10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010

OR

¨ 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 000-53619

———————

VERTEX ENERGY, INC.

(Exact name of registrant as specified in its charter)

———————

NEVADA	94-3439569
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
1331 GEMINI STREET SUITE 250 HOUSTON, TEXAS	77058
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: 866-660-8156

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 Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) 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 whether the registrant is a large accelerated filer, and 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.

Large accelerated filer  ¨	Accelerated filer   ¨
Non-accelerated filer  ¨	Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.

 Yes   ¨ No   x

State the number of shares of the issuer’s common stock outstanding, as of the latest practicable date: 8,274,256 shares of common stock (which includes the 20,000 shares of restricted common stock to be issued to consultants as referenced below) issued and outstanding as of May 5, 2010.

TABLE OF CONTENTS

	Page
PART I
Item 1.  Consolidated Financial Statements	F-1
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Cash Flows	F-5
Notes to Consolidated Financial Statements	F-6
Item 2.  Management’s Discussion And Analysis Of Financial Condition And Results Of Operations	3
Item 3.  Quantitative And Qualitative Disclosures About Market Risk	16
Item 4.  Controls and Procedures	16
PART II
Item 1.  Legal Proceedings	17
Item 1A:  Risk Factors	17
Item 2.  Unregistered Sales Of Equity Securities And Use Of Proceeds	17
Item 3.  Defaults Upon Senior Securities	18
Item 4.  (Removed and Reserved)	18
Item 5.  Other Information	18
Item 6.  Exhibits	18

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

VERTEX ENERGY, INC.

CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

F-1

VERTEX ENERGY, INC.

CONTENTS

	Page
Consolidated  Financial Statements
Consolidated  Balance Sheets	F-3
Consolidated  Statements of  Operations	F-4
Consolidated  Statements of Cash Flows	F-5
Notes to Consolidated Financial Statements	F-6

F-2

VERTEX ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
	March 31,			December 31,
	2010			2009
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	71,345		$	514,136
Accounts receivable, net		2,675,125			2,188,423
Inventory		2,596,406			2,978,883
Prepaid expenses		102,731			115,541
Total current assets		5,445,607			5,796,983
Noncurrent assets
Licensing agreement, net		1,795,631			1,675,197
Fixed assets, net		74,598			75,807
Total noncurrent assets		1,870,229			1,751,004
TOTAL ASSETS	$	7,315,836		$	7,547,987
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	3,613,414		$	5,052,558
Accounts payable-related party		617,864			527,731
Line of credit		1,100,000			-
Due to related party		441,855			841,855
Total current liabilities		5,773,133			6,422,144
Long-term liabilities
Mandatorily redeemable preferred stock, Series B, $.001 par value, 2,000,000 shares authorized, 100,000 and 0 issued          and outstanding as of March 31, 2010 and December 31, 2009, respectively		100,000			-
Total liabilities		5,873,133			6,422,144
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value per share:
50,000,000 shares authorized
Series A Convertible Preferred stock, $0.001 par value,     5,000,000 authorized and 4,755,666 and 4,755,666  issued         and outstanding at March 31, 2010 and  December 31,            2009 respectively		4,756			4,756
Common stock, $0.001 par value per share;
750,000,000 shares authorized; 8,254,256 and 8,254,256       issued and outstanding at March 31, 2010 and          December 31, 2009 respectively		8,254			8,254
Additional paid-in capital		2,137,356			2,090,507
Accumulated deficit		(707,663	)		(977,674	)
Total stockholders’ equity		1,442,703			1,125,843
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,315,836		$	7,547,987

See accompanying notes to the consolidated financial statements

F-3

VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2010 AND 2009
(UNAUDITED)
	March 31,			March 31,
	2010			2009
Revenues	$	13,273,080		$	7,709,263
Revenues-related parties		-			147,871
		13,273,080			7,857,134
Cost of revenues		12,245,250			7,838,642
Gross profit		1,027,830			18,492
Selling, general and administrative expenses		751,173			632,376
Income (loss) from operations		276,657			(613,884	)
Other income (expense)
Other income		30,000			-
Interest expense		(36,646	)		-
Total other income (expense)		(6,646	)		-
Net income (loss)	$	270,011		$	(613,884	)
Earnings per common share
Basic	$	.03		$	(0.11	)
Diluted	$	.02		$	(0.11	)
Shares used in computing earnings per share
Basic		8,254,256			5,502,000
Diluted		13,726,756			5,502,000

See accompanying notes to the consolidated financial statements

F-4

VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
THREE MONTHS ENDED MARCH 31, 2010 AND 2009
(unaudited)
	March 31, 2010			March 31, 2009
Cash flows operating activities
Net income (loss)	$	270,011		$	(613,884	)
Adjustments to reconcile net loss to cash
used by operating activities
Stock based compensation expense		46,848			34,377
Depreciation and amortization		33,448			573
Changes in assets and liabilities
Accounts receivable		(486,702	)		233,720
Accounts receivable- related parties		-			21,232
Due from partnership		-			265,219
Inventory		382,476			580,971
Prepaid expenses		12,810			70,163
Accounts payable		(1,439,143	)		660,830
Accounts payable – related parties		90,133			(1,196,673	)
Net cash provided by operating activities		(1,090,119	)		56,528
Cash flows from investing activities
Purchase of intangible assets		(149,956	)		-
Purchase of fixed assets		(2,716	)		-
Net cash used by investing activities		(152,672	)		-
Cash flows from financing activities
Proceeds from sale of Preferred “B” shares		100,000			-
Distributions to limited partners prior to merger		-			(51,391	)
Line of credit proceeds, net		1,100,000			-
Payments on due to related party balance		(400,000	)		-
Net cash provided (used) by financing activities		800,000			(51,391	)
Net increase in cash and cash equivalents		(442,791	)		5,137
Cash and cash equivalents at beginning of the period		514,136			17,616
Cash and cash equivalents at end of period	$	71,345		$	22,753
SUPPLEMENTAL INFORMATION
Cash paid for interest during the period	$	33,443		$	14,650

See accompanying notes to the consolidated financial statements

F-5

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

NOTE 1.  BASIS OF PRESENTATION, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated interim financial statements of Vertex Energy, Inc. (the “Company,” or “Vertex Energy”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual financial statements as filed with the SEC on Form 10-K on March 30, 2010 (the “Form 10-K”).  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.  Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year 2009 as reported in Form 10-K, have been omitted.

There are several indicators that may cause the Company to face liquidity difficulties. These indicators include (i) losses for the 2008 and 2009 fiscal years, (ii) negative working capital at March 31, 2010, and (iii) default by the Company, based on non-compliance with certain financial covenants, with regard to its bank line of credit in the amount of $3,500,000 as of March 31, 2010, and subsequent thereto, and (iv) negative cash flow from operations for the three months ended March 31, 2010. Furthermore, the Company has drawn $1,100,000 on the line of credit as of March 31, 2010, repayment of which could technically be demanded by the lender at any time.

Accordingly, Company management has identified the following as factors which mitigate the negative indicators noted above:

· The Company has seasoned senior management, and has a track record of profitable operations prior to the last two years, and forecasts improved operations and positive income from operations as experienced during the first quarter of 2010.

· Management specifically attributes the performance of the last two years to one-time occurrences, including (i) an unprecedented near collapse of the American financial markets in the last half of 2008, (ii) a category 5 hurricane in the Houston area, also in 2008, resulting in a slow down in the Company’s operations, and (iii) the significant and temporary increase in legal, accounting, and administrative costs during 2008 and 2009 associated with the Company’s merger process.

· Also during 2008 and 2009, management has devoted considerable resources in the development, through its affiliate Cedar Marine Terminals, LP of an improved internal, re-refining process which management believes will result in less dependence on outside providers and greater profitability. Management does not anticipate incurring significant additional licensing or development costs at the current facility.  During the first quarter of 2010, volumes produced and sold increased over the 2009 quantities.

· Management believes that if the bank calls the outstanding debt or does not renew its line of credit, the Company would decrease the purchase of inventory, sell existing inventory in order to repay the loan and may have to scale back current operations.

Based on the above, management has concluded that sufficient factors exist which mitigate the indicators of the Company’s liquidity difficulties.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Topic 810-10-15, “Consolidation-Variable Interest Entities,” or Topic 810-10-15.  Topic 810-10-15 improves financial reporting by enterprises involved with variable interest entities and provides more relevant and reliable information to users of financial statements.  Topic 810-10-15 is effective as of the beginning of the first annual reporting period that begins after November 15, 2009 and for interim periods within that first annual reporting period.  We adopted Topic 810-10-15 on January 1, 2010, but it did not have a material impact on our consolidated financial statements.

F-6

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

NOTE 2.  RELATED PARTIES

The Company has numerous transactions with Vertex Holdings, L.P., formerly Vertex Energy, L.P. (also defined herein as the “Partnership” or “Vertex LP”), including the lease of the Partnership’s storage facility, subletting of office space, transportation of feedstock to re-refiners and the Company’s storage facility, and delivery from the Company’s re-refinery to end customers. The pricing under these contracts is with certain wholly-owed subsidiaries of the Partnership and is priced at market, and is reviewed periodically from time to time by the Board of Directors’ Related Party Transaction committee.  The Related Party Transaction committee includes at least two independent directors and will review and pre-approve any and all related party transactions.

