AMNC Amincor Inc (PK)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ("MD&A")

AMINCOR (CONSOLIDATED BASIS)

GOING CONCERN/LIQUIDITY AND CAPITAL RESOURCES

During the three months ended March 31, 2013, cash flows used in continuing operations was $869,346. This was principally due to a net loss from continuing operations of $2,478,826 which was partially offset by a reduction in accounts receivable of approximately $414,000, increase in accounts payable of approximately $431,000, depreciation expense of approximately $477,000, an increase in accrued expenses and other current liabilities of approximately $369,000 and a decrease in prepaid expenses and other current assets of approximately $350,000. The net loss from continuing operations is discussed in greater detail in the results from operations for the three months ended March 31, 2013 and 2012 section of this MD&A.

For the three months ended March 31, 2013, cash flows used in investing activities from continuing operations of $20,604 were primarily due to immaterial purchases of additional equipment at Baker's Pride, Inc.

For the three months ended March 31, 2013, cash flows provided by financing activities from continuing operations of $674,274 was primarily due to proceeds received on loans from related parties.

For the three months ended March 31, 2013, total cash flows used in discontinued operations was $8,195. Cash used in discontinued operations was primarily related to the winding down of entities classified as discontinued operations.

The accompanying consolidated condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. However, as reflected in the accompanying consolidated condensed financial statements, we recorded a net loss from continuing operations of $2,478,826 and $2,548,732 for the three months ended March 31, 2013 and 2012, respectively. We had a working capital deficit of $23,249,795 and an accumulated deficit of $86,821,262 as of March 31, 2013. The results of the Company's cash flows from continuing operations for the three months ended March 31, 2013 have been adversely impacted by the loss of Baker's Pride's most significant customer Aldi, Inc. The Company's primary focus is to achieve profitable operations and positive cash flow of its operations of its long established niche businesses - Tyree and Baker's Pride.

Our auditors, Rosen Seymour Shapss Martin & Company LLP, have stated in their audit report dated December 31, 2012 that there is substantial doubt on the Company's ability to continue operations as a going concern due to our recurring net losses from operations, and the Company has a significant working capital deficit. Our ability to continue as a going concern is dependent upon our

capability to raise additional funds through debt and equity financing, and to achieve profitable operations. Our plans to continue as a going concern and to achieve a profitable level of operations are as follows:

With respect to BPI, management has successfully negotiated a contract for co-packing frozen donut products to one of the world's largest family owned food companies which is a global supplier to the food service and in store bakery retail industries. Management believes that this contract will pave the way for additional contracts from other significant food companies in addition to increased business from the newly acquired customer. BPI has entered the frozen segment and is also positioning itself to enter back into the fresh bread manufacturing industry by placing significant and competitive bids to strategic players within the fresh bread markets. Management believes that by September 2013, its facilities will be operationally capable of supporting themselves on internally generated cash flows. Management has had verbal conversations with its lender, Central State Bank, regarding the bridge loan financing which will allow for BPI to extend its interest only financing on the new donut equipment until such time that BPI is able through its cash flow to make principal payments.

With respect to Tyree, management is projecting an increase in its environmental business through the end of 2013 and 2014. Tyree's ability to succeed in securing additional environmental business depends on the ability of one of Tyree's primary customers to secure remediation work by bidding environmental liabilities currently present on gasoline stations and referring this work to Tyree. Management is in the process of evaluating the profitability of Tyree's other divisions and intends to continue these operations provided that they continue to be profitable. In addition, Tyree's management believes that Tyree is currently holding greater level of inventory than is necessary for operations and will seek to liquidate or cease additional purchases of similar inventory on a going forward basis. Management intends to utilize cash flows generated from this decrease in inventory as additional working capital.

Tyree's management is working to secure additional available capital resources and turnaround Tyree's operations to generate operating income. As of March 31, 2013, Tyree has a working capital deficit of approximately $10.5 million exclusive of amounts owed to Amincor and recorded a net loss of approximately $660,000 for the three months ended March 31, 2013. Tyree has entered into settlement agreements and continues to negotiate with creditors to pay off its outstanding debt obligations. However, without additional capital resources, Tyree may not be able to continue to operate and may be forced to curtail its business, liquidate assets and/file for bankruptcy protection. In any such case, its business, operating results or financial condition would be materially adversely affected.

