You should read the following discussion in conjunction with our consolidated financial statements and related notes in our Annual Report on Form 10-K filed with the SEC on March 30, 2009. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from our expectations. Factors that could cause such differences include those described in "Risk Factors" and elsewhere in our Annual Report on Form 10-K for fiscal 2008 filed with the SEC on March 30, 2009. We undertake no obligation to update any of the forward-looking statements. Certain tabular information may not foot due to rounding. Our fiscal year ends on the Saturday closest to December
31. Interim results are presented for the twelve week periods and twenty-four week periods ended June 20, 2009 and June 14, 2008, each referred to as "second quarter ended" or "second fiscal quarter" and "first half ended", respectively

In addition to historical information, this quarterly report contains forward-looking statements and are based on current management expectations that involve substantial risks and uncertainties, which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as "aim," "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "project," "should," "will be," "will continue," "will likely result," "would" and other words and terms of similar meaning in conjunction with a discussion of future or estimated operating or financial performance. You should read statements that contain these words carefully, because they discuss our future expectations, contain projections of our future results of operations or of our financial position or state other "forward-looking" information. Forward-looking statements speak only as of the date of this quarterly report. Except as required under federal securities laws and the rules and regulations of the SEC, we do not have any intention, and do not undertake, to update any forward-looking statements to reflect events or circumstances arising after the date of this quarterly report, whether as a result of new information, future events or otherwise. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on the forward-looking statements included in this quarterly report or that may be made elsewhere from time to time by, or on behalf of, us. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

Overview

We are a leading provider of industrial and hazardous waste services to small and mid-sized customers who are engaged in vehicle maintenance or manufacturing activities. We offer a broad range of services desired by these customers including parts cleaning solvent management, and the removal and management of a variety of regulated wastes. We operate from a network of 58 branch facilities providing service to customers in 38 states.

Critical Accounting Policies

Critical accounting policies are those that both are important to the accurate portrayal of a company's financial condition and results, and require subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

In order to prepare financial statements that conform to accounting principles generally accepted in the United States, commonly referred to as GAAP, we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Certain estimates are particularly sensitive due to their significance to the financial statements and the possibility that future events may be significantly different from our expectations.

Management believes that there have been no significant changes during the first half of 2009 to the items that we disclosed as our critical accounting policies and estimates in the section entitled Management's Discussion and

Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended January 3, 2009 filed with the United States Securities and Exchange Commission on March 30, 2009.

New Accounting Pronouncements

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles (SFAS No. 168). SFAS No. 168 will become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. This Statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. We do not expect the adoption of SFAS 168 to have a material effect on our consolidated financial statements.

Effective this quarter, we implemented Statement of Financial Accounting Standards No. 165, Subsequent Events (SFAS 165). This standard establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. The adoption of SFAS 165 did not impact our financial position or results of operations. We evaluated all events or transactions that occurred after June 20, 2009 up through July 31, 2009, the date we issued these financial statements. On June 29, 2009, we acquired for $3.5 million the industrial real estate and equipment that we had been occupying as a tenant in Indianapolis. The Indianapolis property is the site of our solvent recycling facility and our largest hub. We are not aware of any subsequent events that would require an adjustment to the financial statements.

RESULTS OF OPERATIONS

                                            Second Quarter Ended,                                   First Half Ended,
                              June 20,                   June 14,                   June 20,                   June 14,
                                2009           %           2008           %           2009           %           2008           %