The financial statements included revenues from related parties of $0 and $147,871 and inventory purchases from related parties of $1,232,847 and $998,954 for the three months ended March 31, 2010 and 2009, respectively.  As of March 31, 2010, the Company owes $1,059,719 to related parties. This includes $441,855 due to Vertex Holdings, L.P., and $617,864 of accounts payable most of which is due to Cedar Marine Terminal (“CMT”). Vertex Holdings, L.P. and CMT are majority owned and controlled by our Chief Executive Officer and Chairman Benjamin P. Cowart.

NOTE 3.  CONCENTRATIONS, SIGNIFICANT CUSTOMERS AND COMMITMENTS

The Company has concentrated credit risk for cash by maintaining deposits in one bank.  These balances are insured by the Federal Deposit Insurance Corporation up to $250,000.  From time to time during the three months ended March 31, 2010, the Company’s cash balances exceeded the federally insured limits. No losses have been incurred relating to this concentration.

Financial instruments that potentially subject the Company to credit risk consist primarily of trade receivables.  Five large companies with various independent divisions represented 26%, 25%, 21%, 16% and 11% of the Company’s gross sales for the three months ended March 31, 2010. Three companies represented 53%, 32%, 12% of outstanding trade receivables for the three months ended March 31, 2010.  One large company with various independent divisions represented 75% of the Company’s gross sales and 94% of outstanding trade receivables for the three months ended March 31, 2009.

The Company’s revenue, profitability and future rate of growth are substantially dependent on prevailing prices for petroleum-based products.  Historically, the energy markets have been very volatile, and there can be no assurance that these prices will not be subject to wide fluctuations in the future.  A substantial or extended decline in such prices could have a material adverse effect on the Company’s financial position, results of operations, cash flows, and access to capital and on the quantities of petroleum-based product that the Company can economically produce.

The Company has several purchase agreements with suppliers that require purchases of minimum quantities of the Company’s products.  The agreements generally have a one year term, after which they become month-to-month agreements.  There are no penalties associated with these agreements.  Minimum purchases under these contracts are approximately $10,135,756 for the period ending August 31, 2010.

The Company has several debt facilities available for use, of which there was $1,100,000 and $0 outstanding as of  March 31, 2010 and 2009, respectively. See note 4 for further details.

The Company purchases goods and services from three companies that represented 25%, 16% and 13% of total purchases for the three months ended March 31, 2010.  The entity that was 16% of the total is a related party from which Vertex Energy purchased the license described in Note 9.

F-7

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

NOTE 4. NOTES PAYABLE

The Company assumed up to $1.6 million of Vertex LP’s indebtedness as a result of the merger as previously disclosed in the Form 10-K filed on March 30, 2010. As of March 31, 2010, the balance on the liability was $441,855. The liability is evidenced by a note which bears interest of 6.25% and payments are made when sufficient cash flows are available, and when approved by the Related Party Committee of the Board of Directors.

In June 2009, the Company secured a revolving line of credit of up to $3.5 million with Regions Bank (“Regions”), which is expected to be used for feedstock purchases and general corporate purposes.  The line of credit bears interest at LIBOR plus 4% per annum (5% at March 31, 2010), subject to a minimum of 5% per annum, adjusted monthly, and which is due on May 25, 2010.  The balance on the line of credit was $1,100,000 at March 31, 2010.  As of March 31, 2010, the Company was out of compliance with certain covenants, as required by the Letter Agreement.  Regions has not provided us any notice of a default under the Letter Agreement; however, we will be seeking a formal waiver from Regions of the covenant described above after the filing of this report, which we can provide no assura nces will be granted.

The financing arrangement discussed above is secured by all of the assets of the Company.  Management of Vertex Energy believes that with the financing arrangements, in addition to projected earnings, it will have sufficient liquidity to fund the Company’s operations for the foreseeable future, although it may seek additional financing to fund acquisitions or other development in the future.

NOTE 5. STOCK BASED COMPENSATION

The stock based compensation cost that has been charged against income by the Company was $46,848 and $34,377 for the three months ended March 31, 2010 and 2009, respectively. No share-based compensation cost had been capitalized as part of inventory or fixed assets.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the table below. Expected volatilities are based on management’s estimates given that the Company’s stock is not widely traded. The Company uses historical data to estimate option exercise and employee terminations within the valuation model. The expected term of options granted  is based on the remaining contractual lives of the related grants. The risk-free rate for periods within the contractual life of the option is based on the Federal Reserve’s risk-free interest rate based on zero-coupon government issues at the time of the grant.

The Company believes that such awards better align the interests of its employees with those of its shareholders. Option awards are generally granted with an exercise price equal to the market price of the Company's stock at the date of grant; those option awards generally vest based on four years of continuous service and have 10-year contractual terms. Certain option awards provide for accelerated vesting if there is a change in control (as defined in the Plan).

F-8

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

Stock option activity for the three months ended March 31, 2010 is summarized as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)		Grant Date Fair Value
Outstanding at December 31, 2009		2,733,334	$	5.76		8.61	$	731,762
Options granted		-		-		-		-
Options exercised		-		-		-		-
Options cancelled/forfeited/expired		-		-		-		-
Outstanding at March 31, 2010		2,733,334	$	5.76		8.36	$	731,762
Vested at March 31, 2010		1,298,459	$	11.39		7.36	$	163,246
Exercisable at March 31, 2010		1,298,459	$	11.39		7.36	$	163,246

A summary of the Company’s stock warrant activity and related information for the three months ended March 31, 2010 is as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)		Grant Date Fair Value
Outstanding at December 31, 2009		998,944	$	24.21		2.54	$	57,202
Warrants granted		100,000		2.00		3.00		4,950
Warrants exercised		-		-		-		-
Warrants cancelled/forfeited/expired		-		-		-		-
Warrants at March 31, 2010		1,098,944	$	22.19		2.57	$	62,152
Vested at March 31, 2010		998,944	$	24.21		2.54	$	57,102
Exercisable at March 31, 2010		998,944	$	24.21		2.54	$	57,102

F-9

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

The following table summarizes the assumptions used in assessing the above described options valuations:

	THREE MONTHS ENDED MARCH 31, 2010		YEAR ENDED DECEMBER 31, 2009
Expected volatility		50-75%		50-75%
Expected dividends		0%		0%
Expected term (in years)		10		10
Risk-free rate		1.71-3.5%		1.71-3.5%

NOTE 6. EARNINGS (LOSS) PER SHARE

Basic earnings per share includes no dilution and is computed by dividing income (loss)  available to common shareholders by the weighted average number of common shares outstanding for the periods presented. The calculation of basic earnings per share for the three months ended March 31, 2010 includes the weighted average of common shares outstanding.  Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity, such as convertible preferred stock, stock options, warrants or convertible securities.  The calculation of diluted earnings per share for the three months ended March 31, 2010 does not include 2,154,801 options and 1,015,087 warrants due to their anti-dilutive effect.

NOTE 7. COMMON STOCK

The total number of authorized shares of the Company’s common stock is 750,000,000 shares, $0.001 par value per share. As of March 31, 2010 there were 8,254,256 common shares issued and outstanding.

Each share of the Company’s common stock is entitled to equal dividends and distributions per share with respect to the common stock when, as and if declared by the Company’s board of directors. No holder of any shares of the Company’s common stock has a preemptive right to subscribe for any the Company’s securities, nor are any shares of the Company’s common stock subject to redemption or convertible into other securities. Upon liquidation, dissolution or winding-up of the Company and after payment of creditors and preferred shareholders of the Company, if any, the assets of the Company will be divided pro rata on a share-for-share basis among the holders of the Company’s common stock. Each share of the Company’s common stock is entitled to one vote, except with respect to the election of one (1) of the Company's directors by the Company's Series A Preferred Stock (described below under Note 8) holder. Shares of the Company’s common stock do not possess any cumulative voting rights.

NOTE 8.  PREFERRED STOCK

The total number of authorized shares of the Company’s preferred stock is 50,000,000 shares, $0.001 par value per share. The total number of designated shares of the Company’s Series A Preferred Stock is 5,000,000 (“Series A Preferred”).  The total number of designated shares of the Company’s Series B Preferred Stock is 2,000,000. As of March 31, 2010 there were 4,755,666 Preferred A shares issued and outstanding and 100,000 Preferred B shares issued and outstanding.

