large part by a mark-to-market adjustment increase of $0.5 million on the new PE Recycling term loan, for which we have elected to apply the fair value option under ASC 820.

Benefit From Income Taxes

For the year ended December 31, 2009, we recognized a benefit from income taxes of approximately $1.6 million, compared to a benefit from income taxes of $2.1 million for the year ended December 31, 2008. The 2009 provision reflects approximately $0.1 million of current federal and state tax liabilities, arising mainly from our recognition of $8.1 million of net losses before taxes in 2009, compared to $4.3 million of net losses before taxes for the year ended December 31, 2008. For the year ended December 31, 2009, we also recognized $1.7 million of deferred income tax benefits as compared to $1.3 million of deferred income benefits for the year ended December 31, 2007. Deferred income tax expense or benefit represents the future tax consequences attributable to differences between the carrying amount of certain assets and liabilities on our consolidated financial statements and their respective tax bases and loss carryforwards. The large year-to-year change was primarily attributed to increased losses in 2009 as compared to 2008, as well as a decrease in our effective income tax rate from 45% for year ended December 31, 2008 to 19% for the year ended December 31, 2009. The decrease in our effective tax rate is the result of the establishment of an additional $1.8 million valuation allowance for the year ended December 31, 2009 against certain portions our net operating loss carryforwards, as we believe that it is more likely than not that these net operating loss carryforwards will not be realized. We anticipate that our effective income tax rate for 2010 will be approximately 40%. As of December 31, 2009, we had approximately $9.1 million and $24.1 million of federal and state net operating losses, which begin to expire in 2018 and 2013, respectively. As of December 31, 2008, we had $2.8 million and $16.6 million of Federal and state net operating loss carryforwards, which begin to expire in 2018 and 2013, respectively.

Losses from Discontinued Operations

During the years ended December 31, 2009 and 2008 we had losses of $0.3 million in each year relating to the discontinued operations of New Nycon and the Concrete Fibers segment. These losses were largely the result of lower than expected revenues due to an overall lack of marketplace demand for cement and concrete products. This decreased demand was attributable to the decline in building within the residential housing market and the decline in commercial projects requiring the use of concrete. Revenues during the years ended December 31, 2009 and 2008 were $1.6 million and $1.6 million, respectively.

Liquidity and Capital Resources

Overview

Major changes in our financial position during the year ended December 31, 2009 and during the first quarter of 2010 included the following items:

During the year ended December 31, 2009, we had a net loss from continuing operations of approximately $6.9 million. These losses have resulted in a decrease in working capital from $5.1 million as of December 31, 2008 to $0.2 million as of December 31, 2009.

During the year ended December 31, 2009, we entered into several amendments of our former revolving line of credit agreement which reduced our maximum amount under this facility from $7.5 million as of December 31, 2008, to $3.1 million as of December 31, 2009. These amendments also resulted in the removal of certain loan reserves previously held by our lender and added and replaced financial covenants. We also added PE Recycling and certain of our other subsidiaries as borrowers to the line of credit agreement, which added their accounts receivable and inventory as collateral and provided for an initial increase in borrowing availability of $2.2 million in March of 2009. See summary under “—Revolving Line of Credit” below.

On February 11, 2010, we refinanced our existing revolving line of credit by entering into a Commercial Financing Agreement with a new lender. Under the Commercial Financing Agreement with the new lender, we have available to us a line of credit in the principal amount of up to the lesser of $5.0 million, or 85% of all eligible accounts receivable (as defined under the financing agreement) that have not been paid. This refinancing increased our maximum line of credit amount from $3.1 million under the previous lender to $5.0 million, which was critical in enhancing our liquidity in 2010 to fund the projected growth in our accounts receivable. This refinancing provided for approximately $1.4 million of initial borrowing availability as a result of a higher advance rate and less stringent accounts receivable eligibility requirements.

During the year ended December 31, 2008, we had approximately $2.8 million of outstanding accounts receivable for a large job in New York City that was subject to dispute and ongoing litigation. In June 2009, we settled this dispute for $2.0 million, of which $1.0 million was received on July 1, 2009 and the remaining $1.0 million is to be repaid in 18 monthly installments of $55,555 per month. As of December 31, 2009, we had received the first four of these monthly installments, totaling $0.2 million.

On November 30, 2009 we issued 101,650 shares of our Series C convertible preferred stock in exchange for proceeds of approximately $1.0 million (see summary under “— Series C Convertible Preferred Stock” below). We used these proceeds for working capital purposes and to reduce outstanding borrowings on our revolving credit facility.

During the fourth quarter of 2009 and as a result of the operating losses incurred during the year ended December 31, 2009, we negotiated interest-only periods with several of our lenders and operating lease holders, which we expect to save approximately $0.7 million in cash payments during the period from November 2009 through May 2010 (see “—Long-Term Debt” for more details on these negotiations).

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of cash on deposit and money market accounts. We had approximately $0.8 million and $0.9 million of cash and cash equivalents on hand as of December 31, 2009 and 2008, respectively. As of December 31, 2009, we also had approximately $0.2 million on deposit to secure an outstanding letter of credit. We require cash for working capital, capital expenditures, repayment of debt, salaries, commissions and related benefits and other operating expenses, preferred stock dividends and income taxes.

Summary of Cash Flows

The following table summarizes our cash flows for the years ended December 31, 2009 and 2008:

	For the Years Ended December 31,
(in thousands)	2009			2008
Net cash used in operating activities	$	(582	)	$	(3,113	)
Net cash used in investing activities	$	(330	)	$	(489	)
Net cash provided by financing activities	$	808		$	2,617

Net Cash Used in Operating Activities

The most significant items affecting the comparison of our operating cash flows for the years ended December 31, 2009 and 2008 are summarized below:

Increase in loss from continuing operations – Our loss from continuing operations, excluding depreciation and amortization, was $3.6 million for the year ended December 31, 2009 and $0.3 million for the year ended December 31, 2008. Our loss increased by $3.4 million from year to year, which negatively impacted our cash flows for the year ended December 31, 2009.

Decrease in accounts receivable – Sources of cash from changes in accounts receivable were approximately $3.0 million and $0.9 million for the years ended December 31, 2009 and 2008, respectively. The decrease in accounts receivable at December 31, 2009 is the result of an overall decrease in the revenues within our Transportation and Disposal and Treatment and Recycling segments, combined with the collection of a large amount of aged accounts receivable which were outstanding as of December 31, 2008. The decrease in accounts receivable at December 31, 2008, was the result of a decrease in revenues from our Transportation and Disposal segment, offset in part by increases in the overall aging of the accounts receivables for this segment. In particular, we had receivables from one large job outstanding in the amount of approximately $2.8 million as of December 31, 2008, which were disputed but ultimately settled in June of 2009. See “Item 3. Legal Proceedings – Litigation – Accounts Receivable Litigation.”

Change in restricted cash – We recognized an increase in restricted cash of $0.8 million for the year ended December 31, 2008. This cash was restricted for the purpose of establishing a six-month principal and interest payment reserve for the PE Recycling term loan and to establish a $0.2 million deposit account to support an outstanding letter of credit. For the year ended December 31, 2009, we used $0.6 million of this restricted cash to make principal and interest payments for under the term loan, and the $0.2 million deposit supporting a letter of credit remained outstanding.

Decrease in prepaid expenses and other current assets – Sources of cash from prepaid expenses and other current assets were $0.6 million and $0.1 million for the years ended December 31, 2009 and 2008. The source of cash for the year ended December 31, 2009 was primarily attributable to the receipt of an income tax refund from the year ended December 31, 2008. The source of cash in the year ended December 31, 2008 was primarily attributed to a decrease in prepaid expenses relating to PE Recycling and our Transportation and Disposal segments.

Increase in deposits and other assets – A use of cash from an increase in deposits and other current assets for the year ended December 31, 2009 was approximately $0.5 million. This use of cash was primarily due to an increase of $0.1 million relating to the addition of an outstanding notes receivable within our Transportation and Disposal segment and $0.4 million relating to our investment in ACR.

Decrease in accounts payable – Uses of cash for accounts payable were $(0.5) million and $(0.4) million for the years ended December 31, 2009 and 2008 respectively. The decrease in accounts payable during the years ending December 31, 2009 and 2008 was the result of the decrease in overall sales volume and corresponding costs associated with these sales, particularly during the fourth quarter of 2008 and throughout 2009.

Decrease in accrued expenses and other current liabilities – Uses of cash for accrued expenses and other current liabilities were $(0.6) million and $(1.6) million for the years ended December 31, 2009 and 2008, respectively. The decrease in accrued expenses and other liabilities for the year ended December 31, 2009 was due to the settlement of an NJ DEP fine relating to our PE Recycling operations whereby we had previously accrued $0.6 million relating to this potential liability which was ultimately settled for $0.2 million. The remaining differential in 2009 was due to the timing of various payroll and other liabilities. The decrease in accrued expenses and other liabilities during the year ended December 31, 2008 was primarily the result of the timing of the payment for items such as insurance and the settlement of the New Jersey sales and use tax audit at PE Recycling, as well as a decrease in accrued bonuses and commissions due to decreased sales volumes and profitability and a decrease in accrued liabilities at Juda as a result of having only one union employee.

Changes in accrued disposal costs – For the year ended December 31, 2009, sources of cash from accrued disposal costs were $0.4 million due to the timing of our shipment and processing of materials with the Treatment and Recycling operations. During the year ended December 31, 2008, we spent $1.0 million on reducing our accrued disposal costs, which resulted from transporting processed material from our Treatment and Recycling operations.

Increase in amounts due from joint venture – Amounts due from joint venture increased by $0.2 million as a result of losses incurred in our equity investment in ACR.

Our overall liquidity and the availability of capital resources is highly dependent on revenues derived from several large customers, which comprised approximately 13% and 19% of our consolidated revenues for the years ended December 31, 2009 and 2008, respectively. The revenues derived from these customers are a key component of the operations within the Treatment and Recycling and Transportation and Disposal segment, and therefore are integral to providing liquidity to not only that operating segment, but also to our overall operations as a whole. The slowdown or loss of one or more of these customers could negatively impact our liquidity and ability to provide adequate capital resources to meet all of our ongoing capital requirements. We are currently in the process of attempting to broaden our capital resources and sources of revenue through the addition of new customers within the Transportation and Disposal segment in order to minimize the dependence on our revenues from these significant customers.