Sales                         $  22,401       100.0%     $  24,838       100.0%     $  46,157       100.0%     $  47,835       100.0%
Cost of sales                     5,239       23.4%          5,630       22.7%         12,736       27.6%         11,916       24.9%
      Gross profit               17,162       76.6%         19,208       77.3%         33,421       72.4%         35,919       75.1%
Operating costs                  12,094       54.0%         12,601       50.7%         24,333       52.7%         24,117       50.4%
Selling, general, and
administrative expenses           3,979       17.8%          4,131       16.6%          7,831       17.0%         10,763       22.5%
     Operating income             1,089        4.9%          2,476       10.0%          1,257        0.0%          1,039        2.2%
Interest expense - net                -        0.0%             19        0.1%              -        0.0%            371        0.8%
Loss on retirement of fixed
assets                               59                          -                         59                          -
Income before income taxes        1,030        4.6%          2,457        9.9%          1,198        2.6%            668        1.4%
Provision for income taxes          428        1.9%          1,047        4.2%            496        1.1%          2,027        4.2%
Net income (loss)                   602        2.7%          1,410        5.7%            702        1.5%         (1,359 )     (2.8)%
Preferred return                      -        0.0%              -        0.0%              -        0.0%            339        0.7%
Net income (loss) available
to
common stockholders           $     602        2.7%      $   1,410        5.7%      $     702        1.5%      $  (1,698 )     (3.5)%

Second Quarter & First Half Ended June 20, 2009 ("second fiscal quarter of 2009" & "first half of 2009") compared to Second Quarter & First Half Ended June 14, 2008 ("second fiscal quarter of 2008" & "first half of 2008")

Sales

For the second fiscal quarter of 2009, sales decreased $2.4 million, or 9.7%, to $22.4 million from $24.8 million for the second fiscal quarter of 2008. For the first half of 2009, sales decreased $1.6 million, or 3.3%, to $46.2 million from $47.8 million for the first half of 2008. The lagged effect of the U.S. recession has caused many of our customers to produce less waste and to delay deferrable services to a greater degree than we have seen in the past, and thus diminishing our sales growth. We continue to gain net new customers and we believe that so long as we are

doing this, we will be in a strong position to resume our growth when the economy recovers. In the second fiscal quarter of 2009, the rate of sales decline from the previous period has flattened when compared to the first fiscal quarter of 2009 rate; however, we feel that there is insufficient data to conclude that sales will not decline further.

At the end of the second fiscal quarter of 2009, we were operating 58 branch locations compared with 54 at the end of the second fiscal quarter of 2008. There were 54 branches that were in operation during both the second fiscal quarter of 2009 and second fiscal quarter of 2008, which experienced a decline in same-branch sales of $2.8 million, or 11.2%. Excluding the 4 branches in this group that gave up customers to new branch openings, the remaining 50 branches experienced a decline in same-branch sales of $2.2 million, or 9.8%. On a year-to-date basis, same-branch sales declined $2.4 million, or 5.1% for these same 54 branches. Excluding the 4 branches in this group that gave up customers to new branch openings, the remaining 50 branches experienced a decline in same-branch sales of $1.5 million, or 3.4%.

Cost of sales

For the second fiscal quarter of 2009, total cost of sales decreased $0.4 million, or 7.1%, to $5.2 million from $5.6 million for the second fiscal quarter of 2008. The decrease in cost of sales reflects the decline in sales. However, as a percentage-of-sales, cost of sales has increased. The FIFO inventory benefit in the second fiscal quarter of 2009 was not as high as it was in the second fiscal quarter of 2008, as the margin between selling price and inventory value was substantially greater in second fiscal quarter of 2008 due to higher crude oil prices.

For the first half of 2009, total cost of sales increased $0.8 million, or 6.7%, to $12.7 million from $11.9 million for the first half of 2008. Although our cost structure has returned to normal levels seen prior to 2008, we recorded costs of approximately $1.0 million during the first half of 2009 that were related to the declining crude oil prices. These costs reflected the lower of cost or market revaluation of our solvent held at our locations for use in our service programs. Additionally, we have not received the same FIFO inventory benefit in first half of 2009 as we did in first half of 2008 while we sold reuse products at prices far in excess of their carrying value.