F-10

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

Holders of outstanding shares of the Company’s Series A Convertible Preferred are entitled to receive dividends, when, as, and if declared by the Company’s board of directors. No dividends or similar distributions may be made on shares of capital stock or securities junior to the Company’s Series A Preferred until dividends in the same amount per share on the Company’s Series A preferred have been declared and paid. In connection with a liquidation, winding-up, dissolution or sale of the Company, each share of the Company’s Series A Preferred is entitled to receive $1.49 prior to similar liquidation payments due on shares of the Company’s common stock or any other class of securities junior to the Company’s Series A Preferred. Shares.  The Company’s Seri es A Preferred are not entitled to participate with the holders of the Company’s common stock with respect to the distribution of any remaining assets of the Company.  Shares of Series A Convertible Preferred automatically convert into shares of common stock on the earliest to occur of the following: (a) the affirmative vote or written consent of the holders of a majority of the then-outstanding shares of Series A Preferred; (b) If the closing market price of the Company's common stock averages at least $15.00 per share over a period of 20 consecutive trading days and the daily trading volume averages at least 7,500 shares over such period; (c) if the Company consummates an underwritten public offering of its securities at a price per share not less than $10 and for a total gross offering amount of at least $10 million; or (d) if a sale of the Company occurs resulting in proceeds to the holders of the Company's Series A Preferred of a per share amount of at least $10; provided that holde rs of the Company's Series A Preferred may not voluntarily convert their shares into the Company's common stock for at least one year following the issuance of the Series A Preferred. Thereafter, holders may convert their shares of Series A Preferred subject to the following conditions: (i) at any time following the one-year anniversary of the issuance of Series A Preferred, holders may convert only up to that number of shares such that, upon conversion, the aggregate beneficial ownership of the Company's common stock of any such holder does not exceed 4.99% of the Company's common stock then outstanding; and (ii) prior to the three-year anniversary of the issuance of the Series A Preferred, no holder may, in any given three-month period, convert more than that number of shares of the Company's Series A Preferred that equals 5% of the total number of shares of Series A Preferred then beneficially owned by such holder.  Each share of the Company's Series A Preferred converts into one share of the Co mpany's common stock, subject to adjustment.

On January 13, 2010, the board of directors approved the filing of a Certificate of Designation of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”), which was filed with the Secretary of State of Nevada on January 14, 2010.  The designation provides for 2,000,000 shares at $.001 par value per share.

In January 2010, the Company began a private placement offering to accredited investors only of up to 2,000,000 units (the “Offering”), each consisting of (a) one share of Series B Preferred Stock; and (b) one three year warrant to purchase one share of common stock of the Company at an exercise price of $2.00 per share (each a “Unit”).  We also agreed to grant investors in the Offering piggy-back registration rights in connection with the shares of common stock issuable in connection with the conversion of the Series B Preferred and the shares of common stock issuable in connection with the exercise of the warrants sold in the Offering.

The  Series B Preferred Stock accrues a dividend of 12% per annum, payable quarterly in arrears (beginning on the first full quarter after the issuance date of such Series B Preferred Stock), based on a face value of $1.00 per share. The Series B Preferred Stock includes a liquidation preference which is junior to the Company’s previously outstanding shares of preferred stock, senior securities and other security holders as provided in further detail in the designation. The Series B Preferred Stock is convertible into shares of the Company’s common stock on a one for one basis at a conversion price of $1.00 per share, provided that the Series B Preferred Stock automatically converts into shares of the Company’s common stock on a one for one basis if the Company’s common stock trades above $2.00 per sha re for a period of 10 consecutive trade days.  The Series B Preferred Stock has no voting rights (other than on matters concerning the Series B Preferred Stock described in the designation) and the Company is obligated to redeem any unconverted shares of the Series B Preferred Stock in cash at $1.00 per share on the third anniversary date of the original issuance date of each share of Series B Preferred Stock.

Based upon the Company’s evaluation of the terms and conditions of the Series B Preferred Stock, the Company concluded that their features are more akin to a debt instrument than an equity instrument, since the shares are potentially subject to cash redemption, which means that the Company’s accounting conclusions are generally based upon standards related to a traditional debt security. The Series B Preferred Stock is recorded as a liability at the carrying value of the possible redemptions.

F-11

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

Each warrant provides the holder the right to purchase one share of the Company’s common stock at an exercise price of $2.00 per share.  The warrants contain a cashless exercise provision (exercisable after six months have past from the date of issuance of any warrant) whereby the holder can affect a cashless exercise of any portion of the shares of common stock issuable in connection with the exercise of the warrant which have not been previously registered by the Company.  The warrants have a term of three years.  The right to shares of common stock issuable in connection with the exercise of the warrants (“Warrant Shares”) is redeemable by the Company in its sole discretion at a redemption price of $0.01 per Warrant Share, in the event the Company’s common stock trades at or abov e $3.00 per share for at least ten consecutive trading days, after providing the holder at least 30 days notice of the Company’s intention to exercise such redemption right.

NOTE 9.  LICENSING AGREEMENT

The Company operates under an operating and licensing agreement with a related party that is majority owned and controlled by our Chief Executive Officer and Chairman, Benjamin P. Cowart, that provides for an irrevocable, non-transferable, royalty-free, perpetual right to use a certain thermal/chemical extraction technology (TCEP”) to re-refine certain used oil feedstock and associated operations of this technology on a global basis.  This includes the right to utilize the technology in any future production facilities built by the Company.  If the related entity is unable to continue operations, the Company would not have a source of its TCEP products to sell to customers, which could negatively impact sales. The Company must approve any research and development costs that are performed by the related party a nd this may affect the related party’s ability to maintain technological feasibility of the technology which could impact the value of the license. The Company will continue to make expenditures on the development of the process in the foreseeable future, which could be significant. We believe the license is technologically feasible; however, we believe we can make improvements that will enhance the TCEP process and design.

The initial valuation of the license was based upon the cost to acquire the use of the thermal/chemical extraction technology and its processes.  It will be assessed over time for changes in the valuation. Additional development costs capitalized during the three months ended March 31, 2010 were $149,956. The Company is amortizing the value of the license agreement over a fifteen year period.  Amortization expense was $29,523 and $0 for the three months ending March 31, 2010 and 2009, respectively.  The Company evaluated the carrying value of the license and determined that no impairment existed at March 31, 2010.

The related party recently received notice from a lender that the lender believed it to be in default of certain borrowing criteria.  Although the related party is taking action to remedy this default, it has not been remedied to date.  If the default is not cured, it could materially impact the Company’s ability to utilize this licensing agreement.  The related party has until May 28, 2010, to repay amounts owed under the loan agreements, and believes that it has additional time to come to an understanding with the lender regarding its defaults.

F-12

VERTEX ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(UNAUDITED)

NOTE 10.  SEGMENT REPORTING

The Company’s reportable segments include the Black Oil and Refining & Marketing divisions.  Segment information for the three months ended March 31, 2010 and 2009, is as follows:

THREE MONTHS ENDED MARCH 31, 2010
				Refining &
	Black Oil			Marketing			Total
Revenues	$	2,956,984		$	10,316,096		$	13,273,080
Cost of revenues		2,890,077			9,355,173			12,245,250
Gross profit		66,907			960,923			1,027,830
Selling, general and administrative expenses		301,261			449,912			751,173
Net income (loss) from operations		(234,354	)		511,011			276,657
Other income		30,000			-			30,000
Interest expense		(18,323	)		(18,323	)		(36,646	)
Net income (loss)	$	(222,677	)	$	492,688		$	270,011
Total Assets	$	1,367,356		$	5,948,479		$	7,315,835
THREE MONTHS ENDED MARCH 31, 2009
				Refining &
	Black Oil			Marketing			Total
Revenues	$	5,872,774		$	1,984,360		$	7,857,134
Cost of revenues		5,628,299			2,210,343			7,838,642
Gross profit		244,475			(225,983	)		18,492
Selling, general and administrative expenses		533,827			98,549			632,376
Net income (loss)	$	(289,352	)	$	(324,532	)	$	(613,884	)
Total Assets	$	2,111,984		$	1,293,019		$	3,405,003

NOTE 11. SUBSEQUENT EVENTS

Subsequent to March 31, 2010, $1,400,000 was outstanding under the Line of Credit, of which there was $2,128,157 available, leaving an available balance of $728,157. The Company was out of compliance with certain covenants, as required by the Letter Agreement.  This was due in part to the additional expenditures and investments made in the thermal/chemical extraction process resulting in the Company having non-conforming ratios with the bank.  Management believes that as they begin selling the finished product from the thermal/chemical extraction process it will be able to comply with the ratios during the second quarter of 2010.  The bank has not provided the Company with notice of default under the Letter Agreement, and therefore it does not believe to be in default under the agreement; however, the Comp any will seek a formal waiver of the covenant described above, of which no assurance can be provided that the waiver will be granted.

In April 2010, we paid $200,000 to Vertex LP in connection with the $1.6 million of debt which the Company agreed to assume from Vertex LP and/or replace in connection with the Merger, of which $241,855 remained to be assumed/replaced following the payments.

In April 2010 we entered into consulting and advisory agreements for general corporate advisory services.  The agreements will expire on June 30, 2010.  Pursuant to the agreements, we agreed to compensate the consultants with 20,000 shares of restricted common stock, which will be restricted for one year; until April 30, 2011.

In April 2010 we entered into a consulting and advisory agreement for general corporate advisory services.  This agreement will expire on May 31, 2010.  Pursuant to the agreement, we agreed to compensate the consultants with a monthly fee and a bonus of cash and/or an amount of warrants, in an amount consistent with the going market rate for performing such services.