With respect to EHC, one of EQS' managers has signed a letter of intent to purchase EQS in exchange for the assumption of the accounts payable and a $500,000 note to Amincor Other Assets, Inc. which is collateralized with a secured lien on all of the lab equipment of EQS. Management believes that this will increase the cash flows of EHC as EQS had historically received cash to cover expenses for operations from its sister company, AWWT. AWWT has recently

signed a licensing agreement with a Denver based water technology company which will allow AWWT to sell waste water treatment equipment to large municipal, industrial, agricultural and commercial generators of waste water. Management is currently in discussion with multiple customers in this market and believes that there is a significant opportunity for consistent and reliable cash flows from placing systems in use with these customers.

With respect to Amincor Other Assets, there are significant assets currently residing on Amincor Other Asset's balance sheet related to the discontinued operations of Imperia and Tulare are included in assets held for sale. Management intends to liquidate these assets as soon as they are able to do so profitably. Management believes there is more value in these assets than is currently shown on our balance sheet and an attempt to liquidate these assets quickly will decrease their value to, or below, what is currently showing on our balance sheet. In the meantime, management is utilizing these assets to the best of their ability by offsetting the costs associated with owning those assets by generating income from renting these properties out when possible.

With respect to Amincor, Inc.'s corporate offices, Management continues to seek new financing from a financial institution in order to provide more working capital to its subsidiary companies. Management has had discussions with many financial institutions of different types and has narrowed down eligible candidates to only a few. Management expects that by executing on the above plans for the subsidiary companies and by acquiring new financing for working capital for its subsidiary companies, Baker's Pride, Tyree and AWWT will become profitable and be able to generate enough internal cash flow to operate independently of one another.

CONTINGENT LIABILITIES:

ESI

The Volkl license agreement was terminated in September 2011 and concurrently the Strategic Alliance Agreement with Samsung America CT, Inc. ("Samsung") was also terminated. Volkl is seeking a $400,000 royalty payment. ESI has initiated counterclaims against the various parties, including but not limited to Samsung, seeking damages for, including but not limited to infringement, improper use of company assets and breach of fiduciary duty. The counterclaim against Samsung has been settled and ESI has moved to have Samsung dismissed Samsung from any further claims.

Volkl was successful in obtaining a judgment against ESI and a confirmation of the Arbitration is presently pending in Federal Court. Management believes that this matter and the Frost matter below will eventually be settled out of court for less than the royalty and damages amounts sought.

On September 28, 2012, Sean Frost ("Frost"), the former President of ESI, filed a Complaint to Compel Arbitration Regarding Breach of Employment Contract and Related Breach of Labor Code Claims and For an Award of Compensatory Damages in

the Superior Court of the State of California, County of San Diego against Epic Sports International Inc., Amincor, Inc. and Joseph Ingrassia (collectively, the "Defendants"). The first cause of action is a petition to compel arbitration for unpaid compensation and benefits pursuant to Frost's employment agreement. The second cause of action is for breach of contract for alleged non-payment of expenses, vacation days and assumption of certain debts. The third cause of action is for violation of the California Labor Code for failure to pay wages due and owing. Frost is seeking among other things, damages, attorneys' fees and costs and expenses.

As of the date this filing, the case continues to be litigated and Management will update accordingly.

TYREE

One of Tyree's largest customers, Getty Petroleum Marketing, Inc. ("GPMI") filed for bankruptcy protection on December 5, 2011. As of that date, Tyree had a pre-petition receivable of $1,515,401.27. Additionally, Tyree has a post-petition administrative claim for $593,709.20. A Proof of Claim was filed with the Bankruptcy court on Tuesday, April 10, 2012. On August 27, 2012, the United States Bankruptcy Court for the Southern District of New York confirmed GPMI's Chapter 11 plan of liquidation offered by its unsecured creditors committee, overruling the remaining objections. The plan provides for all of the debtors' property to be liquidated over time and for the proceeds to be allocated to creditors. Any assets not distributed by the effective date will be held by a liquidating trust and administered by a liquidation trustee, who will be responsible for liquidating assets, resolving disputed claims, making distributions, pursuing reserved causes of action and winding up GPMI's affairs. As an unsecured creditor, Tyree may never collect or may only collect a small percentage of the pre and post petition amounts owed. To date, Tyree has not be notified of any intent by the United States Bankruptcy Court for the Southern District of New York to claw back any amounts paid to Tyree pre-petition.