We use EBITDA, a non-GAAP financial measure, as a liquidity measure to assess our ability to meet our debt service obligations and satisfy our debt covenants, some of which are based on our EBITDA. We believe the use of EBITDA as a liquidity measure and in required financial ratios is a common practice among asset- and receivables-based lenders. In providing EBITDA as a liquidity measure, we believe EBITDA is useful from an economic perspective as a measurement of our ability to generate cash, exclusive of cash used to service existing debt, by eliminating the effects of depreciation, financing and tax rates on our ability to finance our ongoing operations Furthermore, because EBITDA is used as a standard measure of liquidity by other similar companies within our industry, we believe it provides a reasonable method for investors to compare us to our competitors. However, the use of EBITDA as a measure of our liquidity has limitations and should not be considered in isolation from or as an alternative to GAAP measures, such as net cash provided by operating activities. See “ – Results of Operations – Year Ended December 31, 2009 Compared to Year Ended December 31, 2008.”

The following table presents a reconciliation from net cash used in operating activities, which is the most directly comparable GAAP liquidity measure, to EBITDA for the years ended December 31, 2009 and December 31, 2008.

	For the Years Ended December 31,
(in thousands)	2009			2008

EBITDA	$	(2,630	)	$	498
Adjustments to reconcile EBITDA to net cash used in operating activities:
Interest expense, net		(2,445	)		(1,889	)
Depreciation expense from discontinued operations		(174	)		(133	)
Provision for (benefit from) income taxes		1,600			2,058
Interest expense for accretion of warrant discount		308			200
Amortization of deferred financing costs		354			121
Interest expense for Series B preferred stock payment in kind		604			210
Impairment of idle machinery and write off of fixed assets		733			1,618
Provision for doubtful accounts		251			750
(Gain) loss on sale of property and equipment		(24	)		(245	)
Stock-based payments		98			89
Write-off of expenses for unrealized acquisitions		30			271
Change in fair value of derivatives and other assets and liabilities measured at fair value		5			—
Change in fair value of warrants with contingent redemption provisions		(729	)		(1,151	)
Deferred income taxes		(1,679	)		(1,309	)
Changes in operating assets and liabilities:
Accounts receivable		3,027			919
Inventories		(85	)		(120	)
Prepaid expenses and other current assets		550			44
Deposits and other assets		(524	)		195
Restricted cash		602			(814	)
Accounts payable		(471	)		(375	)
Accrued expenses and other current liabilities		(613	)		(1,619	)
Accrued disposal costs		410			(1,031	)
Contingent consideration		—			(33	)
Due from joint venture		224			(343	)
Income taxes payable		—			(1,024	)
Total adjustments		2,052			(3,611	)
Net cash used in operating activities	$	(578	)	$	(3,113	)

Net Cash Used in Investing Activities

Our investing activities for the year ended December 31, 2009 resulted from investments in our equipment within the Treatment and Recycling segment. We spent approximately $0.4 million in 2009 on a project to refurbish and modify our existing equipment at PE Recycling in order to improve its operating efficiency and capacity to process increased amounts of refinery waste, which we anticipate receiving in 2010 as a result of the Province of Ontario’s LDR. See “Item 1. Business – Our Integrated Environmental Services – Treatment and Recycling Segment – Refinery Services.” We also received approximately $0.1 million from the sale of vehicles and equipment not needed in our ongoing operations during the year ended December 31, 2009.

Our investing activity for the year ended December 31, 2008 primarily resulted from our strategy of growing our operations by acquiring what we believed were complementary companies in the environmental services sector. On April 1, 2008, we completed the acquisition of Nycon and began the operations of our Concrete Fibers segment, which used approximately $45,000 in cash. We also spent $0.2 million in payments for pending acquisitions during the year ended December 31, 2008, which related primarily to the startup of PE Energy and costs to seek to acquire a second Brownfield site, which were subsequently expensed due to the acquisitions not being completed. For the year ended December 31, 2008, we also received proceeds of $0.7 million from the sale of trucks and equipment that were previously utilized at Juda within our Transportation and Disposal segment.

Net Cash Provided by Financing Activities

The most significant items affecting the comparison of our cash flows provided by financing activities for the years ended December 31, 2009 and 2008 are summarized below:

Private placements of securities –

For the year ended December 31, 2009:

On November 30, 2009 we raised approximately $1.0 million in net proceeds from the private placement of 101,650 shares of our Series C convertible preferred stock with a purchase price of $10.00 per share.

We paid approximately $60,000 in dividends relating to our then outstanding Series A preferred stock.

For the year ended December 31, 2008:

In March 2008, we received approximately $5.8 million in proceeds, net of financing fees and offering expenses of approximately $0.5 million, from the private placement of 6,300 shares of our Series B preferred stock and a related warrant, at a purchase price of $1,000 per share.

We paid $0.1 million in dividends relating to our then outstanding Series A preferred stock.

Other indebtedness –

For the year ended December 31, 2009:

During the year ended December 31, 2009 we had net borrowings of approximately $1.5 million under our revolving line of credit and $1.3 million in repayments of long-term debt and notes payable. During the year ended December 31, 2008 we had net repayments of $6.0 million under our revolving lines of credit and $5.0 million in repayments of long-term debt and notes payable.

In December of 2009, the former owner of Nycon agreed to convert our obligation to repay $75,000 of the former owner’s notes payable (which obligation was originally incurred as part of the Nycon acquisition) into $37,500 worth of our Series C convertible preferred stock, reflecting the additional working capital contributions we made to New Nycon and the fact that New Nycon did not achieve its projected financial goals.

For the year ended December 31, 2008:

In December of 2008, the former owner of Nycon agreed to convert our obligation to repay $150,000 of the former owner’s notes payable (which obligation had been originally incurred as part of the Nycon acquisition) into $120,000 of additional contingent earn-out payments, because New Nycon did not achieve its projected financial goals.

On November 12, 2008, we completed the refinancing of PE Recycling’s revolving line of credit and long-term debt into an $8.0 million term loan, which provided for an additional $2.6 million of net proceeds after the repayment of the existing PE Recycling debt. These proceeds were used to establish a $0.7 million principal and interest payment reserve and the remaining $1.9 million was used to pay down our Pure Earth revolving line of credit.

Equipment refinancing – In June 2008, we received an additional $200,000 in financing provided for by the provider of an existing equipment term loan following the lender’s review of our December 31, 2007 financial statements.

Financing-related fees – During the year ended December 31, 2009, we incurred $0.2 million of financing fees relating to our revolving line of credit agreement as compared to $0.7 million incurred in 2008 relating to the Series B preferred stock offering and the PE Recycling refinancing.

Capital Resources

We had a working capital devicit of $(0.8) million as of December 31, 2009 and working capital of $3.1 million as of December 31, 2008. Our working capital requirements in 2008 and 2009 have been funded primarily by the net proceeds from our securities offerings, borrowings under our revolving lines of credit, the refinancing of other long-term debt, and with respect to 2009, the collection of aged accounts receivable. The decrease in working capital between December 31, 2008 and December 31, 2009 is due primarily to our operating loss of $6.9 million during the year ended December 31, 2009.

Our capital resources and working capital needs for 2010 will be largely dependent upon our ability to generate new sales and manage our operating margins and collections during 2010. On February 11, 2010, we refinanced our existing revolving line of credit with a new lender, which will provide additional availability to fund the growth of our accounts receivable. The refinancing of our previous revolving line of credit resulted in an initial increase in availability of approximately $1.4 million due to a higher advance rate and less stringent eligibility criteria. The new line of credit also provides for maximum borrowing capacity up to $5.0 million as compared to the $3.1 million of borrowing capacity that existed at December 31, 2009.

In the past, as noted above, we have been successful in obtaining funding by issuing our common and preferred stock, convertible debentures and related warrants. We also have funding available through our revolving line of credit, our PE Recycling term loan and other debt facilities described in more detail below. See “ – Debt Obligations.” We have also in the past used our common stock as currency to complete several of our acquisitions, and we intend to continue to do so where possible and appropriate in order to preserve our cash for future operations and to meet our working capital needs.

We are a holding company with no significant revenue-generating operations of our own, and thus any cash flows from operations are and will be generated by our subsidiaries and investments. Our ability to service our debt and fund ongoing operations is dependent on the results of operations derived from our subsidiaries and their ability to provide us with cash. Our corporate subsidiaries could also be prevented from effecting any distribution or dividend under applicable corporate law, and subsidiaries formed as limited liability companies would need to comply with all of the restrictions and limitations of applicable law and those contained in their respective operating agreements and other governing instruments. Although we do not believe that these restrictions and limitations presently have a material adverse effect on our operations or access to liquidity, there can be no assurance that they will not have such an effect upon us in the future.

We are also required by the State of New Jersey to maintain escrow accounts in which we deposit funds in the event of closure and post-closure events involving waste management facilities within our Treatment and Recycling segment. The balance of this escrow account was $278,305 and $273,623 as of December 31, 2009 and December 31, 2008, respectively. We do not expect the requirement to maintain this escrow account to significantly impact our capital resources.

Based upon the cash we have on hand, anticipated cash to be received from our operations and the expected availability of funds under our revolving lines of credit, we believe that our sources of liquidity will be sufficient to enable us to meet our cash needs at least until December 31, 2010, provided that several large committed jobs within the Transportation and Disposal segment begin as scheduled in April and May of 2010. If we experience significant delays associated with these jobs or are unable to begin this work as scheduled due to unforeseen circumstances, we may need to seek additional sources of financing. We are currently seeking additional financing from existing investors or new sources of public or private debt and equity. In addition, we plan to obtain approximately $1.0 million of additional working capital through the following transactions:

We completed the sale of substantially all of the assets and the assumption of substantially all of the liabilities of New Nycon on March 31, 2010. This sale provided $0.2 million of cash at closing with an additional $50,000 due 90 days subsequent to March 31, 2010, following any post-closing adjustments to uncollected accounts receivable.

We are seeking to finance the remaining balance of the note receivable arising from the settlement of the accounts receivable litigation in June 2009. The remaining balance on this note as of March 31, 2010, was approximately $0.6 million, from which we expect to obtain $0.3 million in cash through financing with an existing lender.