Subsequent to March 31, 2010, the Company received $350,000 in cash in connection with the sale of 350,000 units, each consisting of (a) one share of Series B Convertible Preferred Stock; and (b) one three year warrant to purchase one share of common stock of the Company at an exercise price of $2.00 per share (each a “Unit”).  There are 450,000 shares of Series B Convertible Preferred Stock issued and outstanding as of the date of this Report.

F-13

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

We caution you that this report contains forward-looking statements regarding, among other things, financial, business, and operational matters.

All statements that are included in this Quarterly Report, other than statements of historical fact, are forward-looking statements. Forward-looking statements involve known and unknown risks, assumptions, uncertainties, and other factors. Statements made in the future tense, and statements using words such as “may,” “can,” “could,” “should,” “predict,” “aim’” “potential,” “continue,” “opportunity,” “intend,” “goal,” “estimate,” “expect,” “expectations,” “project,” “projections,” “plans,” “anticipates,” “believe,” “think,” “confident” “scheduled” or similar expressions are intended to identify forward-looking statements. Forward-looking statements are not a guarantee of performance and are subject to a number of risks and uncertainties, many of which are difficult to predict and are beyond our control. These risks and uncertainties could cause actual results to differ materially from those expressed in or implied by the forward-looking statements, and therefore should be carefully considered. We caution you not to place undo reliance on the forward-looking statements, which speak only as of the date of this report. We disclaim any obligation to update any of these forward-l ooking statements as a result of new information, future events, or otherwise, except as expressly required by law.

Please see the “Glossary of Selected Terms” incorporated by reference hereto as Exhibit 99.6, for a list of abbreviations and definitions used throughout this report.

Corporate History of the Registrant:

Vertex Energy, Inc. (the “Company,” “we,” “us,” and “Vertex”) was formed as a Nevada corporation on May 14, 2008.  Pursuant to an Amended and Restated Agreement and Plan of Merger dated May 19, 2008, by and between Vertex Holdings, L.P. (formerly Vertex Energy, L.P.), a Texas limited partnership ("Vertex LP"), us, World Waste Technologies, Inc., a California corporation (“WWT” or  220;World Waste”), Vertex Merger Sub, LLC, a California limited liability company and our wholly-owned subsidiary ("Merger Subsidiary"), and Benjamin P. Cowart, our Chief Executive Officer, as agent for our shareholders (as amended from time to time, the “Merger Agreement”). Effective on April 16, 2009, World Waste merged with and into Merger Subsidiary, with Merger Subsidiary continuing as the surviving corporation and becoming our wholly-owned subsidiary (the "Merger"). In connection with the Merger, (i) each outstanding share of World Waste common stock was cancelled and exchanged for 0.10 shares of our common stock; (ii) each outstanding share of World Waste Series A preferred stock was cancelled and exchanged for 0.4062 shares of our Series A preferred stock; and (iii) each outstanding share of World Waste Series B preferred stock was cancelled and exchanged for 11.651 shares of our Series A preferred stock.

Additionally, as a result of the Merger, as the successor entity of World Waste, we assumed World Waste’s filing obligations with the Securities and Exchange Commission and our common stock began trading on the Over-The-Counter Bulletin Board under the symbol “VTNR.OB” effective May 4, 2009.  The previous trading symbol on the Over-The-Counter Bulletin Board was “WDWT.OB”.  Finally, as a result of the Merger, the common stock of World Waste was effectively reversed one for ten (10) as a result of the exchange ratios set forth in the Merger, and unless otherwise noted, the impact of such effective reverse stock split, created by the exchange ratio set forth a bove, is retroactively reflected throughout this report.

Description of Business Activities:

We provide a range of services designed to aggregate, process, and recycle industrial and commercial waste streams. We currently provide these services in 13 states, with our primary focus in the Gulf Coast Region of the United States.  Our primary focus is on the recycling of used motor oil and other distressed hydrocarbon streams. This is accomplished (1) through our Black Oil division, which aggregates used motor oil from third-party collectors and manages the delivery of this feedstock to third-party re-refining facilities, as well as fuel oil blenders, and burners of black oil, and (2) through our Refining and Marketing division, which aggregates hydrocarbon streams from collectors and generators and manages the delivery of the hydrocarbon products to a third-party facility for further processing, and then manages the s ale of the end products. In addition, we are in the process of implementing a proprietary licensed thermal chemical extraction process that, through an operating and license agreement with a related party, will process used motor oil and convert it to higher value products such as marine fuel cutterstock and a feedstock component for major refineries.

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Biomass Renewable Energy

We are continuing to work on joint development commercial projects which focus on the separation of municipal solid waste into feedstocks for energy production.  We are very selective in choosing opportunities that we believe will result in some value for the shareholders of Vertex.  We cannot assure that the ongoing venture will successfully bring any projects to a point of financing or successful construction and operation.

Reliance on Contracts and Relationships; Low Capital Intensive Business

We currently have no significant capital assets and instead contract on a fee-paid basis for the use of all assets we deem to be necessary to conduct our operations, from either independent third-parties or related-parties, pursuant to the Operating Agreement, described below, and other related party agreements described in greater detail in our Report on Form 10-K, filed with the Commission on March 30, 2010. These assets are made available to us at market rates which are periodically reviewed by the Related Party Transaction Committee of the Company’s Board of Directors. Our management has chosen to contract for the use of assets rather than purchase or build and own them in order to provide flexibility in the Company’s capital equipment requirements in the event there is a need for more or less capacity due to rapid gro wth or contraction in the future. We expect to continue to rely on contracts for access to assets going forward, to avoid the initial capital expenditures that would be required to build our own facilities.

We also have an agreement in place with KMTEX, pursuant to which KMTEX has agreed to process feedstock of certain petroleum distillates, which we provide to KMTEX, into more valuable feedstocks, including pygas, gasoline blend stock and MDO/cutter stock, which agreement expires on June 30, 2010, but is subject to a three year extension upon the mutual agreement of both parties.  The agreement can be terminated upon sixty days prior written notice by either party at any time.  In connection with and pursuant to the agreement, we pay KMTEX certain monthly tank rental fees, truck and rail car fees, and processing fees based on the weight of the material processed by KMTEX, as well as certain disposal fees and other fees.

Operating and Licensing Agreement

In connection with the Merger and effective as of the effective date of the Merger, Cedar Marine Terminals, L.P., a subsidiary of Vertex LP (“CMT”) and us entered into an Operating and Licensing Agreement (the “Operating Agreement”).  CMT is controlled by Vertex LP, an entity which is majority owned and controlled by our Chief Executive Officer and Chairman, Benjamin P. Cowart.  These related party transactions are discussed in detail in the Form 10-K filed on March 30, 2010. Pursuant to the Operating Agreement, CMT agreed to provide services to us in connection with the operation of the Terminal run by CMT, and the operations of and use of certain proprietary tec hnology relating to the re-refining of certain oil feedstock referred to as our “thermal chemical extraction process” (“TCEP”), in connection with a Terminaling Agreement by and between CMT and Vertex LP.  Additionally, we have the right to use the first 33,000 monthly barrels of the capacity of the thermal chemical extraction process pursuant to the terms of the Operating Agreement, with CMT being provided the right to use the next 20,000 barrels of capacity and any additional capacity allocated pro rata (based on the percentages above), subject to separate mutually agreeable allocations.

The Operating Agreement has a term expiring on February 28, 2017, and can be terminated earlier based on provisions in the Operating Agreement.

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In consideration for the services to be rendered pursuant to the Operating Agreement, we agreed to pay CMT its actual costs and expenses associated with providing such services, plus 10%, subject to a maximum price per gallon of $0.40, subject to CMT meeting certain minimum volume requirements as provided in the agreement. The maximum price to be paid per gallon is subject to change based on the mutual agreement of both parties and during the third quarter we agreed to pay CMT its actual costs and expenses (which have exceeded $0.40 per gallon) associated with providing such services, plus 10%, not withstanding the maximum price per gallon.  This decision was made in light of unanticipated per gallon costs greater than $0.40 per gallon incurred during the start-up phase of the plant.  As of the date of this filing we are continuing to operate under this structure.

Pursuant to the Operating Agreement, we also have the right to a non-revocable, non-transferable, royalty-free, perpetual (except as provided in the agreement) license to use the technology associated with the operations of the thermal chemical extraction process (the “License” which we have fully paid for in the amount of $1,881,846), in any market in the world (except at CMT’s Baytown facility where it is non-exclusive).

Strategy and Plan of Operations

Our goal is to continue to grow our business of recycling used motor oil and other distressed hydrocarbon streams. Strategies to achieve this goal include (1) working to grow revenues in core businesses, (2) seeking to increase margins through developing additional processing capabilities, including but not limited to the thermal chemical extraction process at additional locations other than Baytown, Texas, (3) increasing market share through greenfield development or through acquisitions, and (4) continued pursuit of alternative energy project development opportunities, some of which were originally sourced by World Waste.

· Our primary focus is to continue to supply used motor oil and other hydrocarbons to existing customers and to cultivate additional feedstock supply volume by expanding relationships with existing suppliers and developing new supplier relationships. We will seek to maintain good relations with existing suppliers, customers and vendors and the high levels of customer service necessary to maintain these businesses. We plan to seek to develop relationships with several other re-refining facilities to serve as such facilities’ primary and exclusive feedstock provider.