Tyree management has negotiated settlements with Local Union 99, Local Union 138 and Local Union 355. Tyree management continues to negotiate with Local Union 1, Local Union 25, and Local Union 200 over unpaid benefits that are due and owing to each of the respective unions. Tyree records indicate approximately $1,100,000 of unpaid benefits due. Tyree management does not dispute that benefits are due and owing to the respective unions, however, settlement and payment plan discussions are ongoing. The Local Union 1 and Local Union 200 have each filed suit in the United States District Court Eastern District of New York to enforce their rights as to the unpaid benefits due and owing from Tyree, and as guarantor of certain amounts due and owing, Amincor, Inc. is also a named party in these lawsuits. Local Union 200 has also filed a claim with the National Labor Relations Board.

A variety of unsecured vendors have filed suit for non-payment of outstanding invoices, as noted in Tyree's financial statements under accounts payable and notes payable. Each of these actions is handled on a case by case basis, with settlement and payment plan.

BPI

In connection with Baker's Pride's USDA loan application, BPI had Environmental Site Assessments done on the property where one of its bakeries is located as required by BPI's prospective lender. A Phase II Environmental Site Assessment was completed on October 31, 2011 and was submitted to the Iowa Department of Natural Resources ("IDNR") for their review. IDNR requested that a Tier Two Site Cleanup Report ("Tier Two") be issued and completed in order to better understand what environmental hazards exist on the property. The Tier Two was completed on February 3, 2012 and was submitted to IDNR for further review. Management's latest correspondence with IDNR, dated March 21, 2012, required revisions to the Tier Two to be in compliance with IDNR's regulations. Management has retained the necessary environmental consultants to become compliant with IDNR's request. Due to the nature of the liability, the remediation work is 100% eligible for refund from INDR's Innocent Landowner Fund. As such there is no direct liability related to the clean up of the hazard.

TULARE

The City of Lindsay, California has invoiced Tulare Frozen Foods, LCC ("TFF") $533,571 for outstanding delinquent amounts. A significant portion of the outstanding delinquent amounts are penalties, interest and fees that have accrued. A settlement proposal, whereby the City of Lindsay would retain TFF's $206,666 deposit as settlement and release in full of all outstanding obligations was sent to the City of Lindsay for review on March 29, 2012. As of the date of this filing, no settlement has been reached.

RESULTS FROM OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012

NET REVENUES

Net revenues for the three months ended March 31, 2013 totaled $7,193,160 as compared to net revenues of $13,897,017 for the three months ended March 31, 2012, a decrease in net revenues of $6,703,857 or approximately 48.2%. The primary reason for the decrease in net revenues is related to Tyree's and BPI's operations. Tyree's net revenues decreased by approximately $2.7 million and BPI's net revenues decreased by approximately $4.1 million during the three months ended March 31, 2013. A detailed analysis of each subsidiary company's individual net revenues can be found within their respective MD&A sections of this Form 10-Q.

COST OF REVENUES

Cost of revenues for the three months ended March 31, 2013 totaled $6,281,420 or approximately 87.3% of net revenues as compared to $10,704,512 or approximately 77.0% of net revenues for the year ended March 31, 2012. The primary reason for the increase in cost of revenues as a percentage of net revenues is related to BPI's operations. BPI incurred fixed costs well in excess of its net revenues

for the three month period ended March 31, 2013 due to the loss of a material customer A detailed analysis of each subsidiary company's individual cost of revenues can be found within their respective MD&A sections of this Form 10-Q.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative ("SG&A") expenses for the three months ended March 31, 2013 totaled $3,187,811 as compared to $5,695,027 for the three months ended March 31, 2012, a decrease in operating expenses of $2,507,216 or approximately 44.0%. The primary reason for the decrease in SG&A expenses was related to BPI's and Tyree's operations. BPI's operating expenses decreased by approximately $740,000 and Tyree's operating expenses decreased by $1.5 million during the three months ended March 31, 2013 as compared to the three months ended March 31, 2013. A detailed analysis of each subsidiary company's individual operating expenses can be found within their respective MD&A sections of this Form 10-Q.