We are in the process of increasing our revolving line of credit limit from $5.0 million to $7.5 million and adding the accounts receivable collateral from PE Energy into our revolving line of credit facility, which we anticipate will provide an additional $0.4 million of borrowing availability.

Our principal projected cash needs for 2010 include the following components:

approximately $1.0 million in cash dividend payments relating to the outstanding Series B preferred stock, including $0.3 million of accrued and unpaid amounts relating to the quarters ended September 30, 2009 and December 31, 2009;

approximately $2.9 million in principal and interest payments relating to our outstanding debt, revolving line of credit, term loans and notes payable;

approximately $0.5 million of uncommitted but planned capital expenditures within our Treatment and Recycling segment for additional equipment and or site improvements;

approximately $0.6 million for permitting, legal costs and bonding required in relation to the expected start-up of operations for our Brownfield operations in September 2010;

approximately $0.5 million for working capital needs and other new business initiatives at PE Energy; and

general operating and administrative expenses of $9.5 million, including legal costs.

Existing or future environmental regulations could require us to make significant additional capital expenditures and adversely affect our results of operations and cash flow, although, at this time, we are not aware of any present or potential material adverse effects on our results of operations and cash flow arising from environmental laws or proposed legislation.

We continually monitor our actual and forecasted cash position, as well as our liquidity and capital resources, in order to plan for our current cash operating needs and to fund business activities or new opportunities that may arise as a result of changing business conditions. We intend to use our existing cash and cash flows from operations to grow our business, fund potential acquisitions or projects, and pay existing obligations and any recurring capital expenditures. Nonetheless, our liquidity and capital position could be adversely affected by any of the other risks and uncertainties described in “Part I, Item 1A. Risk Factors.”

Also, there can be no assurance that our existing liquidity and capital resources will be sufficient for our existing and proposed future operations and business plans. In such case, we would need to seek additional debt or equity financings or to arrange for alternative sources of temporary or permanent financing to meet our liquidity and capital requirements. Our ability to obtain new financing could be adversely impacted by, among other things, negative changes in our profitability and restricted access to liquidity in the capital markets resulting from overall economic conditions, especially given the current difficulties facing the banking, lending and capital markets sectors. While we may be able to raise additional debt or equity capital as the need arises, there can be no assurance that we will be able to do so at a time when it is needed or at all, or that the net proceeds from any such transactions will be sufficient to support our operations or on terms that are favorable or acceptable to us. Any inability to obtain future capital could materially and adversely affect our business and growth plans, our results of operations and our liquidity and financial condition.

Debt Obligations

The following is a summary of our outstanding debt obligations as of December 31, 2009 and 2008.

	December 31,
(in thousands)	2009		2008
Revolving line of credit	$	1,885	$	408
Notes payable		1,011		1,008
Long-term debt		8,666		9,908
Mandatorily redeemable (Series B) preferred stock		5,359		4,447
Total debt	$	16,921	$	15,771

Revolving Line of Credit

The table below summarizes the credit capacity, maturity and other information regarding our outstanding revolving line of credit as of December 31, 2009.

Revolving Line of Credit	Maximum Outstanding			Balance Outstanding		Interest Rate			Scheduled Maturity/ Termination Date
	(in thousands)
Pure Earth, Inc.	$	3,150	(1)	$	1,885		10.75	% (2)	April 23, 2010

(1)

Subject to reduction for (i) a borrowing base limitation; (ii) outstanding letters of credit; and (iii) other loan reserves. As of December 31, 2009, the borrowing base limitation was approximately $2.1 million, and we had aggregate required loan reserves and outstanding letters of credit of $1.0 million.

(2)

As of December 31, 2009, this line of credit bore interest at the lender’s prime rate, subject to a minimum of 5.0%, plus 5.75%.

This revolving line of credit was used to fund our working capital needs. The repayment of outstanding borrowings under our revolving line of credit was secured by our and our subsidiaries’ eligible accounts receivable and inventories.

On February 11, 2010, we refinanced this revolving line of credit by entering into a Commercial Financing Agreement with a different lender. Subject to the terms, conditions, limitations and covenants contained in the financing agreement, the lender has agreed to make available to Pure Earth Materials, Inc., PEI Disposal Group, Inc., Pure Earth Transportation & Disposal, Inc., and Pure Earth Recycling (NJ), Inc., each of which is our wholly owned subsidiary, a line of credit in a principal amount of up to the lesser of $5.0 million or 85% of all eligible accounts receivable (as defined under the financing agreement) that have not been paid. All of the accounts receivable of the borrowers will be tendered to the lender for purchase, and the lender will purchase from the borrowers such accounts receivable as it determines for a purchase price equal to the face value of each such accepted invoice, less trade and cash discounts allowable or taken by the customer. Proceeds from the collection of the accounts receivable sold to the lender will be used to reduce the amount of the obligations outstanding under the line of credit. In the event of a customer dispute with respect to any purchased receivables, the lender may immediately reduce the amount available for borrowing by the borrowers under the line of credit by an amount up to the full amount of the receivable subject to the dispute, to the extent and as provided in the financing agreement. The lender also has the right to reduce the 85% advance percentage with respect to a particular account in its reasonable discretion. Eligible accounts receivable will also be reduced by, among other things, (i) the amount of any account that at the time exceeds 20% of all accounts receivable of the borrowers, but only to the extent of such excess, and (ii) the amount of any account that is the subject to a claim or disagreement by a customer against a borrower. We and our wholly owned subsidiaries have also entered into a Security Agreement, dated February 11, 2010, with the lender, pursuant to which any and all amounts due under the line of credit shall be secured by an assignment of their accounts receivable. The obligations of the borrowers under the financing agreement have also been unconditionally guaranteed by us and each of our wholly owned subsidiaries, on a joint and several basis.

We will be required to pay the lender an invoice service fee equal to 0.95% charged monthly on the daily outstanding principal balance under the line of credit. We must pay an origination/commitment or underwriting fee of 0.5% of the line of credit to the lender at first funding during the initial term and a renewal or underwriting fee of 0.5% of the line of credit shall be paid at the beginning of each succeeding term. Interest shall be charged by the lender on the daily outstanding principal balance of the line of credit at the prime rate plus 2.5% on an annualized basis charged daily, collected at the end of each month. The prime rate is the greater of the prime rate as published in the Wall Street Journal as the “Prime Rate” (equal to the base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks) or 5% per year. We also were required to pay the lender’s legal fees and expenses and other customary closing costs in connection with the financing agreement. The financing agreement expires on July 31, 2010, and will be automatically renewed for successive six-month periods unless the borrowers deliver written notice of cancellation to the lender not earlier than 90 days and not later than 30 days prior to the expiration date of the initial term or any succeeding renewal term. If the line of credit is terminated prior to July 31, 2010, we will be required to pay a prepayment penalty equal to 0.95% of the difference between $15.0 million and the aggregate amount of invoices actually tendered to the lender during the initial term.

In the event of a default under the line of credit, the lender may, unless the default is cured within 15 days after notice to the borrowers, declare all indebtedness thereunder to be immediately due and payable, and may exercise any or all of its other rights under the financing agreement. The financing agreement defines a “default” to include, among other things:

default in the payment of any indebtedness or any obligation when due;

the borrowers’ breach of any material term, provision, warranty, or representation under the financing agreement, or under any other agreement, contract or obligation between the borrowers’ and the lender;

the lender reasonably believes that the borrowers are failing to tender all of their accounts receivable to the lender for purchase;

the borrowers have failed to tender accounts receivable equal to 20% of the annual base purchase amount (being the base purchase amount multiplied by 12) during any calendar quarter;

the borrowers have failed to tender accounts receivable to the lender for purchase for a period of 30 or more consecutive days;

the appointment of any receiver or trustee for all or a substantial portion of the borrowers’ assets, the filing of a general assignment for the benefit of creditors by the borrowers or a voluntary or involuntary filing under any bankruptcy or similar law which is not dismissed with prejudice within 90 days;

the borrowers’ failure to pay all taxes to every government agency in a timely manner, except to the extent that such taxes are the subject of a bona fide dispute being pursued in accordance with applicable governmental rules and regulations, and as to which such borrowers have established adequate reserves;

notwithstanding the 15 day notice period, the borrowers’ failure to timely deliver to the lender any misdirected payment remittance received by us on a purchased account within three business days;

notwithstanding the 15 day notice period, failure of the borrowers to cure a default under certain ancillary agreements within three business days after receipt of written notice from the lender; and

the representations and warranties of the borrowers under the finance agreement or any ancillary agreement being false or materially misleading.

As of December 31, 2009, we were not in default under the terms of our former revolving line of credit. As of the date hereof, the borrowers under our new line of credit were not in default under the terms of the financing agreement.

Notes Payable

In connection with our acquisition of PE Recycling in March 2007, we also agreed to assume approximately $3.6 million of subordinated indebtedness in the form of a note payable to Gregory Call, one of the former owners, and former officer and employee, of PE Recycling. As of November 15, 2007, this subordinated debt was reduced to $1.0 million as a result of acquisition purchase price adjustments and the conversion of approximately $1.2 million of the outstanding principal into 373,615 shares of our common stock. As of December 31, 2009, this subordinated debt had an outstanding principal balance of approximately $1,011,348 and bore interest at a rate of 6.77% per year. Under the stock purchase agreement, we were to repay $333,333 of the principal on December 31, 2009, with the remainder of principal and all accrued but unpaid interest due and payable on December 31, 2010, subject to approval by our lender.

On June 17, 2009, we issued a notice of setoff to the holder of the note payable, notifying him of our intent to setoff post-closing claims in excess of $4.0 million against amounts due under this note payable and shares of Pure Earth common stock that may otherwise be due to Mr. Call as permitted under the stock purchase agreement. Effective on June 27, 2009, we offset the amounts due to the former owner under this note payable against the post-closing claims. Mr. Call has formally denied the validity of these post-closing claims and on September 14, 2009, we filed a complaint against him to seek legal redress for these claims. See “Part I, Item 3. Legal Proceedings – PE Recycling Litigation.” The ultimate outcome of these post-closing claims and this litigation remains uncertain, and therefore the note payable will remain on our consolidated financial statements until either a settlement with the former owner is reached or we are legally released from this obligation.