· We intend to improve margins by applying new technologies, including but not limited to the re-refining of certain oil feedstock through the “thermal chemical extraction process” to existing and new feedstock streams. The first application of this technology at CMT’s Baytown, Texas facility came on-line during the third quarter of 2009 and we have continued to enhance the facility and process.  We also plan to build additional facilities for various processes to implement proprietary company-owned, leased, or potentially acquired technologies to upgrade feedstock materials to create marine cutterstock, vacuum gas oil and other value-added energy products.  By moving from our historical role as a value-added logistics provider, to operating as an actual re-refiner ourselves, we plan to improve margins through th e upgrading of used motor oil and transmix inventories into higher value end products, funding permitting, of which there can be no assurance.

· We plan to seek to grow market share by consolidating feedstock supply through partnering with or acquiring collection and aggregation assets. For example, we may seek to use a combination of stock and cash to acquire or enter into joint ventures with various local used motor oil collectors and aggregators, technology providers, real estate partners and others. Such acquisitions and/or ventures, if successful, could add to revenues and provide better control over the quality and quantity of feedstock available for resale and/or upgrading as well as providing additional locations for the implementation of our thermal chemical extraction technology.  This may include the greenfield development of collection assets, terminals, re-refining facilities and equipment and opportunistic mergers and acquisitions.

· We will continue to evaluate and potentially pursue various alternative energy project development opportunities.  These opportunities may be a continuation of the projects sourced originally by World Waste and/or may include new projects initiated by us.

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Recent Events

On or around February 5, 2010, Vertex entered into an agreement with a third party to supply the third party with recovery oil feedstock (used oil).  We have not yet begun supplying feedstock under the agreement, which calls for commencement of deliveries on or before August 1, 2010. Pursuant to the terms of the agreement, we have agreed to supply up to 12,000 barrels of feedstock per month to the third party in consideration for payment to be made to the Company. We anticipate supplying feedstock pursuant to the terms of the agreement.  There are no penalties associated with these agreements.

RESULTS OF OPERATIONS

Description of Material Financial Line Items:

Revenues

We generate revenues from two existing operating divisions as follows:

BLACK OIL - Revenues for our Black Oil division are comprised primarily of feedstock sales (used motor oil) which are purchased from a network of local and regional suppliers.  Volumes are consolidated for efficient delivery and then sold to third-party re-refiners and fuel oil blenders for the export market.

REFINING AND MARKETING - The Refining and Marketing division generates revenues relating to the sales of finished products.  The Refining and Marketing division gathers hydrocarbon streams in the form of petroleum distillates, transmix and other chemical products that have become off-specification during the transportation or refining process. These feedstock streams are purchased from

pipeline operators, refineries, chemical processing facilities and third-party providers, and then processed at a third-party facility under our direction. The end products are typically three distillate petroleum streams (gasoline blendstock, fuel oil cutterstock and marine cutterstock), which are sold to major oil companies or to large petroleum trading and blending companies. The end products are delivered by barge and truck to customers.  In addition, the Refining and Marketing division gathers hydrocarbon streams in the form of recovered black oil which is then re-refined through our thermal chemical extraction process.  The finished product is then sold by barge as marine fuel cutterstock and a feedstock component for major refineries.

Our revenues are affected by changes in various commodity prices including crude oil, natural gas and 6-oil.

Cost of Revenues

BLACK OIL - Cost of revenues for our Black Oil division are comprised primarily of feedstock purchases from a network of providers. Other cost of revenues include transportation costs incurred by third parties, purchasing and receiving costs, analytical assessments, brokerage fees and commissions, surveying and storage costs.

REFINING AND MARKETING - The Refining and Marketing division incurs cost of revenues relating to the purchase of feedstock, purchasing and receiving costs, and inspection and processing of the feedstock into gasoline blendstock and marine cutterstock by a third party. Cost of revenues also includes brokers fees, inspection and transportation costs.

Our cost of revenues are affected by changes in various commodity indices, including crude oil, natural gas and #6 oil.  For example, if the price for crude oil increases, the cost of solvent additives used in the production of blended oil products, and fuel cost for transportation cost from third party providers will generally increase. Similarly, if the price of crude oil falls, these costs may also decline.

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General and Administrative Expenses

Our general and administrative expenses consist primarily of salaries and other employee-related benefits for executive, administrative, legal, financial and information technology personnel, as well as outsourced and professional services, rent, utilities, and related expenses at our headquarters, as well as certain taxes.

After deducting nonrecurring costs in connection with the Merger, we expect that we will incur higher general and administrative expenses, primarily related to our public-company reporting status.  These expenses are expected to include additional accounting and finance expenses, audit fees, legal fees and corporate governance expenses, exchange listing fees, transfer agent and stockholder-related fees, and increased premiums for director and officer liability insurance coverage. We anticipate that we will incur additional expenses in the range of approximately $800,000 to $1,200,000 annually above our normal historical general and administrative expenses as a result of our public company status.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2010 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2009

Set forth below are our results of operations for the three months ended March 31, 2010, as compared to the same period in 2009; in the comparative tables below, increases in revenue/income or decreases in expense (favorable variances) are shown without parentheses while decreases in revenue/income or increases in expense (unfavorable variances) are shown with parentheses in the “$ Change” and “% Change” columns.

	Three Months Ended March 31,
	2010			2009			$ Change			% Change
Revenues	$	13,273,080		$	7,857,134		$	5,415,946			69	%
Cost of Revenues		12,245,250			7,838,642			(4,406,608	)		(56	)%
Gross Profit		1,027,830			18,492			1,009,338			5458	%
Selling, general and administrative expenses		751,173			632,376			(118,797	)		(19	)%
Income (loss) from operations		276,657			(613,884	)		890,541			145	%
Other Income		30,000			-			30,000			100	%
Interest Expense		(36,646	)		-			(36,646	)		(100	)%
Net income	$	270,011		$	(613,884	)	$	883,895			144	%

Each of our segments’ gross profit during these periods was as follows:

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	Three Months Ended March 31,
Black Oil Segment	2010		2009			$ Change			% Change
Total revenue	$	2,956,984	$	5,872,774		$	(2,915,790	)		(50	)%
Total cost of revenue		2,890,077		5,628,299			2,738,222			49	%
Gross profit	$	66,907	$	244,475		$	(177,568	)		(73	)%
Refining Segment
Total revenue	$	10,316,096	$	1,984,360		$	8,331,736			420	%
Total cost of revenue		9,355,173		2,210,343			(7,144,830	)		(323	)%
Gross profit	$	960,923	$	(225,983	)	$	1,186,906			525	%

Our revenues and cost of revenues are significantly impacted by fluctuations in commodity prices; decreases in commodity prices typically result in decreases in revenue and cost of revenues.  Our gross profit is to a large extent a function of the market discount we are able to obtain in purchasing feedstock, as well as how efficiently management conducts operations.

Total revenues increased 69% during the first quarter of 2010, compared to the same period in 2009, largely due to increases in commodity pricing.  The average posting (U.S. Gulfcoast Residual Fuel No. 6 3%) for the three months ended March 31, 2010 increased $31.77 per barrel from a three month average of $38.91 per barrel during the 2009 period to $70.68 per barrel during the 2010 period.  On average, prices we received for our products increased 68% for the quarter ended March 31, 2010, compared to the prior year’s quarter, resulting in a $5.4 million increase in revenue.

Volume for our Black Oil division decreased twenty-five percent for the three months ended March 31, 2010, compared to the three months ended March 31, 2009.  Our volumes were impacted due to (1) loss of demand to fuel oil blenders due to market changes, (2) loss of the Omega Refining, LLC (“Omega”) contract, and (3) decreased volumes of feedstock available in the market due to the overall economic slowdown.  In addition, one of the third-party re-refining facilities that the Black Oil division supplies feedstock to stopped receiving product at the end of the 2009 year and did not start back up until the end of the 1st quarter of 2010.

In addition to our volume decrease for the three months ended March 31, 2010, our per barrel margin decreased approximately 63% from the three months ended March 31, 2009.  Also, consistent with previous years, the seasonal downturn during the first quarter adversely affected our performance.

Our Refining and Marketing division experienced an increase in production of 505% for its marine cutterstock product for the three months ended March 31, 2010, compared to the same period in 2009, and commodity price increases of approximately 56% for the same period. The increased production was due in large part to the increased TCEP production during the 1st quarter of 2010.  The average posting (U.S. Gulfcoast No. 2 Waterborne) for the three months ended March 31, 2010 increased $30 per barrel from a three month average of $54.06 per barrel during the 2009 period to $84.42 per barrel during the 2010 period.   

Our Pygas production decreased during the three months ended March 31, 2010, compared to the same period in 2009; however, commodity prices increased approximately 66% for our finished product for the three month period ended March 31, 2010, compared to the same period in 2009.