LOSS FROM OPERATIONS

Loss from operations for the three months ended March 31, 2013 totaled $2,276,071 as compared to $2,502,522 for the three months ended March 31, 2012, a decrease increase in loss from operations of $226,451 or approximately 9.0%. The primary reason for the decrease in loss from operations is related to the decrease in operating expenses as noted above.

OTHER EXPENSES (INCOME)

Other expenses for the three months ended March 31, 2013 totaled $202,755 as compared to $46,210 for the year ended December 31, 2012, an increase in other expenses of $156,545. The primary reason for the increase in other expenses is related to increased interest expenses resulting from factoring receivables of Tyree, EQS and AWWT alongside a higher carrying balance on BPI's bridge loan. A detailed analysis of each subsidiary company's individual other expenses (income) can be found within their respective MD&A sections of this Form 10-Q.

NET LOSS FROM CONTINUING OPERATIONS

Net loss from continuing operations totaled $2,478,826 for the three months ended March 31, 2013 as compared to $2,548,732 for the three months ended March 31, 2012, a decrease in net loss from continuing operations of $69,906 or approximately 4.2%. The primary reason for the decrease in net loss from continuing operations is related to the decreases in SG&A expenses as noted above.

INCOME (LOSS) FROM DISCONTINUED OPERATIONS

Loss from discontinued operations totaled ($6,254) for the three months ended March 31, 2013 as compared to ($55,839) for the three months ended March 31, 2013, a decrease in loss from discontinued operations of $49,585 or approximately 88.8%. The net loss of Masonry was ($6,695) for the three months ended March 31, 2013 as compared to ($10,236) for the three months ended March 31, 2012, an increase in net loss of $46,044. The net income of Tulare was $411 for the three months ended March 31, 2013 as compared to a net loss ($45,603) for the three months ended March 31, 2012, a decrease in net loss of $46,044. The net income of ESI was $0 for the three months ended March 31, 2013 and 2012.

NET LOSS

Net loss totaled $2,485,080 for the three months ended March 31, 2013 as compared to $2,604,571 for the three months ended March 31, 2012, a decrease in net loss of $119,491 or approximately 4.6%. The primary reason for the decrease in net loss during the three months ended March 31, 2013 was due to the aforementioned decreases in SG&A expenses.

BAKER'S PRIDE, INC.

SEASONALITY

Seasonality influenced the operations of the South Street Bakery facility as cookie sales are typically higher during the winter holiday season when compared to the summer season. Operations at the Jefferson Street facility are not influenced by seasonality. However, when donut production commences at the Mt. Pleasant Street facility, it will greatly be affected by seasonality. For the three months ended March 31, 2013 and 2012, none of the operations of Baker's Pride were influenced by seasonality.

LOSS OF MATERIAL CUSTOMER

On July 16, 2012, BPI was notified that Aldi, BPI's primary customer would be terminating its contract with the Company as of the end of October 2012 due to BPI's inability to meet certain pricing, cost and product offering needs. As such, BPI performed an impairment study and concluded that BPI's goodwill and intangible assets were fully impaired as of September 30, 2012.

Net revenues generated from Aldi comprised 0.0% and 92.2% of net revenues for the three months ended March 31, 2013 and 2012, respectively. All Aldi revenues generated in the first three months of 2012 were from BPI's Jefferson Street facility. The balance of net revenues generated in the first three months of 2012 were in BPI's South Street facility. On November 30, 2012, BPI terminated the equipment and facility lease which allowed for production at the South Street facility. It is management's intention to enter into a co-packing agreement for all of the products formerly produced internally with other

bakeries in order to continue to provide the same product offerings without operating the facility. Management has moved all equipment owned but formerly residing at the South Street facility to the Mt. Pleasant Street facility. Management intends to return to its business plan of operating the Mt. Pleasant Street facility thereby reducing fixed overhead and variable costs by using cross trained personnel and providing its customer base the opportunity to purchase one, two or all three of its product types in less than trailer load quantities but obtain cost effective logistics through a combined load of all products offered by BPI.