Long-Term Debt

Long-term debt at December 31, 2009 and 2008 was approximately $8.7 million and $10.0 million, respectively, and consisted of the following items:

	December 31,
	2009		2008
PE Recycling term loan		7,145		7,927
Equipment term loan	$	1,205	$	1,603
Various equipment notes payable		316		378
Nycon assumed liabilities		—		75
Total	$	8,666	$	9,983

Future maturities of our long-term debt at December 31, 2009 were as follows:

Year ending December 31,	Amount Due (in thousands)
2010	$	1,463
2011		1,902
2012		1,225
2013		1,217
2014		1,276
Thereafter		1,583
Total	$	8,666

PE Recycling Term Loan

On November 12, 2008, PE Recycling, as borrower, and the Company, as guarantor, closed on a $8.0 million term loan with Susquehanna, the proceeds of which were used to refinance existing debt at PE Recycling with the previous lender and to reimburse the Company for capital expenditures and working capital advances made to or on behalf of PE Recycling. The loan is collateralized by the mortgaged properties and equipment held by PE Recycling, excluding accounts receivable, inventory and three pieces of equipment. The previous debt held by PE Recycling consisted of a $2.4 million revolving line of credit and $2.9 million in various bank and equipment notes payable, which carried annual interest rates ranging from 6.50% to 8.50% with varying maturities. The new consolidated term loan matures on November 15, 2015, is payable in 84 monthly installments and bears interest at an adjustable yearly rate equal to 250 basis points above the one-month LIBOR, which was approximately 0.23% and 2.94% as of December 31, 2009 and 2008, respectively. This interest rate is adjusted on the 15th of every month beginning December 15, 2008. We also entered into an $8.0 million interest rate swap agreement with Susquehanna by which we are required to pay a fixed rate of interest of 6.10% per year to Susquehanna over a seven-year term corresponding to the loan term, in exchange for the payment by Susquehanna to us of adjustable rate payments based on one-month LIBOR, plus 250 basis points. Entering into this swap agreement effectively converts our adjustable rate loan into a fixed rate loan bearing interest at 6.10% per year. We were also required to establish a reserve account from the loan proceeds in the amount of $720,000 to be held by Susquehanna for the purposes of paying the first six months of principal and interest payments.

The consolidated term loan contains a financial covenant which requires us, as the guarantor, to maintain a maximum leverage ratio of 4.0 to 1.0, adjusted for any non-cash adjustments to intangible assets and measured annually at the end of each fiscal year commencing on December 31, 2009. In addition, we are required to provide annual financial statements and other financial information as requested by the lender, as well as quarterly environmental reports for compliance purposes. In the event that we fail to comply with these requirements, the lender, at its option and sole discretion, has the right to increase the interest rate by 0.50%. The Susquehanna term loan also contains certain negative and affirmative covenants, and prohibits PE Recycling from, among other things:

undergoing a fundamental corporate change without advance notice, which includes any mergers, consolidations, major share transactions, recapitalizations, dissolutions or changes in its legal structure;

disposing of assets without prior consent;

incurring debt, creating liens, or engaging in sale leaseback transactions without prior consent;

assuming, guaranteeing or otherwise becoming liable for the obligations of any person;

discontinuing any substantial part of the existing business or entering into a new, unrelated business;

terminating any ERISA plan or failing to properly maintain any such plan;

use of the proceeds of the term loan for investment in margin securities.

On November 16, 2009, we entered into an amendment of the PE Recycling term loan agreement and the related interest rate swap agreement, whereby the lender granted us a three month interest-only period beginning on November 15, 2009 and ending on February 15, 2009. During this time, we continued to make interest payments in accordance with the term loan and interest rate swap agreement. After February 15, 2009, our monthly principal and interest payment increased by approximately $4,000 to $121,761 per month, with an effective interest rate of 6.10% for the remainder of the loan term.

As of December 31, 2009 and 2008, we and PE Recycling were in compliance with the covenants and restrictions under this term loan agreement.

Equipment Term Loans

In November 2007, we refinanced several of our outstanding equipment loans, which at the date of refinancing had an aggregate carrying value on our consolidated balance sheet of $1.2 million. We refinanced these loans into a combined equipment term loan in the amount of $2.3 million, which is secured by equipment to which the loans relate. The equipment term loan is payable in monthly installments for four years beginning on January 1, 2008 and bears interest at a rate of 8.5% per year. This loan agreement permitted us to borrow up to an additional $200,000 upon the lender’s satisfactory review of our 2007 consolidated financial statements, which the lender approved and advanced on June 11, 2008. As of December 31, 2009 and 2008, the outstanding balance under this equipment term loan was $1.2 million and $1.6 million, respectively.

On December 7, 2009, we entered into a loan restructure agreement with the lender, whereby beginning on November 1, 2009 and ending April 1, 2010, we agreed to make revised monthly payment amounts of $10,029, representing the interest portion of the previous payment amount. Beginning May 1, 2010 and through the end of the original maturities in December 2011 and June 2012, we will make revised principal and interest payments of totaling approximately $65,000 per month.

Equipment Notes Payable

In conjunction with the acquisition of PE Recycling on March 30, 2007, we assumed $3.2 million of PE Recycling’s existing debt. This debt consisted of various bank notes payable secured, to varying degrees, by some or substantially all of PE Recycling’s assets, and personally guaranteed by one of the former owners of PE Recycling. These notes bore interest at differing rates of interest, up to a maximum of 8.125% per year. The majority of this debt was refinanced in November of 2008 as part of the new Susquehanna term loan except for approximately $0.3 million of debt relating to three items of equipment that were not included. These remaining loans mature in September 2011 and September 2012, and bear interest at rates ranging from 4.99% to 6.95% per year.

Mandatorily Redeemable Preferred Stock

General

On March 4, 2008, we issued 6,300 shares of our Series B preferred stock and a related warrant for an aggregate purchase price of $6.3 million. The Series B preferred stock ranks prior to all classes or series of our capital stock with respect to dividend rights and liquidation preferences. The Series B preferred stock accrues cumulated cash dividends of 14% per year, compounded quarterly. We may, at our option, elect to pay a portion of the quarterly dividend of up to 4% in kind, which dividend in kind accretes to the liquidation value of the shares, except that the holder of the Series B preferred stock can request us to issue additional shares of Series B preferred stock to such holder in an amount equal to such accreted dividends. We are required to redeem any and all outstanding shares of Series B preferred stock on March 3, 2013. As a result, the Series B preferred stock is classified as a liability instrument.

We allocated the $6.3 million in proceeds received between the fair value of the Series B preferred stock and the warrant issued in connection with this offering, resulting in a discount on the debt of $2.2 million. The discount is being amortized using the effective interest rate method over the five-year term of the Series B preferred stock. Although the stated interest rate of the Series B preferred stock is 14%, as a result of the discount recorded for the warrants, the effective interest rate is 27.2%. We also incurred approximately $0.5 million in costs associated with this offering, which were recorded as deferred financing costs to be amortized over the term of the Series B preferred stock or immediately upon any redemption thereof.

The amendment to our former revolving line of credit agreement in August 2009 prohibited us from declaring or paying any cash dividends, including to the holder of our Series B preferred stock, which would have constituted an event of noncompliance under the Series B preferred stock investment agreement and related agreements for nonpayment of amounts otherwise due and payable. On August 18, 2009, the holder of the Series B preferred stock agreed that in lieu of making the dividend payment otherwise due on September 30, 2009, we would pay such holder these cash dividend payments, plus 14% interest thereon, either:

in one lump sum representing the full dividend payment plus accrued interest on November 30, 2009; or

if we refinance this revolving line of credit with an alternative lender prior to such dates, then any unpaid portion of the dividend payment, plus accrued interest, shall be paid on the date such refinancing is consummated.

In addition, on November 30, 2009, the holder of the Series B preferred stock consented to our issuance of Series C convertible preferred stock and, with respect thereto, agreed to waive all rights of notice, first refusal, preemptive or similar rights, and to waive the application of any covenant that would, absent such waiver, be breached by our offer and sale of the Series C convertible preferred stock. Further, the holder of the Series B preferred stock agreed that in lieu of making the dividend payment otherwise due on each of September 30, 2009 and December 31, 2009, we would pay such holder these cash dividend payments, plus 14% interest thereon, either:

on February 15, 2010; or

if we refinance this revolving line of credit with an alternative lender or we extend its maturity date prior to February 15, 2010, on the date of such refinancing or extension.

On February 11, 2010, we refinanced our revolving line of credit, but we were not able to make the cash dividend payment, plus accrued interest, otherwise due to the Series B preferred stockholder on February 15, 2010. On March 26, 2010, we obtained the waiver of the holder of the Series B preferred stock to the non-payment of the September 30, 2009, December 31, 2009 and March 31, 2010 quarterly cash dividends as well as the required payment on February 15, 2010 as outlined in the November 30, 2009 agreement. In lieu thereof, we agreed to pay the holder the amount of such unpaid dividends plus 14% accrued interest by June 15, 2010.

Mandatory Redemption

The Series B preferred stock is to be redeemed in full on March 3, 2013. The following additional events will require us to redeem the Series B preferred stock:

a person or persons becoming the beneficial owner of outstanding capital stock having 50% or more of our total voting power;

any sale, assignment, lease, conveyance, exchange, transfer, sale-leaseback or other disposition of more than 50% of our assets, business or properties;

the failure of Mr. Alsentzer to serve as Chief Executive Officer with at least the duties and responsibilities associated with such title;

the failure of Mr. Kopenhaver to serve as Chief Financial Officer with at least the duties and responsibilities customarily associated with such title;

each of Mr. Alsentzer and Mr. Kopenhaver ceasing to serve as a director on the board of directors of Pure Earth and each of its subsidiaries;

Mr. Alsentzer ceasing to beneficially own 1,919,000 shares of our common stock, subject to adjustment;

Mr. Kopenhaver ceasing to beneficially own at least 134,000 shares of our common stock, subject to adjustment;

any event of noncompliance with the terms of the Series B preferred stock certificate of designation, as defined therein; or

the protective provisions of the Series B preferred stock ceasing to be effective.