Our gasoline blendstock volumes increased 12% during the three months ended March 31, 2010 as compared to the same period in 2009.  This variance was primarily caused by the timing of production and feedstock availability.  The overall increase in revenues associated with our Refining and Marketing division was due to increases in market prices coupled with increased volumes.  Overall volume for the Refining and Marketing division increased 69% during the three month period ended March 31, 2010 as compared to the same period in 2009.  In addition, margin per barrel increased over 300% during the three months ended March 31, 2010 as compared to the same period of 2009.

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The following table sets forth the high and low spot prices during 2009 for our key benchmarks.

Benchmark	High		Date	Low		Date
U.S. Gulfcoast No. 2 Waterborne (dollars per gallon)	$	2.07	December 29	$	1.05	March 11
U.S. Gulfcoast Unleaded 87 Waterborne (dollars per gallon)	$	2.05	June 16	$	1.05	January 7
U.S. Gulfcoast Residual Fuel No. 6  3% (dollars per barrel)	$	75.55	November 4	$	37.50	January 2
NYMEX Crude oil (dollars per barrel)	$	81.19	October 22	$	33.98	February 12
Reported in Platt’s US Marketscan (Gulf Coast)

The following table sets forth the high and low spot prices during the first three months of 2010 for our key benchmarks.

Benchmark	High		Date	Low		Date
U.S. Gulfcoast No. 2 Waterborne (dollars per gallon)	$	2.16	January 6	$	1.84	February 8
U.S. Gulfcoast Unleaded 87 Waterborne (dollars per gallon)	$	2.21	March 17	$	1.86	February 8
U.S. Gulfcoast Residual Fuel No. 6  3% (dollars per barrel)	$	75.70	January 7	$	65.55	February 5
NYMEX Crude oil (dollars per barrel)	$	83.76	March 31	$	71.19	February 5
Reported in Platt’s US Marketscan (Gulf Coast)

We have seen increased stabilization in each of the benchmark commodities through March 2010; however such values are significantly stronger than they were in 2009.  Declining commodity pricing, typically results in a corresponding decrease in our revenues, gross profits, and net income.  As such, we have adjusted the way we price some of our products and we believe the resulting pricing will help to mitigate some of the volatility experienced in prior periods.

Our margins are a function of the difference between what we are able to pay for raw materials and the market prices for the range of products produced.  The various petroleum products produced are typically a function of Crude Oil indices and are quoted on multiple exchanges such as the New York Mercantile Exchange (“NYMEX”).  These prices are determined by a global market and are subject to external factors over which the Company has no control, including but not limited to supply/demand, weather, politics, and global/regional inventory levels.  As such, we cannot provide any assurances regarding results of operations for any future periods, as numerous factors outside of our control affect the prices paid for raw materials and the prices (for the most part keyed to the NYMEX) that can be charged for such products.  Additionally, for the near term, results of operations will be subject to further uncertainty, as the global markets and exchanges, including the NYMEX, have recently experienced extreme volatility due to a tightening of the credit markets and an overall malaise in the financial investment market in general.

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             During the three months ended March 31, 2010, gross profit increased 5,458% from the same period in 2009, primarily due to increases in commodity pricing, and increases in volumes and increased industrial demand associated with the prior downturn of the US economy and resulting recession during 2009.  Selling, general, and administrative expenses increased 19% for the three months ended March 31, 2010, compared to the same period in 2009.  This increase is primarily due to added expenditures incurred in connection with the regulatory compliance requirements associated with us being a publicly-traded company, some of which included legal, audit and filing expenses of approximately $70,000.  In addition $46,848 of expenses during t he first quarter of 2010 related to stock compensation expenses associated with employee and consultant stock options.

We had net income of $270,011 for the three months ended March 31, 2010, compared to net loss of $613,884 for the three months ended March 31, 2009, an increase in net income of  $883,895 or 144% from the prior year’s period.  The increase in net income was mainly due to a 69% increase in revenues and substantial increases in the margins on our products during the period ended March 31, 2010, compared to the period ended March 31, 2009, and was offset by a 56% increase in cost of revenues and a 19% increase in selling, general and administrative expenses.

Liquidity and Capital Resources

The success of our current business operations is not dependent on extensive capital expenditures, but rather on relationships with feedstock suppliers and end-product customers.  Through these relationships, we are able to achieve volume discounts in the procurement of our feedstock, thereby increasing the margins of our segments’ operations.  The resulting operating cash flow is crucial to the viability and growth of our existing business lines.

We had total assets of $7,315,836 as of March 31, 2010, which consisted of total current assets of $5,445,607, consisting of cash and cash equivalents of $71,345, accounts receivable, net of $2,675,125, inventory of $2,596,406, prepaid expenses of $102,731, and long term assets consisting of fixed assets of $74,598, and a licensing agreement in the amount of $1,795,631, which represents the value of the Company’s licensing agreement for the use of the thermal chemical extraction technology.  As of March 31, 2010, an additional $481,846 of development investments were made to the thermal/chemical process technology and added to the original $1.4 million license value.   The Company has fully paid Cedar Marine Terminals (“CMT”) fo r the license for the thermal/chemical process as of the date of this filing.

We had total liabilities, which consisted of current liabilities of $5,773,133 as of March 31, 2010, which included accounts payable of $3,613,414, accounts payable – related parties of $617,864, amounts due to related party of $441,855, and a balance on our line of credit with Regions bank in the amount of $1,100,000.

We had negative working capital of $327,526 as of March 31, 2010. Excluding current liabilities to related parties our working capital was $732,193 as of March 31, 2010.

The Company continues to monitor developments in the financial and credit markets of which  continued turmoil in these markets has resulted in a decreased willingness on the part of lenders to enter into new agreements or extend loans.  The banks and other businesses with which we transact our business have also been affected by market developments and conditions, which could affect their ability to enter into transactions with us and further impact the way we conduct business. 

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Our future operating cash flows will vary based on a number of factors, many of which are beyond our control, including commodity prices, the cost of recovered oil, and the ability to turn our inventory.  Other factors that have affected and are expected to continue to affect earnings and cash flow are transportation, processing, and storage costs.  Over the long term, our operating cash flows will also be impacted by our ability to effectively manage our administrative and operating costs.

In June 2009, we secured a line of credit of up to $3.5 million (which shall in no event be more than 80% of certain accounts held by us and 50% of the total amount of our inventory, as otherwise described in the Regions Agreement), in connection with our entry into a Letter Loan Agreement (the “Regions Agreement”) and a Revolving Line of Credit (the “Line of Credit”) with Regions Bank (“Regions”) which is expected to be used for feedstock purchases and general corporate purposes.  The Line of Credit bears interest at the LIBOR rate plus 4% per annum, subject to a minimum of 5% per annum, adjusted monthly, and which is due on May 25, 2010.  The Company is currently in discussions with Regions regarding a renewal or extension of this line of credit.  The Regions Agreement also provided for a $1.6 million loan, which we have not borrowed against to date (the “Letter Loan”) and a $500,000 equipment guidance line, which we have not utilized to date.  The Letter Loan would be due on May 25, 2010, and accrue interest at the rate of the greater of 5% or the LIBOR rate plus 1.5% per annum, adjusted monthly.  The Line of Credit (and the Letter Loan and equipment guidance line, should we choose to draw on such loans) are secured by a Security Agreement, which gives Regions a security interest in substantially all of our assets.  The Line of Credit also provided that we would pay Regions an aggregate of $17,500 in borrowing fees, and would pay Regions a fee equal to the unused amount of the Line of Credit multiplied by 0.35%, accruing daily and payable at the end of each calendar quarter.  The Line of Credit also requires that we meet and comply with certain liabilities to assets ratios and lending ratios described in greater detail in the Line of Credit, as well as certain other affirmative and negative covenants, the breach of which trigger a default of the Line of Credit.

As of March 31, 2010, we had drawn down $1,100,000 of the Line of Credit, of which there was $3,300,392 available to us (based on the criteria described above).  As of March 31, 2010 we were out of compliance with certain covenants, as required by the Letter Agreement.  This was due in part to the additional expenditures and investments made in the thermal chemical extraction process resulting in us having non-conforming ratios with Regions bank.  We believe that as we continue selling our finished product from the thermal chemical extraction process we will be taking steps during the second quarter to comply with these ratios.  Regions has not provided us any notice of a default under the Letter Agreement, and as such we do not believe we are in default under the Letter Agreement; however we wi ll be seeking a formal waiver from Regions of the covenant described above after the filing of this report, which we can provide no assurances will be granted.

Our development stage re-refining business will require significant capital to design and construct additional facilities other than the existing facility in Baytown, Texas.  Vertex LP currently has one such facility under development in Baytown, Texas, which we have the right to use pursuant to an Operating Agreement with CMT described above. We currently estimate that the cost to construct a new, fully functional full-scale commercial process at another location would be approximately $2.5 to $5.0 million, based on throughput capacity.  The facility infrastructure would be an additional capitalized expenditure to these proposed process costs and would depend on the location and site specifics of the facility.

We believe that cash from ongoing operations and our working capital facility will be sufficient to satisfy our existing cash requirements.   In order to implement our growth strategy, and pay our outstanding debts (as described above) we may need to secure additional financing in the future.