Effective November 2, 2012, BPI has stopped production at the Jefferson Street facility. As such, there were layoffs of production personnel and wage reductions of remaining personnel in order to minimize losses until production resumes at the Jefferson Street facility. Production is currently underway with low volume regional companies with plans to increase product offerings and grow the business. Discussions are active for co-packing arrangements to enable BPI to broaden its offerings for new business opportunities. Discussions continue with major branded food products companies with BPI operating as the producer; however, as of the time of filing BPI has not yet secured a significant contract with a new bread customer but has secured a significant contract with a donut customer.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012

NET REVENUES

Net revenues for the three months ended March 31, 2013 totaled $54,808 as compared to $4,144,288 for the three months ended March 31, 2012, a decrease of $4,089,480 or approximately 98.7%. The primary reason for the decrease in net revenues is related to the loss of BPI's customer Aldi on November 2, 2012. Of the approximate $4.1 million decrease in net revenues, Aldi's business was responsible for $3.8 million of this decrease. The remaining decrease in net revenues is related to the termination of the equipment and facility lease that allowed for production at the South Street facility.

COST OF REVENUES

Cost of revenues for the three months ended March 31, 2013 totaled $554,650 as compared to $3,080,600 for the three months ended March 31, 2012, a decrease of $2,525,950 or approximately 82.0%. The Company had a 98.7% decrease in net revenues against an 82.0% decrease in cost of revenues in 2013 as compared to 2012. The primary reason for the decrease in cost of revenues is related to the Jefferson Street facility not operating at 100% capacity during the three months ended March 31, 2013 due to the loss of Aldi as compared to operating at 100% capacity during the three months ended March 31, 2012. Certain fixed costs are incurred by BPI regardless of the production levels at BPI's facilities which were incurred during the three months ended March 31, 2013 but were not offset by sales as they were during the three months ended March 31, 2012.

SELLING, GENERAL & ADMINISTRATIVE EXPENSES

S,G&A expenses for the three months ended March 31, 2013 totaled $1,081,017 as compared to $1,820,333 for the three months ended March 31, 2012, a decrease of $739,316 or approximately 40.6%. The primary reason for the decrease in 2013 is related to the termination of the equipment and facility lease that allowed for production at the South Street facility (savings of approximately $405,000), the absence of non-cash intangible amortization expense due to the impairment of intangible assets as of September 30, 2012 (savings of approximately $191,000) and temporary decreases in management's salaries at BPI until production levels return to normal (savings of approximately $50,000).

LOSS FROM OPERATIONS

Loss from operations for the three months ended March 31, 2013 totaled $1,580,859 as compared to $756,645 for the three months ended March 31, 2012, an increase in loss from operations of $824,214 or approximately 108.9%. The increase in loss from operations was primarily due to the decreases in net revenues as noted above.

OTHER EXPENSES

Other expenses for the three months ended March 31, 2013 totaled $169,312 as compared to $97,513 for three months ended March 31, 2012, an increase of $71,799. The primary reason for this increase in 2012 is higher interest expense due to a larger loan balances on BPI's working capital line the bridge loan financing used to purchase new equipment for the Mt. Pleasant Street facility.

NET LOSS

Net loss for the three months ended March 31, 2013 totaled $1,750,171 as compared to $854,158 for the three months ended March 31, 2012, an increase in net loss of $896,013. The primary reason for this increase in net loss is related to the decrease in net revenues as noted above.

ENVIRONMENTAL HOLDING CORP.

SEASONALITY

EQS's sales are typically higher during the second and third quarters of its fiscal year. The fourth quarter of the year is usually affected by a slow down at the holiday season and year end. In addition, frigid temperatures combined with the possibility of extreme weather tend to discourage projects from being scheduled during the winter months.

AWWT's sales are typically higher during the second and third quarters of its fiscal year. The fourth and first quarters of the year are usually affected by inclement weather which makes it difficult to process liquid streams due to freezing.

NET REVENUES

Net revenues for the three months ended March 31, 2013 totaled $325,981 as compared to $269,438 for the three months ended March 31, 2012, an increase of $56,543 or approximately 17.3%.

EQS's net revenues for the three months ended March 31, 2013 was $233,658 as compared to $269,438 for the three months ended March 31, 2012, a net revenues decrease of $35,780 or approximately 13.2%. The primary reason for this decrease was related to discontinuing business with specific customers of EQS due to non-payment and one-time business coming in from a large project taking place in March and April of 2012 that did not repeat in 2013.