Once a mandatory redemption event occurs, we must pay holders demanding redemption of their Series B preferred stock up to 103% of the liquidation value of the Series B preferred stock, depending on the redemption date. No such events have occurred since the issuance of the Series B preferred stock whereby the holder of the Series B preferred stock has demanded redemption.

Optional Redemption

Assuming we have funds legally available to do so, we have the right at any time and from time to time under the terms of the Series B preferred stock to redeem the Series B preferred stock at a price of up to 103% of the liquidation value of the Series B preferred stock, depending on the redemption date. We also have the right to redeem the Series B preferred stock at 100% of the liquidation value in connection with our consummation of an acquisition of property or fixed assets, or the assets or stock of another company, after, among other things, the holders of the Series B preferred stock failed to consent to the acquisition.

Debt Incurrence Covenant

Under the Series B preferred stock investment agreement, we agreed that we will not incur any indebtedness if, after the incurrence, our leverage ratio would exceed 3.75 to 1 through March 4, 2010, and 3.25 to 1 thereafter. The leverage ratio is calculated as defined in the investment agreement to equal the ratio of:

our consolidated funded debt, less our cash and cash equivalents, to

the sum of our consolidated EBITDA plus any pro forma acquisition EBITDA for each acquisition approved by the holders of the Series B preferred stock or otherwise permitted by the investment agreement for the trailing 12 fiscal months or four fiscal quarters prior to the date of determination.

Indebtedness of up to $10.0 million (less repayments on term loans thereunder and permanent reductions of revolving credit commitments) under our then existing revolving lines of credit, as they may be refinanced or replaced from time to time, may be incurred without complying with this debt incurrence covenant if used solely to fund working capital or up to $100,000 of capital expenditures in any trailing 12-month period. This debt incurrence covenant will remain in effect until shares of Series B preferred stock with an aggregate liquidation value of less than 10% of the aggregate liquidation value of the Series B preferred stock on March 4, 2008 remain outstanding.

As of December 31, 2009 and 2008, due to a decline in our trailing 12-month EBITDA, our leverage ratio exceeded the permitted levels described above. Therefore, we are prohibited from incurring additional indebtedness without obtaining the consent and approval of the holder of the Series B preferred stock until our leverage ratio ceases to exceed the ratios described above.

Negative Covenants

In addition to the debt incurrence covenant and the protective provisions in the Series B preferred stock certificate of designations, the investment agreement governing the Series B preferred stock contains various restrictive covenants that, among other things and subject to specified exceptions, restrict our and our subsidiaries’ ability to:

liquidate, wind up or dissolve;

effect a consolidation, merger or other combination;

make, create, incur, assume or suffer to exist liens upon our property or assets;

make or agree to make certain dispositions of our assets;

purchase, own, invest or otherwise acquire capital stock, indebtedness or any other obligation in or security or interest in any other entity;

declare or make any dividend payment or any distribution of cash, property or assets with respect to our capital stock or rights therein;

engage in transactions with our affiliates;

engage in lines of business outside of the United States and in lines of business other than the general lines of business in which we presently operate, and, specifically, we may not:

engage in or own assets related to the nuclear, solar or wind energy industries;

create, generate, use, accept, dispose of or treat hazardous substances in excess of 2,200 pounds in any calendar month for any single company other than PE Recycling, and excluding the transportation of hazardous substances; and

operate a hazardous waste landfill, a commercial hazardous waste incinerator or other activity that requires obtaining a material environmental permit not previously disclosed to the holder of the Series B preferred stock;

engage in sale-leaseback transactions;

amend, modify or waive any provision of our organizational documents, the terms of any class or series of capital stock or any agreement related thereto, other than in any manner that would not adversely affect the Series B preferred stock;

issue securities senior or equal in rank to the Series B preferred stock;

permit non-wholly owned subsidiaries to issue shares of their capital stock to third parties, except for ordinary common equity interests;

enter into any restriction or encumbrance on

our ability to comply with our obligations under the Series B preferred stock investment agreements; or

the ability of any of our subsidiaries to make a dividend payment or distribution with respect to its capital stock, to repay indebtedness owed to us, to make loans or advances to us, or to transfer any of its assets to us;

change our fiscal year; or

make any material changes in accounting policies or practices, except as required under generally accepted accounting principles.

Accounting Treatment

We classify and measure our preferred stock according to the provisions of ASC 480. The Series B preferred stock issued in March 2008 is mandatorily redeemable in March 2013 and is therefore classified as a liability for accounting purposes. We assess the classification of our common stock purchase warrants and other free-standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. As a result of this assessment, we determined that the warrant issued in connection with the Series B preferred stock is classified as a liability.

We account for the issuance of common stock purchase warrants and other free standing derivative financial instruments in accordance with the provisions of ASC 815. We classify as equity any contracts that require physical settlement or net-share settlement, or give us a choice of net-cash settlement or settlement in our own shares (either physical settlement or net-share settlement). We classify as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement or settlement in shares (either physical settlement or net-share settlement). Because the warrant associated with the Series B preferred stock has a redemption right that is settled in cash, this warrant has been classified as a liability for accounting purposes. In accordance with ASC 815, at December 31, 2009 and 2008, we adjusted the carrying value of the warrant to reflect a change in its fair value as a result of a decline in the fair value of our common stock underlying the warrant. This adjustment resulted in the recording of $0.7 million and $1.1 million of other income, respectively, for the years ended December 31, 2009 and 2008, and reduced the carrying value of the warrant to $0.4 million as of December 31, 2009 and $1.1 million as of December 31, 2008. We will continue to adjust the carrying value of the warrant in the future based upon changes in the fair value of our underlying common stock and other assumptions, with a corresponding gain or loss reflected in our statement of operations.

Series C Convertible Preferred Stock

General

On November 18, 2009, our Board of Directors approved the designation of 260,000 shares of our preferred stock as Series C Convertible Preferred Stock. On November 30, 2009, we closed on a private placement of our Series C convertible preferred stock whereby the Company sold and issued an aggregate of 101,600 shares of such stock at a purchase price of $10.00 per share, and received aggregate gross proceeds therefore of $1,016,000. In December 2009, we also issued an additional 3,750 shares of Series C convertible preferred stock valued at a purchase price of $10.00 per share in exchange for the extinguishment of our obligation to repay $75,000 in debt of the former owner of Nycon. As of December 31, 2009, 105,350 shares of Series C convertible preferred stock were issued and outstanding.

Ranking

The rights of the holders of the Series C convertible preferred stock with respect to dividends and liquidation rank:

senior to and prior to:

all classes or series of our common stock, and

any class or series of our preferred stock which by its terms is subordinated or junior to the Series C convertible preferred stock ;

junior to the Series B preferred stock and any other class or series of our preferred stock which by its terms is senior or prior to the Series C convertible preferred stock; and

pari passu and at parity with any class or series of our preferred stock which by its terms is neither senior nor junior to the Series C convertible preferred stock.

Dividends

The holders of the Series C convertible preferred stock are entitled to receive cumulative dividends, payable in cash, in shares of Series C convertible preferred stock, or in our common stock upon conversion, when, as and if declared by our board of directors out of funds legally available therefor, at the rate of 10% per year from the original issue date through (but not including) the first anniversary of the original issue date, and 15% per year thereafter until the Series C convertible preferred stock is retired. If we elect to satisfy dividends by delivering additional shares of Series C convertible preferred stock, such stock will be valued for this purpose at $10.00 per share. To the extent not paid in cash or Series C convertible preferred stock, accrued and unpaid dividends will be compounded quarterly on each March 1, June 1, September 1 and December 1, commencing March 1, 2010 and computed on a 12-month, 360-day year and on a basis of $10.00 per share, plus any accrued and unpaid dividend amounts which are compounded as provided above.

No dividends, other than dividends payable solely in shares of Series C convertible preferred Stock, common stock or other junior securities, may be paid, or declared and set apart for payment unless and until all accrued and unpaid dividends on senior securities shall have been paid or declared and set apart for payment and unless such payment is permitted by the terms of the senior securities. No dividends shall be paid or declared and set apart for payment on any class or series of our preferred stock ranking, as to dividends, on a parity with the Series C convertible preferred stock for any period unless cumulative dividends have been, or contemporaneously are, paid or declared and set apart for payment on the Series C convertible preferred stock for all dividend payment periods terminating on or prior to the date of payment of such dividends. No dividends shall be paid or declared and set apart for payment on the Series C convertible preferred stock for any period unless cumulative dividends have been, or contemporaneously are, paid or declared and set apart for payment on the Company’s preferred stock ranking, as to dividends, on a parity with the Series C convertible preferred stock for all dividend periods terminating on or prior to the date of payment of such dividends.

Liquidation, Dissolution or Winding Up

In the event of any liquidation, dissolution or winding up of the Company, after any payment or distribution of our assets is made to or set apart for the holders of the Series B preferred stock in accordance with the terms thereof, but before any payment or distribution of our assets shall be made to or set apart for the holders of junior securities, a holder of a share of Series C convertible preferred stock shall be entitled to receive the liquidation value of such share, which is an amount in cash equal to (i) $10.00 (as adjusted for stock splits, stock combinations and similar changes), plus (ii) the sum of all accrued and unpaid dividends on such share. After payment is made in full to the holders of the Series C convertible preferred stock, the other series or class or classes of our capital stock shall be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series C convertible preferred stock shall not be entitled to share therein.

Conversion Rights

The Series C convertible preferred stock is convertible at the option of the holder at any time into shares of our common stock at a conversion price of $0.40 per share, subject to adjustment for common stock dividends, stock splits, combinations of our common stock or any reorganization, recapitalization, reclassification, consolidation or merger. In addition, we may require the conversion of shares of Series C convertible preferred stock, at the then effective conversion price:

in the event that, at any time, (x) the 30-day average closing price per share of its common stock is greater than $1.00 per share for any 30 day period, and (y) the 30-day average daily trading volume of the common stock for such period is greater than 250,000 shares; or

upon the consummation of one or more qualified public offerings of our common stock pursuant to an effective registration statement.