As part of our ongoing efforts to maintain a capital structure that is closely aligned with the cash-generating potential of our business and future growth, which is subject to cyclical changes in commodity prices, we will be exploring additional sources of external liquidity.  The receptiveness of the capital markets to an offering of debt or equities cannot be assured and may be negatively impacted by, among other things, debt maturities, current market conditions, and potential stockholder dilution. The sale of additional securities, if undertaken by the Company and if accomplished, may result in dilution to our shareholders. We cannot be assured however, that future financing will be available in amounts or on terms acceptable to us, or at all.

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There is currently only a limited market for our common stock, and as such, we anticipate that such market will be illiquid, sporadic and subject to wide fluctuations in response to several factors moving forward, including, but not limited to:

(1)	actual or anticipated variations in our results of operations;
(2)	our ability or inability to generate new revenues; and
(3)	the number of shares in our public float.

Furthermore, because our common stock is traded on the Over-The-Counter Bulletin Board, our stock price may be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock. Additionally, at present, we have a limited number of shares in our public float, and as a result, there could be extreme fluctuations in the price of our common stock.  The total number of shares of common stock outstanding as of the date of this report was 8,274,256 shares (which includes the 20,000 shares of restricted common stock to be issued to consultants as referenced below), and approximately 6,600,0 00 of these shares are subject to Lock-up Agreements.  The Lock-up Agreements provide that until three years following the effective date of the Merger (the “Lock-Up Period”), shareholders subject to the Lock-Up Agreements cannot sell, assign, pledge or otherwise transfer any shares of common stock such holders beneficially own, without the Company's prior written consent.  Notwithstanding the foregoing, the Lock-up Agreements provide that the holders may transfer (i) all or any portion of the shares subject to the Lock-up Agreements commencing on the date that the closing price of our common stock has averaged at least $15.00 per share over a period of 20 consecutive trading days and the daily trading volume over the same 20-day period has averaged at least 7,500 shares; (ii) all or any portion of the shares as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound by th e restrictions set forth in the Lock-up Agreement, (iii) all or any portion of the shares to any trust for the direct or indirect benefit of the holder or the immediate family of the holder, provided that the trustee of the trust agrees to be bound by the restrictions set forth in the Lock-up Agreement, and provided further that any such transfer shall not involve a disposition for value, and (iv) in any given three-month period commencing on the one-year anniversary of the effective date of the Merger, up to that number of shares equal to 5% of the total number of shares then beneficially owned by such holder.

As such, we currently have approximately 1,600,000 shares of common stock that are currently tradeable in our public float, which are not subject to the Lock - Up  Agreements.  Further, due to the limited volume of our shares which trade and our limited public float, we believe that our stock prices (bid, ask and closing prices) are entirely arbitrary, are not related to the actual value of the Company, and may not reflect the actual value of our common stock (and may reflect a lower value). Shareholders and potential investors in our common stock should exercise caution before making an investment in the Company, and should not rely on the publicly quoted or traded stock prices in determining our common stock value, but should instead determine the value of our common stock based on the information contained in the Company's public reports, industry information, and those business valuation methods commonly used to value private companies.

We may seek the listing of our common stock on NASDAQ, NYSE, or AMEX or another national securities exchange in the future.  We believe that the listing of our securities on a national exchange will facilitate the Company’s access to capital, from which certain acquisitions and capital investments might be financed.  However, we can provide no assurances that we will be able to meet the initial listing standards of any stock exchange in the future, or that we will be able to maintain a listing of our common stock on any stock exchange in the future, assuming we are initially approved for quotation on an exchange of which there can be no assurance.  Until meeting the listing requirements of a national securities exchange, we expect that our common stock will continue to be eligible to trade on the OTC B ulletin Board, another over-the-counter quotation system, or on the "pink sheets," where our stockholders may find it more difficult to dispose of shares or obtain accurate quotations as to the market value of our common stock.

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Cash flows for the three months ended March 31, 2010 compared to the three months ended March 31, 2009

	Three Months Ended March 31,
	2010			2009
Beginning cash and cash equivalents	$	514,136		$	17,616
Net cash provided by (used in):
Operating activities		(1,090,119	)		56,528
Investing activities		(152,672	)		-
Financing activities		800,000			(51,391	)
Net increase (decrease) in cash and cash equivalents		(442,791	)		5,137
Ending cash and cash equivalents	$	71,345		$	22,753

Operating activities used cash of $1,090,119 for the three months ended March 31, 2010 as compared to being provided $56,528 of cash during the corresponding period in 2009.  The primary reason for this decrease is related to our $486,702 increase in accounts receivable, $382,476 decrease in inventory and $90,133 increase in accounts payable-related parties, which was offset by $1,439,143 of decrease in accounts payable.  Additionally, non-cash net income related to stock compensation provided $46,848 of liquidity.

Investing activities used cash of $152,672 for the three months ended March 31, 2010 as compared to having not used any cash during the corresponding period in 2009.  Investing activities in 2010 are comprised primarily of $149,956 in cash payments related to the license of the thermal chemical extraction process and $2,716 in the purchase of fixed assets.

Financing activities provided $800,000 during the three months ended March 31, 2010 resulting from proceeds from a draw down on our line of credit with Regions bank in the amount of $1,100,000 and proceeds from an investment in the company of $100,000, offset by a $400,000 cash payment against a note paid to an entity controlled by Vertex LP, an entity which is majority-owned and controlled by our Chief Executive Officer and Chairman, Benjamin P. Cowart.

Recent Events

In January and March of 2010, we paid an additional $200,000 to Vertex LP in connection with the $1.6 million of debt which the Company agreed to assume from Vertex LP and/or replace in connection with the Merger.

On January 13, 2010, the Board Of Directors approved the filing of a Certificate of Designation of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”), which was filed with the Secretary of State of Nevada on January 14, 2010. The designation provides for 2,000,000 shares of Series B Preferred Stock at $0.001 par value per share.  The Series B Preferred Stock accrues a dividend of 12% per annum, payable quarterly in arrears (beginning on the first full quarter after the issuance date of such Preferred Stock), based on a face value of $1.00 per share. The Series B Preferred Stock includes a liquidation preference which is junior to the Company’s previously outstanding shares of preferred stock, senior securiti es and other security holders as provided in further detail in the designation. The Series B Preferred Stock is convertible into shares of the Company’s common stock on a one for one basis at a conversion price of $1.00 per share, provided that the Series B Preferred Stock automatically converts into shares of the Company’s common stock on a one for one basis if the Company’s common stock trades above $2.00 per share for a period of 10 consecutive trading days.  The Series B Preferred Stock has no voting rights (other than on matters concerning the Series B Preferred Stock described in the designation) and the Company is obligated to redeem any unconverted shares of Series B Preferred Stock in cash at $1.00 per share on the third anniversary date of the original issuance date of each share of Preferred Stock.

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In January 2010, the Company began a private placement offering to accredited investors only of up to 2,000,000 units (the “Offering”), each consisting of (a) one share of Series B Preferred Stock; and (b) one three year warrant to purchase one share of common stock of the Company at an exercise price of $2.00 per share (each a “Unit”).  We also agreed to grant investors in the offering piggy-back registration rights in connection with the shares of common stock issuable in connection with the conversion of the Series B Preferred Stock and the shares of common stock issuable in connection with the exercise of the warrants sold in the Offering.

In February, the Company sold 100,000 Units and raised $100,000 in connection with the Offering.   Subsequent to March 31, 2010, the Company received $350,000 in cash in connection with the sale of an additional 350,000 Units.  There are 450,000 shares of Series B Preferred Stock issued and outstanding as of the date of this Report.  The Company claims an exemption from registration provided by Rule 506 of the Securities Act of 1933, as amended, as the subscribers were accredited investors and made certain representations and warranties to the Company in the Subscription Agreements evidencing the purchase.

In April 2010 we entered into a consulting and advisory agreement for general corporate advisory and financing services.  This agreement will expire on May 31, 2010.  Pursuant to the agreement, we agreed to compensate the consultant with a monthly fee and to pay the consultant a bonus of cash and/or an amount of warrants, in an amount consistent with the going market rate for performing such services.

In April of 2010, we paid an additional $200,000 to Vertex LP in connection with the $1.6 million of debt which the Company agreed to assume from Vertex LP and/or replace in connection with the Merger, of which $241,855 remained to be assumed/replaced following the payment.

Net Operating Losses

We intend to take advantage of any potential tax benefits related to net operating losses (“NOLs”) acquired as part of the World Waste merger.  As a result of the merger we acquired approximately $42 million of net operating losses that may be used to offset taxable income generated by the Company in future periods.

It is possible that the Company may be unable to use these NOLs in their entirety.  The extent to which the Company will be able to utilize these carry-forwards in future periods is subject to limitations based on a number of factors, including the number of shares issued within a three-year look-back period, whether the merger is deemed to be a change in control, whether there is deemed to be a continuity of World Waste’s historical business, and the extent of the Company’s subsequent income. The Company has not yet determined the extent, if any, to which it may be able to utilize these carry-forwards. The history of these NOLs and the related tax laws are complex and the Company is researching the facts and circumstances as to whether the Company will ultimately be able to utilize the benefit from these NOLs.