AWWT's net revenues for the three months ended March 31, 2013 was $92,323 as compared to $0 for the three months ended March 31, 2012, an increase in net revenues of $92,363. The primary reason for this increase is related to the acquisition of AWWT's plant assets on November 2, 2012.

COST OF REVENUES

Cost of revenues for the three months ended March 31, 2013 totaled $326,832 or approximately 100.3% of net revenues as compared to $258,712 or approximately 96.0% for the three months ended March 31, 2012, an increase in cost of revenues of $68,120 or approximately 26.3%.

EQS's cost of revenues for the three months ended March 31, 2013 was $249,319 or approximately 106.7% of EQS's net revenues as compared to $258,712 or approximately 96.0% of EQS's net revenues for the three months ended March 31, 2012. EQS recorded a decrease in cost of sales of 3.6% against a decrease in net revenues of 13.3% for the three months ended March 31, 2013. The primary reason for the increase in cost of revenues as a percentage of net revenues is related to fixed costs that are incurred from running EQS's lab regardless of the sales volume. EQS was better able to offset these fixed costs during the three months ended March 31, 2012 with higher net revenues than it was during the three months ended March 31, 2013.

AWWT's cost of revenues for the three months ended March 31, 2013 was $77,513 or approximately 84.0% of AWWT's net revenues as compared to $0 for the three months ended March 31, 2013. The primary reason for this increase in cost of revenues is related to the acquisition of AWWT's plant assets on November 2, 2012.

SELLING, GENERAL & ADMINISTRATIVE EXPENSES

SG&A expenses for the three months ended March 31, 2013 totaled $170,171 or approximately 52.2% of net revenues as compared to $165,579 or 61.5% of net revenues for the three months ended March 31, 2012, a decrease of $4,592 or approximately 2.8%.

EQS's SG&A expenses for the three months ended March 31, 2013 totaled $141,321 or approximately 60.5% of EQS's net revenues as compared to $165,579 or approximately 61.5% of EQS's net revenues, a decrease in EQS's operating expenses of $24,258 or approximately 14.7%. The primary reason for this decrease in operating expenses was related to the allocation of certain management personnel at EQS's salaries to AWWT.

AWWT's operating expenses for the three months ended March 31, 2013 totaled $28,850 or approximately 31.2% of AWWT's net revenues as compared to $0 for the three months ended March 31, 2012. The primary reason for this increase in operating expenses is related to the acquisition of AWWT's plant assets on November 2, 2012.

LOSS FROM OPERATIONS

Loss from operations for the three months ended March 31, 2013 totaled $171,022 or approximately 52.5% of net revenues as compared to $154,853 or approximately 57.5% for the three months ended March 31, 2012, an increase in loss from operations of $16,169 or approximately 10.4%.

EQS's loss from operations for the three months ended March 31, 2013 totaled $156,981 or approximately 67.2% of EQS's net revenues as compared to $154,853 or approximately 57.5% of EQS's net revenues, an increase in EQS's loss from operations of $2,128 or approximately 1.4%. The primary reason for this increase in loss from operations was related to the decrease in EQS's net revenues as noted above.

AWWT's loss from operations for the three months ended March 31, 2013 totaled $14,041 or approximately 15.2% of AWWT's net revenues as compared to $0 for the three months ended March 31, 2012. The primary reason for this net loss from operations is related to a lower net revenue figure than originally projected for the three months ended March 31, 2013.

OTHER EXPENSES

Other expenses for the three months ended March 31, 2013 totaled $59,184 or approximately 18.2% of net revenues as compared to $18,640 or approximately 6.9% of net revenue for three months ended March 31, 2012, an increase in other expenses of $40,543.

EQS's other expenses for the three months ended March 31, 2013 totaled $56,186 or approximately 24.0% of EQS's net revenues as compared to $18,640 or approximately 6.9% of EQS's net revenues for the three months ended March 31, 2012, an increase in EQS's other expenses of $37,546. The primary reason for this increase is related to increased interest expenses due to EQS factoring receivables during the three months ended March 31, 2013 in addition to a higher interest expense on a larger loan balance on EQS's working capital line which carried loan balances of $834,632 and $635,279, as of March 31, 2013 and 2012, respectively.