Our board of directors has the sole authority to determine whether the average prices and trading volumes satisfy the foregoing thresholds for conversion at our election. However, we have agreed with the holder of our Series B preferred stock that the foregoing mandatory conversion provisions shall not apply to such holder to the extent that the application of such provisions would cause it to own more than 4.9% of our common stock.

Optional Redemption

Subject to the rights of, and limitations imposed in respect of, senior securities, we may redeem the Series C convertible preferred stock, at our election, in each of the following two circumstances. First, if there has been no qualified public offering since the initial issuance date of the Series C convertible preferred stock, we may redeem all or any portion thereof at a redemption price per share equal to (i) the number of shares of its common stock into which a share of Series C convertible preferred stock is then convertible, multiplied by (ii) the greater of (a) two times the then current conversion price, or (b) the then current 30-day average market closing price per share of our common stock for the 30-day period immediately preceding the date of the redemption notice. Second, if we become a party to a transaction that constitutes a “sale of the corporation” as defined in the terms of the Series C convertible preferred stock, we may redeem all or any portion thereof at or prior to the consummation of the sale of the corporation, at a redemption price equal to the greater of (i) the liquidation value of such shares, or (ii) such amount as would have been payable to on account of such shares had all of the Series C convertible preferred stock been converted into common stock immediately prior to such sale of the corporation.

Accounting Treatment

The Series C convertible preferred stock does not contain any redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control. Therefore, these shares have been classified as a component of equity as of December 31, 2009 pursuant to the guidance set forth in ASC 480. We also evaluated the conversion option featured in the Series C convertible preferred stock pursuant to the guidance set forth in ASC 815 and ASC 825. The conversion option provides the holders of the Series C convertible preferred stock with the right to convert such preferred stock into a fixed number of shares of common stock, which was established at the date of issuance. At the time of issuance of the Series C convertible preferred stock, the conversion features were determined to be in the money; therefore, a beneficial conversion feature did exist and was recorded as a dividend equal to the fair value of the beneficial conversion option at the date of issuance.

Other Contractual Obligations

Below is a description of our material other contractual obligations and commitments as of December 31, 2009.

Operating Leases. We operate certain of our facilities, vehicles and equipment under operating leases that expire from January 2010 through November 2013. We incurred aggregate rent expense for the year ended December 31, 2009 and the year ended December 31, 2008 of $1.5 million and $1.3 million, respectively. Future minimum aggregate annual rent obligations as of December 31, 2009 were as follows:

Years Ending December 31,	Minimum Aggregate Lease Payments Due (in thousands)
2010	$	1,319
2011		557
2012		489
2013		361
Thereafter		—
Total	$	2,728

Contingent Consideration from Acquisitions. At December 31, 2009, we had obligations as a result of our acquisitions to pay contingent consideration to the sellers of companies we acquired in 2007 and 2008.

PE Recycling

We are obligated us to issue an additional 400,000 shares of our common stock to a former owner of PE Recycling if the former owner was successful in obtaining additional permits, implementing certain equipment by May 29, 2009 to increase facility capacity, and resolving specified insurance claims. As of December 31, 2009, we believe the former owner has not met the performance requirements necessary to earn these additional shares of common stock and consequently we have not issued any of these contingent shares. The ultimate resolution of these contingencies is subject to the outcome of the ongoing litigation between us and the former owner.

We are also required to issue up to 435,044 shares of our common stock to the former PE Recycling 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. As of December 31, 2009 we have not issued any shares due to the former owners of PE Recycling. The ultimate resolution of this contingent liability is subject to the outcome of ongoing litigation between us and the former owner.

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. For the years ended December 31, 2009 and 2008, we did not issue any additional shares to the owners of Soil Disposal Group due to the offset of any amounts due under this agreement against commissions paid to the owners of Soil Disposal Group during 2009 and 2008.

Employment and Consulting Agreements. We have entered into employment agreements with several of our officers and key employees, as well as consulting agreements with third parties. These agreements provide for approximately $1.6 million in aggregate annual compensation. However, this amount may be increased by the amount of additional cash and stock bonuses that may be payable upon achieving specified criteria. These agreements have differing terms, the longest of which expire in June 2013. Future minimum aggregate annual payments under these agreements as of December 31, 2009 were as follows:

Year ending December 31,	Minimum Aggregate Payments Due
	(in thousands)
2010	$	1,563
2011		611
2012		558
2013		286
Total	$	3,018

Litigation and Legal Proceedings. See “Part I, Item 3. Legal Proceedings” for a summary of potential commitments and contingencies that may arise from material litigation and legal proceedings that involve us or our operations.

Idle Machinery

As of December 31, 2009, we had approximately $3.8 million of idle equipment and machinery relating to our PE Recycling operations. Included in the PE Recycling acquisition was equipment having an initial fair value of approximately $8.5 million at the date of purchase on March 30, 2007. During the year ended December 31, 2008, we recorded approximately $1.6 million of impairment relating to this idle machinery due to the softening of the overall economy. During the year ended December 31, 2009, we made the following changes to the idle machinery:

In April 2009, we placed into service approximately $2.0 million of equipment that was previously classified as idle.

In December of 2009, we placed into service $1.0 million of equipment that was previously classified as idle in exchange for removing equipment with a net carrying value of $0.7 million. We recorded a write off of $0.7 million in relation to the equipment that was removed from service due to its poor condition at the time of removal. In relation to this exchange of equipment we spent approximately $0.3 million in additional parts and labor which was capitalized into fixed assets as part of the retrofitting and refurbishment of this equipment.

As of December 31, 2009, the carrying value of the idle equipment at PE Recycling was approximately $3.8 million and we had recorded deferred tax liabilities of approximately $1.5 million in relation to this equipment. As of December 31, 2008, the carrying value of the idle equipment at PE Recycling was approximately $6.8 million and we had recorded deferred tax liabilities of approximately $2.7 million in relation to this equipment.

In November 2008, PE Materials shifted its rock crushing operations from the North Bergen, New Jersey facility to its other location in Lyndhurst, New Jersey. As a result of this move, approximately $0.3 million of equipment was no longer needed for operations and was transferred into idle machinery. We intend to hold this equipment for sale.

There can be no assurance that the idle equipment will ultimately be sold for book value, given the permit requirements and their specialized use. If we sell the equipment for less than book value, we would recognize a loss in the period in which the sale occurs.

Off-Balance Sheet Arrangements

Our most significant off-balance sheet financing arrangements as of December 31, 2009 are non-cancelable operating lease agreements, primarily for office and equipment rentals, and future performance obligations incurred in connection with our acquisitions where we have assessed that the payment of the obligation is not presently probable. As of December 31, 2009, future minimum obligations under our operating lease agreements are $2.7 million. As of December 31, 2009, the potential maximum cash and non-cash future performance obligations associated with our acquisitions were approximately $0.6 million in the aggregate, based upon an estimated fair value of $0.50 per share for our common stock.

We do not otherwise participate in any off-balance sheet arrangements involving unconsolidated subsidiaries that provide financing or potentially expose us to unrecorded financial obligations.

Related Party Transactions

As part of the PE Recycling acquisition, we issued a note payable to a former owner in the principal amount of $1.0 million, which is currently the subject of a complaint we filed against the former owner to seek redress for post-closing claims we are asserting against the former owner. See “ – Debt Obligations – Notes Payable” and “Part I, Item 3. Legal Proceedings – Pure Earth Recycling Litigation.”

As of December 31, 2009 and 2008, we had approximately $0.1 million and $0.3 million in due from joint venture, which consists of amounts due to PE Recycling from ACR. These amounts reflect the value of goods and services performed and provided by PE Recycling to the joint venture, for which it has not yet been compensated.

Seasonality and Inflation

Our operating revenues tend to be generally higher in the summer months, primarily due to the higher volume of construction and demolition waste. The volumes of industrial and residential waste in certain regions where we operate also tend to increase during the summer months. Our second and third quarter revenues and results of operations typically reflect these seasonal trends. Typically, during the first quarter of each calendar year we experience less demand for environmental consulting and engineering due to the cold weather in the Northeast region. In addition, facility closings for the year-end holidays reduce the volume of industrial waste generated, resulting in lower volumes of waste that we process during the first quarter of each year. Certain weather conditions may result in the temporary suspension of our operations, which can significantly affect our operating results.

While inflationary increases in costs have affected our operating margins in recent periods, we believe that inflation generally has not had, and in the near future is not expected to have, any material adverse effect on our results of operations.

Recently Issued Accounting Pronouncements

Standards Codification. In June 2009, the Financial Accounting Standards Board (“FASB”) confirmed that the ASC would become the single official source of authoritative U.S. generally accepted accounting principles, or GAAP, other than guidance issued by the SEC, superseding all other accounting literature except that issued by the SEC. The ASC does not change U.S. GAAP. However, as a result, only one level of authoritative U.S. GAAP exists. All other literature is considered non-authoritative. The FASB ASC is effective for interim and annual periods ending on or after September 15, 2009. Therefore, we have changed the way specific accounting standards are referenced in our consolidated financial statements.

Share Based Payments. On June 16, 2008, the FASB issued FASB Staff Position Emerging Issues Task Force No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, which was subsequently included in ASC Topic 260 — Earnings Per Share Topic (“ASC 260”). This guidance concluded that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities to be included in the computation of earnings per share using the two-class method. The guidance was effective for fiscal years beginning after December 15, 2008 on a retrospective basis, including interim periods within those years. The adoption of ASC 260 did not have any impact on our consolidated financial statements as there were no unvested share-based payment awards outstanding.

Impairment. In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, which was subsequently included in ASC Topic 320 — Investments - Debt and Equity Securities (“ASC 320”). ASC 320 amends the guidance on other-than-temporary impairment for debt securities and modifies the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. ASC 320 is effective for interim and annual periods ending after June 15, 2009. We do not currently have any outstanding investments in debt or equity securities, therefore the adoption of ASC 320 did not have an impact on the consolidated financial statements.

Fair Value. In April 2009, the FASB issued FASB Staff Position No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (“FSP FAS 157-4”), which was subsequently incorporated in ASC 820. This guidance provided additional direction in determining whether a market for a financial asset is inactive and, if so, whether transactions in that market are distressed, in order to determine whether an adjustment to quoted prices is necessary to estimate fair value. This additional guidance was effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted. The adoption of the guidance did not have a material impact on our consolidated earnings, financial position or cash flows.