Operating costs

For the second fiscal quarter of 2009, operating costs decreased $0.5 million, or 4.0%, to $12.1 million from $12.6 million for the second fiscal quarter of 2008. Although certain cost cutting measures were taken in the second fiscal quarter of 2009, we continue to have fixed operating costs, including branch labor, collection truck and facility costs that are associated with new branches opened early in the year. Diesel fuel decreased along with the reduction in energy prices in the second fiscal quarter of 2009 compared to the second fiscal quarter of 2008.

For the first half of 2009, operating costs increased $0.2 million, or 0.8%, to $24.3 million from $24.1 million for the first half of 2008. Branch labor, collection truck and facility costs increased as additional branches were established. Diesel fuel decreased in total as well as a percentage-of-sales as energy prices were lower in the first half of 2009 as compared to the first half of 2008.

Selling, general & administrative expenses

For the second fiscal quarter of 2009, selling, general and administrative expenses decreased $0.1 million, or 2.4%, to $4.0 million from $4.1 million for the second fiscal quarter of 2008. The decline was due to the reduction in the allocated bonuses related to the Management Incentive Plan "MIP" which is based on the profitability of operations.

For the first half of 2009, selling, general and administrative expenses decreased $2.9 million, or 27.1%, to $7.8 million from $10.7 million for the first half of 2008. The decrease was due to $3.2 million of expense for employee stock options which were granted at the time of our initial public offering in March 2008 and vested immediately along with the vesting of certain Key Employee Membership Interest Trust "KEMIT" units in the first half of 2008. Additionally, in the first half of 2009, the allocation of the MIP bonuses was reduced because of its alignment with

the profitability of operations. This was offset by the fact that in the first half of 2009, we incurred six months of public company costs compared to only three months in the first half of 2008.

Interest expense - net

For the second fiscal quarter of 2009, interest expense was zero compared a minimal amount in the second quarter of fiscal 2008, due to no debt outstanding.

For the first half of 2009, interest expense decreased $0.4 million, or 100.0%, to zero from $0.4 million for the first half of 2008. The decrease was due to the reduction in our total debt outstanding in connection with our initial public offering in March 2008.

Provision for income taxes

For the second fiscal quarter of 2009, provision for income taxes decreased $0.6 million, or 60.0%, to $0.4 million from $1.0 million in the second quarter of fiscal 2008, which was a result of a decline in our taxable income. The income tax expense for the second fiscal quarter was based on an estimated effective tax rate of 41.6% for the year. The effective tax rate decreased in the second fiscal quarter of 2009 as compared to the second fiscal quarter of 2008 primarily due to a lower expected blended state income tax rate.

For the first half of 2009, the provision for income taxes decreased $1.5 million, or 75.0%, to $0.5 million from $2.0 million for the first half of 2008. In connection with our initial public offering in March 2008, we changed our parent company legal structure from a limited liability company to a 'C' corporation. As a limited liability company, we were not subject to federal or state corporate income taxes and as such had not incurred any historical taxes. For comparison purposes, we have presented pro forma net loss, which reflects income taxes assuming we had been a corporation since the time of our formation and assuming tax rates equal to the rates that would have been in effect had we been required to report tax expense in such years (see note 9 in the Notes to the Financial Statements for more details). A one-time charge to earnings of $2.2 million was recorded in the first quarter of fiscal 2008 reflecting the net deferred tax assets and deferred tax liabilities at the time of the reorganization of the LLC to a 'C' corporation. We also recorded a one-time deferred tax asset due to the change in tax status of $2.3 million in March 2008.

FINANCIAL CONDITION

Liquidity and Capital Resources

Cash and Cash Equivalents

As of June 20, 2009 and January 3, 2009, cash and cash equivalents were $2.2 million and $0.3 million, respectively. Our primary sources of liquidity are cash flows from operations and funds available to borrow under our bank credit facility.