AWWT's other expenses for the three months ended March 31, 2013 totaled $2,997 or approximately 3.2% of AWWT's net revenues as compared to $0 for the three months ended March 31, 2012. Similar to EQS, AWWT also factors receivables with a factor in addition to accruing interest on a working capital line.

NET LOSS

Net loss for the three months ended March 31, 2013 totaled $230,205 as compared to a net loss of $173,493 for the three months ended March 31, 2012, an increase of $56,712 or approximately 32.7%.

EQS's net loss for the three months ended March 31, 2013 totaled $213,167 as compared to a net loss of $173,493 for the three months ended March 31, 2012, an increase in net loss of 39,674 or approximately 22.9%. The primary reason for the increase in net loss as related to EQS was related to the decrease in net revenues as noted above.

AWWT's net loss for the three months ended March 31, 2013 totaled $17,038 as compared to $0 for the three months ended March 31, 2012. The primary reason for the net loss on AWWT was related to the lower than expected net revenue figure as noted above.

TYREE HOLDINGS, INC.

SEASONALITY AND BUSINESS CONDITIONS

Historically, Tyree's revenues are lower during the first quarter of the year as Tyree's customers complete their planning for the remainder of the year. Approximately 26% of Tyree's revenues are earned from customer capital expenditures. Customers' capital expenditures are cyclical and tend to mirror the condition of the economy and the weather patterns.. During normal conditions, Tyree will need to draw from its borrowing base early in the year and then pay down the borrowing base as the year progresses when it generates positive cash flows. The highest revenue generation occurs from late in the second quarter through the beginning of the fourth quarter of the year.

On December 5, 2011 Tyree's largest customer, Getty Petroleum Marketing, Inc. ("GPMI") filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court in the Southern District of New York. This bankruptcy filing had a significant and lasting impact on Tyree's operations and financial activities. Immediately following the bankruptcy filing of GPMI, all ongoing work with GPMI was significantly reduced and plans for Tyree's restructuring began which included a reduction of approximately 15% in workforce during the first quarter of 2012. In June 2012 Green Valley Oil, LLC ("GVO") a subtenant of GPMI and customer of Tyree went out of business. Tyree made additional expense reductions and reduced its workforce by approximately 35.0% by the end of 2012

Tyree maintains a $15,000,000 revolving credit agreement with its Parent (Amincor) which expires on January 1, 2016. Borrowings under this agreement are limited to 70% of eligible accounts receivable and the lesser of 50% of eligible inventory or $4,000,000. The balances outstanding under this agreement were $4,752,171 and $4,819,829 as of March 31, 2013 and December 31, 2012, respectively. Borrowings under this agreement are collateralized by a first lien security interest in all tangible and intangible assets owned by Tyree. Availability of funding from Amincor is dependent on Amincor's liquidity. The annual interest rate charged on this loan was approximately 5% for the three months ending March 31, 2013 and 2012. Starting in January 2013, Tyree began factoring certain accounts receivables with a related party.

Going forward, Tyree's growth will be difficult to attain until either (i) new working capital is available through profitable operations or (ii) new equity invested into Tyree to facilitate organic and acquisition based growth.

LIQUIDITY

Tyree incurred net losses of $665,233 and $1,345,774 for the three months ended March 31, 2013 and 2012, respectively. Tyree's largest customer filing for bankruptcy in December 2011 produced large write-offs of receivables and reductions in revenues which resulted in corporate cash demands well in excess of receipts from revenues, thus stressing the available funding on the existing credit facility. In the fourth quarter of 2011, management responded with a plan to term out all current vendors. Much was accomplished during 2011 with $1.9 million of accounts payable converted to long and short term debt, at March 31, 2013 this amounted to $2,662,000. Most of the remaining vendors have agreed to term notes early in 2012, thus addressing the cash shortfall produced in 2011, while leaving some availability on Tyree's revolving credit line. In reaction to the GPMI Bankruptcy filing, management reduced employee headcount by an additional 72 full time employees, rescheduled accounts payable, reduced management's salaries and reduced its rent commitments. Tyree has been successful in securing several new customers but has not yet been able to replace all of the lost business from GPMI and GVO. Management continues to analyze Tyree's overhead expenses and will continue to reduce its work force as necessary until it is able to replace the business lost as a result of the GPMI bankruptcy filing and the Green Valley business cessation.