In January 2010, the FASB updated ASC 820 to add disclosures for transfers in and out of Level One and Level Two of the valuation hierarchy and to present separately information about purchases, sales, issuances and settlements in the reconciliation for assets and liabilities classified within level three of the valuation hierarchy. The updates to ASC 820 also clarify existing disclosure requirements about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The updates to ASC 820 are effective for fiscal years and interim periods beginning after December 15, 2009, except for the disclosures about activity in the reconciliation of Level Three activity, which are effective for fiscal years and interim periods beginning after December 15, 2010. The updates to ASC 820 enhance disclosure requirements and will not impact our financial position, results of operations or cash flows.

In April 2009, the FASB issued FASB Staff Position No. 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, which was subsequently incorporated in ASC 825. This guidance requires disclosures about the fair value of an entity’s financial instruments, whenever financial information is issued for interim reporting periods. The additional guidance was effective for interim periods ending after June 15, 2009. Accordingly, we have included these disclosures in our notes to the consolidated financial statements.

In August 2009, the FASB issued Accounting Standards Update 2009-05, Fair Value Measurements and Disclosures — Measuring Liabilities at Fair Value. This guidance provides clarification that in circumstances in which a quoted price in an active market for an identical liability is not available, fair value should be measured using one or more specific techniques outlined in the update. The guidance was effective for the first reporting period after issuance. The adoption of the guidance did not have a material impact on the consolidated earnings, financial position or cash flows of the Company.

Subsequent Events. In May 2009, the FASB issued FASB Statement No. 165, Subsequent Events, which was subsequently incorporated in ASC Topic 855 — Subsequent Events (“ASC 855”). The new guidance established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The circumstances under which these events or transactions should be recognized or disclosed in financial statements were defined. Disclosure of the date through which subsequent events have been evaluated was also required, as well as whether that date was the date the financial statements were issued or the date the financial statements were available to be issued.

The new guidance was effective for interim or annual reporting periods ending after June 15, 2009. In February 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-09 to further amend ASC 855. ASU 2010-09 removed the requirement for an entity that is an SEC filer to disclose the date through which subsequent events have been evaluated. Although we have evaluated events and transactions that occurred after the balance sheet date through the issuance date of these financial statements to determine if financial statement recognition or additional disclosure is required, we have discontinued the separate evaluation date disclosure in our notes to the consolidated financial statements.

Transfers of Financial Assets. In June 2009, the FASB issued FASB Statement No. 166, Accounting for Transfers of Financial Assets, is a revision to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, which was subsequently incorporated in ASC Topic 860 – Transfers and Servicing (“ASC 860”). This standard will require additional disclosure about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It also changes the requirements for derecognizing financial assets, and requires additional disclosures. We do not currently engage in the transfer of financial assets and therefore, we do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

Consolidation. In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R), to amend certain requirements of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, which was subsequently incorporated in ASC Topic 810 – Consolidation (“ASC 810”). This statement improves financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable information to users of financial statements. This statement is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. We do not presently utilize variable interest entities, and thus we do not expect that the adoption of this statement will have a material impact on our consolidated financial statements.

Revenue Recognition. In October 2009, the FASB issued ASU No. 2009-13, Multiple Deliverable Arrangements (“ASU No. 2009-13”), an update to ASC 605. ASU No. 2009-13 amends ASC 605 regarding how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting and how the arrangement consideration should be measured and allocated to the separate units of accounting. ASU No. 2009-13 is effective prospectively for arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. We are currently evaluating the impact of adopting ASU No. 2009-13 on our consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable to smaller reporting companies.

Item 8. Financial Statements and Supplementary Data.

Our audited consolidated financial statements as of and for the fiscal years ended December 31, 2009 and 2008, together with the related notes thereto, have been included in this annual report on pages F-1 through F-48. By this reference, we have incorporated by reference these financial statements into this Item 8. As a smaller reporting company, we have omitted supplementary data from our consolidated financial statements.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Information with respect to this Item 9 has been previously reported in our definitive proxy statement dated and filed with the SEC on April 30, 2009.

Item 9A(T). Controls and Procedures.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls.

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of December 31, 2009. Based upon the December 31, 2009 disclosure controls evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide a reasonable level of assurance that information required to be disclosed in the reports we file, furnish or submit under the Exchange Act is recorded, processed, summarized and reported within the specified time periods in the rules and forms of the Securities and Exchange Commission. These officers have concluded that our disclosure controls and procedures were also effective to provide a reasonable level of assurance that information required to be disclosed in the reports that we file, furnish or submit under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure, all in accordance with Exchange Act Rule 13a-15(e). Our disclosure controls and procedures are designed to provide reasonable assurance of achieving these objectives.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that pertain to the maintenance of records that, in reasonable detail:

accurately and fairly reflect its transactions and dispositions of its assets;

provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles and that its receipts and expenditures are being made only in accordance with authorizations of its management and directors; and

provide reasonable assurance regarding prevention or timely detection of the unauthorized acquisition, use, or disposition of its assets that could have a material effect on its financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2009. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (COSO). Based on its assessment, management has concluded that, as of December 31, 2009, our internal control over financial reporting was effective based on those criteria.

Changes in Internal Control Over Financial Reporting

In connection with management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2009, there were no changes in our internal control over financial reporting during the fourth quarter of the year ended December 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report on Internal Control over Financial Reporting

This annual report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this Annual Report on Form 10-K.

Item 9B. Other Information.

Not applicable.

100

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Except as otherwise provided herein, information required by this Item 10 is incorporated by reference to our definitive proxy statement, which will be filed with the SEC not later than 120 days after the close of the fiscal year covered by this report.

Code of Ethics

We adopted a code of ethics which applies to our directors, officers and employees as well as those of our subsidiaries. A copy of our Code of Ethics may be obtained free of charge by submitting a request in writing to Pure Earth, Inc., One Neshaminy Interplex, Suite 201, Trevose, Pennsylvania, 19053. In the event of any amendment to, or waiver from, a provision of our code of ethics applicable to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, we may satisfy any required public disclosure of such amendment or waiver by posting such information on our website at http://www.pureearthinc.com. The foregoing reference is meant to be an inactive reference only, and information contained on our website is not incorporated by reference in this annual report on Form 10-K.

Item 11. Executive Compensation.

Information required by this Item 11 is incorporated by reference to our definitive proxy statement, which will be filed with the SEC not later than 120 days after the close of the fiscal year covered by this report.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Except as otherwise provided herein, information required by this Item 12 is incorporated by reference to our definitive proxy statement, which will be filed with the SEC not later than 120 days after the close of the fiscal year covered by this report.

Item Equity Compensation Plan Information

The following table sets forth information with respect to our equity compensation plans as of December 31, 2009.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants or rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders (1)		—		—		807,200
Equity compensation plans not approved by security holders		—		—		—
Total		—		—		807,200

(1)	Represents awards of restricted stock outstanding as of December 31, 2009 under our incentive plan, which was approved by our stockholders on September 5, 2007.

101

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Information required by this Item 13 is incorporated by reference to our definitive proxy statement, which will be filed with the SEC not later than 120 days after the close of the fiscal year covered by this report.

Item 14. Principal Accounting Fees and Services.

Information required by this Item 14 is incorporated by reference to our definitive proxy statement, which will be filed with the SEC not later than 120 days after the close of the fiscal year covered by this report.

102

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a)(1) Financial Statements. The consolidated financial statements of Pure Earth, Inc. listed below have been filed as part of this annual report and are incorporated by reference into Part II, Item 8 – Financial Statements and Supplementary Data. Such financial statements may be found beginning on the pages of this annual report on Form 10-K listed below.

Report of Independent Registered Public Accounting Firm		F-2

Consolidated Balance Sheets as of December 31, 2009 and 2008		F-3

Consolidated Statements of Operations For the Years Ended December 31, 2009 and 2008		F-5

Consolidated Statements of Stockholders’ Equity For the Years Ended December 31, 2009 and 2008		F-7

Consolidated Statements of Cash Flows For the Years Ended December 31, 2009 and 2008		F-8

Notes to Consolidated Financial Statements		F-10

(a)(3) Exhibits. The warranties, representations and covenants contained in any of the agreements included herein or which appear as exhibits hereto should not be relied upon by buyers, sellers or holders of the Company’s securities and are not intended as warranties, representations or covenants to any individual or entity except as specifically set forth in such agreement.

Exhibit No.		Description
2.1*		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. (n/k/a Pure Earth Recycling (NJ), Inc.) and Rezultz, Incorporated (1)

103

Exhibit No.		Description
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. (n/k/a Pure Earth Recycling (NJ), 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. (n/k/a Pure Earth Recycling (NJ), 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. (n/k/a Pure Earth Recycling (NJ), 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. (n/k/a Pure Earth Recycling (NJ), 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. (n/k/a Pure Earth Recycling (NJ), 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, 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. (n/k/a Pure Earth Recycling (NJ), 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. (n/k/a Pure Earth Recycling (NJ), 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)
2.10.1		Amendment to Asset Purchase Agreement, dated March 9, 2009, by and among New Nycon, Inc., Robert Cruso and Frank Gencarelli
2.10.2		Amendment to Asset Purchase Agreement, dated December 10, 2009, by and among New Nycon, Inc., Robert Cruso and Frank Gencarelli
3.1		Second Amended and Restated Certificate of Incorporation of Pure Earth, Inc., as amended (2) (3) (4)
3.2		Second Amended and Restated Bylaws of Pure Earth, Inc. (2) (3)
4.1		Specimen Common Stock Certificate (1)
4.2		Specimen Series B Preferred Stock Certificate (1)
4.3		Form of Common Stock Purchase Warrant issued to DD Growth Premium pursuant to the Securities Purchase Agreement, dated as of June 30, 2006 (1)
4.4		Form of Registration Rights Agreement, dated June 30, 2006, by and between Pure Earth, Inc. and DD Growth Premium (1)
4.5		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)
4.6		Debenture Redemption Agreement, dated as of August 17, 2007, by and among Pure Earth, Inc. and Dynamic Decisions Strategic Opportunities (1)
4.6.1		First Amendment to Debenture Redemption Agreement, dated as of October 2, 2007, by and among Pure Earth, Inc. and Dynamic Decisions Strategic Opportunities (1)