Our secured bank credit facility provides for borrowings of up to $25.0 million and matures on December 31, 2010. Under the terms of the credit facility, interest is payable monthly at the prime rate, unless the total leverage ratio is greater than or equal to 2.75 to 1. The weighted average effective interest rate for amounts outstanding was 3.25% and 6.58% at June 20, 2009 and January 3, 2009, respectively. Amounts borrowed under the credit facility are secured by a security interest in substantially all of our tangible and intangible assets. As of June 20, 2009 and January 3, 2009, we were in compliance with all covenants under the credit facility. As of June 20, 2009, we did not have any amounts outstanding under the credit facility and therefore had $25.0 million of borrowing availability under our bank credit facility and as of January 3, 2009, approximately $24.9 million was available for borrowing under the bank credit facility.

We believe that our existing cash, cash equivalents and available borrowings will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. We cannot assure

you that this will be the case or that our assumptions regarding sales and expenses underlying this belief will be accurate, especially given the current recession. Because some of our services generally lag trends in the general economy, our sales results do not fully reflect the impact of the U.S. recession on our business. While we recently have noticed a flattening in our sales decline, we cannot conclude that our sales will not decline further. A further decline could adversely impact our liquidity. If in the future, we may require more liquidity than is available to us under our credit facility, we may need to raise additional funds through debt or equity offerings. Adequate funds may not be available when needed or may not be available on terms favorable to us, especially given the current tightening of the financial credit markets. If additional funds are raised by issuing equity securities, dilution to existing stockholders may result. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility, and would also require us to fund additional interest expense. If funding is insufficient at any time in the future, we may be unable to develop or enhance our products or services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations.

                                                                             First Half Ended,
                                                                          (Dollars in thousands)
                                                                    June 20, 2009         June 14, 2008
Net cash provided by (used in):
 Operating activities                                              $         5,344       $           390
 Investing activities                                                       (3,547 )              (2,581 )
 Financing activities                                                           86                 2,146
Net increase (decrease) in cash and cash equivalents               $         1,883       $           (45 )

The most significant items affecting the comparison of our operating activities for the first half of 2009 and the first half of 2008 are summarized below:

• Inventory - The significant decline in inventory positively affected cash flows from operations by $3.9 million compared to the first half of 2008. The change reflects the declining value of our inventories due to the decline in crude oil prices from the highs of mid-year 2008.

• Accounts Receivable - The decline of accounts receivable provided an improvement of $2.9 million in cash flows from operations compared to the first half of 2008. During the first half of 2009 we saw a reduction of our accounts receivable as receipts were higher than sales due to stronger collection efforts.

• Accrued Expenses - The decline in accrued expenses of $1.0 million was mostly due to the reduction in accrued income taxes payable in 2009 because of our lower taxable income.

Net Cash Used in Investing Activities - The most significant items affecting the comparison of our investing activities for the periods presented are summarized below:

• Capital expenditures - We used $3.5 million during the first half of 2009 for capital expenditures, compared with $2.6 million in first half of 2008. Capital expenditures in 2009 were mostly flat in our core business. During the first half of 2009, approximately $1.7 million of the capital expenditures were for purchases of parts cleaning machines compared to $1.6 million in the first half of 2008.

The remaining $1.8 million in the first half of 2009 was for other items including office equipment, leasehold improvements, software and intangible assets, compared to $1.0 million in the first half of 2008.

Net Cash Used in Financing Activities - The most significant items affecting the comparison of our financing activities for the periods presented are summarized below:

• Proceeds from issuance of common stock - In March 2008, we raised net proceeds of $33.2 million from an initial public offering and concurrent direct placement. These net proceeds include offering costs of $0.9 million paid prior to fiscal year end 2007 and include approximately $1.0 million of offering costs paid subsequent the initial public offering. The proceeds were used to reduce borrowings under our credit facility which included $10.9 million borrowed in March 2008 used to pay preferred members for an accrued return on preferred units as part of the reorganization. In the first half of 2009 we had no such event.