NET REVENUES

Net revenues for the three months ended March 31, 2013 totaled $6,860,022 as compared to $9,519,309 for the three months ended March 31, 2012, a decrease of $2,659,287 or approximately 27.9%. The decrease in revenues in 2013 can primarily be attributable to service revenues lost when GPMI and GVO went out of business have never been completely replaced. In addition, in November 2012, Tyree did not renew its fixed-fee maintenance contract with Cumberland Farms as it yielded a negative gross profit in 2012. The Service operating division billed approximately $2,250,000 less during the three months ended March 31, 2013 as compared to the three months ended March 31, 2012. Additional decreases

in revenue are attributable to Tyree's Construction division. Tyree's Construction business unit completed two very large jobs in 2012 which were not replaced with jobs of equal size in 2013. The Construction business unit billed approximately $570,000 less during the three months ended March 31, 2013 than it did during the three months ended March 31, 2012. Revenues by operating divisions for the three months ended March 31, 2013 and March 31, 2012 were as follows:

Revenues                                              2013               2012
                                                   ----------         ----------
Service and Construction                           $3,288,315         $6,395,568
Environmental, Compliance and Engineering           3,571,707          2,925,202
Manufacturing / International                              --            198,539
                                                   ----------         ----------

TOTAL                                              $6,860,022         $9,519,309
                                                   ==========         ==========

COST OF REVENUES

Cost of revenues for the three months ended March 31, 2013 totaled $5,447,589 or approximately 79.4% of net revenues as compared to $7,401,217, or 77.7% for the three months ended March 31, 2012. The gross profit percentage decreased by 1.7% period to period due to under estimating the cost of several construction jobs in New Jersey. The effect of this under estimation resulted in a drop of approximately 7.0% or $105,000 in the Construction business unit's gross profit.

OPERATING EXPENSES

Operating expenses for the three months ended March 31, 2013 totaled $1,863,281, or approximately 27.2% of net revenues compared to $3,351,628, or approximately 35.2% of net revenues for the three months ended March 31, 2012, a decrease in operating expenses of $1,488,347 or approximately 44.4%. The decrease in operating expenses in 2013 was primarily attributed to the reduction in Tyree's work force over the course of 2012 (a reduction of approximately $667,000) and the absence of intangible amortization due to the impairment of intangible assets in 2012 (a reduction of approximately $277,000) alongside other smaller expense reductions across all of Tyree's expense categories.

LOSS FROM OPERATIONS

Loss from operations for the three months ended March 31, 2013 totaled $450,849, or approximately 6.5% of net revenues as compared to $1,233,537, or approximately 13.0% of net revenues for the three months ended March 31, 2012, a decrease in loss from operations of $782,688 or approximately 63.4%. The decrease in loss from operations was primarily due to the decrease in operating expenses as noted above.

OTHER EXPENSES

Other expenses for the three months ended March 31, 2013 totaled $214,384, or approximately 3.1% of net revenues as compared to other expenses of $112,238, or approximately 1.2% of net revenues for the three months ended March 31, 2012, an increase in other expenses of $102,146 or approximately 91.0%. The increase in other expenses during the three months ended March 31, 2013 was primarily due to an increase in interest expense due to a Tyree factoring certain accounts receivables to improve cash flow.

NET LOSS

Net loss for the three months ended March 31, 2013 totaled $665,233 as compared to $1,345,774 for the three months ended March 31, 2012, a decrease of $680,541 or approximately 50.6%. The decrease in net loss is primarily related to the decrease in operating expenses as noted above.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

Our Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of our consolidated condensed financial statements in accordance with GAAP requires us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts and classification of revenues and expense during the periods presented, and the disclosure of contingent assets and liabilities. We evaluate our estimates and assumptions on an ongoing basis and material changes in these estimates or assumptions could occur in the future. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances and at that time, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates if past experience or other assumptions do not turn out to be substantially accurate.

Please refer to our Note 2 of our consolidated condensed financial statements contained in this Quarterly Report on Form 10-Q, and our Management's Discussion and Analysis of Financial Condition and Results of Operation contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended December 31, 2011 and Note 2 of our consolidated condensed financial statements contained therein for a more complete discussion of our critical accounting policies and use of estimates.