104

Exhibit No.		Description
4.7		Stock Purchase Agreement, dated August 17, 2007, by and among Dynamic Decisions Strategic Opportunities and Pure Earth, Inc. (1)
4.7.1		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)
4.7.2**		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)
4.7.3**		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)
4.7.4**		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)
4.8		Investment Agreement, dated as of March 4, 2008, among Pure Earth, Inc. and Fidus Mezzanine Capital, L.P. (1)
4.8.1		Letter, dated August 18, 2009, from Pure Earth, Inc. to Fidus Mezzanine Capital, L.P. (5)
4.8.2		Letter, dated November 30, 2009, from Pure Earth, Inc. to Fidus Mezzanine Capital, L.P. (4)
4.9		Warrant, dated March 4, 2008, to purchase Common Stock of Pure Earth, Inc. issued to Fidus Mezzanine Capital, L.P. (1)
4.10		Registration Rights Agreement, dated as of March 4, 2008, between Pure Earth, Inc. and certain holders (1)
4.11**		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)
4.12		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)
4.13		Investment Agreement, effective June 29, 2008, by and among Pure Earth, Inc., Black Creek Capital Corp. and Charles M. Hallinan (3)
4.14		Form of Subscription Agreement with respect to Series C Convertible Preferred Stock (4)
4.15		Specimen Series C Convertible Preferred Stock Certificate (4)
4.16		Form of Registration Rights Agreement with respect to the Series C Convertible Preferred Stock Offering (4)
4.17		Letter from Pure Earth, Inc. to Fidus Mezzanine Capital, L.P., dated November 24, 2009, regarding mandatory conversion right of Series C Convertible Preferred Stock (4)
10.1**		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**		Pure Earth, Inc. 2007 Stock Incentive Plan (1)
10.4**		Form of Restricted Stock Agreement for awards under the Pure Earth, Inc. 2007 Stock Incentive Plan (1)
10.5		Credit and Security Agreement, dated as of October 24, 2006, between Pure Earth, Inc., South Jersey Development, Inc., American Transportation & Disposal Systems, Ltd., Juda Construction, Ltd. and Wells Fargo Bank, National Association (1)
10.5.1		First Amendment to Credit and Security Agreement, dated December 29, 2006, by and between Pure Earth, Inc., South Jersey Development, Inc., American Transportation & Disposal Systems, Ltd., Juda Construction, Ltd. and Wells Fargo Bank, National Association (1)
10.5.2		Second Amendment to Credit and Security Agreement and Waiver of Defaults, dated May 16, 2007, by and between Pure Earth, Inc., Pure Earth Transportation and Disposal, Inc., Pure Earth Materials, Inc., Juda Construction, Ltd. and Wells Fargo Bank, National Association (1)
10.5.3		Third Amendment to Credit and Security Agreement, dated November 13, 2007, by and between Pure Earth, Inc., Pure Earth Transportation and Disposal, Inc., Pure Earth Materials, Inc., Juda Construction, Ltd. and Wells Fargo Bank, National Association (1)

105

Exhibit No.		Description
10.5.4		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 (3)
10.5.5		Fifth Amendment to Credit and Security Agreement, portions effective as of October 21, 2008 and March 13, 2009, by and among Pure Earth, Inc., each of its subsidiaries, and Wells Fargo Bank, National Association (6)
10.5.6		Sixth Amendment to Credit and Security Agreement, dated August 19, 2009 and effective as of June 30, 2009, by and among Pure Earth, Inc., each of its subsidiaries, and Wells Fargo Bank, National Association (5)
10.5.7		Seventh Amendment to Credit and Security Agreement, dated October 23, 2009, by and among Pure Earth, Inc., each of its subsidiaries, and Wells Fargo Bank, National Association (5)
10.6		Sales Representative Agreement, dated November 20, 2007, by and between PEI Disposal Group, Inc., Soil Disposal Group, Inc., Richard Rivkin, Stephen Shapiro, James Case, Jeffrey Berger and Aaron Environmental Group, Inc. (1)
10.7		Form of Confidentiality, Non-Competition and Non-Solicitation Agreement, dated November 20, 2007, by and among Soil Disposal Group, Inc., PEI Disposal Group, Inc., Pure Earth, Inc., any and all subsidiaries of PEI Disposal Group, Inc. and Pure Earth, Inc., and certain employees of Soil Disposal Group, Inc. signatory thereto (1)
10.8		Commercial Lease, dated October 26, 2007, between Red Rock Land Development, LLC and Pure Earth Materials (NJ) Inc. (1)
10.8.1		Memorandum of Understanding, dated September 25, 2008, between Red Rock Land Development, LLC and Pure Earth Materials (NJ) Inc., amending Commercial Lease dated October 26, 2007 (7)
10.9		Subordinated Promissory Note, dated November 15, 2007, by Casie Ecology Oil Salvage, Inc., MidAtlantic Recycling Technologies, Inc. (n/k/a Pure Earth Recycling (NJ), Inc.) and Rezultz, Incorporated in the principal amount of $1,000,000 in favor of Gregory W. Call (1)
10.10		Promissory Note, dated November 20, 2007, by PEI Disposal Group, Inc., as maker, in the principal amount of $640,000, in favor of Soil Disposal Group, Inc. (1)
10.11		Promissory Note, dated November 28, 2007, by Pure Earth, Inc., Juda Construction, Ltd. and Pure Earth Materials, Inc., as makers, in the principal amount of $2,265,000, in favor of CoActiv Capital Partners LLC (1)
10.11.1		Loan Restructure Agreement, dated December 7, 2009, by and between CoActiv Capital Partners LLC and Pure Earth, Inc., Pure Earth Materials, Inc., and Juda Construction, LTD. as co-borrowers.
10.12		Exclusive License, dated April 30, 2008, by and between New Nycon, Inc. and Paul E. Bracegirdle (1)
10.13		Term Loan Agreement, dated November 12, 2008, by and among Casie Ecology Oil Salvage, Inc., MidAtlantic Recycling Technologies, Inc. (n/k/a Pure Earth Recycling (NJ), Inc.) and Rezultz, Incorporated and Susquehanna Bank (6)
10.13.1		First Amendment to Term Loan Agreement, dated November 16, 2009, by and among Pure Earth Treatment (NJ), Inc. (f/k/a Casie Ecology Oil Salvage, Inc.), Pure Earth Recycling (NJ), Inc. (f/k/a MidAtlantic Recycling Technologies, Inc.), Rezultz, Incorporated and Susquehanna Bank
10.14		Guaranty, dated November 12, 2008, of Pure Earth, Inc. in favor of Susquehanna Bank (6)
10.14.1		First Amendment to Guaranty Agreement, dated November 16, 2009, of Pure Earth, Inc., in favor of Susquehanna Bank
10.14.2		ISDA® Master Agreement, dated November 12, 2008, by and among Susquehanna Bank, Casie Ecology Oil Salvage, Inc., MidAtlantic Recycling Technologies, Inc. (n/k/a Pure Earth Recycling (NJ), Inc.) and Rezultz, Incorporated (6)
10.14.3		Amendment to ISDA® Master Agreement, dated November 13, 2009, by and among Susquehanna Bank, Pure Earth Treatment (NJ), Inc. (f/k/a Casie Ecology Oil Salvage, Inc.), Pure Earth Recycling (NJ), Inc. (f/k/a MidAtlantic Recycling Technologies, Inc.) and Rezultz, Incorporated.
10.14.4		Schedule to the Master Agreement, dated November 12, 2008, by and among Susquehanna Bank, Casie Ecology Oil Salvage, Inc., MidAtlantic Recycling Technologies, Inc. (n/k/a Pure Earth Recycling (NJ), Inc.) and Rezultz, Incorporated (6)
10.14.5		Confirmation, dated November 12, 2008, by and among Susquehanna Bank, Casie Ecology Oil Salvage, Inc., MidAtlantic Recycling Technologies, Inc. (n/k/a Pure Earth Recycling (NJ), Inc.) and Rezultz, Incorporated (6)
10.14.6		Amendment to Confirmation, dated November 13, 2009, by and among Susquehanna Bank, Pure Earth Treatment (NJ), Inc. (f/k/a Casie Ecology Oil Salvage, Inc.), Pure Earth Recycling (NJ), Inc. (f/k/a MidAtlantic Recycling Technologies, Inc.) and Rezultz, Incorporated
10.14.7		Term Loan Note, dated November 12, 2008, issued by Casie Ecology Oil Salvage, Inc. (n/k/a Pure Earth Treatment (NJ), Inc), MidAtlantic Recycling Technologies, Inc. (n/k/a Pure Earth Recycling (NJ), Inc.), and Rezultz, Incorporated, as borrowers, in favor of Susequehanna Bank, as payee
10.14.8		Amendment to Term Loan Note, dated November 16, 2009, issued by Pure Earth Treatment (NJ), Inc. (f/k/a Casie Ecology Oil Salvage, Inc.), Pure Earth Recycling (NJ), Inc. (f/k/a MidAtlantic Recycling Technologies, Inc.) and Rezultz, Incorporated, as borrowers, in favor of Susequehanna Bank, as payee

106

Exhibit No.		Description
10.15**		Letter dated June 1, 2009, between Pure Earth, Inc. and Mark Alsentzer
10.15.1**		Letter dated June 1, 2009, between Pure Earth, Inc. and Brent Kopenhaver
10.15.2**		Letter dated June 1, 2009, between Pure Earth, Inc. and Joseph T. Kotrosits
21.1		Subsidiaries of the Registrant
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) promulgated under the Exchange Act
32.1		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 2002
32.2		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.

Management contract or compensatory plan or arrangement.

(1)

Previously filed as an exhibit to our registration statement on Form 10 (File No. 0-53287), as filed with the SEC on June 20, 2008.

(2)

Included is the revised version of this exhibit, redlined to show the new amendments. The redlined version is being provided pursuant to SEC staff Compliance & Disclosure Interpretation 246.01.

(3)

Previously filed as an exhibit to Pre-Effective Amendment No. 1 to our registration statement on Form 10/A (File No. 0-53287), as filed with the SEC on August 8, 2008.

Pure Earth, Inc. 10-K