Critical Accounting Policies and Use of Estimates

Our financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Management regularly evaluates its estimates and judgments, including those related to revenue recognition, goodwill, intangible assets, long-lived assets valuation, and legal matters. Actual results may differ from these estimates. (See Note 1 to the Vertex Energy, Inc. financial statements.)

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Revenue Recognition.  Revenue for each of the Company’s divisions is recognized when persuasive evidence of an arrangement exists, goods are delivered, sales price is determinable, and collection is reasonably assured.

Legal Matters.  Accruals are established for legal matters when, in our opinion, it is probable that a liability exists and the liability can be reasonably estimated. Actual expenses incurred in future periods can differ materially from accruals established.

Stock Based Compensation

The Company accounts for share-based expense and activity in accordance with FASB ASC Topic 718, which establishes accounting for equity instruments exchanged for services. Under this provision share-based compensation costs are measured at the grant date, based on the calculated fair value of the award, and are recognized as an expense over the employee’s requisite service period, generally the vesting period of the equity grant.

Share-based payments to non-employees are measured at the grant date, based on the calculated fair value of the award, and are recognized as an expense over the service period, generally the vesting period of the equity grant. The Company estimates the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, expected option term, expected volatility of the stock over the option’s expected term, risk-free interest rate over the option’s expected term, and the expected annual dividend yield. The Company believes that the valuation technique and approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the stock options granted.

Basic and Diluted Loss per Share

Basic and diluted loss per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.

Income Taxes

The Company accounts for income taxes in accordance with the FASB ASC Topic 740.  The Company records a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and when temporary differences become deductible.  The Company considers, among other available information, uncertainties surrounding the recoverability of deferred tax assets, scheduled reversals of deferred tax liabilities, projected future taxable income, and other matters in making this assessment.

Recently Issued Accounting Pronouncements

In June 2009, the Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Topic 810-10-15, “Consolidation-Variable Interest Entities,” or Topic 810-10-15.  Topic 810-10-15 improves financial reporting by enterprises involved with variable interest entities and provides more relevant and reliable information to users of financial statements.  Topic 810-10-15 is effective as of the beginning of the first annual reporting period that begins after November 15, 2009 and for interim periods within that first annual reporting period.  We adopted Topic 810-10-15 on January 1, 2010, but it did not have a material impact on ou r consolidated financial statements.

Market Risk

Our revenues and cost of revenues are affected by fluctuations in the value of energy related products.  We attempt to mitigate much of the risk associated with the volatility of relevant commodity prices by using our knowledge of the market to obtain feedstock at attractive costs, by efficiently managing the logistics associated with our products, by turning our inventory over quickly, and by selling our products into markets where we believe we can achieve the greatest value.  We believe that the current downward trend in natural gas prices coupled with increasing crude oil prices provides an attractive margin opportunity for our proposed thermal chemical extraction process.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judg ment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on our evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

We regularly review our system of internal control over financial reporting to ensure we maintain an effective internal control environment. There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K, filed with the Commission on March 30, 2010, and investors are encouraged to review such risk factors, prior to making an investment in the Company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In January 2010, the Company began a private placement offering to accredited investors only of up to 2,000,000 units (the “Offering”), each consisting of (a) one share of Series B Preferred Stock; and (b) one three year warrant to purchase one share of common stock of the Company at an exercise price of $2.00 per share (each a “Unit”).  We also agreed to grant investors in the offering piggy-back registration rights in connection with the shares of common stock issuable in connection with the conversion of the Series B Preferred Stock and the shares of common stock underlying the exercise of the warrants sold in the Offering.

In February, the Company sold 100,000 Units and raised $100,000 in connection with the Offering.   Subsequent to March 31, 2010, the Company received $350,000 in cash in connection with the sale of an additional 350,000 Units.  There are 450,000 shares of Series B Preferred Stock issued and outstanding as of the date of this Report.  The Company claims an exemption from registration provided by Rule 506 of the Securities Act of 1933, as amended, as the subscribers were accredited investors and made certain representations and warranties to the Company in the Subscription Agreements evidencing the purchase.

In April 2010 we entered into consulting and advisory service agreements for general corporate advisory services with two individuals.  The agreements will expire on June 30, 2010.  Pursuant to the agreements, we agreed to compensate the consultants with 10,000 shares of restricted common stock each (20,000 total), which shares will be restricted for one year until April 30, 2011.

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Item 3. Defaults Upon Senior Securities

None.

Item 4. (Removed and Reserved)

None.

Item 5. Other Information.

None.

Item 6. Exhibits

EXHIBIT NO.	DESCRIPTION
2.1(1)	Amendment No. 5, dated as of March 31, 2009, to Amended and Restated Agreement and Plan of Merger by and among World Waste Technologies, Inc., Vertex Holdings, L.P. (formerly Vertex Energy, L.P.), Vertex Energy, Inc., Vertex Merger Sub, LLC and Benjamin P. Cowart.
3.1(2)	Articles of Incorporation (and amendments thereto) of Vertex Energy, Inc.
3.2(1)	Amended and Restated Certificate of Designation of Rights, Preferences and Privileges of Vertex Nevada, Inc.'s Series A Convertible Preferred Stock.
3.3(2)	Withdrawal of Designation of the Company’s Series B Preferred Stock
3.4(4)	Series B Convertible Preferred Stock Filing
3.5(2)	Bylaws of Vertex Energy, Inc.
4.1(2)	Vertex Energy, Inc., 2008 Stock Incentive Plan
4.2(3)	2009 Stock Incentive Plan of Vertex Energy, Inc.
10.1(2)	Asset Transfer Agreement
10.2(2)	Services Agreement
10.3(2)	Right of First Refusal Agreement
10.4(2)	Operating and Licensing Agreement
10.5(2)	Employment Agreement with Benjamin P. Cowart
10.6(2)	Employment Agreement with John Pimentel

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10.7(2)	Employment Agreement with Matthew Lieb
10.8(2)	Letter Loan Agreement with Regions Bank
10.9(2)	Line of Credit with Regions Bank
10.10(2)	Security Agreement with Regions Bank
10.11(3)	Letter Agreement with Christopher Stratton
14.1(2)	Code of Ethics
16.1(2)	Letter from Stonefield Josephson, Inc.
31.1*	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
31.2*	Certification of Acting Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
32.1*	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
32.2*	Certification of Acting Principal Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
99.1(2)	Audited Financial Statements of Vertex Holdings, L.P. formerly Vertex Energy, L.P. (certain assets, liabilities and operations related to its black oil division and certain assets, liabilities and operations of the refining and marketing division) for the years ended December 31, 2008 and 2007
99.2(2)	Unaudited Financial Statements of Vertex Holdings, L.P. formerly Vertex Energy, L.P. (certain assets, liabilities and operations related to its black oil division and certain assets, liabilities and operations of the refining and marketing division) for the three months ended March 31, 2009 and 2008
99.3(2)	Audited Financial Statements of Vertex Energy, Inc. as of December 31, 2008
99.4(2)	Unaudited Interim Financial Statements of Vertex Energy, Inc. for the three months ended March 31, 2009 and 2008
99.5(2)	Pro Forma Financial Statements of Vertex Energy, Inc.
99.6(2)	Glossary of Selected Terms

* Filed herewith.

(1) Filed as an exhibit to the registrant’s Report on Form 8-K, filed with the Commission on April 8, 2009, and incorporated herein by reference.

(2) Filed as an exhibit to the registrant’s Report on Form 8-K/A. filed with the Commission on June 26, 2009, and incorporated herein by reference.

(3) Filed as an exhibit to the registrant’s Report on Form 8-K, filed with the Commission on July 31, 2009, and incorporated herein by reference.

(4) Filed as an exhibit to the registrant’s Report on Form 8-K, filed with the Commission on January 14, 2010, and incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.

	VERTEX ENERGY, INC.
Date: May 17, 2010	By: /s/ Benjamin P. Cowart
	Benjamin P. Cowart
	Chief Executive Officer
	(Principal Executive Officer)
Date: May17, 2010	By: /s/ Christopher Stratton
	Christopher Stratton
	Chief Financial Officer
	(Principal Financial Officer)

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EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Benjamin P. Cowart, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Vertex Energy, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
	(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an Quarterly Report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 17, 2010	By:	/s/ Benjamin P. Cowart
	Benjamin P. Cowart
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher Stratton, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Vertex Energy, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
	(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an Quarterly Report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 17, 2010
	By:	/s/ Christopher Stratton
		Christopher Stratton
		Chief Financial Officer (Acting Principal Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SS. 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Vertex Energy, Inc. (the "Company") on Form 10-Q for the period ended March 31, 2010, as filed with the Securities and Exchange Commission (the "Report"), I, Benjamin P. Cowart, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 17, 2010	/s/ Benjamin P. Cowart
	Benjamin P. Cowart
	Chief Executive Officer
	(Acting Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SS. 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Vertex Energy, Inc. (the "Company") on Form 10-Q for the period ended March 31, 2010, as filed with the Securities and Exchange Commission (the "Report"), I, Christopher Stratton, Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 17, 2010	/s/ Christopher Stratton
	Christopher Stratton
	Chief Financial Officer (Acting Principal Accounting Officer)